Justice Coal Companies Story Archives - West Virginia Public Broadcasting

Justice, 2 Coal Companies Face Lawsuit From Bond Provider In Virginia

Western Surety alleges breach of contract and seeks more than $3 million in damages and attorney’s fees.

Gov. Jim Justice and two of his family’s coal companies face yet another lawsuit in Virginia.

Western Surety Co. sued Justice, Southern Coal Corp. and Bluestone Resources this week in U.S. District Court for the Western District of Virginia.

Western Surety alleges breach of contract and seeks more than $3 million in damages and attorney’s fees.

Justice and his family own dozens of coal-related companies, including Southern and Bluestone. Both are based in Roanoke, Virginia.

Justice, who’s running for the U.S. Senate in 2024, faces a multitude of legal challenges.

Another bond provider, Federal Insurance Co., sued Justice and four of his companies in June in the U.S. District Court for the Southern District of New York, seeking $8.1 million in damages.

The U.S. Justice Department sued 13 of Justice’s companies in May over mine health and safety violations. The government seeks to collect $7.6 million in penalties.

Another Justice-owned company, Blackstone Energy, could owe the Virginia Department of Environmental Quality numerous fines of $32,500 per day going back three years.

In a filing last month in Richmond Circuit Court, the Virginia attorney general’s office asked Blackstone to show why it isn’t in violation of a consent order that requires it to clean up contamination at several mine sites.

U.S. Justice Department Sues Justice Family Coal Companies

The U.S. Justice Department is suing 13 companies owned by the family of Gov. Jim Justice over unpaid fines and fees.

Updated on Wednesday, May 31, 2023 at 3:15 p.m.

The U.S. Justice Department is suing 13 companies owned by the family of Gov. Jim Justice, alleging they failed to pay fines and fees for more than 100 mine reclamation violations from 2018 to last year.

The DOJ seeks to recover $7.6 million in civil penalties, administrative fees and interest from coal companies owned by the Justice family.

The DOJ alleges that the companies are in violation of the Surface Mining Control and Reclamation Act and the Abandoned Mine Land program.

Justice, a Republican, is seeking the U.S. Senate seat currently held by Democrat Joe Manchin.

In a briefing Wednesday, Justice suggested the suit could be politically motivated, with Democrats holding a narrow Senate majority.

“There’s a lot at stake right now,” he said. “The entire U.S. Senate could be flipped. And that’s what I intend to help make happen.”

Justice, who isn’t named in the complaint, ran the companies until he was elected governor in 2016. His son, James C. Justice III, or Jay, has run the companies since then and is named in the 128-page complaint.

Justice first faces a Republican primary with Rep. Alex Mooney next year. Manchin has not said if he’ll run for re-election.

Roman Stauffer, Justice’s U.S. Senate campaign manager, said in a statement that the DOJ complaint was political and that Democrats would prefer to run against Mooney.

“Joe Biden, Chuck Schumer, and the Democrats have seen the polls that show Jim Justice winning this race, and they’re panicking. So now the Biden Justice Department has decided to play politics. We will see a lot more of this as the Democrats work to help Alex Mooney because they know they can easily beat him,” Stauffer said.

Many of the Justice family companies are based in Roanoke, Virginia. The DOJ complaint was filed in the U.S. District Court for the Western District of Virginia.

Christopher Kavanaugh, the U.S. Attorney for the Western District of Virginia, was nominated by President Joe Biden in 2021 and confirmed unanimously by the Senate.

“Over a five-year period, defendants engaged in over 130 violations of federal law, thereby posing health and safety risks to the public and the environment,” Kavanaugh said in a statement. “Today, the filing of this complaint continues the process of holding defendants accountable for jeopardizing the health and safety of the public and our environment.”

A 2016 NPR investigation found that Justice’s coal empire owed $15 million in taxes, fines and fees in six states.

The Justice family coal companies’ legal troubles have continued well into his time as governor of West Virginia. Here are some recent examples:

In May, a U.S. District judge in Charleston ruled that a Justice coal company owed a retired miner and his spouse six years of health care premiums.

In April, the Fourth U.S. Circuit Court of Appeals in Richmond, Virginia, ruled that two Justice companies must pay $2.5 million in penalties for thousands of water pollution violations in several states.

In March, an Elkins bank went to court to demand the repayment of an $861,000 loan to a Justice company and asked the state auditor to garnish the governor’s paycheck to settle the debt.

In January, another Justice company settled a lawsuit over incomplete mine reclamation work in Southwest Virginia.

In December, a Justice company reached a settlement in Birmingham, Alabama, for nearly $1 million for air pollution violations from a coke plant it owns there.

