Companies that bought coal mines from a bankrupt Kentucky producer still have environmental citations, fees and fines pending more than a year after the sale, preventing them from receiving mining permits, state agencies say and federal.
Regulators cited a subsidiary of one of the companies, American Resources Corporation, for a violation in December in which the company allegedly allowed polluted water to flow into a creek from an underground mine in Pike County.
The iron content of the bright orange water was so high that inspectors could not measure it with a device they use in the field, according to an order from the US Office of Surface Mining Reclamation and Enforcement (OSMRE).
The release at the McCoy Elkhorn Coal LLC mine caused “significant and imminent environmental harm”, according to the notice of violation.
Representatives of American Resources and a lawyer for the company did not respond to a request for comment. The Kentucky Energy and Environment Cabinet said the company was treating the water to solve the problem.
American Resources also said in a court document that it has made significant progress in resolving salvage violations at the mines in Kentucky and Indiana, where it is based.
Violations were a problem in Cambrian Coal’s bankruptcy.
Cambrian was a major producer of coal at one time, with operations in eastern Kentucky and elsewhere in the central Appalachians.
Like several other coal companies, however, it sank when demand for coal fell in recent years due to several factors, including competition from natural gas for power plant customers, competition from renewable energy sources and a pressure for stricter environmental rules.
Cambrian filed for bankruptcy in June 2019.
Three companies were allowed to purchase the Cambrian permits in September 2019, but are still working to finalize the transfers. The companies are American Resources; a company called Clintwood JOD LLC; and Pristine Clean Energy LLC.
Dozens of violations
Regulators have included information about outstanding violations and unpaid costs and fines against the three companies in a recent court application over Cambrian’s bankruptcy.
Michael C. Castle, director of OSMRE’s field office in Lexington, included a list with an affidavit he swore on Feb. 2 that showed the companies all had numerous violations outstanding – over 50 for American Resources, 125 against Pristine and 169 for Clintwood JOD.
The December notice of violation against McCoy Elkhorn Coal said inspectors found “cloudy, orange-colored water” coming out of a seal in the underground mine and down a slope to a creek in the middle. December.
There was also what appeared to be polluted water dripping from another seal.
The discharge contaminated a three-kilometer section of the creek, according to the state’s Energy and Environment Cabinet.
State records indicate McCoy Elkhorn was cited for alleged pre-mine violations in October 2019 and January 2020, when inspectors said polluted water stained a mile or more of the creek each time.
In June 2020, inspectors said structures designed to treat mine runoff had been neglected since fall 2019.
A notice of violation stated that a state biologist had studied an affected stream and was “considered” killed “of aquatic species.
Regulators have proposed fines of nearly $ 60,000 in January and June 2020, according to records.
In December, inspectors issued what is known as a ceasefire order directing McCoy Elkhorn to repair the iron-laden landfill.
Federal rules prohibit coal companies from obtaining new permits or modifying existing permits if they have outstanding infractions. This is called being “blocked license”.
American Resources, Clintwood JOD and Pristine are all stranded due to pending violations, federal officials said in court files on February 2.
Because of this, the three companies cannot complete the transfer of Cambrian licenses required to conduct mining operations, federal and state regulators have said.
“Cloudy for the environment”
The Kentucky Energy and Environment Cabinet said in a statement this week that American Resources, known as ARC, alleged the cabinet was preventing the company from resuming mining at its Perry County complex. .
The reality is that the company’s failure to follow environmental rules is the roadblock, the cabinet said.
“The CRA and its affiliates have ongoing and environmentally damaging violations in Kentucky,” the firm said in a statement. “Due to these persistent violations, the EEC cannot issue an operating authorization for the CRA or any entity affiliated with the company.”
The firm said it was working with the company to resolve the violations and pave the way for the resumption of operations.
Mark Jensen, CEO of American Resources, said in a Feb. 4 affidavit that the company had at least four teams working over the past year to recover mines and correct violations in eastern Kentucky.
Jensen said in a press release in mid-December that American Resources expected to generate at least $ 55 million in revenue this year, largely from the Perry County mine, but also from a division that she created to recycle metal in mines. and another focused on the extraction of rare earth minerals.
In some cases, the outstanding citations against the companies do not imply permanent environmental problems, but rather a failure to pay fees and fines.
The three companies have said in court documents that they either paid for those obligations or were making arrangements to pay in order to finish transferring the Cambrian licenses to them.
William K. Abraham, managing partner of Pristine Clean Energy, said in a court document that the company has submitted all the applications necessary to finalize the transfer of the Cambrian permits it has purchased and that it will pay the required application fees. ‘here Feb. 12.
The company has reached an agreement to pay the unpaid fees and will either pay fines or negotiate to reduce them, Abraham said.
Christopher Stanley, managing director of Clintwood JOD, said in an affidavit that the company was working to secure the transfer of the licenses.
Jensen said in a Feb. 4 affidavit that the company has submitted all the applications and fees necessary to finalize the license transfers and will arrange to pay the unpaid fees and pay or negotiate fine settlements.
The company has been accused on several occasions during the bankruptcy of not paying the costs it had agreed to pay, and employees who said the company bypassed them blocked a shipment of coal in County Pike early last year.
More recently, however, American Resources honored its financial obligations in bankruptcy and paid a company for bonds to cover mine reclamation work, according to a court document filed by Cambrian attorney Patricia Burgess and attorneys. representing unsecured creditors. .
Burgess said in a court hearing last week that Cambrian and other parties to the bankruptcy had agreed on a plan to end the liquidation of the company.