Alpha Transfers Mining Properties to Lexington Coal

Alpha Natural Resources has announced the transfer of mostly idle mining properties in West Virginia, Kentucky and Tennessee to Lexington Coal Co., related ongoing royalty payments and reclamation equipment.

Alpha, based in Kingsport, Tennessee, says that eliminates self-bonding in West Virginia nine years early.

The company emerged from bankruptcy reorganization last year.

Lexington Coal CEO Steven Poe says the transfer includes some 250 permits, five active mines in West Virginia and Kentucky and bonding representing $192 million.

The companies say Kentucky-based Lexington will receive $199 million in cash and $126 million in installments toward bonding, reclamation, water treatment and other obligations.

Alpha will continue operating 20 mines and 9 prep plants in West Virginia, and the company still expects to produce 14 million tons of metallurgical and thermal coal in 2017.

Fighting For Breath: Black Lung's Deadliest Form Increases

At the age of 38, a coal miner named Mackie Branham Jr. was diagnosed with progressive massive fibrosis, a debilitating and terminal form of an illness that was supposed to be a disease of the past — black lung. But Branham is among many the miners afflicted by a resurgence in the disease, and officials are just beginning to realize the scope of the problem. A review of health clinic records shows roughly a thousand such cases, many times more than federal officials had thought existed.

Credit Benny Becker / Ohio Valley Resource
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Ohio Valley Resource
Mackie Branham, Jr., was diagnosed with the complex form of black lung at age 38.

"The more I talk, the more I get out of breath." – Mackie Branham

Driving into Pike County, Kentucky, the welcome sign tells you that you’ve entered “America’s Energy Capital.” Sheer rock walls line the highway, evidence of a community that’s extremely skilled at cutting through mountains.

Pike County is in the heart of the central Appalachian coalfields, and it’s home to the offices of Dr. James Brandon Crum, a radiologist who often reads the lung X-rays of coal miners. Last July, he reached out the National Institute of Occupational Safety and Health (NIOSH) because he’d noticed a disturbing trend among his patients.

According to a NIOSH study published this month, Crum found the worst form of black lung disease in 60 patients in a period of 20 months. That’s more cases than the NIOSH black lung surveillance program had identified nationwide since 2010.

One of the study’s co-authors, NIOSH epidemiologist Scott Laney, described the rate of severe black lung at Crum’s clinic as “unprecedented by any historical standard.”

Mackie Branham Jr. is one of the 60. An X-ray of his lungs shows that they’re littered with dark splotches, the scar tissue that’s built up around deposits of coal and rock dust. With his diagnosis, Branham was told he couldn’t go back to working in the coal mines. That meant no more paychecks and the beginning of an extremely difficult period for Branham’s family.

Credit Benny Becker / Ohio Valley ReSource
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Ohio Valley ReSource
The Branham family.

"I can no longer provide for my family." – Mackie Branham

Branham’s work-history lines up with many of the reasons the NIOSH study suggests could be causing the uptick in severe black lung in younger miners. As a self-described “company man,” Branham did whatever the company asked, and that often meant extremely long hours. He often missed birthdays and holidays to pick up extra shifts. He’d sometimes work more than 24 hours straight. Longer hours likely go part of the way to explaining how a 38-year-old can have lungs worse than many retired miners.

The NIOSH report suggests another piece of the puzzle could be the popularity of a technique called slope mining, which involves making a long cut through rock in order to reach a coal seam. In central Appalachia, this usually means cutting through sandstone. Sandstone breaks down into silica dust, which can be much more harmful than coal dust. Branham said he once spent six straight months making this kind of cut, regularly working shifts as long as 16 hours.

The report also suggests that the recent downsizing of the Appalachian coal industry could be playing a major role in this new spike of diagnoses. In today’s coal landscape, laid-off miners have little hope of getting rehired, and that’s created a new incentive for miners to get tested and apply for benefits.

