Conservation Groups Concerned About Cleanup Costs For Bankrupt Blackjewel Coal

Dec 18, 2019

Credit Kanawha Forest Coalition

Environmental groups sparred with coal company Blackjewel Tuesday over damage left behind in the coal company’s ongoing bankruptcy. The group is calling attention to numerous environmental violations by Blackjewel and its related companies and urging the federal bankruptcy judge to prioritize the environment as the bankruptcy continues. 

The groups identified more than 400 instances when regulators found Blackjewel mines out of compliances in Kentucky alone, and more than 200 of the more serious violations in which the company was ordered to cease operations. The groups say some of those could pose serious risks to drinking water, tourism destinations and residential properties. 

The environmental groups include the Sierra Club, Appalachian Voices, Appalachian Citizens Law Center, and the Wyoming-based Powder River Basin Resource Council. 

“There may be as many as 40 permits that just have no buyer,” said Appalachian Voices program director Erin Savage. Blackjewel admitted to 57 in its response. 

The groups are concerned some permits may not be sold. In that case, they wrote, “They will eventually be abandoned, leaving serious questions about abatement of these violations and reclamation of these mines.” Reclamation costs for most Blackjewel mines are secured by third-party surety companies, but it is unclear whether those bonds will cover the total cost of reclamation. 

Companies that purchased mines in the Blackjewel bankruptcy process will in most cases assume responsibility for mine cleanup once the permits are transferred. 

But for the 57 mines that don’t sell, reclamation costs fall to insurance companies. Those companies can then choose to reclaim the mine land themselves using bonded funds, or to pass those bond funds to the relevant state government, which then assumes responsibility for cleanup. 

“Basically, we don’t have good estimates for how much these mines will actually cost to reclaim,” Savage said. 

In its last session, Kentucky’s General Assembly approved a bill that changed the formula by which surface mining bonds are calculated, indicating that previously issued bonds will likely be insufficient to cover reclamation costs. 

“It would be up to the bankruptcy court to decide how any properties that are not purchased by new owners are handled. But the state does have a $50.1 million guarantee bond fund that could come into play in this situation,” said Kentucky’s Energy and Environment Cabinet spokesperson John Mura. 

Mura added that the guarantee fund cannot be used to address acid mine drainage and subsidence, two long-term challenges at many mine sites. 

One threatened tourism destination is Kentucky’s Daniel Boone National Forest, where Blackjewel was issued a cessation order for a water treatment failure that released pollution into Copperas Creek.

In Virginia, several mines with long histories of shoddy reclamation work have already sent mud and debris downstream onto neighboring properties, according to the nonprofit groups, and no reclamation work has been done since Blackjewel entered bankruptcy.

 “Our goal is to ensure public safety and to protect the environment through this process and every day,” said Virginia Department of Mines, Minerals and Energy spokesperson Tarah Kesterson. “We also are working with surety companies and will work with the companies ordered to reclaim the remaining sites to ensure it gets done.”

In West Virginia, the Department of Environmental Protection has issued multiple cessation orders since the bankruptcy for a mine complex in Kanawha Co. That mine is just six miles from the federal courthouse in Charleston where the bankruptcy hearings take place. Those citations mention off-site land damage, downstream water quality issues and threats to human safety, environmentalists say. 

Representatives for Blackjewel responded to the environmentalists’ letter within hours, saying, “The Debtors recognize that such issues are serious and complex and they have been working diligently to address them as quickly as possible with the limited resources available to them.” Blackjewel added it had no plans to continue mining and was solely focused on transferring the permits and reclamation obligations to new owners. 

Blackjewel will likely face questioning about the letter from Judge Frank Volk in a Wednesday hearing.