State lawmaker holds permit for coal mines with 'pattern of violations'

Permits are in name of Hall's company

jcheves@herald-leader.comJune 9, 2013 

FRANKFORT — State Rep. Keith Hall, chairman of the House committee on energy, holds the permits for Pike County coal mines with a repetitive pattern of safety and environmental violations, according to state officials.

Since 2010, state inspectors have cited Hall's Beech Creek Coal Co. and other companies mining coal on his permits for dropping rocks on homes; mining outside of permitted areas; water pollution; failing to obey regulations on blasting, reclamation and maintaining slurry ponds; and allowing rocks, dirt and trees to slide down slopes.

"It's a danger to everybody out here, I think. Every time you hear the blast, you wonder if something's about to come down on you," said Barbara Eldridge of the Phelps community.

Eldridge lives next to the largest of Beech Creek Coal's three surface mines near Phelps in sparsely populated eastern Pike County. That mine has produced more than 410,000 tons of coal in three years and, at its busiest, has employed 40 people. A year ago, a jagged slab of rock the size of a truck tire traveled 613 feet down from the mine and slammed into Eldridge's home, denting a wall and shattering a paved walkway.

Neighbors and state records say rocks from that mine also have hit the homes of Freda Daugherty, crashing through her bedroom wall, and Brian Compton, punching a hole in his roof. Also, rocks and a downed tree have fallen into the yards of Nancy Funk and Neva Prater, who live near another of Beech Creek Coal's mines in the area. No injuries have been reported, but neighbors say they worry.

"I hate to say anything against it because I don't want to put people out of work. Coal is all we've got out here," said Robert Compton, who lives next to the largest of the three mines. "But I just want them to do it right. We deserve to be safe."

Hall, D-Phelps, declined to be interviewed for this story.

In emails Hall sent the Lexington Herald-Leader last week, the lawmaker said his role at the mines is minimal. His company, Beech Creek Coal, holds the mining permits. But the coal is owned by Kentucky Berwind Land Co. and the "actual coal mining" is done by other companies, known as the operators, Hall wrote.

However, the state holds Beech Creek Coal responsible for violations at the mines because the permits are in that company's name, said Natural Resources Commissioner Steve Hohmann. Individual operators also can be held responsible for problems depending on the circumstances, Hohmann said.

At Beech Creek Coal's largest mine, state records identify the operator as Kentucky Fuel Corp. Hall wrote that he met last week with lawyers for Kentucky Fuel and he's trying to remove Beech Creek Coal's name from that permit.

"During my 13-year tenure as a member of the Kentucky House of Representatives, I have been a strong advocate for the health and safety of our coal miners," Hall wrote. "I will continue to be a passionate advocate for responsible and safe coal mining. The future safety of our coal miners and environment is of my highest concern."

Kentucky Fuel did not return calls seeking comment.

Bill Stephens of Augustus Augering & Contracting, which operates at the two smaller mines permitted to Beech Creek Coal, said the state has cited those mines for problems that are routine elsewhere.

"I don't know what kind of ax they have to grind," Stephens said. "I think they're picking on us because Keith Hall's name was attached to it. The sort of things they're citing, other mines do it all the time."

Hohmann said Hall's mines don't get special scrutiny or favors because Hall is a lawmaker with authority over the Energy and Environment Cabinet, which regulates mining.

"We try to treat everybody even-handedly and fairly," Hohmann said. "We try to treat everybody the same."

Despite the repeated citations, the state gave Hall "technical" approval on March 19 to triple the size of his largest mine from 183 to 674 acres. That expansion is blocked for now due to pending violations and because Beech Creek Coal has yet to give the state several required items, such as $300,000 in supplemental assurance for bonding, Hohmann said.

"If he gets his blockable problems resolved, we don't have much choice but to comply," Hohmann said. "We don't have the ability to deny it simply because we want to."

Pattern of violations

In the last two years, Beech Creek Coal and Kentucky Fuel twice have been summoned to the Kentucky Department for Natural Resources for what the state calls a "pattern-of-violations meeting," to discuss the citations at the 183-acre mine. The state has issued 11 non-compliance citations at the mine and two cessation orders, temporarily halting work due to imminent danger.

At each meeting, state inspectors told the companies to improve their performance at the mine or potentially face penalties. State records show that Hall attended a Sept. 22, 2011, meeting, where inspector Mike Ramey described the "level of cooperation" on the permit as "a 4 on a scale of 1-to-10."

"The company never has any explanation for why the work is not getting done," state officials wrote five days later in a memo summarizing the meeting.

Since the most recent meeting Jan. 3, state inspectors have issued three more citations at the mine.

