a Better Bubble™
This article was produced for ProPublica’s Local Reporting Network in partnership with Mountain State Spotlight. Sign up for Dispatches to get stories like this one as soon as they are published.
State environmental regulators have a trove of data on coal mines, including their histories, ownership and environmental violations. ProPublica and Mountain State Spotlight obtained this information for West Virginia and Kentucky, which together are home to about half of the nation’s coal mines. We then combined the states’ data with court records of coal industry bankruptcies. The result was a new look at the association between bankruptcy and environmental problems.
Residents of coal mining communities have warned that environmental problems at mines that have gone through bankruptcy often worsen over time, leading to polluted streams as well as flooding and landslides. We wanted to find out how the compliance record at bankrupt mines compared to other operations. We found that mines that have been through multiple bankruptcies in the past decade had a higher median number of environmental violations than nonbankrupt mines. We shared our findings with independent experts and insiders, who said the results provided meaningful new information about the relationship between bankruptcy and environmental damage.
Data SourcesIn West Virginia, the Department of Environmental Protection provides a public dashboard with mining permits and violations. Kentucky’s Energy and Environment Cabinet maintains a Surface Mining Information System with details on mining permits and violations. These dashboards are useful for exploring individual mines, but they do not provide data in a format that can be used for a systematic analysis. ProPublica and Mountain State Spotlight received the underlying data from both states in October 2022 in response to public records requests.
In both states, companies obtain separate permits for each mine they operate. The data analyzed for West Virginia includes all coal mining permits with inspections at any point since 1990 and all violations issued since then. The Kentucky data includes information on all coal mining permits and violations issued since the year 2000; data prior to 2000 was not provided because of data quality issues. For both states, we obtained and analyzed data for permits whether or not the mine is currently active or was ever cited by state inspectors.
The data from both states includes a mining permit’s identification number that was tracked across owners, and which we used as our main unit of analysis. In Kentucky, the permitting data showed the owner at any given time, even if it changed hands. In West Virginia, the permitting data did not specify when a permit changed owners, but it did list the owners at the time of each inspection. Changes in those listings enabled us to determine when ownership changed.
Sign up for Dispatches, a ProPublica newsletter about wrongdoing in America.
Two federal agencies, the Office of Surface Mining Reclamation and Enforcement and the Mine Safety and Health Administration, also maintain data on mines, including limited information on certain environmental violations. However, we found that environmental violations are most comprehensively recorded in state mining data. OSMRE data was useful in clarifying mine ownership in some cases.
We created a database of coal mining companies that went through bankruptcy between 2012 and 2022. We identified bankruptcy cases using a list compiled by S&P Global Market Intelligence, and supplemented it with those companies’ subsidiaries and affiliates from relevant court filings. The resulting list encompassed 63 bankruptcy cases, comprising more than 1,100 corporate entities. We then matched this list with environmental citations from state permitting data.
Identifying Bankrupt MinesOur analysis categorized mines as having gone through bankruptcy or not. A company’s bankruptcy filings do not always specify on a permit-by-permit basis which mines it owned at the time. We identified mines as having gone through bankruptcy if the owner of the mining permit also appeared as a parent company or subsidiary in our bankruptcy list at the time the bankruptcy was declared.
Matching the permittees to the names in bankruptcy filings was complicated by the numerous ways that a company name can be recorded. An entity named “Mining Company,” for instance, could be entered as “The Mining Company,” “Mining Co.,” “The Mining Co. Ltd,” “Mining Company Limited” and so on. To unify these data sources, we employed a machine-learning utility called csvdedupe, made by Dedupe.io. The algorithm was specifically designed to connect variations of names for the same entity.
Each name match was reviewed by reporters; any differences beyond abbreviations or punctuation were further confirmed by reviewing ownership data from OSMRE. We also identified a handful of matches by reviewing corporate structures and name changes recorded in the OSMRE data. It is possible that our method failed to identify some bankrupt mines, if the owner’s name was not matched by the algorithm or identified in our searches of the OSMRE database.
Our analysis was limited to permits for surface and underground mines. It excluded a small number of permits in each state where the data indicated that mining operations had never started. States also issue permits for other facilities such as coal preparation plants and coal slurry impoundments, which can be associated with significant environmental problems. However, of the other types of permits issued, only preparation plants were defined the same way by both Kentucky and West Virginia, and they accounted for a small percentage of permits overall. We decided to limit our comparison to mines and not other kinds of properties mining companies might own.
