Motion: W.Va. Gov. Jim Justice hasn’t reclaimed KY coal mines, should forfeit $2.9M
West Virginia Gov. Jim Justice has defaulted on a promise to fix environmental problems at coal mines in Eastern Kentucky and should have to pay more than $3 million, state regulators argue.
Attorneys for the Kentucky Energy and Environment Cabinet filed a motion this week asking a judge to enforce an agreement that included a $2,998,995 penalty against Justice; his son, Jay Justice; and several family coal companies for reclamation violations.
The payoff would be higher because the agreement called for 8 percent interest going back to 2015, according to the court record.
The state also wants to revoke five permits at Justice-company mines in Kentucky; take the reclamation money posted for the mines; require the companies to fix violations at the sites and reclaim them; and block Justice companies from getting new coal permits or amending current permits until they fix the violations.
The Justices and their companies “have been provided many second chances to meet their permit obligations and time and again have failed,” the state’s lawyers said in the motion.
Richard A. Getty, a Lexington attorney who represents the Justices, said they will oppose the state’s request, calling it “unnecessarily severe.”
Justice companies couldn’t meet deadlines to complete some reclamation because of the economic slowdown inflicted by the coronavirus pandemic, but notified the state of that before the deadlines and proposed a way to get the work done using money the Justices had posted to cover the $2.9 million penalty, Getty said.
That would have put people to work and gotten the reclamation done at less cost than the state could hire contractors to do it, Getty said.
“We think what we proposed is reasonable,” Getty said.
The state rejected that proposal, noting that the $2.9 million Justice and his son posted was to cover penalties on violations dating back years in some cases, not reclamation work.
The state has been trying for years to get Justice companies to complete all reclamation at mines in Eastern Kentucky.
Jim Justice was elected governor of West Virginia as a Democrat in 2016 but later announced at a rally with President Donald Trump that he was changing his registration to Republican.
In its listings of the richest people in the country, Forbes once calculated Justice’s worth at more than $1 billion, but he has since fallen off that list.
In August 2014, Jim and Jay Justice and several family companies admitted to hundreds of reclamation violations in Eastern Kentucky.
They entered into an agreement with the state to complete work at dozens of mines that included cleaning out sediment ponds, stabilizing landslides, fixing drainage problems, monitoring water quality and eliminating highwalls.
Highwalls are sheer walls left when a company cuts a large notch in the side of a mountain to reach coal. Federal law requires restoring the approximate original contour of the slope.
Jim Justice has said his companies had inherited many of the violations when he bought a bankrupt coal company, and that he worked diligently to fix the problems during a tough time for the coal industry.
The companies resolved many of the non-compliance issues but missed the deadline to fix all of them, including the expensive work of eliminating all the exposed highwalls.
That led the state to sue in 2015 to enforce the earlier deal.
After contentious negotiations, the Energy and Environment Cabinet and Jim and Jay Justice and Justice coal companies agreed on a new settlement in April 2019.
The deal set deadlines for the companies to complete reclamation work at five mines, and required them to post a $2.9 million letter of credit the state could take if the Justices defaulted on the agreement.
Jim and Jay Justice are personally liable for the payment, though the deal included a provision that if the Justices maintained a certain level of payroll at Kentucky mines, they would get back the $2.9 million.
The deal called for Justice companies to have gross payroll of at least $40 million between July 1, 2019 and Dec. 31, 2021. It allowed them to get back a portion of the $2.9 million if the total payroll was less.
The companies had hired fewer people than anticipated by May 2020 because of the pandemic and a drop in coal prices, but believed they would ultimately get close to the employment level required to get back most or all of the money, attorney Billy R. Shelton said in the letter.
The Justices were instead willing to give the state the money to cover reclamation, Shelton said.
Elizabeth U. Natter, general counsel for the cabinet, said in response that the state was not willing to let that money go for reclamation work the Justices were already required to do.
The state’s motion to declare the Justices in default on the deal notes that there had been as many as 14 agreements pertaining to some of the outstanding violations at issue in the case.
The Justices “made an agreement back in 2014, and then another agreement in 2019, and still have not fulfilled their obligations,” state attorneys said in the motion.
Justice companies have failed to eliminate well over a mile of highwall at three sites, according to an affidavit from Kevin Hembree, assistant director of the state Division of Mine Reclamation and Enforcement.
At one mine with more than a mile of exposed highwall, the Justice company at the site was supposed to fully reclaim it by June 30, 2020, but hasn’t done any work to reclaim it since the agreement was filed, Hembree said.
At another, there has been no work in four years to reclaim the highwall, he said.
Franklin Circuit Judge Thomas D. Wingate will be called on to decide whether the Justices have defaulted on the 2019 deal.
This story was originally published September 29, 2021 at 1:54 PM with the headline "Motion: W.Va. Gov. Jim Justice hasn’t reclaimed KY coal mines, should forfeit $2.9M."
