Coal Tattoo

Read about the Don Blankenship Appeal

October 24, 2016 by Ken Ward Jr.
Former Massey Energy CEO Don Blankenship and his lawyers enter the Robert C. Byrd U.S. Courthouse on Tuesday morning. Photo by Joel Ebert.

 

We’ve got a story online from Sunday’s Gazette-Mail that previews this week’s oral argument on former Massey Energy CEO Don Blankenship’s appeal of his criminal conviction. We’ve also got a handy sidebar that explains the issues in the appeal and provides some information about how the process works and what might come next in the case.

For those who want to dive in more, here’s a searchable collection of the court filings in Blankenship’s appeal and some related documents:

 

And here is a spreadsheet that lists all of the various court documents from this case:

Questions and answers about Jim Justice’s debts

October 13, 2016 by Ken Ward Jr.
Jim Justice

 

(AP Photo/Evan Agostini for The Greenbrier Resort, File)

There’s been a flurry of response from both Jim Justice and his supporters to the blockbuster story by NPR (along with West Virginia Public Broadcasting and Ohio Valley ReSource) about Justice’s $15 million in unpaid taxes and fines. Some supporters, like the United Mine Workers, are rushing to defend Justice, and others — like the state Democratic Party — are trying to deflect attention with one of those “I know you are, but what am I” stories the career campaign consultants want our elections to be all about.

Justice himself stooped to a silly attack on respected NPR reporter Howard Berkes, saying that Berkes was “twisting things” and trying to make Justice out to be a bad guy.

Having watched the national media kick our butts on this story, pulling together all of the pieces in a way that they hadn’t been before, it seemed like the least we could do was to do a little bit of fact-checking on the response to the NPR story. So here is a little question-and-answer session I did via email with Howard Berkes:

Coal Tattoo:  In a statement issued yesterday, the United Mine Workers of America defended Jim Justice, saying that Mr. Justice’s “fines are, in fact, being paid right now.” What can you say from your reporting about that? To what extent are the MSHA fines “being paid right now”?

Berkes:   It is true that Justice’s mining companies are making $75,000 a month in payments as stipulated in a payment plan with the Mine Safety and Health Administration (MSHA).  That payment plan was signed on December 30,2015, and covers $1,546,363.04 in delinquent mine safety penalties that are under MSHA’s jurisdiction (payment plan documents [posted here]) in the form provided by MSHA in response to a FOIA request). Another  $1,751,107 in delinquent mine safety penalties (including interest and fees) is at the Treasury Department for collection and is not covered by a payment plan, according to a detailed list of delinquencies as of 7/31/2016 and provided to NPR in response to a FOIA request.  Some of the delinquent penalties at the Treasury Department have been referred to the Department of Justice for possible litigation and others are pending referral to DOJ.

Coal Tattoo: Exactly how far overdue are these penalties, generally speaking? Are any of them penalties that are still being contested, or appealed, by the Justice companies involved?

 Berkes: All of the penalties in our analysis are officially final.  They have been through any challenges and appeals.  None are contested. We eliminated from our analysis any delinquent penalties listed by MSHA as “On Hold” because they were recalled for further review.  The oldest penalties go back to August, 2009, and as we reported, there were $1,381,408 in newly delinquent penalties since January of 2014, when we first engaged with Justice and his mining companies, who said the delinquent penalties would be paid.      

Coal Tattoo: What can you tell use from your reporting about the extent to which the total overdue debts you reported on — some $15 million — were for taxes or other things that are not MSHA fines and therefore not part of any payment plans with the federal government?

Berkes: Only $1,546,363.04 in mine safety penalties is covered by a payment plan with the federal government.  There are county payment plans for $4,555,297.29 in delinquent county taxes in Kentucky.  Some of those plans were in default until the last few weeks.  But as of last week, the Justice companies are making payment on all payment plans in Kentucky.  We documented one county payment plan in Virginia in Tazewell County.  That payment plan began after the county sheriff seized mining equipment.  We also documented one county payment plan in Alabama.