All violations were counted equally in our analysis. That’s because determining the severity of a violation would require reviewing narrative details of hundreds of thousands of environmental citation records. The violations are issued by the states’ environmental protection agencies and can involve a variety of infractions. The most common involve environmental issues such as water pollution and sediment control. Some less common types of violations, such as failure to maintain proper insurance and signage, may not directly cause environmental damage, but can have ramifications for safety and surrounding communities.
Blackjewel mines were defined as those owned by Blackjewel at the time of the bankruptcy. Some have since been sold.
In calculating the median number of violations for mines that have gone through multiple bankruptcies, we decided to include all violations throughout a mine’s history, regardless of the owner at the time of the violation or whether the violation occurred before or after the bankruptcy. We didn’t make any distinction, because an environmentally troubled mine could be more likely to end up in bankruptcy, or bankruptcy proceedings could exacerbate a mine’s environmental issues.
Our analysis found that surface and underground mines that have gone through multiple bankruptcies in the past decade had a higher median number of environmental violations than nonbankrupt mines. We focused on the median number of violations, not the mean, because a small number of mines had a very large number of violations, which could have skewed the results.
In Kentucky, mines that have gone through multiple bankruptcies in the past decade had almost twice the median number of environmental violations as those that have not gone bankrupt... (Source: ProPublica and Mountain State Spotlight analysis of Kentucky EEC mine permit and violation data. Note: Includes all coal mining permits and violations issued since the year 2000.) …And in West Virginia, they had almost one-and-a-half times as many. (Source: ProPublica and Mountain State Spotlight analysis of West Virginia DEP mine permit and violation data. Note: Includes all coal mining permits with inspections at any point since 1990, and all violations issued since then.)In both states, the median number of violations among mines that have gone through at least one bankruptcy was higher than those that have not gone through bankruptcy, and lower than those that have gone through at least two bankruptcies. The number of violations per mine is not comparable between states. Each state’s department uses different processes to impose violations for mines. In addition, the time periods analyzed for the two states are different.
Of the 210 bankrupt Blackjewel mines in our database, including 197 in Kentucky and 13 in West Virginia, almost half have gone through at least two bankruptcies. The vast majority of those — 101 of 103 — are in Kentucky.
In Kentucky, Blackjewel mines that have gone through at least two bankruptcies had a median of 16 environmental violations, more than twice the rate for nonbankrupt mines in the state. (Source: ProPublica and Mountain State Spotlight analysis of mine permit and violation data. Note: Blackjewel mines were defined as those owned at the time of the bankruptcy.) LimitationsIn preparing our analysis, we shared our results with bankruptcy experts, former industry officials and environmental advocates. Experts generally endorsed our methodology and said our findings were noteworthy, and also emphasized areas where more research is needed. But they also cautioned that many factors other than bankruptcy could affect the environmental record for a mine. The size of a mine, its age, its production capacity and even the geographic area where it was located all could factor into its tally of environmental violations.
Mining companies are usually required to remediate, or “abate,” environmental violations they cause; in some cases the process takes months or years. Future research could delve into how long it takes for environmental violations to be fixed at bankrupt mines, though doing so would present some challenges. It is often unclear from the data when a particular violation was abated, if ever. Additionally, mine operators can appeal certain violations and fines, and in those cases it cannot always be determined from the data if those appeals were successful, were dropped or are still pending.
Alex Mierjeski contributed research. John Templon contributed data reporting.
This article was produced for ProPublica’s Local Reporting Network in partnership with Mountain State Spotlight. Sign up for Dispatches to get stories like this one as soon as they are published.
Whenever a hard rain fell on Harlan County, Kentucky, the mud, rocks and debris from the Foresters No. 25 mine pounded down the hillside into the community of Wallins Creek.
Local residents repeatedly complained about washed-out culverts and mud in their yards. Time after time, county work crews came out after a heavy rain to repair Camp Creek Road, a water line that runs alongside it and a local bridge. The strip mine’s owner, Blackjewel, fixed some problems, but when the rains came again, so did the muddy flooding.
Amber Combs, who lived down the hill from Foresters, recalled a day in August 2017 when "the water was rushing down and the yard was a muddy slush pond. It was literally like a river around my house." Combs complained to Kentucky regulators, who fined Blackjewel $1,300, which it never paid. Overall, under Blackjewel’s ownership, Foresters would run up 17 violations and more than $600,000 in unpaid fines.
