Early this month, lawyers representing federal agencies asked for 23 coal companies owned by Gov. Jim Justice and his family to be held in contempt because over the past year they have made late payments or no payments at all on a settlement agreement over mine safety fines.
Now, a lawyer for the Justice coal companies is responding in court that there’s a good reason: The companies have empty pockets.
A filing this week on behalf of the Justices has a subsection in all capital letters titled, “DEFENDANTS HAVE NO ABILITY TO PAY.”
“While the Defendants have not entirely satisfied their obligations under the Consent Judgment, this is not due to a willful violation of the Court’s order. Instead, the Defendants have an inability to pay the current amounts due. This inability to pay is well known to the Government and has existed for some time,” wrote Aaron Houchens, an attorney representing the Justice companies in Virginia.
The filing for the Justices anticipates the premise that the lack of ability to pay could be their fault — and rejects it.
“The Government will undoubtedly argue that the Defendants’ financial problems are self-induced and they should be prohibited from asserting this defense. Any such argument should be rejected,” wrote the lawyer for the Justice companies, saying the lawyers representing federal agencies should have known there’s no money available.
“Upon information and belief, at the time of the stipulation and judgment in this case the Government knew or should have known of the Defendants’ problematic financial condition.”
This case has gone on for a decade — and a federal judge intervened last summer with an order saying the Justices needed to catch up with roughly a half-million dollars in delinquent payments on fines for mine safety violations. Attorneys representing federal agencies then gave the Justice companies a little more latitude through a settlement agreement.
A silent period of more than a year went by until lawyers representing federal agencies on Aug. 6 popped in a motion for contempt — saying they failed to meet the terms, continually made payments late and did not pay the final amount that was due five months ago.
“The only thing consistent about Defendants’ payments is the fact that they are consistently late,” wrote the lawyers on behalf of federal agencies in an accompanying
memorandum.
‘Not financially viable’
The Justice responded Tuesday in a filing in U.S. District Court for the Western District of Virginia that underscores the companies have paid down millions of dollars over the long haul of the case, while acknowledging that there is still more to pay.
And the Justice companies say they made a payment of $10,000 as recently as July 12 “and plan to make payments as they are financially able to do so.”
The Justice filing continued, “Unfortunately, the global coal market, extraneous business factors, and financial constraints constantly frustrate Defendants’ business activities and make their primary business — mining coal — almost impossible to do. Without active and significant mining operations, Defendants are not financially viable, and this makes compliance with the payment terms an impossibility.”
The filing for the Justices includes several examples. Southern Coal Corp. is described as insolvent. Kentucky Fuel is described as having no assets.
“Each and every asset owned by many of the Defendants is pledged to Carter Bank and Trust as security for millions of dollars in debt,” referring to a recently renegotiated agreement of about $300 million between the bank and the Justices, a matter that has gone in and out of conflict.
The lawyer for the Justices suggested that discovery may be necessary in the case “so that claims outlined herein and those that exist relating to the Defendants’ financial condition can be fully vetted and presented to this Court.”
Decade of fines and collection attempts
This case dates back to 2014.
After inspections at about 50 mines owned by Justice, the Mine Safety and Health Administration issued hundreds of citations and orders for violations. Between 2014-19, the Justice companies failed to pay monetary civil penalties for the violations, totaling $4,776,370, according to federal officials. In May 2019, the federal prosecutors under the Trump administration’s Department of Justice filed suit over the debt on behalf of the U.S. Secretary of Labor and MSHA. It’s a civil case, the United States of America vs. Southern Coal Corp., et al.
The two sides reached a joint stipulation in 2020, with the Justice companies agreeing to pay a little more than $5 million. The companies were supposed to make monthly payments of $102,442 until the debt was fully paid. The payoff date was supposed to be March 1, 2024.
The payments started getting spotty in December 2021 and January 2022, but then improved somewhat after federal officials filed notice of non-compliance.
In early 2023, a period of non-payment began, according to the federal prosecutors who said they repeatedly notified the Justice companies of past due amounts. Payments were missed that January, February, March, April and May. The federal prosecutors asked at that point for the court to intervene with an order to pay the past due amount.
Last June, the federal judge overseeing the case entered that order, but the U.S. attorneys agreed to let the Justice companies keep up with their current payments while providing leeway to pay down months of overdue payments over a 10-week period.
The federal prosecutors say the Justice companies still have failed to comply, despite monthly reminders from August 2023 until now. They say the Justice companies still owe $579,041 to the federal government.
“Defendants appear to believe they are above the law,” wrote the lawyers on behalf of federal agencies.
Problems are handled
Justice, once considered West Virginia’s only billionaire, is a two-term Republican governor now running for U.S. Senate. Justice’s disclosures on file with the state Ethics Commission show financial interest in dozens of companies. Most of them are not in a blind trust.
Justice, in his administration briefings and public appearances, regularly talks about how much West Virginia values its coal miners. During an administration briefing Aug. 9, just a few days after attorneys representing the U.S. Mine Safety and Health Administration filed for contempt over the unpaid penalties, West Virginia Watch reporter Caity Coyne asked the governor how he could square his proclaimed appreciation for miners with his companies’ failure to comply with a federal order to pay down fines for safety violations.
In response, Justice said he has repeatedly described not being involved with the day-to-day operations of the Justice companies any more.
“But I can tell you this — just like anyone. From time to time you have a tough go of it and everything. But every single time, I don’t know how many times I’ve got to tell you — if there’s a problem, it gets taken care of. And we take care of it, and everything,” Justice said.
“Sure we may be a few minutes late to the fire, but we always show up at the fire.”
