The state Transportation Cabinet spent more than $1 million from 2006 to 2008 to close and move a two-mile section of Kentucky Highway 699 in Perry County at the request of a coal company.
The Lexington Herald-Leader reports that investigators with the cabinet’s inspector general found that Blue Diamond Coal Co. approached Jason Blackburn, a district permits engineering supervisor, about the deal in 2004. The company wanted a land swap that would allow it to mine property where the road was located in the Cornettsville Leatherwood area.
In 2006, Blackburn’s office presented the idea to then-transportation secretary Bill Nighbert, who approved it.
But according to the inspector’s report, cabinet officials are not authorized to execute a land swap. Only the state Finance and Administration Cabinet, with the governor’s permission, can give away state assets.
The inspector general’s report was completed in December, but it was not publicized. A Feb. 17 audit of state government mentioned it in passing.
“For what it’s worth, the rationale was that the cabinet would get an improved roadway to serve an otherwise isolated community,” cabinet spokesman Chuck Wolfe said.
The road was not in the cabinet’s six-year plan of priority projects.
The coal company handled the project’s earth-moving and grading while cabinet workers did paving and striping. The cabinet’s final cost was $1,039,111.
Several cabinet employees told investigators that the project troubled them. They questioned the land transfer and also said the state was not paid for an estimated 418,993 tons of coal mined at the site by Blue Diamond Coal Co., which is owned by the James River Coal Co., of Richmond, Va.
Cabinet Superintendent James Deaton told investigators that he “didn’t want to have anything to do with the project.”
Also cabinet e-mails show that Blackburn asked the coal company in 2006 if it had any jobs available for his father. Blackburn did not return a call from the newspaper seeking comment on Feb. 25 but told investigators last year that he did not intend to link his promotion of the land swap to the job. His father did not go to work for the company, he said.
No cabinet employee has been disciplined in the matter.
The rebuilt section of the highway is now open to traffic, although it has not yet been accepted into the state highway system. Cabinet engineers must examine it first, Wolfe said.
Also, the property was not properly conveyed to the state and the cabinet is trying to prepare a “deed of correction” to solve the problem.
Richard Douthat, vice president at James River Coal’s Lexington office, said the company had no comment.
Brian Patton, a James River executive, told cabinet investigators the state got a road improvement project worth $4 million to $5 million for a fraction of the cost.