Politics & Government

Trial delayed again in case that probes coal's influence on Beshear

Gov. Steve Beshear listened to fellow speakers during the grand opening of the Center for Applied Energy Research in Lexington, Ky., on Aug. 15, 2012. The 43,000 sq ft laboratory is environmentally friendly. Currently, research is being done in the fields of biofuels and lithium batteries among others.  Photo by Pablo Alcala | Staff
Gov. Steve Beshear listened to fellow speakers during the grand opening of the Center for Applied Energy Research in Lexington, Ky., on Aug. 15, 2012. The 43,000 sq ft laboratory is environmentally friendly. Currently, research is being done in the fields of biofuels and lithium batteries among others. Photo by Pablo Alcala | Staff Lexington Herald-Leader

FRANKFORT — A judge on Tuesday postponed, for the third time, a trial that centers on the extent of the coal industry's political influence in Gov. Steve Beshear's administration.

A wrongful termination lawsuit filed by Ron Mills, who was fired in 2009 as Beshear's director of mine permits, was scheduled to start trial Monday in Franklin Circuit Court. But Special Judge Reed Rhorer granted a request by the Beshear administration to delay the trial due to a witness' illness. Rhorer pushed it back to Oct. 22.

Rhorer previously postponed trial dates in the case set for last April and October 2011.

In his suit, 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.

Mills claims whistleblower 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 for punitive damages and lost wages.

The Beshear administration has been unable to get the suit dismissed despite challenging it for several years in motions as high as the Kentucky Court of Appeals.

Environmentalists are closely watching the case. They say it's the latest proof that the Beshear administration lets the coal industry choose its own regulators and regulations.

"Was Ron Mills fired for opposing the coal companies? Of course he was," said Ted Withrow, a former state Division of Water coordinator in Eastern Kentucky now active with the environmentalist group Kentuckians for the Commonwealth.

"The coal companies have the governor on speed dial, and that's true regardless of who the governor is," Withrow said. "If you work in state government and you go up against coal, even if you're just enforcing the law, you had better fear for your job. So we have a situation where the state regulators basically work for the industry rather than police it."

In a deposition videotaped last December, to be shown to a jury if the case goes to trial, Beshear said he had been aware of Mills' firing but denied the coal industry was behind it. Attorneys for the state say in court that Mills was terminated because of Peters' dissatisfaction with his job performance.

"The governor does not become involved in personnel decisions at the cabinet level," Beshear spokeswoman Kerri Richardson said in a prepared statement on Tuesday. "However, he does expect directors across state government to be good managers and effective administrators in order to carry out the work of the state effectively. We absolutely do not make any personnel decisions based on outside interests or pressure."

Kentucky Coal Association President Bill Bissett said the coal industry wants state regulators who are fair and objective experts. Bissett said he has "no knowledge" of anyone in the industry influencing the hiring or firing of regulators.

Evidence discovered in the case shows that Mills was unpopular with the coal industry. For part of 2008 at the Division of Mine Permits, he blocked a little-known policy, called "the 33 1⁄3 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 had never 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 33 1/3 rule. Alliance Coal hired Beshear's old law firm, Stites & Harbison, to prepare a favorable legal analysis. Peters overturned Mills and reinstated the rule to "accommodate the coal interests," as cabinet emails describe it. That freed the mine permits Alliance Coal wanted.

Peters fired Mills in 2009 without giving a reason. In his deposition in the case, Peters denied undue influence by the coal industry and criticized Mills' management ability. He cited a backlog in pending mine permits during Mills' two-year tenure.

However, Natural Resources Commissioner Carl Campbell, who was Mills' direct supervisor, rebutted Peters in his own deposition in 2010. Campbell said Mills was a good manager who inherited a mine permits backlog at an under-funded and understaffed agency. Peters fired Campbell last year without giving a reason.

The morning that Mills lost his job, in November 2009, an Alliance Coal executive was informed by an aide in the governor's office, 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 in an email that Mills was about to be fired. Around 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.

Ashcraft, whom court records show lobbying the Beshear administration on coal-related matters, declined to discuss Mills on Tuesday.

"I know nothing about it, and I can't really comment on pending litigation and personnel decisions made by the state of Kentucky," Ashcraft said.

Within the Energy and Environment Cabinet, officials said it was common knowledge that Ashcraft was complaining about Mills, according to statements taken in the case.

"The consensus was that basically Ron had gotten himself sideways with the secretary over some of his policy decisions, and that's why he was let go," said James Dickinson, a policy advisor and attorney at the Natural Resources Department, in a deposition.

"It was not a secret at all that Rusty Ashcraft was extremely exercised about the 33 1/3 issue and extremely unhappy with Ron about the fact that, you know, the policy had been changed and they were not going to be able to get permits the way they had been getting them," Dickinson said. "And Rusty made no bones about it. He said that openly and publicly to several people."