Gov. Steve Beshear's administration is attempting to settle a lawsuit filed by Ron Mills, its former mine permits director, who says he was fired in 2009 for refusing to sign illegal permits sought by one of Beshear's major campaign donors.
Mills' wrongful-termination lawsuit against the state is scheduled to be heard by a jury next week in Franklin Circuit Court. However, state officials said Wednesday they're trying to avoid a trial.
"We are working on an agreed disposition of the Ron Mills case," said Dick Brown, spokesman for the state Energy and Environment Cabinet, where Mills worked. That "is all that I am at liberty to discuss at this point."
Mills and his attorney, Bernard Pafunda, declined to comment on settlement talks. Mills claims whistle-blower status, which could protect him even though he was a political appointee who served at the governor's pleasure. He wants to be reinstated and paid $3.23 million in punitive damages and lost wages.
In his lawsuit, Mills says he was fired by Energy and Environment Secretary Len Peters because he refused to sign five illegal mine permits sought by Alliance Coal of Tulsa, Okla., covering 55,000 acres in Western Kentucky.
Alliance Coal is a leading coal producer that has given more than $585,000 in Kentucky state and federal political donations since 2007. Beshear and the Kentucky Democratic Party are among its many beneficiaries.
The Beshear administration has been unable to get Mills' lawsuit dismissed despite challenging it for several years in motions as high as the Kentucky Court of Appeals.
Beshear and Alliance Coal executives have denied any joint effort to fire Mills. Attorneys for the state said in court that Mills was fired from the Division of Mine Permits because of Peters' dissatisfaction with his job performance.
Evidence discovered in the case shows that Mills was unpopular with the coal industry. For part of 2008, he blocked a little-known policy, called "the 331⁄3 rule," that allows coal companies to begin underground mining without acquiring legal access to all the land in their plans. Mills said the rule was "illegal," violated basic property rights and never had been subject to public comment or legislative approval.
The coal industry lobbied the governor's office and the Energy and Environment Cabinet to reinstate the 331⁄3 rule. Alliance Coal hired Beshear's old law firm, Stites & Harbison, to prepare a favorable legal analysis.
Peters ultimately overturned Mills and reinstated the rule to "accommodate the coal interests," as the cabinet's deputy secretary, Hank List, described it in an email. That freed the mine permits that Alliance Coal wanted.
The morning that Mills lost his job, in November 2009, an Alliance Coal executive was informed by an aide to the governor, according to records discovered in the case.
Raymond "Rusty" Ashcraft, Alliance Coal's manager of environmental affairs and permitting at the company's Lexington office, then told 11 coal industry colleagues via email that Mills was about to be fired. About that same time, Mills was being told himself in Frankfort by a cabinet lawyer.
"Ron Mills will be asked to resign this morning and will be replaced by Allen Luttrell on an acting basis," Ashcraft wrote in his email message.