State regulators ‘bending over backwards’ to accommodate Justice mining companies, environmental groups say

FLOYD — The numerous coal companies that belong to the family of West Virginia Gov. Jim Justice have allowed thousands of acres of southwest Virginia surface mines to go unreclaimed for years, even as the state agency tasked with enforcing reclamation laws has repeatedly bent its own rules to give the companies more time.

Officials with the Virginia Department of Mines, Minerals and Energy say they’re trying to prevent the multi-million dollar clean-up bill from landing on taxpayers, but environmental activists say the agency’s accommodations just leave the unreclaimed land in limbo, even as the problem exposes structural flaws in Virginia’s enforcement of mine reclamation.

Federal guidelines under the Surface Mining Control and Reclamation Act of 1977 require land that’s been mined to be reclaimed —  companies must plant trees, bushes and other vegetation and implement structures to control water runoff and erosion. However, the Justice companies have failed at this, racking up so many penalties that in 2014, the DMME allowed them to enter into a compliance agreement that laid out steps to let the companies catch up on payments for numerous violations while continuing the process.

The compliance agreement has been amended four times since then to allow the mines even more latitude, and the Justice companies have been hit with another $536,000 in penalties for failing to comply with the agreement.

This all squares with Justice’s longstanding reputation for failing to pay taxes, penalties and bills. But some environmental groups say the problems with Justice mines in Southwest Virginia are so bad that they have the potential to structurally destabilize the collective pool of money maintained by the DMME to reclaim surface mines should the owners default.

“Essentially, Justice’s liability is so great that if he were to go under, if he were to go bankrupt and forfeit all of his bonds, the bond pool would completely disappear by many many times over,” said Matt Hepler, an environmental scientist with Appalachian Voices.

Justice built a billion-dollar fortune over the past decades through his resorts, mines and other businesses. But he also built a reputation for slow-walking payments. In 2014, NPR singled out Justice for owing nearly $2 million in overdue fines related to his coal mines.

Just weeks before his election as governor two years later, NPR reported that Justice owed more than $15 million in six states for unpaid taxes and mine safety penalties. Justice eventually passed most of the mine ownership to his children.

Despite the transfer of ownership, however, the problems historically associated with the governor have continued. According to Tarah Kesterson, the DMME’s public relations manager, the Justice companies obtained 39 permit transfers in 2009, most of which were in various stages of reclamation as required by federal law and enforced by the DMME. In 2013, the DMME began enforcement action, culminating a year later in the companies requesting a compliance agreement.

“Enforcement action has been taken requiring the reclamation of disturbed areas,” Kesterson said. “That includes planting trees, bushes and other vegetation and the maintenance and repair of structures that control water runoff and erosion. DMME issues notices of violations and/or cessation orders when the companies do not follow Virginia coal surface mining reclamation regulations or follow plans approved by the agency during the permitting process.”

In 2014, the DMME stopped accepting self-bonding, in which companies could put up their own assets to cover reclamation. The practice had once been widespread but has declined since a wave of coal companies declared bankruptcy, seriously threatening the potential for reclamation of their mines. Nearly $25 million million in self bonds remain in Virginia from before its change in policy, all of which belong to A&G Coal Corp., one of the Justice companies.

Kesterson said the Justice companies completed backfilling and regrading reclamation on five permits since 2014. Work on two more permits is currently in progress, she wrote, but “with limited equipment and resources, the company has been making slow progress in meeting its reclamation obligations.”

That’s not good enough for environmental watchdog groups like Appalachian Voices and the Southern Appalachian Mountain Stewards.

“He’s gotten five different compliance agreements and has not met those at any time,” said SAMS President Taysha DeVaughan. “Not only is he not paying for it, but he’s not upholding his end of the agreement. The implication he can kick the can down the road is the biggest issue for me. I don’t see that as progress at all.”

The issue of the Justice companies’ reclamation troubles have come up repeatedly at meetings of the Coal Surface Mining Reclamation Fund Advisory Board the last few years. That’s the board, appointed by the governor, that monitors the bond pool.

The bond pool is a two-tier system with two silos of funding from coal companies. In one tier, every mine pays a per-acre cost for what they’ve been permitted. The second tier is the bond pool, which works like insurance. Each company pays into it through a tax on every ton of coal that’s produced.

As of the end of March, Virginia’s bond pool fund balance was $9.3 million. That’s what has been collected from taxes (based on tonnage produced paid quarterly) and entrance fees — $1,000 upon entrance in the pool, and $1,000 for permit renewal, paid every five years. The amount posted — the total bonds posted on all permits that participate in the pool — is $116.9 million.

The pool bond is intended to pay for any excess costs above the posted bond, should the bond be forfeited.

The Coal Surface Mining Reclamation Fund Advisory Board met most recently on April 9 and spent several minutes near the beginning of the meeting talking about the status of reclamation on the Justice mines.

“I’d have to say they’re making a little progress here and there on some of the permits,” said Randy Casey, director of the DMME’s Division of Mined Land Reclamation. As of April 15, the companies have paid $544,750 for falling short of the compliance plan. But they’ve also committed new violations with penalties of more than $60,000, Kesterson said

“We’re doing all we can on our side: fines, enforcement actions — everything [we can] to keep them working,” Casey said.

But the activists in Appalachian Voices and SAMS say the DMME is allowing the Justice companies to let their mines go unreclaimed because declaring a bond forfeiture will destabilize the bond pool.

“They have the ability to go after his company in a more robust way, but at the moment, I don’t think the DMME has the political will to do that,” Hepler said. Instead, “the DMME is bending over backwards to help Justice so he doesn’t go into bond forfeiture. They don’t want him to bond forfeit all of his mines and put the fund in jeopardy.”

The DMME’s numerous amendments to the compliance plan for the Justice companies are part of “an effort to avoid placing the burden of reclamation on the taxpayers of Virginia,” Kesterson wrote in an email.

“While there are reasons, such as inclement weather, for extensions and changes, the main purpose of using this enforcement tool is to avoid bond forfeiture and have the company fund all reclamation.”

Jay Justice, who manages the Justice companies through the Roanoke-based Southern Coal Corporation, responded to a request for an interview and list of questions by emailing that he “would love to discuss all of this with you. I have a much different side to the story that you may have been presented from others.”

However, he did not response to three subsequent emails attempting to schedule the interview.

Kesterson said the 39 permits held by the Justice companies included a total of nearly 17,000 acres that have been disturbed. Of those, 10,604 have been reclaimed as of March 2019. That leaves 7,000 more acres to reclaim by March of 2022 — unless the compliance agreement is amended yet again.

UPDATE: This story has been edited to more precisely characterize the amount of new penalties for the Justice companies.