Coal companies owned and operated by Gov. Jim Justice’s family are fighting a U.S. Department of Justice allegation filed in federal court earlier this month that they failed to comply with a 2016 consent agreement under which they pledged to address environmental violations.
The federal government is seeking $3.19 million from the companies per penalties stipulated in the agreement, but the coal companies responded in the U.S. District Court for the Western District of Virginia in a filing Thursday that such a penalty would be “grossly disproportionate” when accounting for the compliance history of the mines in question.
The consent decree required Southern Coal Corp. and two-dozen other companies to pay a $900,000 civil penalty to resolve more than 23,000 water pollution violations. Half of that amount was to go to the federal government, with the rest being split among Alabama, Kentucky, Tennessee and Virginia after a complaint alleged the companies discharged pollutants into state waters in violation of the federal Clean Water Act.
The agreement noted the companies had “limited financial ability to pay” after reviewing their financial information and required them to provide a $4.5 million letter of credit to guarantee compliance, submit quarterly reports tracking compliance, and pay daily penalties for noncompliance varying by violation. The filing notes the federal government withdrew $1.5 million from that line of credit.
Southern Coal Corp., Premium Coal Co. Inc. and Justice Coal of Alabama LLC said in Thursday’s filing that they established a compliance program, engaged in environmental monitoring, filed reports and certifications and complied with all requirements set by the consent decree.
The Justice coal companies say they responded to a September 2020 federal government demand ordering that they finish reclamation work at Premium’s Tennessee mines and noting stipulated penalties relating to expired permits in Tennessee and Alabama by launching additional reclamation efforts in Tennessee, which were largely completed in November, and pointing out what they said was Alabama environmental regulators’ mistake in withholding an Alabama water pollutant discharge permit.
The federal government issued the demand to the companies in September that they pay $3.19 million in stipulated penalties within 30 days, and that Southern Coal and Premium Coal stop unpermitted discharges in Tennessee. The companies never paid the penalties or finished the work to comply in time, according to the feds.
The coal companies allege the federal government said it needed more information about their financial condition to evaluate their proposal to resolve the feds’ penalty demand but did not specify which records it needed, later responding that it did not accept their proposal but would consider further discussions to resolve the demand before filing a motion seeking the $3.19 million under the 2016 decree.
The federal government, the companies posit, “overreached” in their $3.19 million demand, arguing that the decree doesn’t require that they renew their water pollutant discharge permits or comply with permit terms that mandate such renewals.
“Had the decree included such sweeping potential liability, Defendants never would have agreed to it,” the companies said in their response filed Thursday.
Nearly two dozen companies owned by the Justice family agreed last year to pay $5.13 million to settle a federal lawsuit from the U.S. Attorney for the Western District of Virginia on the Department of Labor’s behalf, claiming they failed to pay mine safety fines.
Last month, a federal judge approved a separate agreement between a Justice family-controlled company and environmental groups, which had sued over selenium pollution in August 2019.
Senior U.S. District Judge David Faber, in the U.S. District Court for the Southern District of West Virginia, approved a settlement between Bluestone Coal Corp. and the Ohio Valley Environmental Coalition, the West Virginia Highlands Conservancy, Appalachian Voices and the Sierra Club.
The settlement came four months after Faber found Bluestone liable for selenium pollution discharged into water near the Red Fox Surface Mine, in McDowell County.
The agreement requires Bluestone to provide the environmental groups with quarterly progress reports monitoring pollutant discharge permit compliance, and pay a $30,000 civil penalty to the U.S. Treasury and $270,000 to the West Virginia Land Trust, a statewide conservationist nonprofit, to help fund development of a new water trail along the Tug River.
The company also must comply with selenium effluent limits at an outlet that has been out of compliance within 12 months of the agreement’s approval.
Justice said he would put his children in charge of his family’s business operations upon becoming governor in 2017. The West Virginia Secretary of State’s Office lists Justice’s son, James C. Justice III, and daughter, Jillean L. Justice, as the directors of Southern Coal and Bluestone, and the former as president of both companies.
Bluestone Resources, sibling entities Bluestone Coal Sales Corp. and Blackstone Energy LTD, Gov. Justice and his wife Cathy and Justice III sued the global lender Greensill Capital earlier this month in the U.S. District Court for the Southern District of New York, seeking punitive damages and expenses “in an amount to be determined at trial” after they say Greensill defrauded Bluestone into transferring more than $200 million in value.
In a statement following its lawsuit filing, Bluestone said it has engaged potential lenders and has “adequate working capital to support its operations, to serve its customers and to maintain its relations with all its stakeholders.”