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EPA, Jim Justice coal firms reach $6M deal over water pollution

Jim Justice

The U.S. Environmental Protection Agency said Friday that it had reached a nearly $6 million deal to resolve thousands of pollution violations at coal-mining operations that Democratic gubernatorial candidate Jim Justice owns in West Virginia and four other states across the Appalachian coalfields.

The EPA said the deal requires Justice’s Southern Coal Corp. and 26 affiliated companies to make “comprehensive upgrades” to the mining and coal-processing operations to prevent pollution discharges.

In a news release, the EPA estimated the cost of the pollution-control measures at $5 million. Southern Coal also will pay a $900,000 fine under the agreement, the EPA said.

Court records filed as part of the settlement indicate the deal resolves more than 23,000 water pollution violations between 2009 and 2014 in West Virginia, Virginia, Tennessee, Kentucky and Alabama.

The violations include actual exceedances of pollution limits, performing only partial water-quality sampling, filing only partial water-pollution sampling reports, or no such reports at all, and not responding to formal federal government information requests several times in an investigation that dates back to 2011.

The settlement is subject to a public-comment period and review by a federal judge. Government regulators in other states where the violations occurred took part in the settlement, but the West Virginia Department of Environmental Protection did not. The period covered by the settlement included years after Justice had sold some of his major coal operations to a Russian firm, but before he had purchased those assets back.

“Discharging pollution from coal mining into waterways is a serious threat to clean water, and that’s why [the] EPA stepped in on behalf of communities across Appalachia,” said Assistant Administrator Cynthia Giles, of the EPA’s Office of Enforcement and Compliance Assurance. “Company-wide compliance programs like the one Southern Coal Corporation will establish are critical to protecting our lakes, rivers and streams and the people who depend on them.”

Violations in Kentucky accounted for just over half of those covered by the settlement, with violations in Virginia accounting for about a third. The settlement documents mention only 837 violations in West Virginia out of the 23,693 covered by the deal, or about 3.5 percent.

In a prepared statement issued by Southern Coal, company Chief Operating Officer Tom Lusk said the company had been “working closely with the EPA” for two years and was “pleased that an agreement has been reached.”

“While the Obama administration has been tough on our coal industry in these difficult times for coal, we are focused on striking a balance with full regulatory compliance and keeping our coal miners working,” Lusk said.

Southern Coal’s statement included a comment from United Mine Workers President Cecil Roberts, in which Roberts said, “Jim Justice is one of the good coal operators.”

In his run for governor, Justice, who owns The Greenbrier resort and is considered the state’s richest man, has been dogged by criticism about environmental and mine safety fines, unpaid taxes and legal disputes with vendors and other companies about unpaid bills.

The new settlement with the EPA comes less than a year after Justice’s operations agreed to pay a $220,000 fine in a deal to resolve allegations about building 20 dams at a Monroe County hunting and fishing preserve without first obtaining required Clean Water Act permits.

Lawyers for the EPA and the U.S. Department of Justice on Friday filed their 86-page settlement and a legal complaint it was based on in U.S. District Court for the Western District of Virginia at Roanoke.

The settlement requires establishment of a $4.5 million letter of credit and a “standby trust” to guarantee sufficient funding for compliance with the Clean Water Act and the work the companies have agreed to perform under the settlement, the EPA said.

EPA spokesman Nick Conger said that, while the work required by the settlement is estimated to cost $5 million, the letter of credit is for $4.5 million because the company has already spent some money upgrading its mining and processing operations. The $4.5 million letter of credit will cover the remaining work under the deal, Conger said.

Under the settlement, Southern Coal and its affiliates must implement a company-wide, EPA-approved environmental management system, better track audits, violations and sampling data, have third-party, independent audits of its compliance and improve employee training on environmental matters, officials said.

“This settlement is designed to bring the companies into compliance with the Clean Water Act and requires actions that should prevent future violations,” said Assistant Attorney General John C. Cruden, for the Justice Department’s Environment and Natural Resources Division. “We appreciate our state partners working with us on the consent decree and for their joint oversight efforts with us in the future.”

The $900,000 fine will be split, with the EPA getting half and the other half being divided between the four states that signed on as co-plaintiffs against Southern Coal — Alabama, Kentucky, Tennessee and Virginia.

Conger said West Virginia “was given the opportunity to participate in the settlement, but decided not to.” He said West Virginia officials did “assist [the] EPA in gathering of evidence of violations” and that the injunctive relief — the requirements for pollution control improvements — applies to all of Southern Coal’s operations, even if the state is not a co-plaintiff.

West Virginia DEP Secretary Randy Huffman said Friday that his agency had “recently taken enforcement action” against Southern Coal operations and that the company’s environmental performance had improved, prompting state officials to believe it was “unnecessary to double down on them.”

Huffman also noted that the violations in West Virginia were “an insignificant part of the overall problem” being targeted by the federal action.

While West Virginia did account for a very small share of the violations cited in the EPA deal, violations in the state more frequently involved actual pollution exceedances, as opposed to inadequate sampling or reporting to regulators. Pollution exceedances accounted for 85 percent of the violations in West Virginia, compared to about 12 percent in the overall settlement, according to court records.

DEP spokeswoman Kelley Gillenwater released copies of three November 2008 settlements the state reached with three Justice companies — Dynamic Energy, Bluestone Coal, and Second Sterling Corp. — that involved a total of $1.58 million in penalties. “Following the resolution of those orders, Southern Coal’s compliance record greatly improved,” Gillenwater said.

“A review of the compliance record of Southern Coal reveals that all discharge monitoring reports for these companies have been filed for the last two calendar quarters and the most recent exceedance was a one-time self-reported minor noncompliance for manganese in July 2012,” wrote John Vernon, the DEP Division of Mining and Reclamation’s assistant director for enforcement, in a March 2015 letter in which the DEP withdrew from the EPA lawsuit discussions.

“Accordingly, the WVDEP acknowledges its appreciation of the environmental management system put in place by Southern Coal and desires to afford Southern Coal opportunities to continue its improved effort to comply with environmental laws.”

Vernon also noted Justice’s move in early 2015 to buy back some of his family’s coal holdings from the Russian firm OAO Meche, saying that Southern Coal “has recently acquired a number of mining operations from a foreign owner and with this acquisition the assumption of substantial reclamation and environmental operating responsibilities.”

The EPA announcement of the pollution settlement came the day after Gov. Earl Ray Tomblin announced his formal endorsement of Justice in the gubernatorial race.

On Friday, Tomblin spokeswoman Jessica Tice said the governor “was not involved” in the state’s decisions about the EPA case.

Reach Ken Ward Jr. at, 304-348-1702 or follow @kenwardjr on Twitter.