Runoff from Blackjewel’s Foresters No. 25 mine damaged a road in Wallins Creek, Kentucky, in 2020. (Silas Walker/Lexington Herald-Leader)Founded in 2008 by West Virginia native Jeff Hoops, Blackjewel grew in just a decade to become the sixth-largest coal producer in the U.S., partly by accumulating mines like Foresters that had gone bankrupt. By 2018, it boasted more than 500 mining permits in Kentucky, Virginia, West Virginia and Wyoming. Then, in July 2019, Blackjewel stunned the industry by declaring bankruptcy, with claims against it later estimated at $7.5 billion.
That December, environmental groups where Blackjewel operated warned the bankruptcy judge that, while he was focusing on what they called the company’s “significant financial mismanagement,” he should also be aware of “severe environmental mismanagement problems.”
“Reclamation work, water treatment, and other expenses related to environmental compliance should be approved and prioritized” in the bankruptcy case, the environmental advocates wrote.
Kentucky regulators agreed. But, citing longstanding case law, the judge rejected their request. Instead, bankruptcy trustees began divvying up the company’s assets among preferred creditors such as banks and hedge funds. Problems at Foresters and other Blackjewel sites persisted. By mid-2020, there were more than 600 outstanding violations of state mining and reclamation standards at the company’s mines in Kentucky, including 450 since the bankruptcy filing. On top of that, regulators had cited Blackjewel mines for more than 13,000 violations of Kentucky water quality rules, mostly for failing to monitor pollution discharges.
The Blackjewel case, still unresolved and nearing its fourth anniversary this July, highlights the environmental toll of what has become a central feature of the coal industry’s business strategy: bankruptcy. Over the past decade, Blackjewel and other coal companies have found two ways to use bankruptcy to their advantage. First, they expanded their holdings by acquiring other companies’ bankrupt mines, which they hoped would turn a temporary profit during upticks in coal prices and production within the industry’s long-term decline.
Then they declared bankruptcy themselves, entering an arena where they didn’t have to pay all of their debts, and where environmental liabilities took a back seat to banks and other financial creditors. As more coal companies busted, hundreds of mines cycled through repeated bankruptcies. Some, like Foresters, are no longer producing coal, yet they continue to pollute their communities.
Mounds of coal from a Harlan County strip mine stand along Route 119 in Totz, Kentucky, on Nov. 7, 2013. (Luke Sharett/Bloomberg via Getty Images)A first-of-its-kind analysis by ProPublica and Mountain State Spotlight has documented that mines that have gone through multiple bankruptcies also tend to create more environmental damage. By combining data from federal bankruptcy court filings and state regulatory records, we identified mining permits that have been through more than one bankruptcy and compared the number of environmental violations they’d accrued to violations for mines that had not been through bankruptcy.
We found that the median number of environmental violations for surface and underground mines that had been through multiple bankruptcies between 2012 and 2022 in Kentucky was almost twice the median number for mines that had not, and 40% higher in West Virginia. Blackjewel mines in Kentucky that have gone through multiple bankruptcies had more than twice as many violations as the state median for nonbankrupt mines. Our analysis could not determine if bankruptcy caused the environmental violations or was simply associated with them. Read about our methodology here.
The analysis suggests that the bankruptcy system is “keeping mines alive that are not viable and that are struggling to remain in compliance with environmental laws,” said University of Chicago law professor Josh Macey, co-author of a 2019 study on coal bankruptcies.
Blackjewel’s founder, Hoops, epitomizes how the story of the coal industry and its barons has become inseparable from bankruptcy. He built his empire on bankrupt mines. Then, as Blackjewel’s liabilities mounted, he began seeking new vistas. In the months before Blackjewel’s bankruptcy, according to court records, he transferred tens of millions of dollars into another company that is building a resort in his native West Virginia, part of a broader effort he has described as a noncoal empire he can leave to his children.
Hoops, who declined requests for an in-person or phone interview, said in emailed answers to questions that he didn’t intend for Blackjewel to go bankrupt and that creditors forced him into it. “The model was never to bankrupt the company,” he wrote. “In no way have I benefited from the system.” He added, “I will not recover a cent of my valid claims.” Hoops said that Blackjewel complied with environmental laws and that when violations were issued, it took steps to address them.
