By Brad McElhinny
May 8, 2019 - Federal officials are taking about two dozen companies owned by West Virginia Governor Jim Justice to court over millions of dollars in unpaid safety violation penalties dating back years.
Photo by Steve Rotsch, Governor's Office
The total amount sought is $4.7 million.
The lawsuit was filed in the Western District of Virginia on behalf of the U.S. Secretary of Labor and the Mine Safety and Health Administration.
“As alleged in the complaint, the defendants racked up over 2,000 safety violations over a five-year period and have, to date, refused to comply with their legal obligations to pay the resulting financial penalties,” stated U.S. Attorney Thomas Cullen of the Western District of Virginia.
“This is unacceptable, and, as indicated by this suit, we will hold them accountable.”
The 23 defendants are: Southern Coal Corporation; Justice Coal of Alabama; A&G Coal Corporation; Black River Coal; Chestnut Land Holdings; Double Bonus Coal Company; Dynamic Energy; Four Star Resources; Frontier Coal Company; Infinity Energy; Justice Energy Company; Justice Highwall Mining; Kentucky Fuel Corporation; Keystone Service Industries; M&P Services; Nine Mile Mining; Nufac Mining Company; Pay Car Mining; Premium Coal Company; S and H Mining; Sequoia Energy; Tams Management; and Virginia Fuel Corporation.
Those are all companies owned by Governor Justice and his family. The suit mentions Justice, along with son Jay and daughter Jill, as operators of the companies.
Steve Ball, counsel for Bluestone Industries, referred an invitation to comment to lawyer Mike Carey, who he described as outside counsel for the companies.
Carey, a former federal prosecutor, also has served as outside counsel for the Governor’s Office, including in the ongoing lawsuit over the governor’s residency. He’s also representing The Greenbrier, owned by Justice, in a federal lawsuit against insurers.
Reached by telephone today, Carey said both sides have been in negotiations for months and had agreed to extend negotiations until June 1.
“The Justice family is disappointed the U.S. Attorney’s Office has decided to follow this route and file a lawsuit at this time,” Carey said.
He added, “Going forward we’re going to have to vigorously defend the lawsuit.”
The court documents indicate each of the companies operated at least one mine with delinquent uncontested MSHA penalties.
“Failure to pay penalties is unfair to miners who deserve safe workplaces, and to mine operators who play by the rules,” stated David Zatezalo, assistant secretary of Labor for the Mine Safety and Health Administration.
According to court documents, MSHA collectively issued at least 2,297 citations to the operations for violations of the Mine Health and Safety Act between May 3, 2014, and May 3, 2019.
“The defendants failed to pay the penalties or even notify MSHA that it contested the assessed civil penalties,” according to a statement put out by the U.S. Attorney’s Office.
The statement then describes a series of steps meant to get the companies to pay:
After 100 days and two demand letters, MSHA referred the civil penalties to the Department of Treasury for collection.
The Department of Treasury made another written demand, but the companies still failed to pay.
The Department of Treasury referred the civil penalties to the Department of Justice for collection.
On Sept. 5, 2018, the U.S. Attorney’s Office for the Western District of Virginia made a written demand on the defendants for the delinquent debts.
“The defendants, however, still failed to pay the outstanding debts and, as of the date of this filing, continue not to pay both the old and newly-assessed penalties,” according to the statement.
All that, dating back months, led to today’s filing.
“This is really amazing that they’ve done so,” said Ellen Smith, a longtime editor of Mine Safety and Health News, speaking to MetroNews.
She recalled annual coverage by that publication of top mine delinquent debtors in terms of civil penalties. Companies headed by Jim Justice companies were always on that top list owing MSHA money, she recalled.
“It’s something that is not fair when mining companies have to compete,” she said. “You are not competing on a level playing field when one mine operator pays their civil penalties and another doesn’t. It has just been years of injustice.”
Justice sold the coal holdings to the Russian company Mechel in May 2009 for $568 million and then bought it back in 2015 for $5 million.
So some of the safety violations were incurred under Mechel’s ownership.
Carey, the lawyer for Justice, brought that up.
“One of the reasons the Justices believe this case should have been settled is well over 50 percent of the assessments pending were incurred when the Russians owned the property,” Carey said.
That has been a common refrain by Justice during the reporting by Mine Safety and Health News, Smith said.
“He would have a company and then it would be sold to this Russian company and then he would buy it back again,” Smith said.
“And then you would say, ‘Well, who owes this money?’ And the response would be, ‘Well, we don’t owe this money because we sold that company. And it’s like, ‘Well, yeah, you sold that company but then you bought it back.’ So you could never pinpoint who was responsible for these fines.”
A 2016 National Public Radio report that was published when Justice was running for governor said his companies owed $15 million in taxes and fines.
That amount was spread over six states. The amount has grown, with additional tax liens being filed since the original report.
Separately, at least two federal subpoenas to West Virginia government agencies ask for information about Justice’s private holdings.
The most recent to be revealed asks the Department of Revenue to provide tax information about more than 90 companies headed by Justice, dating back to 2010.