Bankrupt coal producer Blackjewel LLC, an affiliated marketing company and the U.S. Department of Labor have agreed to a number of stipulations that will halt the transportation of coal at three sites in Virginia until the issue of idled employees receiving overdue pay is resolved, according to a filing in a federal bankruptcy court.

The federal government argues that the coal at three Blackjewel facilities in Raven, Honaker and Appalachia are “hot goods” produced in violation of the Fair Labor Standards Act, which prohibits the transportation of goods made in violation of minimum wage and overtime requirements.

Blackjewel and the marketing company, Blackjewel Marketing and Sales Holdings LP, “agree that they shall not transport, offer for transportation, ship, deliver, sell, or otherwise place into commerce any coal mined, processed, or stored in Virginia, including but not limited to the Virginia Coal” at the three locations “until the issue of the uncompensated work performed on the Virginia Coal by Debtors’ employees is resolved,” states the Friday filing.

Blackjewel filed for Chapter 11 bankruptcy protection on July 1 in U.S. Bankruptcy Court for the Southern District of West Virginia. As the company started bankruptcy proceedings, it halted operations at its facilities in Virginia, Kentucky, West Virginia and Wyoming.

The company was the country’s sixth largest coal producer in 2017, according to the most recently available federal data.

Most of Blackjewel’s 1,700 employees were laid off and the company owes many of them paychecks for work completed in the weeks before the bankruptcy filing.

Department of Labor attorneys filed an emergency motion earlier this month seeking an order to prohibit the transportation of coal from Raven and Honaker and require that any sales proceeds from the coal be held in an escrow account until the issue of uncompensated work is resolved. The most recent filing added a facility called Pigeon Creek Processing near the town of Appalachia to the list of sites with “hot goods.”

Blackjewel Marketing and Sales Holdings, one of the parties to the agreement, is an entity formed by Blackjewel, Javelin Global Commodities and Uniper SE that marketed Blackjewel’s coal.

In previous filings, Blackjewel said it was cooperating with federal authorities in regard to coal in Virginia, as well as a similar situation involving coal in Harlan County, Kentucky.

State data shows Blackjewel employed about 480 people in Virginia in 2018. It’s not known when unpaid miners will be compensated.

Blackjewel is in the process of selling its assets, including a $33.75 million sale of three mines in Wyoming and West Virginia to Bristol, Tennessee-based Contura Energy. Although a judge approved the sale, Contura still must reach an agreement with the federal government to finalize the deal.

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