We found no evidence of payment plans, and the Justice companies did not assert the existence of payment plans, for $3,107,854.95 in federal tax liens in Kentucky, Virginia and West Virginia, and $3,941,541.59 in state tax liens in South Carolina, Tennessee, Virginia and West Virginia.  Our spreadsheet summarizing Justice company debts by states and counties  [is posted here]. 

Coal Tattoo: Are you aware of any movement since the publication of your story toward paying these other overdue debts? And have Justice, his companies or his campaign questioned the accuracy of anything you reported?

Berkes: We have been in contact with the Justice companies and campaigns about our findings since early August, sharing our data and offering an opportunity to dispute the data and comment.  In our first contact, Justice mining executives noted that some of the delinquent penalties listed by MSHA as unpaid in the data provided to us were listed as paid in MSHA’s Mine Data Retrieval System (MDRS).  We then reviewed every delinquent penalty and also confirmed with MSHA the status of penalties listed in the MDRS.  We then removed from our analysis and findings the penalties listed as paid in the MDRS.  Justice COO Tom Lusk has provided updates on payment plans.  We documented the revival of dormant payment plans, some of which occurred after county attorneys threatened lawsuits and after we contacted Lusk.  Some counties confirmed that they were discussing payment plans before we contacted Lusk.  There’s no question that Lusk was pursuing some of these payment plans, and some existed, before we contacted the Justice companies.  We’re not aware of any payments since our story was published last week.

Coal Tattoo: Justice indicated in Tuesday night’s debate that he doesn’t believe that not paying fines or taxes on time is part of any buiness plan or practice or pattern of his. But didn’t your reporting describe a pattern in which such debts weren’t paid, until attention was brought — either by the press or a lawsuit — over one particular set of bills, and those bills would then be paid, while perhaps others not brought to public attention continued to go unpaid or even got larger?

Berkes: We found coincidental timing of some payments and payment plans.  When the Gazette-Mail reported nearly $4 million in delinquent county taxes in West Virginia in April, most were completely paid-off in two weeks.  When the county sheriff in Tazewell County, Virginia, seized mining equipment at a Justice mine in March, a payment plan began.  When the county attorney in Harlan County, Kentucky, filed suit in October, a payment plan followed.  When the county attorney in Knott County, Kentucky, sued and filed two motions for summary judgement in August and September, a payment plan followed.  When NPR reported delinquent mine safety penalties in 2014, a payment plan followed (though two years later).  In Pike County, Kentucky, we were told, a Justice mining company was not responsive until after NPR told Justice representatives that we were going to report delinquent taxes. 

We also found that some Kentucky county payment plans defaulted in this same time frame.  Payments suddenly stopped, county officials told us, in January, April and May, and recently resumed.

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UMWA presidential endorsement ‘highly unlikely’

October 12, 2016 by Ken Ward Jr.
FILE - In this Sunday, Oct. 9, 2016, file photo, Republican presidential nominee Donald Trump and Democratic presidential nominee Hillary Clinton speak during the second presidential debate at Washington University in St. Louis. The contentiousness of the presidential election is spilling into some workplaces. And even when there’s no rancor, more time is spent on election chatter than in the past. Rather than try to control what people are saying, owners should focus on whether the work is getting done in an atmosphere that’s not hostile. (AP Photo/Patrick Semansky, File)

 

Republican presidential nominee Donald Trump and Democratic presidential nominee Hillary Clinton speak during the second presidential debate at Washington University in St. Louis. (AP Photo/Patrick Semansky, File)

Despite some of the recent talk about coal and energy issues in the presidential race between Republican Donald Trump and Democrat Hillary Clinton, it seems that the United Mine Workers of America union’s political arm is going to stay out of the fray.

UMWA spokesman Phil Smith told me this morning that an endorsement of either candidate is “highly unlikely” at this point.

So far, Smith said, no state UMWA political councils have recommended such an endorsement to the union’s national political council, which is made up of members of the UMWA International Executive Board. That national council is the body that would vote on any presidential endorsement, Smith said.

In the UMWA’s political work, the endorsement process starts with area political councils, which make recommendations to state councils on state races. State councils then make recommendations to the national council for federal races. But Smith noted that all of the state council meetings for this election have already occurred. There’s still a chance of some movement that would result in a national council vote, but again, Smith said that is “highly unlikely.”

