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State may be stuck with paying huge reclamation costs at strip mines here

The state of Kentucky may be stuck in court to recover reclamation costs associated with Blackjewel Mining.

A federal bankruptcy judge on Tuesday approved an agreement among parties to the bankruptcy that says the company will not be responsible for reclaiming mines that aren’t purchased in the liquidation process. Instead, states will reclaim the mines, potentially leaving millions of dollars in costs for taxpayers, or for states to recover through claims against the bankruptcy estate. Five of the 33 mines already slated for revocation are in Letcher County.

Among permits to be revoked are Goose Creek Number 6 surface mine between Goose Creek and Jackhorn and Little Creek Number 6 between Goose Creek and Meadow Fork, and three permits for the Cumberland #17 mine on Black Mountain.

Permits that are in the midst of being sold are also subject to revocation if the sales are not completed with six months. Blackjewel would not be responsible for those reclamations either.

“This gives Blackjewel a pass on a lot of things,” said Mary Cromer, deputy director of Appalachian Citizens Law Center, which represents several citizens’ groups and environmental groups opposed to the agreement.

The 33 permits already to be revoked are among 204 mining permits in four states that are owned by Blackjewel and its subsidiaries, Revelation, Cumberland River and Lone Mountain.

“The other 171 permits that haven’t transferred yet, we’re just kicking the can down the road for six months,” Cromer said.

While Cromer said the deal will leave the states holding the bag for reclamation costs far in excess of the bond amount, John Muhr, a spokesman for the Kentucky Energy and Environment Cabinet, said the agreement reserves the state’s right to recover its costs.

“Governor Beshear and Energy and Environment Cabinet Secretary Rebecca Goodman understand the significant environmental and financial issues connected to the Blackjewel bankruptcy and are committed to securing the best possible outcome for Kentuckians. It is not acceptable for individuals to profit by bankrupting mining companies, putting miners out of work, and leaving Kentucky holding the bag for reclamation and environmental liabilities,” a written statement from the cabinet reads.

“Today, Kentucky, along with U.S. Department of Justice, representing the EPA, OSMRE and the Army Corp of Engineers, agreed to allow the debtors’ plan of liquidation to be confirmed by the bankruptcy court in Charleston, West Virginia. Through weeks of negotiation, the cabinet’s objections to the plan were resolved. The permits will not be abandoned. The Confirmation Order preserves the cabinet’s right to seek the costs of reclamation and penalties, which will be heard by the court at a later date. In addition, the Order allows time for the purchasers to complete the permit transfers, and reiterates the purchasers’ obligations to reclaim the permits and hopefully put miners back to work.”

Cromer said it is “in no way certain” that the state will be able to recover the costs through the bankruptcy court, given that other creditors are also standing in line for that money.

“All 33 of those permits will be revoked, and what they’re saying is if there is an excess in costs, they are going to go back and try to get that from the bankruptcy estate,” she said. “We’ll see.”

A hearing on the status of permit purchases is scheduled for tomorrow (Thursday) in U.S. Bankruptcy Court in Huntington, W.Va. Some of those purchases appear to be jeopardy.

Kopper Glo Mining, which intends to purchase seven permits in Letcher County. An associated company, INMET Mining LLC, is mining other permits which Kopper Glo already purchased in Harlan County and in Virginia, and has filed a suit in Harlan Circuit Court to prevent Kentucky Utilities from turning off its electricity for nonpayment.

The company claims in its suit that while the mine was idled because of COVID-19, KU charged exorbitant amounts for providing the electrical capacity, despite there being no demand at the time.

KU has filed a response saying the contract with INMET speaks for itself. It has already taken a $1.2 million bond posted by INMET and that the company wired more than $1.7 million to KU on February 3. But, KU contends that INMET still owes it more than $2.25 million – some of which is from 2019 – and has not made a good faith effort to pay. Some of the bills, KU contends, were owed for power used between September 2019, when INMET took over the mines, and January 2020, when it closed some of the accounts and opened new ones under the name Acquired Locations.

Blackjewel made headlines in the summer of 2019 when it closed without notice and employees’ final paychecks bounced. In retaliation, miners blocked the railroad tracks at Cumberland to prevent a train loaded with Blackjewel coal from leaving the tipple.

Blackjewel reclamation bonds revoked

These are the Blackjewel permits in Letcher County that will be immediately revoked under the Bankruptcy Court’s order and the amount of bonds meant to pay for reclamation. (List from the order signed on Monday.)

867-0511 Goose #6 $0,781,100
867-0512 Little Crk #6 $1,293 100
867-0521 Cumberland #17 $2,851,500
867-0544 Cumberland #17 $5,651,400
867-9031 Cumberland #17 $1,580,500

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