In 2019, the Trump DOJ sued 23 Justice family companies, seeking $4.7 million in unpaid mine safety and health violations. The DOJ and the companies reached a settlement in April 2020.

In March, before Justice announced his Senate bid, The Wall Street Journal reported that he was considering a sale of part of the family coal business.

Justice Coal Company Must Pay Miner’s Health Premiums, Court Rules

U.S. District Judge Frank Volk ruled last week that Bluestone Coal owes a retired miner and his spouse six years of unpaid health care premiums.

A federal judge has ruled that one of Gov. Jim Justice’s coal companies is liable for health care premiums for a retired miner.

U.S. District Judge Frank Volk ruled last week that Bluestone Coal owes a retired miner and his spouse six years of unpaid health care premiums.

Volk, in an opinion filed in the U.S. District Court for the Southern District of West Virginia, gave the parties 30 days to reach an agreement on a settlement.

Bluestone owed about $100,000 in premium payments for Kenny and Patsy Dowell as of last September. The company must also pay interest and liquidated damages equal to 20 percent of the principal.

Bluestone is one of the numerous coal companies owned by the Justice family. Other Justice companies have been ordered to pay back loans and civil penalties in recent months.

In March, Bluestone Resources was found to be in default on an $861,000 loan from an Elkins bank. In December, Bluestone Coke was ordered to pay $925,000 to address air pollution violations in Birmingham, Alabama.

Report: Justice Considers Sale Of Family Coal Business

Justice’s term as governor ends next year, and he’s been weighing a challenge to U.S. Sen. Joe Manchin.

Gov. Jim Justice may put his family’s coal business up for sale ahead of a potential U.S. Senate run, The Wall Street Journal reported late Tuesday.

Justice owns numerous companies that operate in West Virginia, Kentucky, Virginia and other states.

Justice’s term as governor ends next year, and he’s been weighing a challenge to U.S. Sen. Joe Manchin.

The WSJ article noted that the sale of the coal business would help Justice settle substantial debt.

Justice’s companies have paid millions of dollars in fines and penalties in multiple states, much of it related to unfinished mine reclamation.

In January, A&G Coal settled a lawsuit over three unreclaimed mine sites in southwest Virginia. As part of that settlement, A&G must complete reclamation work at the sites by 2025 and face higher fines if the new deadline is not met.

It also agreed to fund reclamation costs of up to $600,000 from coal mined at the three sites.

In December, Bluestone Coke agreed to pay nearly $1 million to settle a lawsuit over air pollution from its coke plant in Birmingham, Alabama.

The plant had been cited for years for hazardous pollutants from its coking ovens. The health department in Jefferson County, Alabama, went to court in 2021 alleging Bluestone violated its permit and the federal Clean Air Act.

In 2021, a Kentucky judge ordered Justice companies to pay a $3 million penalty, plus interest, for failing to complete reclamation work at three sites in eastern Kentucky. Justice and his son, Jay, were named as defendants in the case.

Justice’s coal business centers primarily on metallurgical coal, the kind that’s used to make steel.

An NPR investigation in 2016 found that Justice’s coal companies owed $15 million in taxes and safety penalties across six states, including nearly $7 million in Kentucky.

Justice was elected in 2016 as a Democrat, but later switched parties.

Justice spokesman Jordan Damron didn’t immediately respond to a request for comment on the sale.

Ohio Valley Coal Companies Scored Tens Of MIllions In Paycheck Protection Loans

More than 50 Ohio Valley coal companies received loans totaling as much as $119 million through the Paycheck Protection Program meant to keep people employed during the pandemic’s economic downturn.

Congress passed the PPP in March to help businesses keep employees on the payroll and out of unemployment lines. The data released by the Small Business Administration does not show specific dollar amounts for the loans, but rather categorizes loans into ranges such as $150,000 to $350,000 at the lowest end, and $5 million to $10 million at the upper end.

Six Ohio Valley coal companies fell into that high-dollar category, including Rhino Energy, whose former CEO David Zatezelo currently heads the federal Mine Safety and Health Administration.

Five subsidiaries of Lexington, Kentucky’s bankrupt Blackhawk Mining received loans totalling as much as $14 million. Four of those five subsidiaries reported that zero employees would be affected by the loan. A spokesperson from Blackhawk did not immediately respond to requests for comment.

Click here to see which Ohio Valley coal companies got the most from the Paycheck Protection Program.

Lexington-based Ramaco Resources, with mines in Pennsylvania and West Virginia, indicated 381 jobs would be affected by the program, according to SBA records.

And according to ProPublica, coal companies associated with West Virginia’s billionaire Governor Jim Justice’s family received up to $12 million from the program. Many of the Justice mines have long histories of failures to pay mine safety fines and taxes.