Readers may recall that, after endorsing Democrat Barack Obama in 2008, the mine workers did not make a presidential endorsement in 2012. And as we discussed four years ago, a non-endorsement isn’t necessarily out of the ordinary for the UMWA.

This time around, the much-misconstrued comments from Secretary Clinton about mining jobs and the future of coal country — among other issues — certainly has generated significant support among active UMWA members for Mr. Trump. But remember that union political councils also include retired UMWA members, many of whom may be focused on the union’s troubled pension and health-care benefit plans — an issue that Secretary Clinton has talked repeatedly about, but Trump has ignored.

‘One of the good coal operators’

October 11, 2016 by Ken Ward Jr.
Jim Justice

 

Just a few hours before the second and final debate between gubernatorial candidates Jim Justice and Bill Cole — and in the wake of last week’s devastating report about Justice by NPR — the United Mine Workers union is stepping up to defend their candidate. Here’s UMWA President Cecil Roberts in what the union says is a “reality check” on which candidate is best for mine safety:

I read the NPR story regarding the mine safety fines incurred by mines operated by companies that Jim Justice owns. Let me be clear: I believe his company needs to pay any fines it has incurred. My understanding is that those fines are, in fact, being paid right now.

But if we want to talk about which candidate for West Virginia Governor cares more about the health and safety of working miners, let’s make sure the facts are clear. Jim Justice has never questioned the need for mine safety laws and regulations.

The prepared statement from President Roberts went on:

Bill Cole hasn’t just questioned whether we need safety laws for West Virginia miners, he played a key part in slashing the state’s mine safety and health law in 2015. First, the law Bill Cole pushed through the State Senate abolished a commission that was charged with making sure miners weren’t breathing harmful diesel exhaust emissions while working underground.

Bill ColeSecond, Bill Cole agreed with those who thought it was not a problem for miners to have to carry an injured miner 1,500 feet to get to mechanized transportation and then be brought outside for medical treatment. Anyone who has ever walked underground over broken rock and lumps of coal knows how difficult that is at the best of times. Trying to do that over the equivalent of five football fields while rushing to get an injured co-worker to safety is the last thing miners need to be doing.

And third, Bill Cole supported putting miners’ lives in danger by allowing companies to move large equipment around in a mine and putting that equipment between working miners and escape routes if something bad happens. This law was put into place back in the 1970s when miners were killed as a result of this practice. We should never allow something to happen underground that we know has already lead to miners’ deaths. But Bill Cole did.

The UMWA is talking about the legislation described in this story, and which a top union official and state legislator criticized in this op-ed piece, saying:

This extreme legislation loosens coal mining safety regulations to the benefit of big corporations without any regard for worker safety.

Oddly, the UMWA didn’t mention in its statement today that the bill in question was eventually signed by Democratic Gov. Earl Ray Tomblin, over the union’s objections.

Also not mentioned is what happened the following legislative session, earlier this year, when the UMWA actually went along with another coal lobby bill that weakened mine safety protections. That bill also passed, and was signed by Gov. Tomblin. Union officials said they had little choice but to try to reach that compromise bill, fearing the industry — and a Republican controlled Legislature with Cole as Senate President — easily had the votes to pass something worse.

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Coal decline: It’s the shale gas, West Virginia

by Ken Ward Jr.
COAL TRAIN

A CSX train loaded with coal winds its way into the mountains in this photo taken near the New River at Cotton Hill in Fayette County, W.Va.  (AP Photo/Jeff Gentner)

There’s an important new study out that goes to the heart of the political discussion in West Virginia about the coal industry’s decline. Here’s the press release from the authors at Case Western University:

Cheap shale gas produced by fracking has driven the decline in coal production in the United States during the last decade, researchers at the Great Lakes Energy Institute at Case Western Reserve University have found.

Power plants, which use 93 percent of the coal produced nationally, have been operating under the same EPA regulations signed into law by President George H.W. Bush in 1990. Proposed new rules since then have all been challenged in court and not implemented until June 2016, when the EPA’s restrictions on mercury and other toxic emissions were approved by the U.S. Supreme Court.

