Many affected as Revelation Energy files for Chapter 11 bankruptcy

KFTC members and residents of many other coal producing states and regions have followed the activities of Revelation Energy, LLC with increasing alarm in recent years.

They watched closely as the company went a buying spree, acquiring hundreds of mine permits and hundreds of thousands of acres of mines in Kentucky alone from 2014 to 2018. They tracked notices of dozens of safety, health and environmental violations and overdue taxes charged against Revelation Energy, many of which remain outstanding. (According to the Lexington Herald Leader, Revelation Energy has been the top violator of reclamation and environmental rules in each of the last three years.)

And throughout this year, KFTC members actively organized against proposed mining permits and permit amendments sought by Revelation Energy that threaten water quality and community well-being in Harlan and Pulaski counties.

According to KFTC member Davie Ransdell, who serves on KFTC’s Land Reform Committee and represents the organization on the board of the Alliance for Appalachia, “Anyone watching this company has been concerned that a scam or a train-wreck was coming.”

Then on July 1, 2019 Revelation Energy and its recently formed affiliate Blackjewel LLC announced that the companies were filing for Chapter 11 bankruptcy protection in the Southern District of West Virginia. That is the first step of a legal process that many companies use to avoid paying debts.

It sets in motion a flurry of new questions and concerns for employees, vendors and other creditors, including the county governments that are owed millions in unpaid property taxes; state and federal agencies who are owed millions in unpaid taxes, fees and fines for violations. For example, according to the Lexington Herald Leader, Revelation Energy owes the state of Kentucky $6 million, and owes millions more to private companies in Kentucky.

On a recent conference call of organizations and grassroots activists working in Central Appalachia and the Powder River Basin of Wyoming, participants ticked of a list of additional concerns, including:

• What help can employees expect now, including 1,100 workers in Kentucky, West Virginia and Virginia and 600 more in Wyoming? 
• How many Revelation mines are actually shutting down, and which ones are still operating? 
• Is the company still paying fees to the Abandoned Mine Lands Fund and to the Black Lung Disability Trust Fund? 
• What happens next for unreclaimed mine sites and places where there may be ongoing violations of the federal Surface Mining Control and Reclamation Act, Mine Safety and Health Act, and Clean Water Act? 
• What happens now for counties and schools, many of which are already in economic distress, who are owed millions in back taxes?

Since the company filed for bankruptcy, news reports and KFTC members living in eastern Kentucky described workers whose paychecks were clawed back after being deposited in their bank accounts, due to the company having insufficient funds to meet payroll. Those workers are in a terrible state of limbo: they were given no notice and were not officially laid off, so it's unclear if they qualify for unemployment and other benefits.

In recent days the Kentucky Attorney General Andy Beshear appointed an attorney in his office to help workers navigate the complex legal and financial questions they now face. And already an employee in West Virginia has filed a class action lawsuit alledging that the company violated federal laws when it failed to properly notify or compensate workers.

The owner of Revelation Energy and Blackjewell, a West Virginia man named Jeff Hoops, has long been at the center of criticism. When he sought to purchase two mines in the Powder River Basin of Wyoming in 2017, the sale was opposed by local organizations who pointed to 42 outstanding mine permit violations at the company’s mines in Central Appalachia. Hoops was also the owner of Frasure Creek Mining, a company operating in eastern Kentucky that was exposed by environmental organizations, including Appalachian Voices, KFTC, WaterKeeper Alliance and Kentucky Riverkeeper for falsifying water pollution reports to the state and committing tens of thousands of violations under the Clean Water Act.

KFTC member Davie Ransdell points out that she’s watched other coal companies follow a similar pattern, including Horizon Natural Resources 15 years ago and countless others since then. (After Horizon filed for bankruptcy, its productive mines were purchased by ICG, a company owned by Wilbur Ross, the billionaire who currently serves as U.S. Commerce Secretary.)

“The pattern starts when the industry is in a downturn and many mines are doing poorly. They can be bought really cheaply. So a new company steps in and goes on a buying spree. They amass lots and lots of properties and run them hard. Production numbers go up. Violations go up. The bills mount up. Then one day they file for bankruptcy and pretty much walk away. At that point, the whole thing goes to court, where other companies can step in to buy the properties on the cheap. The new company is given lots of time to address the outstanding problems, they don’t have to pay the fines, and the violations don’t show up on the new company’s record.”

Ransdell continued, “Mine regulators are supposed to use something called the Applicant Violator System to stop bad actors from getting new mining permits. But if a company appeals its violations, or if it uses bankruptcy to transfer properties and permits to a new corporation, they can escape accountability.”

KFTC and other organizations working in areas affected by Revelation Energy and Blackjewel’s operations will continue to monitor what happens next in the bankruptcy process and to push for accountability for the workers and communities being harmed.