Coal company that bought Kentucky mines barred from new permits, court motion alleges

A coal company that purchased mines in Perry County is blocked from mining coal, according to court records, possibly jeopardizing a sale agreement in one of this year’s major Kentucky coal company bankruptcies.

Earlier this year, Cambrian Coal entered Chapter 11 bankruptcy proceedings and sold nearly all of its assets. One of the buyers, American Resources Corporation, purchased the Cambrian subsidiary Perry County Coal.

According to a court motion filed by attorneys representing Kentucky River Properties LLC., and Timberlands LLC., the court approved a sale order Sept. 25 that included a provision that the purchasing companies could not be “permit blocked” by any governmental body.

Perry County coal never signed that agreement, according to the court motion.

Instead, Perry County Coal and American Resources Corporation entered into a separate agreement from the sale order approved in September. Their agreement, which both companies signed, did not require ARC to be without permit blocks, according to the court motion.

Neither company filed the separate agreement in the court bankruptcy record, according to the motion.

A letter from the Kentucky Energy and Environment Cabinet confirmed that ARC is blocked in the federal Applicant Violator System from receiving any new mining permits.

It remains unclear how the permit block will impact the bankruptcy or the Perry County employees.

The approved bidding procedures for the sale also required the purchasing companies to not be “permit blocked” by the federal Surface Mining Control and Reclamation Act, according to court records.

Patricia Burgess, an attorney with Frost Brown Tood, which is representing Cambrian, said the company did not intend to hide anything from the court or mislead it in any way during the sale proceedings.

During the bidding process, one of the purchasers, Pristine Energy, backed out of a proposed deal to buy Cambrian’s Perry County assets, Burgess said. When the company opened a new bidding process for Perry County, ARC was the only company to make a bid, she said.

During its negotiations, the company met with officials from the Kentucky Energy and Environment Cabinet, who told Cambrian that the state would work with ARC to correct its permit block issues, Burgess said.

“This was not a hidden secret,” Burgess said, referring to the permit block. “This, in our mind, was a very known issue.”

According to records from the U.S. Department of the Interior, American Resources Corporation has 36 outstanding violations in Kentucky and three outstanding violations in Indiana. Its Kentucky subsidiaries with outstanding violations include Knott County Coal, Samuel Coal Company, and McCoy Elkhorn Coal.

The U.S. Department of the Interior records do not give descriptions of the violations, but they could include unfinished mine reclamation or environmental obligations.

American Resources Corporation is headquartered in Fishers, Indiana, and operates mines in Eastern Kentucky as well as Indiana and Wyoming County, West Virginia, according to a corporate structure document filed by the company in bankruptcy court.

In October, Cambrian President Mark Campbell told the Herald-Leader that Perry County Coal had laid off approximately 80 employees less than a week after Pristine Energy, which purchased Cambrian’s Premier Elkhorn mining complex in Pike County, laid off more than 200 workers.

Cambrian’s Pike County subsidiaries owed $932,000 in delinquent taxes to the county at that time. Perry County Coal owed $109,000 to Perry County.

The companies were previously headed by former University of Kentucky trustee and coal baron Jim Booth, who resigned less than two weeks before Cambrian declared bankruptcy.

Cambrian was one of several major coal companies operating in Eastern Kentucky to declare bankruptcy this year. Others included Blackhawk Mining and Blackjewel LLC., whose bankruptcy was highly publicized after its former employees protested in Harlan County.

This story was originally published December 20, 2019 at 2:50 PM.