Consumption of coal continued to grow under those 1990-era EPA rules until 2008, and then went into steady decline, dropping by 23 percent from 2008 thru 2015.

The data show the drop in those years to be correlated with the shale revolution, as natural gas production increased by a factor of more than 10 and its price dropped in half, the researchers say. And, due to the continuing–and in some cases accelerating–technological and economic advantages of gas over coal, the decline in coal is expected to continue at least decades into the future.

Mingguo Hong, associate professor of electrical engineering and computer science at Case Western Reserve and co-author of the study, said:

Some people attribute the decline in coal-generated electricity to the EPA’s air-quality rules, even calling it ‘Obama’s war on coal . While we can’t say that the EPA rules have no impact — as, for example, discouraging the building of new coal power plants because of the expectation that tougher air-quality rules will clear the courts — the data say the EPA rules have not been the driving force.

Hong and co-author Walter Culver, a founding member of the Great Lakes Energy Institute Advisory Board at the university, say the data show that shale-gas competition is what’s been hurting coal as of today. They expect that, as wind and solar sources of electricity continue to improve, they will be tough competitors to coal in the not-distant future. According to Culver:

If you’re a power plant operator and you see gas supply is continuing to increase and natural gas can do the job cheaper–by a lot–the decision to switch from coal is pretty easy. As we look toward the future, we see no natural mechanisms that will permit coal to recover.

Fact check: Donald Trump’s 1,000 years of coal

October 10, 2016 by Ken Ward Jr.
Republican presidential candidate Donald Trump puts on a miners hard hat during a rally in Charleston, W.Va., Thursday, May 5, 2016. (AP Photo/Steve Helber)

 

Republican presidential candidate Donald Trump puts on a miners hard hat during a rally in Charleston, W.Va., Thursday, May 5, 2016. (AP Photo/Steve Helber)

If coal and energy issues are at the top of the list of things you care about, you had to sit through a lot of other stuff during last night’s presidential debate, but eventually you heard from Republican Donald Trump and Democrat Hillary Clinton on this issue.

It was the next-to-last question from an audience member:

What steps will your energy policy take to meet our energy needs, while at the same time remaining environmentally friendly and minimizing job loss for fossil power plant workers?

Over at West Virginia MetroNews,  Brad McElhinny ran through their responses in a piece posted earlier this morning. Brad also cited “fact-check” stories by the Los Angeles Times and the Associated Press. They mostly focused on the question of whether Secretary Clinton wants to put all of the nation’s coal miners out of work, an issue that is more political theater than policy or reality (see my previous analysis of this whole question here).

The thing that really needs fact-checked from this whole exchange is this from Mr. Trump:

There is a thing called clean coal. Coal will last for 1,000 years in this country.

Coal will last for 1,000 years in this country? Really? Wow.

Remember this from four years ago? That time that then-GOP presidential nominee Mitt Romney said, in an ad attacking President Obama’s “war on coal”, said: “We have 250 years of coal, why wouldn’t we use it?”

After looking into it at the time, here’s what we published in the Gazette:

In new campaign ads criticizing the Obama administration’s coal policies, Republican presidential candidate Mitt Romney cites an estimate of the nation’s remaining coal reserves that has been increasingly questioned as overly optimistic.One of two new Romney ads includes footage of his visit last month to an Ohio coal mine, with a voiceover of a Romney speech where he says, “We have 250 years of coal, why wouldn’t we use it?”

Various industry publications have cited that same estimate, saying, “The United States has more than a 250-year-supply of coal if it continues using coal at the same rate at which it uses coal today.”

But in a major report five years ago, the National Academy of Sciences concluded that the best estimate it could confirm was that U.S. coal reserves would last less than half that long.

“The United States is endowed with a vast amount of coal,” said the report, written by a panel of geologists, engineers and industry officials for the National Academy’s National Research Council.

“Despite significant uncertainties in generating reliable estimates of the nation’s coal resources and reserves, there are sufficient economically mineable reserves to meet anticipated needs through 2030,” said the report, written at the request of the late Sen. Robert C. Byrd, D-W.Va. “Further into the future, there is probably sufficient coal to meet the nation’s needs for more than 100 years at current rates of consumption,” the report said. “However, it is not possible to confirm the often-quoted suggestion that there is a sufficient supply of coal for the next 250 years.”