Branham’s black lung is so severe that he wouldn’t be able to work even if there were mines hiring. But he said he’s also affected by the continuing layoffs. As he sees it, laid-off miners have few options besides applying for black lung benefits, and that flood of claims has put him further down the list, forcing him to wait longer before he can hope to receive benefits.

Credit Benny Becker / Ohio Valley Resource
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Ohio Valley Resource
Amber and Mackie Branham.

'I make in a week what he made in two days.'     – Amber Branham

Mackie Branham Jr. lives with his wife Amber and their five children. The family has a lawyer, and has been fighting for benefits since March, but they’ve not yet seen a dime. Branham says that his former employer, Alpha Natural Resources, has been fighting him every step of the way.

Coal companies have long been notoriously aggressive in fighting black lung claims. Branham’s condition is pretty clear-cut since he’s disabled and isn’t a smoker. But he still had to get opinions from seven doctors to make it through the process. In the meantime, it’s been hard for his family to get by. He tried to get government benefits, but was turned down for both unemployment and disability. His wife has been working over 60 hours a week as a waitress, and yet Branham said he’d likely be homeless if not for help from his family and a very kind landlord.

"We're having a lot more severe black lung than even our worst nightmares." – Attorney Evan Smith

The NIOSH study found 60 cases of the worst form of black lung diagnosed at Dr. Crum’s clinic since 2015, and characterized that as a “resurgence.” With help from the ReSource, NPR found 392 additional cases in the same period at clinics across the region. Clinics noted over a thousand cases since 2010, which is more than double the number of cases that NIOSH’s black lung surveillance programs have found in the last forty years.

A growing number of miners with the worst form of black lung is likely to create challenges for families, communities, and the region as the whole. Coal companies responsible for paying benefits could face a growing cost in an already difficult market. Taxpayers and the federal government could end up bearing more of the burden.

Credit Howard Berkes / NPR
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NPR
Mackie Branham views a lung X-ray with Dr. James Brandon Crum, who was among the first physicians to note an uptick in black lung diagnoses

Branham’s former employer,  Alpha, recently emerged from bankruptcy, and is still responsible for his benefits. In the recent wave of coal bankruptcies, some companies have shed their liabilities to pay black lung benefits. When that happens, any black lung claims that company would have been responsible for are transferred to the federal black lung benefit fund. That’s what happened when  Patriot Coal, once a major employer in the region, shifted about $62 million in liabilities onto the black lung benefits fund.

Credit Alexandra Kanik / Ohio Valley Resource
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Ohio Valley Resource

Benefits in Question

The federal government started paying black lung benefits in 1969 after thousands of striking miners demanded that black lung be recognized as a condition that deserved worker’s compensation.

The system has gone through a lot of changes in the years since, including changes to the requirements to receive benefits and how the costs are spread between taxpayers and coal companies. But since the 1980s, there had been one steady trend from year to year:  a decrease in the number of living beneficiaries, and the amount of benefits getting paid out each year. That’s what you’d expect given the number of regulations intended to limit exposure to coal dust.

But in the last few years, the number of black lung claims has been increasing.

Credit Alexandra Kanik / Ohio Valley Resource
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Ohio Valley Resource

The new surge in the worst forms of black lung is more evidence that these regulations haven’t been working as well as they were intended to. Coal mines can be an extremely cost-conscious and productivity-oriented environment, and for years there have been widespread and well-documented cases of mine operators cutting corners and ignoring safety regulations.

A new dust rule may finally address some of the issues causing the current uptick, but because black lung is contracted through years of exposure, it’ll be at least a decade before anyone can tell if things have improved.

In the meantime, some in the region are concerned about the future of the federal black lung benefits fund. Among them is Evan Smith, an attorney at the Appalachian Citizen’s Law Center in Whitesburg, Kentucky, and the man behind blacklungblog.com.  Smith said the recent bankruptcies and the increase in black lung claims could put the fund at risk.

