Revelation: Alpha Weasels Out of Bonding Obligations

Photo: WVNS-TV

In an October 24 press release, Alpha Natural Resources announced they had reached a deal to sell its idled mining operations to Lexington Coal Company. As you may recall, in 2011, Alpha took over Massey Energy’s assets in West Virginia.

Now, Alpha will transfer to Lexington Coal a total of 250 permits from West Virginia, Kentucky, and Tennessee; 160 permits of those permits are in West Virginia. This deal eliminates $192 million in self-bonding* Alpha owes to West Virginia. Alpha will keep rest of their West Virginia permits (the exact number we do not yet know), and these will be turned over to collateral type bond.** 

Here is the tricky part – the numbers. When Alpha filed for Chapter 11 bankruptcy in August of 2015, they owed West Virginia $244 million in self-bonding obligations. The WV Department of Environmental Protection had previously allowed reductions to what Alpha owed in self-bonding in .  Under a deal with a U.S. bankruptcy court, Alpha emerged from bankruptcy in July of 2016, promising to pay $292.7 million for clean-up obligations for its mines nationwide. Basically, Alpha now owed nationwide what it has owed in West Virginia alone before it made the deal with WVDEP (or at least that’s how we understand it). Nonetheless, regulators settled on this deal because they feared Alpha would liquidate and walk away from its clean-up obligations altogether.  Alpha has also already transferred some of their assets and reclamation obligations to Contura Energy, a company started by former Alpha CEO Kevin Crutchfield 

Alpha Natural Resources Field Office, Boone Co., WV

If this seems confusing, that’s because it is. Bankruptcy deals can be complicated to follow and have many twists and turns. To be honest, we even have a hard time following it ourselves. Companies know this. They count on us not be able to understand what is happening.  So, please forgive us if there are errors in the numbers above.  We aren’t bankruptcy lawyers or accountants.

Fact is, the numbers aren’t that important. The main thing to know is that Alpha Natural Resources made a mega-mess by blowing up mountains and poisoning the water, then it went into bankruptcy and has been trying to get out of paying to clean up their messes ever since.

Now, under this deal with Lexington Coal, Alpha has found another way to walk away from its bonding obligations. Rather than liquidate, Alpha has passed the buck to Lexington Coal, which will have to post bonds for reclamation on the permits it has acquired from Alpha.  Thankfully, it’s very unlikely WVDEP will let Lexington self-bond. But it’s just like Alpha to make a big mess and expect someone else to clean it up.

But wait, there’s more! 

You didn’t think we would talk about one notoriously bad company like Alpha without checking into Lexington Coal too, did you?  And here is where the plot thickens. With help from friends, we did a little research.

Lexington focuses primarily on reclamation projects and the current manager is someone by the name of Steven Poe. But, according to the annual report in May, the previous manager was Patricia Hoops.  If that last name sounds familiar, she’s the spouse of Jeff Hoops. Jeff is the owner of Revelation Energy—the same company responsible for the Rush Creek, Keystone Development #1 (KD#1) and KD#2 mountaintop removal mines just outside the Kanawha State Forest.  Revelation took over these mines from Keystone Industries LLC (doing business as Keystone Development LLC) operated by Thomas Scholl.

The Rush Creek mine complex (operated by Revelation Energy) is a source of perpetual acid mine drainage into the headwaters of Davis Creek. The company has failed to prevent acid drainage from the site, and has failed to comply with orders from the DEP to develop and implement permanent, effective treament. Source: Kanawha Forest Coalition

The KD#2 mine was permanently shut down after two years of citizen action and monitoring, led by our friends at Kanawha Forest Coalition. KD#2 racked up numerous violations forcing WVDEP to shut the site down with only a small fraction of the permit ever being mined. But the KD#1 and Rush Creek mines are still having issues, including acid mine drainage, even though those permits are no longer active and have already been “reclaimed.” Revelation Energy is notorious for its failure to follow regulations. 

One has to wonder why the WVDEP would allow a company with connections to the same people as Revelation Energy to take over Alpha’s abandoned reclamation responsibilities. Revelation and Lexington Coal even share the same address in Milton, WV, for their principal office. And Steven Poe was listed as manager on the WV Secrecy of State’s website, after Patricia Hoops, as of September—just weeks before the deal with Alpha was finalized. Maybe they were hoping we wouldn’t connect the dots?

Former WV Gov. Tomblin and former Alpha CEO Kevin Crutchfield hold up sign for road renaming for Alpha’s Boone Co. Headquarters.

So, to absolve itself of paying most of the bonding money it owes the state of West Virginia, Alpha has sold its unreclaimed mines to a company with connection to already-known bad operators. Sounds about par for the course for the coal industry.  It’s really no shocking revelation, pun intended. When Alpha bought out Massey Energy, Alpha started using the tag line “Running the Right Way,” even changing the address of its Boone County office from Morgan Massey Drive to Running Right Way. Maybe Alpha should update its slogan to “Running Away.”

 

We filed a Freedom Of Information Act request for a list of all permits in West Virginia that Alpha has sold to Lexington:

Lexington Transfers

 

Special Note: Alpha as two new active mining permits in the Coal River Mountain in Raleigh Co., WV.  These are the Middle Ridge and Long Ridge permits.  Our friends at Coal River Mountain Watch and others have been monitoring these sites.

*self bonds (legally binding corporate promises without separate surety or collateral, available only to permittees who meet certain financial tests)

**collateral bonds (cash; certificates of deposit; first-lien interests in real estate; letters of credit; federal, state, or municipal bonds; and investment-grade securities)

For more information about coal mining bonds, visit the Office of Surface Mining Reclamation and Enforcement webpage on bonding.

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The Author

Dustin

Dustin is an OVEC organizer.

He’s an 11th generation Appalachian, born and
raised in West Virginia. He grew up in one of top coal producing
counties. He is descended from a long line of coal miners including
his own father, who passed away from cancer in 2014. Once an avid coal supporter, he was made aware of its destructive practices when Patriot Coal Company began blowing up a mountain named for his ancestors, surrounding their 200-year-old graves with a barren moonscape in a practice known as mountaintop removal (MTR).

Witnessing increased flooding, entire communities uprooted and
erased, and an ever escalating rate of poverty and health issues
throughout the coal fields of Appalachia, he now works with the Ohio
Valley Environmental Coalition to educate others, bring an end to the
practice of mountaintop removal, and make a just transition away from
coal to create a more sustainable and economically diverse Appalachia.
He will continue to fight for the victims of coal and to save the
mountains he loves.

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