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NPR bombshell: Jim Justice’s unpaid taxes and coal-mine safety fines top $15 million

October 7, 2016 by Ken Ward Jr.
Jim Justice

 

Well, our friend Howard Berkes at NPR (along with the good folks at West Virginia Public Broadcasting and the Ohio Valley ReSource) have put together the pieces of the puzzle. Their bombshell this morning on Democratic gubernatorial nominee Jim Justice reports:

… Justice’s mining companies still fail to pay millions of dollars in mine safety penalties two years after an earlier investigation documented the same behavior. Our analysis of federal data shows that Justice is now the nation’s top mine safety delinquent.

His mining companies owe $15 million in six states, including property and minerals taxes, state coal severance and withholding taxes, and federal income, excise and unemployment taxes, as well as mine safety penalties, according to county, state and federal records.

The story continues:

In the past 16 months, while fines and taxes went unpaid, Justice personally contributed nearly $2.9 million in interest-free loans and in-kind contributions to his gubernatorial campaign, according to state campaign finance reports.

Grant Herring, a spokesman for the Justice gubernatorial campaign, said Justice “won’t be doing an interview,” despite multiple requests after NPR provided details of our investigation.

Importantly, the investigation also reports:

Delinquent Justice mines also continue to have worse-than-average safety records, according to NPR’s analysis of MSHA injury and violations data. Our analysis shows that injury rates (for injuries forcing time away from work) are twice the national average and violations rates more than four times the national rate during the years the Justice mines failed to pay penalties.

The Justice fines concern Celeste Monforton, a former MSHA official, mine disaster investigator and lecturer on workplace safety at George Washington University and Texas State University.

“I don’t think we should forget that the reason that he has those penalties is because there were violations and hazards in his coal mining operations,” says Monforton.

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Blankenship’s letter from a Taft, California, jail

October 5, 2016 by Ken Ward Jr.
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Gazette-Mail file photo by Chip Ellis

Well, I guess we all knew that something like this was coming sooner or later. Don Blankenship has seldom been one to keep quiet; well, except for that time he refused to answer questions from investigators after the Upper Big Branch Mine Disaster … or that time he declined to take the stand in his own defense at his federal court criminal trial.

But Kris Maher over at the Wall Street Journal had the story this morning:

Former Massey Energy CEO Don Blankenship, who is serving a one-year sentence in federal prison for violating mine safety laws, is issuing a highly unusual personal defense this week, using a 67-page booklet to declare that he is an “American Political Prisoner.”

“The story is a little complex, and telling it from prison without a computer and without much documentation has not been easy,” Mr. Blankenship wrote. “But it is a story that Americans need to know.”

And indeed, there is a press release, in the form of this blog post — dateline “Taft, California,” where Blankenship is serving his prison sentence, as well as a .pdf file of Blankenship’s booklet now available through his website. I’ve downloaded a copy of the booklet and posted it here for safekeeping. Blankenship says he’s going to send the booklet to 250,000 people — he doesn’t say who — and explains his reasons for doing so:

This booklet is the right thing to do. It is the right thing to do because all Americans deserve a fair trial, and not one like I had. It is right to do this booklet because coal miner safety is more import-ant than political correctness. Lies about accidents and improper prosecutions are serious matters, as they prevent worker safety improvements and deprive people of their basic human rights.

We’ve seen this movie — literally — before. For example, the booklet runs through Blankenship’s theory that the Upper Big Branch disaster was caused not by poor safety practices at Massey under his watch, but by an uncontrollable flood of natural gas into the underground mine. Investigations by the U.S. Mine Safety and Health Administration, the Governors Independent Investigation Panel (the McAteer team), the state Office of Miners Health, Safety and Training, and the United Mine Workers of America all reached conclusions contrary to Blankenship’s theory.

