Beshear supporter racks up mining violations

• Justice Companies have nearly 300 pending reclamation violations in five states%2C including Kentucky.
• Kentucky threatened to suspend eight Justice Companies mining permits on June 26%2C then granted extension to Aug. 11.
• Billionaire coal man Jim Justice and his family has given %24400%2C000 to Beshear political causes since early 2011.

Coal companies owned by a major political supporter of Gov. Steve Beshear are under serious scrutiny for failing to comply with basic strip-mining reclamation regulations in Kentucky and four other states.

The federal Office of Surface Mining Reclamation and Enforcement counts at least 266 pending violations in the five states against companies owned by West Virginia billionaire Jim Justice, who has hobnobbed with Beshear at Justice's glitzy Greenbrier Resort, and who — with his family — has contributed at least $400,000 to Beshear political causes since early 2011.

Nearly half of the unresolved violations — 129 of them — are in Kentucky, where an enforcement confrontation is coming to a head. The others are in Tennessee, West Virginia, Virginia and Alabama.

"I would say, without going back and looking at all of the records, this is the most serious set of violations that I have seen in my seven years," Kentucky Energy and Environment Cabinet Secretary Len Peters said of the environmental record of the Justice Companies.

Justice, who said Beshear is a friend, acknowledged the violations are significant. "But I do believe that every single last one of these issues will be corrected and resolved to the pleasure of the agencies," he told The Courier-Journal. "I absolutely do, without any question whatsoever."

Beshear said in a statement Wednesday that Justice's contributions have had no influence on state government actions. "The cabinet is handling the Justice Company matter in the same manner as all others of its type. The Governor's Office does not interfere," Beshear said in the statement.

And both Justice and Peters dismissed any suggestion that politics or campaign contributions in any way played into either side's handling of the matter, though state officials acknowledged they kept the governor informed.

Kentucky regulators have been so frustrated by the sluggish response to their concerns about water pollution, failing to keep pace with reclamation activities and failing to pay fines, that Department of Natural Resources Commissioner Steve Hohmann has threatened to go after company officers' own money for fines and to cover the cost of reclamations activities.

At one mine in Letcher County, for example, state officials said there is nearly half a mile of "highwall" awaiting reclamation, a cliff carved into the side of a mountain. Reclamation is supposed to occur as the mining takes place.

At other mining operations in Harlan County, regulators complained a Justice-owned company didn't have the correct equipment to reclaim 7,000 feet of highwall. That's more than a mile.

"For the past two and one half years, your company has allowed these problems to continue, languish and multiply to the point that the department is left with no recourse other than to take these actions," Hohmann wrote in a scolding June 26 letter to Stephen Ball, a senior vice president of Southern Coal, which is a Justice company.

Civil penalties owed by Justice companies in Kentucky increased to $2 million from $1.6 million between April and June, Hohmann told Ball, adding that "the current amount of penalties is so overwhelming that it must be addressed now."

Hohmann also informed Ball that further mining by five Justice-owned companies in Eastern Kentucky would be stopped, effective June 30, just four days after he wrote his letter. But the Justice Companies responded with what Peters called a plan for 'taking some serious actions" and on June 29 the suspensions were delayed until Aug. 11.

It's not clear what actions were taken or promised by the Justice Companies in those four days to warrant the extension, because Cabinet officials declined to disclose them while seeking a resolution with Justice representatives.

"We're going through some pretty serious negotiations," Peters said.

"We're optimistic about it, but we can't give you the details of that" yet, Peters said, adding that "there are some actions that are expected to occur."

That's a change of position, however, from what Hohmann had told Ball in late June, that "the progress you have made is overshadowed by the number of new and continuing problems, and is not sufficient to prevent the department from taking action" on the suspensions.

"The parade of legal counsel attempting to represent your companies has done little to advance the cause of resolving these problems or getting the matters adjudicated in a timely manner," he wrote.

For his part, Justice said the immediate correction plan involves "all kinds of stuff in regard to water sampling, there's some reclamation work, there's a whole litany of stuff that the agencies want, and we have put all our people on to get this stuff caught up."

Going after officers

The alleged violations in Kentucky include failing to submit water monitoring reports, failing to live up to promises after previous enforcement actions, failing to pay fines and failing to meet requirements for reclaiming mined land, including eliminating highwalls.

Highwalls are left after rock and coal have been blasted away in a type of strip mining.

