Kentucky

Kentucky county gave this company $400,000. Now, officials plan to sue its leaders.

A hill towers above a busy highway just outside Pikeville in September.
A hill towers above a busy highway just outside Pikeville in September. The GroundTruth Project

Pike County Judge-Executive Ray Jones said he plans to sue the individual leaders of a proposed natural-gas-to-liquids plant that defaulted on a $400,000 loan awarded by the county in 2014.

RCC Big Shoal, a company that proposed bringing hundreds of jobs to Eastern Kentucky years ago but has been embroiled in controversy ever since, pleaded with Jones and other county officials to drop an ongoing suit against the company itself.

The Pike County Fiscal Court refused to drop the suit in a meeting earlier this month. Bill Johnson, RCC’s chairman and chief operating officer, said the county’s ongoing lawsuit has left the company unable to raise enough money to open the plant or pay the county back.

If RCC fails to build the plant, the state will also lose out on a $250,000 investment that it awarded to the company in 2014 through the Kentucky New Energy Ventures Fund, which aimed to make investments in new-energy startups.

Terry Samuel, president of the Kentucky Science and Technology Corporation, the non-profit that administered the state grant, said the company is under no obligation to pay back the loan until it begins production.

Pike County officials, though, are skeptical that the company will ever make it off-the-ground.

“I don’t think there’s any chance of it ever happening,” Jones said. “I don’t see this as a possible project and I think they’re trying to use the threat of losing jobs to coerce us into dismissing this lawsuit, and we’re not doing it.”

RCC first announced in 2014 that it planned to build a plant in Pike County that would turn natural gas into specialty oils and waxes. If completed, it would be the first plant of its kind in the United States.

Johnson said the project could lead to thousands of jobs throughout the region, and would put Eastern Kentucky at the forefront of an industry that has yet to find a home base within the U.S.

“We want to do this, we want to do it in Eastern Kentucky, and we want to be a great neighbor,” Johnson said. “There’s been a lot of big projects canceled out there … and we don’t want to be one of them.”

About two years after RCC first announced its plans and received its investments from Pike County and the state, company officials announced it could not find suitable ground in Pike County to build the plant. Officials later said they planned to build in neighboring Floyd County.

According to a story in the Appalachian News-Express, Floyd County Judge-Executive Robert Williams said he would not offer county support to the project until it fulfills its obligations to Pike County.

The project effectively stalled for another two years, until, in 2018, RCC said it had secured a $325 million investment from a New York-based investment firm called Y2X Infrastructure. Following that announcement, it entered into another agreement with the county to pay back the $400,000 over the course of several months.

The company only paid back $100,000, then ceased its payments.

Johnson said RCC is no longer in business with Y2X. Following the company’s funding announcement, the Herald-Leader reported that Y2X had been formed less than a month prior, and described itself as a “blockchain-centric company,” meaning it planned to use cryptocurrencies, such as Bitcoin, to make investments.

The county has since sued RCC and filed requests for information about how the company spent its dollars.

Johnson said the company has spent “several million dollars to get to where we are today” on work including engineering and environmental assessments.

“We’ve gone through that money in a very judicious manner,” he said.

Johnson said the county’s ongoing suit has prevented it from raising any additional capital, and that “the administration has been absolutely rude on this thing.”

“We wish they would take a real forward stand on this and help us get over this hump so we can move on, pay the county, and start making this plant,” he said.

Jones, the Pike County Judge-Executive, said he’s not willing to budge, and plans to sue Johnson and David Farmer, RCC’s president and CEO.

Including interest, Jones said the company owes about $1 million to the county.

The county’s initial investment was a “prime example” of officials giving money to projects in Eastern Kentucky without properly vetting companies and their financial viability, Jones said.

He compared RCC to Enerblu, a failed battery manufacturing plant that promised hundreds of jobs and received millions in grant funding from the Abandoned Mine Lands Pilot Program.

“They never asked (RCC) for a financial statement, for any personal guarantees, for anything,” Jones said. “It’s just like this Enerblu deal, people are so desperate to grab onto stuff because of the economic situation of Eastern Kentucky.”

Will Wright is a corps member with Report for America, a national service project made possible in Eastern Kentucky with support from the Galloway Family Foundation. Based in Pikeville, Wright joined the Herald-Leader in January 2018 and reports on Eastern Kentucky.
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