The state's next move for Beech Creek Coal could be a show-cause hearing, in which the company must demonstrate why the Energy and Environment Cabinet should not revoke one or more mining permits, Hohmann said.

So far, the state has proposed $16,000 in penalties for violations at the largest mine, only $3,300 of which has been paid. One of Beech Creek Coal's two smaller mines recently received a cessation order because of unresolved problems, Hohmann added.

"They're at a critical juncture," he said.

Coal companies generally get two pattern-of-violations meetings "and then there won't be a third," Hohmann said. "We want to be absolutely certain before we pull the show-cause trigger that we have enough evidence to win it."

The Department for Natural Resources has made about 50 show-cause referrals to the cabinet's Office of General Counsel since Jan. 1, 2011, cabinet spokesman Dick Brown said. Of those, about half are pending, Brown said. Twelve permit holders declared bankruptcy and nine forfeited their bonds and lost their permits, he said.

Tony Oppegard, a Lexington lawyer who specializes in mine-safety cases, said Democratic Gov. Steve Beshear's administration is too slow to act when coal companies break the law.

"I can't say whether Keith's getting special treatment here. Just generally, Gov. Beshear's administration bends over backwards to please the coal operators," said Oppegard, who has worked as a state and federal mine regulator. "It's a very operator-friendly environment in Frankfort."

Apart from the state's actions, the U.S. Mine Safety and Health Administration has proposed more than $530,000 in penalties at the 183-acre mine near Phelps for about 90 safety violations since 2010. Only $11,181 has been paid so far.

Most of the MSHA fines are under appeal by the operator, Kentucky Fuel, owned by West Virginia businessman James Justice II and his family. Kentucky Fuel is named in most of those citations, not Beech Creek Coal.

The Justices are major political donors, including $100,000 the family gave to Beshear's 2011 inaugural fund. James Justice II has been Beshear's Kentucky Derby guest, and Beshear has been Justice's guest at the casino of The Greenbrier resort in White Sulphur Springs, W.Va., which Justice also owns.

In 2012, Kentucky Fuel received more citations from the state (76) and more individual violations (194) than any other coal mining company in Kentucky, according to the U.S. Office of Surface Mining.

'Heads up'

Hall, one of the coal industry's strongest voices in the legislature, is chairman of the House Committee on Tourism Development and Energy and vice chairman of the House Committee on Natural Resources and the Environment.

In 2009, he angered labor unions by trying to weaken a state law requiring two mine-emergency technicians on duty whenever coal is mined. METs are miners trained for free by the state to provide on-site medical care in case of an accident. The previous year, state inspectors cited and shut down one of Hall's mines near Pikeville for not having a mine-emergency technician on duty.

"This has been a real hardship for my constituents in Pike County, the several, several coal operators who have talked to me about this," Hall said in 2009. "What I hope to achieve is not to diminish safety but to make room in our legislation for the small mine operators that don't have 50, 100, 250 or 300 miners."

Earlier this year, a state mining official made certain that his boss knew Hall's Beech Creek Coal had been cited.

On Feb. 27, Billy Ratliff, director of the Division of Mine Reclamation and Enforcement, sent an email to Hohmann, his boss at the Department for Natural Resources.

"Heads up — this is Keith Hall's permit," Ratliff wrote to Hohmann.

"Charles Holbrook [manager of the division's Pikeville regional office] just called, they have cited Beech Creek Coal for several violations," Ratliff wrote. "When the assigned inspector was talking to the company rep (Mackie Norman) and making him aware of these violations, Mr. Norman told the inspector that we were putting them out of business and they were going to leave the site and let the state have the permits.

"I wanted to let you know this in case you run into Keith Hall," Ratliff concluded.

In an interview last week, Hohmann said Hall never has approached him as a lawmaker to complain about citations. Neither Hall nor anyone else has politically pressured him regarding Beech Creek Coal's mines, Hohmann said.

Pointing to Ratliff's email, Hohmann said, "The message there is, we cited Keith Hall — or his permit, actually."

In August 2011, the division's Pikeville office reassigned inspector Kelly Shortridge to take him off Beech Creek Coal's mines. Emails show that Ratliff requested a list of the company's mines assigned to Shortridge. Two days later, Shortridge was called into his supervisor's office.

"They told me that Frankfort no longer wanted me to inspect permits which were owned by a state representative of whom I was friends with outside of state employment," Shortridge wrote in his account of the meeting, kept at the state Personnel Board because of a subsequent 15-day job suspension for insubordination. "I was being changed to a new supervisor as well as being assigned a new workload area as per Frankfort's decision to remove me from certain permits in the Phelps, Ky., area belonging to a state representative."

Shortridge did not return a call last week seeking comment. Cabinet officials declined to discuss the reassignment.

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com

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