"The essence of proper reclamation, and environmental protection when you are dealing with mining ... is to limit the amount of time from initial disturbance of the land to successful post-mining reclamation," said Louisville attorney Tom FitzGerald, director of the Kentucky Resources Council environmental group.

That includes the elimination of highwalls and restoring mined land to its approximate original contours, he said.

When reclamation does not occur, the disturbed area continues to contribute to water pollution, he said. And the more area that's not reclaimed, the greater the risk that bonds posted by the company won't be enough to do the job.

"The landowner, the streams and downstream communities end up footing the tab for unreclaimed sites," FitzGerald said.

Justice said the downturn in the coal market has forced him to idle many operations.

"Agencies allow you 180 days, but at the end of the 180 days, the market is worse," Justice said. "What are you going to do?"

At that point if the land is reclaimed, Justice said the coal can never again be mined at a reasonable cost – and the miners lose their jobs. But if the site is maintained as is, it can be mined again as soon as the market recovers.

Peters emphasized state officials have taken many actions against the Justice Companies during the last year.

"I've been signing a number of orders, with penalties associated with them," he said. "In fact I signed 10 or 15 of them this past Thursday."

In all, he said, he has signed more than 100 enforcement actions against the Justice companies since about March. Jokingly, he added: "I've been tempted to send them a bill for the amount of ink that I've used."

Actions against the company may not be enough, FitzGerald said. That's why FitzGerald said he was pleased to see that the cabinet informed company officers it intends to pursue individual liability against them.

"You are holding them individually accountable for the fact that they have been officers and directors of a company that has amassed this kind of track record," he said.

State officials said the personal letters also were sent to Justice, his son, James C. Justice III, Ball, and James T. Miller, treasurer of Kentucky Fuel Corp., which was also cited by the state in the June 26 letter.

Friendship and politics

Jim Justice, his wife and two adult children emerged as major political givers in Kentucky in April 2011 when they gave $50,000 to the Kentucky Democratic Party. Later in 2011 the four Justices gave $121,600 to the Democratic National Committee at a time when the DNC was transferring large amounts to the Kentucky Democratic Party during Beshear's 2011 re-election campaign.

The four Justices gave $100,000 to the committee that paid for Beshear's 2011 inauguration festivities. And since then, the Justices have given at least $140,000 to the Kentucky Democratic Party — the most recent $40,000 contributed on June 27 — the day after Hohmann's letter suspending Justice mining permits, according to a report filed with the Federal Election Commission.

But Justice said the recent contributions were actually made much earlier in June, and that none of the contributions are intended to affect how he's treated by regulators.

Besides the contributions, Beshear was among the dignitaries Justice invited to help cut the ribbon at the 2010 opening of the casino at the Greenbrier resort in West Virginia. And, at Justice's invitation, Beshear played in the pro-am golf event at The Greenbrier Classic in 2012 (in Phil Mickelson's foursome) and in 2013 (in Bubba Watson's foursome).

Justice said he considers Beshear a friend.

"But my relationship with Steve Beshear is arm's length," he said. "I think he's a great governor. And I try to support people in this country that make a difference. It doesn't matter to me if they're Republican or Democrat."

Peters said Beshear has never interfered with any action regarding Justice's companies.

But the state's top environmental regulator acknowledged he took a rare step of bringing the mounting problems with Justice to the governor's attention about eight months ago.

"The governor's directions to me were very simple: 'You do what's right. Make sure it's consistent with any action you've taken. And you make the judgment on what needs to be done,' " Peters said.

Art Williams, a former commissioner of the Kentucky Department of Environmental Protection and director of the Louisville Metro Air Pollution Control District, said anytime there is a mix of campaign contributions and friendships of elected executive leaders it has the potential to complicate enforcement activities.

While Williams was not familiar with the details of the Justice Companies, he said it's "critically important for the public to know the facts" when there are enforcement actions taking place about the same time as campaign contributions.

"The good elected officials don't expect that their friends will be given any special breaks on penalties," he said.

Peters said he went to the governor only to give him a heads up.

"I just wanted him to be aware of it," Peters said. "I've probably only done that two or three times in the past seven year I've worked with the governor.

"And it's only in extreme cases where I alert him."

Reach reporter James Bruggers at (502) 582-4645 or on Twitter @jbruggers. Reach reporter Tom Loftus at (502) 875-5136 or on Twitter @TomLoftus_CJ.