That’s especially worrying since the fund will also be losing income as the per-ton tax on coal that supports the fund will fall along with declining production. A temporary increase in the tax is also set to expire in December, 2018. Members of Congress have asked for an updated report on the fund’s viability.

Federal black lung benefits have been been a major income source in the Ohio Valley region. Since 2009, Ohioans have received more than $95 million in federal black lung benefits.  In Kentucky, the amount is over $230 million. And in West Virginia, federal black lung benefits have paid out more than $300 million. This money goes straight into the pockets of black lung beneficiaries and is one of the biggest cash streams that’s still flowing into some coalfield communities.

A New Barrier

Credit Alexandra Kanik / Ohio Valley Resource
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Ohio Valley Resource
Click to view a flow chart on how to apply for black lung benefits.

Another possible change in the federal black lung program could come if the Republican Congress repeals the Affordable Care Act (also known as Obamacare). One section of the Act, known as the Byrd Amendment, made it easier for miners with at least 15 years of experience to file for black lung benefits, essentially shifting the burden of proving the cause of the disease from the miner to the mining company.

If the Affordable Care Act is repealed and the Byrd Amendment gets struck along with it, it could open a new set of challenges and delays that miners like Mackie Branham Jr. would have to face in trying to claim their black lung benefits.

Hope for Christmas

The benefits process is adversarial and difficult to get through even with the help of a lawyer. Both Mackie and Amber Branham’s fathers have form of black lung, but neither was able to get benefits, and that seems to be a common story.

It looks like Branham’s story is going to be different. On December 13th, the Branhams got some good news. After Branham submitted a diagnosis from seven doctors—  including a final one chosen by Alpha Natural Resources—  a Kentucky judge awarded Branham his worker’s compensation benefits, and Branham has hope that he’ll get a benefits payment in time for Christmas.

W.Va. DEP Settles with Alpha, Again

West Virginia regulators have settled a lawsuit brought against Alpha Natural Resources over concerns about the coal producer’s reclamation obligations as it emerges from bankruptcy.

Alpha is one of the biggest coal companies in the country. A Virginia court approved its bankruptcy plan in July. Just prior to that, the company struck a deal with the West Virginia Department of Environmental Protection. But in November, Alpha revealed an additional $100 million in unaccounted-for expenses.

Worried that the burden could leave the company unable to pay for reclamation of damaged mine lands, the West Virginia DEP filed a lawsuit against Alpha that sought to hold executives accountable should Alpha fail again after bankruptcy.

Under the settlement announced this week, the DEP has agreed to dismiss the complaint. In exchange, Alpha agreed to post its Boone County headquarters as collateral, appraised at $6.3 million. In addition, the new company emerging from the bankruptcy, Contura Energy Inc., agreed to post an additional $8.5 million in limited guarantees to cover the company’s obligations.

In a release the DEP explained, “Contura agreed to post a $4 million letter of credit and issue a secured $4.5 million guaranty of Alpha’s obligations, each through the end of 2018. By that time, Alpha expects its financial condition to return to the level projected in its prior bankruptcy projections.”

In a release Alpha CEP David Stetson said, “Alpha is pleased that the concerns raised by the West Virginia Department of Environmental Protection with respect to the proposed settlement between Alpha, Contura Energy, and the agent for Alpha’s former first-lien lenders have been fully addressed.”

The agreement still needs to be approved in bankruptcy court.

Alpha Liabilities Cause Concern for West Virginia Regulators

Just months after emerging from bankruptcy, Alpha Natural Resources has revealed $100 million in what it calls “unaccounted for obligations,” causing West Virginia regulators to worry that the burden puts the company at further risk of financial failure.

 

The Alpha disclosure, made in a recent bankruptcy court filing, has increased fears about there being adequate money available to complete proper reclamation on hundreds of Alpha mining permits across West Virginia, The Charleston Gazette-Mail reported.

 

The disclosure prompted a strongly worded objection from the West Virginia Department of Environmental Protection.

