Thousands of tons of coal stockpiled in Southwest Virginia remain halted as a federal bankruptcy judge considers questions related to whether coal mined by Blackjewel LLC was produced in violation of labor laws and if a separate company that bought the coal can be allowed to move it.
Because the bankruptcy court in Charleston, West Virginia, has not yet ruled on these issues, a federal district court judge in Abingdon extended a temporary restraining order last Friday to prevent the transport of coal located at three Blackjewel sites in Virginia near Raven, Honaker and Appalachia.
The U.S. Department of Labor argues in court filings that coal at sites in Virginia and Kentucky are “hot goods” produced by unpaid workers, running afoul of the Fair Labor Standards Act. The law prohibits the transportation of goods made in violation of minimum wage and overtime requirements.
Blackjewel, which was one of the country’s largest coal producers, filed for Chapter 11 bankruptcy protection July 1 in U.S. Bankruptcy Court for the Southern District of West Virginia. At the same time, it laid off hundreds of workers at its facilities in Kentucky, West Virginia, Wyoming and Virginia, and many reported that their final paychecks from the company bounced.
As the coal company moves through bankruptcy proceedings and sells its assets, it’s been unclear when — and if — former Blackjewel employees will be paid for work completed in June, before the company declared bankruptcy.
Blackjewel contends in filings that a company called Blackjewel Marketing and Sales Holdings (BJMS) — a separate entity from Blackjewel LLC that is not the central subject of the Chapter 11 case — previously agreed to buy the coal as a “good faith purchaser” without knowledge of potential “hot goods” violations. The coal company also claims the stockpiled coal will degrade from oxidation and lose value. Given these factors, Blackjewel argues BJMS should be able to move the coal.
The bankruptcy court held an evidentiary hearing on “hot goods”-related issues on Sept. 4 and 5 but has not issued a ruling, according to a filing from the Department of Labor.
In addition to presenting arguments in the bankruptcy court, the Labor Department successfully sought a temporary restraining order on the Virginia-based coal in U.S. District Court for the Western District of Virginia last month.
Judge James Jones on Aug. 23 issued the temporary restraining order, which was set to expire when the bankruptcy court — which oversees Blackjewel’s Chapter 11 proceedings and is dealing with “hot goods”-related questions — concluded an evidentiary hearing. The extension, granted Friday, extends the order to Sept. 20.