Labor Cabinet criticizes Beshear, but stays silent on when it will seek past-due coal bonds

Kentucky Labor Secretary David A. Dickerson sent a scathing letter to Attorney General Andy Beshear Tuesday over alleged “misinformed and inaccurate” criticisms of the Labor Cabinet that Beshear made following the bankruptcy of Kentucky coal producer Blackjewel, LLC.

The letter comes after news broke last week that as many as 30 coal companies may have failed to pay a performance bond required under state law to protect miners’ wages if the companies shut down.

Reporting by the Herald-Leader, along with an audit from the Attorney General’s office, showed that not a single coal company in Kentucky has posted the required bond with the Labor Cabinet over the past five years. The bond issue came to the forefront after hundreds of Blackjewel miners were left with cold checks following the company’s bankruptcy filing in early July.

Beshear and other state legislators have previously criticized the Labor Cabinet for failing to enforce the bond with coal companies that are out of compliance.

According to Beshear’s audit, more than 1,000 Kentucky miners may be working for coal companies that have failed to post this bond, putting them at risk of “another Blackjewel-type situation,” he said.

The law — KRS 337.200 — requires “every employer engaged in construction work, or the severance, preparation, or transportation of minerals” that has continuously operated in Kentucky for less than five years to post a performance bond with the Labor Cabinet to cover its payroll for four weeks. If the company suddenly shuts down, the money could be used to pay employees.

Records obtained by the Herald-Leader showed that 83 companies — mostly construction and contracting companies — have posted the bond with the cabinet within the past five years, but that coal companies have managed to skate by without any regulatory oversight related to the bond.

Some of those coal companies, including JRL Coal Inc., in Harlan County, have dozens of employees and run mining leases of thousands of acres in Eastern Kentucky.

Last year, officials in Gov. Matt Bevin’s Labor Cabinet urged lawmakers to pass a bill that would have repealed the bond requirement. The bill failed before it received a vote in the House of Representatives.

Dickerson’s letter does not specifically say when, or if, the Cabinet will attempt to secure bonds from companies that may be out of compliance. A spokesperson for the cabinet did not immediately respond to a request for comment on how it will move forward with companies that have failed to pay.

The Cabinet will work on a bill during the next legislative session to improve the cabinet’s ability to enforce the law, Dickerson wrote.

The letter claims the cabinet has “no way to compel a company to post a performance bond,” though it can issue fines against companies that fail to comply.

Following Blackjewel’s bankruptcy, the cabinet issued a formal citation to Blackjewel and its former CEO Jeff Hoops for violating the bond law. The citation could come with a penalty of $366,500.

Dickerson said he takes issue with Beshear’s “dismissive attitude” and “shallow remarks” toward the Labor Cabinet. He said Beshear’s criticisms of the cabinet reflect on individual employees who work in the cabinet’s Division of Wages and Hours.

“Our investigators have traveled to Harlan, Perry, and Letcher Counties to speak with miners, obtain wage claim assignments, and help them get the money they deserve,” Dickerson wrote.

The letter also alleges that Beshear, who is running as the Democratic candidate for governor, has used the bankruptcy to gain political points.

“Those at the Labor Cabinet work hard for the Commonwealth. I am proud of each of them,” Dickerson wrote. “I am proud to stand behind their work, and I am proud to stand beside them as we move forward to get our miners paid.”

During an interview with the Herald-Leader Tuesday, Beshear said the Cabinet has refused to enforce the law by failing to issue letters to the companies that may be out of compliance.

In an interview last month, Dickerson told the Herald-Leader that there is no mechanism that allows the cabinet to find out when a company that should pay the bond incorporates in Kentucky.

Beshear said his office was able to identify 30 companies that may be out of compliance in less than 48 hours of searching through public databases.

“We’ve done their work for them,” Beshear said.

If the cabinet continues to refuse to seek bonds from certain companies, Beshear said his office will issue letters requesting bond payments from those companies.

“The Labor Cabinet gives excuses, I’m gonna get results,” he said.

This story was originally published September 3, 2019 at 4:57 PM.