Employment in the coal sector is uncertain in the best of times; some coal miners say they head underground each shift well aware that they may not have a job when next they see daylight. The pandemic has only worsened the prospects for miners. Just 43,800 Americans were employed in the coal industry this June, down from 51,000 last December, according to the Bureau of Labor Statistics. And a wave of bankruptcies has now overtaken most of the region’s coal producers.

Black Gold Oddities

To incentivize companies to use the funds to preserve jobs, PPP loans are eligible for forgiveness ⁠— meaning companies don’t have to pay the government back ⁠— if the loans are used to cover employee wages, benefits or tips.

Indiana-based American Resources Corporation, which has mines in Kentucky and West Virginia, received as much as $5 million through the program, even though the company has come under fire for failing to pay its employees long before the pandemic hit. In a recent bankruptcy court hearing, Judge Gregory Schaaf urged ARC attorney Billy Shelton to use the loan instead to pay court fees, foregoing the possibility of forgiveness at a later date.

If ARC chooses that path, it would put a further financial strain on a company that is already teetering under the weight of new liabilities it acquired last year.

“I would expect [ARC] to liquidate given current market conditions and available liquidity,” said Josh Macey, Assistant Professor at the University of Chicago and an expert on coal-company bankruptcies in reference to ARC’s financial standing at the time of the bankruptcy hearing. “There is just not enough cash right now for them to keep operating.”

The PPP loans come amid a historic downturn in the coal industry, which has only been made worse by the coronavirus pandemic. New renewable energy plants are cheaper than new coal plants “virtually everywhere,” according to a recent report, and the retirements of Ohio Valley coal-fired power plants mean the market for the resource will likely continue to worsen.

Federal Judge Rules Citizen Lawsuit Can Proceed Against Justice Family-Run Coal Companies

A federal judge has denied a request by coal companies owned by the family of West Virginia Gov. Jim Justice to dismiss a lawsuit over selenium violations at a southern West Virginia coal mine.

The Ohio Valley Environmental Coalition, West Virginia Highlands Conservancy, Appalachian Voices and the Sierra Club in sued Bluestone Coal Corporation in August 2019, using the citizen lawsuit provision of the Clean Water Act.

The groups alleged that the Justice companies were discharging selenium at the Red Fox Surface Mine in McDowell County at levels that violated federal mining permits. Selenium, a chemical element found in coal that bioaccumulates, has been linked to growth deformities and reproductive failure in fish.

According to court documents Bluestone reported 107 violations since July 2018 — 42 violations of its average selenium limits and 65 violations of its maximum selenium limits. The company paid $278,000 in fines. But environmental groups argued the company should be subject to millions more in civil penalties.

Bluestone and its affiliates, including Red Fox’s operator Southern Coal Corporation, disagreed. They urged the court to dismiss the lawsuit, arguing that the Justice coal companies are being monitored by federal environmental regulators under a 2016 agreement.

Between 2009 and 2014, 27 Justice coal companies accumulated more than 23,000 water pollution violations at mines in West Virginia, Virginia, Tennessee, Kentucky and Alabama. The companies reached a settlement deal with the Environmental Protection Agency that included a $900,000 civil penalty and an agreement to implement an estimated $5 million in pollution control measures.

The deal also required the Justice companies to provide quarterly pollution reports to regulators. Selenium was not a pollutant covered under the agreement, court documents note.

Bluestone argued that because of the 2016 agreement with the EPA, also known as a consent decree, environmental groups could not bring a citizen lawsuit against them over the selenium pollution. They argued the lawsuit “would create undue interference” with the federal deal.

In his opinion issued Wednesday, U.S. District Court Judge David Faber disagreed. In his 29-page ruling, he sided with environmental groups and questioned whether the 2016 EPA agreement did enough to prevent the Justice coal companies from polluting.

The company “continues to be in consistent non-compliance with the terms of its selenium permits despite facing these general penalties for violations and repeat violations,” wrote Faber, who sits on the bench of the U.S. District Court in the Southern District of West Virginia.

The consent decree’s penalties, he continued, “have not remove[d] or neutralize[d] the economic incentive to violate” the environmental regulations related to selenium.

A request for comment from Bluestone or its lawyers listed on the court docket was not immediately returned.

Environmental groups are seeking additional penalties for the selenium pollution. In court filings, the groups estimate the maximum civil penalty under the Clean Water Act for Bluestone’s violations could top $160 million.

In an emailed statement, Vivian Stockman, executive director of the Ohio Valley Environmental Coalition praised the court’s decision to allow the case to proceed.

“The opinion underscores why it is so important to maintain fair and impartial courts as an independent branch of government,” she said. “Not even our billionaire governor is above the law and his businesses must be held accountable for polluting our waters.”