The other thing that Blankenship goes off about is his belief that the media has ignored (covered up, I think is his term) allegations about MSHA’s role in what happened at UBB. It’s hard to buy into his part of his theory, given that his major concerns about MSHA — inaction about potential methane leaks from the look of UBB, perhaps poorly planned demands for changes in the mine’s ventilation system, and the potential that not all records about MSHA’s involvement at UBB have been made public — were all covered fairly extensively by Blankenship’s favorite news outlet.

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Arch Coal emerges from bankruptcy

by Ken Ward Jr.

Here’s the news out this morning from Arch Coal Inc.:

Arch Coal Inc. today announced that it has successfully completed its financial restructuring and emerged from court protection, with new equity that will trade on the New York Stock Exchange under the ticker symbol ARCH.

“Today marks the beginning of a new era for Arch Coal,” said John W. Eaves, Arch’s chief executive officer. “We are extremely pleased with what we have accomplished during our highly expeditious restructuring process, and are eager to move forward with our compelling plan for value creation. I am confident we have all the pieces in place for long-term success – an extraordinary workforce, cost-competitive assets, a high-quality reserve base, a clean balance sheet and an excellent management team.”

Arch emerges as the leading producer of metallurgical coal and the second largest producer of thermal coal in the United States, with a streamlined portfolio of large, modern, low-cost mines. Arch’s operations have a proven track record of generating cash through all phases of the market cycle, with significant upside in rising price environments.

Arch is emerging with more than $300 million of cash on its balance sheet and a debt level of just $363 million, consisting of a new term loan and capital leases. The company’s total debt is just 7% of what it was prior to restructuring. Cash requirements are expected to be modest, with projected capital spending of $55 million in 2017 and projected debt service of approximately $33 million. In addition, the company has third-party surety bonds in place covering 100% of its reclamation bonding requirements.

You can read the full statement here.

 

What West Virginians should really learn from the story of Jim Justice’s big deal with the EPA

October 4, 2016 by Ken Ward Jr.
Jim Justice

 

Maybe we should just be glad that the U.S. Environmental Protection Agency put out its press release on the water pollution deal with Jim Justice’s companies fairly early on a Friday afternoon, instead of waiting until just before 5 p.m. And oddly, inquiries about this issue were answered far more promptly — and with actual straight answers — than anything else I’ve dealt with the Obama EPA about over the last eight years.

It is a pretty significant story, and it seems hard to imagine it’s not going to quickly become part of the back-and-forth of this year’s gubernatorial campaign. Republican Bill Cole’s people will point to it with statements like this:

Mountain Party candidate Charlotte Pritt’s followers will say the whole thing just shows how Justice is just another coal operator and there’s no difference between Cole and Justice (for those who really are trying to understand if there are differences, former Gazette-Mail political reporter David Gutman gave that story a pretty good shot here).

Just to clear up the facts:  The feds didn’t fine Justice $5 million. The fine in this case was $900,000. His companies are required to put up a $4.5 million letter of credit to ensure funding of new pollution control efforts. EPA says in all those efforts will cost $5 million, and Justice has already spent $500,00. So that’s where the $6 million figure in our story comes from. You can read the consent decree here and the EPA complaint here.

It’s fascinating to watch people who are more interested in partisan politics than in environmental protection (or workplace safety compliance) chatter about this particular story on Jim Justice. Where are their cries that the jackbooted thugs from EPA should let little poor ol’ Jim alone? I’m confused — do we want a strong federal enforcement agency to keep coal industry politics from controlling things, or should the feds leave us alone to run things as we see fit?

Readers who follow these things more closely than the career campaign consultants do will know that these kind of settlements between EPA and major coal producers have not been unusual things. EPA has reached deals in recent years with CONSOL Energy (here and here), Arch Coal (here and here) Alpha Natural Resources, and Patriot Coal, among others. And yes, most of the time, the state Department of Environmental Protection takes part with EPA as a co-plaintiff, a move that allows it some say in the litigation and some share of the fine. In this instance, WVDEP could have pocketed maybe $90,000 from the settlement, if the one-half of the fine going to states had been split five ways instead of four.

Going back through those settlements, the only one I see in West Virginia that the WVDEP didn’t take part in was the one back in 2008 with Massey Energy (see original coverage of that here, here, here and here).

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