 

It also brought a related lawsuit by the DEP that threatens the possibility state officials could eventually block a half-dozen former top Alpha executives or affiliated companies from obtaining new coal-mining permits anywhere in the country.

 

In one recent court filing, DEP lawyer Kevin Barrett referred to the amount of Alpha’s unaccounted for obligations as “whopping.” Barrett said the issue “is devastating” and “seriously threatens” the reorganized company’s ability to perform its legal obligations to reclaim remaining mine sites.

 

“That’s a lot of money,” said DEP Secretary Randy Huffman. “We just felt like we needed to take some action.”

 

The DEP filed a legal complaint in U.S. Bankruptcy Court in Richmond, Virginia, against Alpha and against six former Alpha executives who are now running a new company that took over Alpha’s most valuable holdings as part of its bankruptcy reorganization.

 

The complaint seeks to void previous DEP agreements for which the state could not hold those former Alpha officials responsible if the reorganized Alpha ended up going belly up and leaving mines unreclaimed.

 

If the DEP’s request is granted, those six officials could be linked to any Alpha reclamation problems on the federal government’s “applicant violator system.” The so-called “AVS” is a system that aims to prevent companies or individuals with unresolved environmental violations or unreclaimed mine sites from getting new coal-mining permits.

 

The DEP’s action in the Alpha case is the latest move regarding growing concerns from environmental regulators, citizen groups and labor organizations that the historic downturn in the Appalachian coal market will leave behind billions of dollars in “legacy liabilities” that range from scarred land and polluted streams to financially strapped health care and pension programs and unpaid taxes.

 

In the Alpha bankruptcy, most of the company’s larger and more valuable properties — primarily in the western U.S. — were transferred during the court-approved reorganization to Contura Energy, a company formed by Alpha’s major lenders and now led by former Alpha CEO Kevin Crutchfield.

 

In a press release Friday, independent members of Contura’s board of directors said the DEP’s court filing included allegations the board believed “to be inaccurate and defamatory as they are made without any evidence whatsoever, with no basis in fact, and without merit.”

 

“The efforts of Alpha’s and Contura’s dedicated management teams continue to ensure the preservation of thousands of jobs and provide value to both companies’ diverse set of stakeholders,” the press release said. “We challenge any inference to the contrary. We intend to work with all parties to resolve these allegations and will vigorously defend the hard-earned reputations and integrity of management to the fullest extent.”

After Emerging from Bankruptcy, Alpha Resources Sells Mine

Coal producer Alpha Natural Resources has sold some of its eastern Kentucky coal property to a Texas company.

The company says it has divested most of the assets of its Enterprise mining operations to Kingdom Coal, a subsidiary of Keystone-Kingdom Resources based in Fort Worth.

The sale includes the EMC #9A mine and the Roxana prep plant in Knott and Letcher counties. The EMC mine was the last operating coal mine in Knott County before it was idled in July.

Alpha Natural Resources CEO David Stetson says the transaction is part of the company’s plan to “divest non-strategic properties.”

The one-time coal giant emerged from Chapter 11 bankruptcy as a smaller, privately held company in July. It has 17 mines and seven preparation plants in West Virginia and Kentucky.

Man Missing in Mine Where 2010 Blast Killed 29 Miners

A man has been reported missing after authorities say he went to steal copper from a shuttered West Virginia mine that had been the site of a 2010 explosion that killed 29 coal miners.

West Virginia State Police said in a statement that David Lee Adkins’ wife reported him missing Tuesday. She told authorities her husband and at least three other men had been stealing copper from the Upper Big Branch mine.

One of the suspects was arrested Wednesday for breaking and entering. He told troopers he had been with Adkins inside the mine Tuesday before they became separated around 2:30 a.m.

Police are working with the mine’s owner, Alpha Natural Resources, to have a rescue team search the mine. The mine was permanently closed after the fatal explosion.

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