Virginia regulators are moving against the Roanoke-based coal mining enterprises of Jim Justice to restore mined land at company expense because, they say, Justice isn’t doing it.
Justice said in a Thursday interview that the land at issue is deliberately idle because of badly deteriorated market conditions. The market has slipped for metallurgical coal, the kind the Justice organization is mainly set up to produce. Other metallurgical producers are struggling, as shown by Arch Coal Inc.’s announcement this week to close mines in Wise County and Kentucky and cut 213 jobs.
If conditions improve, mining will resume, Justice said, and he reported progress in that area.
Regulators turned up the heat in May. That’s when the state Department of Mines, Minerals and Energy began proceedings to seize money placed in safekeeping by the company to guarantee reclamation of disturbed mined land at four Wise County locations.
“It’s pretty significant to see this,” said agency spokeswoman Tarah Kesterson, calling bond forfeiture a last-resort enforcement option not deployed against mine owners in a decade. “Most of our companies, the reason we don’t have to do bond forfeiture is because they are good stewards of the law. This [action against Justice] is because the law has been violated and several problems have not been fixed.”
After getting notice that the process had begun, the company had an informal hearing and could request a formal hearing, reconsideration by the agency director and a review in circuit court.
The state mining agency last completed a reclamation bond forfeiture in March 2004, Kesterson said. Justice said the state believes he has exceeded the permitted time a mine can be left idle, which he said is one year. Market conditions left him “no choice in the matter,” he said.
Unless the Justice organization successfully appeals or handles the reclamation work, the Department of Mines, Minerals and Energy intends to get the money secured by bonds, about $9.9 million, and hire a contractor to restore the disturbed ground.
The James C. Justice Cos., led by Justice, a member of the Forbes billionaires list, moved its Southern Coal Corp. to the Roanoke Valley in 2011 from West Virginia, where Justice lives. There are about 30 company mines and about 200 mining permits in five states. Half of the permits are idle “just simply due to the fact that the coal market is just completely terrible,” Justice said.
Three of the four state complaints have in common a requirement to backfill highwall. Highwall mining involves probing a vertical face for coal. When a party backfills, they place material against the face all the way to the top to restore the original contour as closely as possible.
The idled mines the state wants restored still contain coal, Justice said. He opposes reclamation in such a circumstance, especially through bond forfeiture. If a mine undergoes restoration, also known as reclamation, its profitable, productive years are finished, he said. Gone are the jobs and local economic spinoff, too, he said.
To resume mining at a reclaimed site would trigger extraordinary costs, on top of ordinary coal production costs, and would be financially unwise, according to Justice. He wants to leave the idle mines as-is, continue their state-required maintenance, which he said he is doing, and, when conditions improve, produce coal again.
A&G Coal mines 2, 21, 22 and 23 are resuming production soon, he said. No. 2 is one of the four targeted by the state for reclamation.
Justice vowed he would never leave mined land unreclaimed once mining stops for good. Nor does the lack of restoration work at the idle mines hurt the environment, he said. More broadly, he said he cares deeply about the environment.
Virginia, West Virginia, Alabama and Kentucky handle their own environmental regulation of coal mines, while the federal government handles such activities in Tennessee. All five have violations pending against Justice-controlled mines.
The latest data lists 277 unabated or uncorrected environmental violations of the Surface Mining Control and Reclamation Act of 1977, according to the Office of Surface Mining Reclamation and Enforcement, a federal agency that polices mine operators. They bear dates from 2011 to 2014.
“This is a large number of violations, and I can say that the civil penalties are piling up,” agency spokesman Chris Holmes said.
In the interview, Justice accepted blame. “I guess I just screwed up. I mean, we’re not a public company. We’re a private company and we don’t have layers and layers of people that work for us that are sitting around doing the paperwork and we got behind and so we got this enormous flush of violations,” he said. “The majority of this is all paperwork, and I’m cleaning it up.”
Other legal entanglements face the Justice company, including a lawsuit by environmental groups that seeks penalties for an A&G Coal mine releasing the toxic pollutant selenium to a stream near the town of Appalachia without a state permit in violation of the Clean Water Act.
A federal appeals court earlier this month affirmed a lower court ruling that the company is liable.
Justice said the company will protect its legal rights. If in the end it loses the case, the Justice organization will do what’s required, he said.
Additionally, the federal Mine Safety and Health Administration said in May that the Justice organization owed $3.18 million related to worker safety issues.