Before his bankrupt company left a legacy of mud-shrouded roads and polluted streams, Jeff Hoops was a local hero. He rose from a dysfunctional family and a menial job in the West Virginia coalfields to create a regional economic engine and become a philanthropic pillar of his community.
He and his wife, Patricia Hoops, were all smiles on the front page of the Herald-Dispatch of Huntington, West Virginia, in April 2014 when the newspaper named him its “Citizen of the Year.” The article recounted Hoops’ charity work close to home — a residence hall at Appalachian Bible College in Mount Hope, an indoor football practice facility at the University of Pikeville in Kentucky — and halfway around the world: distributing Bibles in Russia, financing construction of an orphanage in India, running a hotel for missionaries in the Dominican Republic. The children’s hospital in Huntington was named for him, thanks to a $3 million gift. So was a local soccer facility, after what the paper called a “generous donation.”
Jeff Hoops receives the Huntington Herald-Dispatch’s Citizen of the Year award in June 2014, at the Huntington Museum of Art in West Virginia. (Bishop Nash/The Herald-Dispatch via AP)Despite his wealth and success, Hoops remained the modest and deeply religious man that his friends and neighbors had always known. As a major donor to Marshall University’s Thundering Herd athletic program, he would rate a perch in a luxury box at the stadium. But he said he prefers to sit in the stands, where he can feel the crowd’s energy and be closer to the action.
“I’ve invited him into the box but he says, ‘No, I’m okay,'” said John Sutherland, executive director of Marshall's Big Green Scholarship Foundation.
When Sutherland wants to talk Marshall sports with Hoops, they meet at Shonet’s Country Cafe, a family diner in Milton, West Virginia, for scrambled eggs and sausage, and sometimes a slice of pie.
Born in 1956, Hoops grew up in Bluefield, deep in southern West Virginia along the Virginia border. Bluefield then had 20,000 residents; it counts less than half that many today. Historically, it was a financial hub and railroad center for the coal industry. Now, it promotes itself as “Nature's Air-Conditioned City” (elevation 2,611), and the local chamber of commerce gives away cold lemonade whenever a summer day hits 90 degrees.
Hoops was the second oldest of five children of Roy Hoops, who worked as a clerk for the Norfolk & Southern Railroad, and Lucy Walker. Roy’s drinking, infidelity and physical abuse of Lucy strained the family, according to court records. Lucy filed for protective orders and divorce several times. When Roy promised to change his behavior, they reconciled.
“Certainly my childhood had its challenges, as my father’s life was controlled by alcohol,” Hoops said.
Hoops was a striver. He sang in the youth chorus at church and made the Bluefield High basketball team as a sophomore despite standing 5-feet-1-inch tall. He sprouted to what he called “a towering 5-8” by 1974, when he graduated from Bluefield and married his high school sweetheart, Patricia Johnson, a week later. He wanted to work right away, but he was only 17, and the minimum age in the coal industry was 18. So he altered his birth certificate and found a job running parts in an underground mine, he said.
Hoops in his 1973 high school yearbook (Bluefield High School via Ancestry.com)In 1975, Hoops joined the engineering department of a mining company, doing surveying and designing ventilation plans. He began going to college at night, eventually earning associate’s and master’s degrees and an executive MBA. Within a decade of high school, he became a top corporate engineer and then vice president of operations for United Coal, which became part of Arch Coal. After leaving Arch in the late 1990s, Hoops established and sold a series of coal companies. A former associate described Hoops as a workaholic driven by a competitive streak. “The joy of his life is coming out on top of a business deal,” the former associate said.
Hoops’ parents divorced in 1985, remarried in 1986 and divorced again in 1991. Roy retired from the railroad and owned an Exxon gas station from 1983 to 2002. On his deathbed in 2014, he called his son to apologize. “I forgave him, told him I loved him, and told him the most important thing was for him to make peace with God,” Jeff Hoops recalled.
When Hoops was growing up, coal was the most powerful business and political player in places like southern West Virginia and eastern Kentucky. But then, buffeted by skyrocketing natural gas production, cheaper renewable energy prices and efforts to reduce greenhouse gas emissions, the industry began to founder.
Makers of everything from asbestos to opioids have used bankruptcy to avoid paying for damage they caused, but the sheer volume of coal bankruptcies outpaced any other sector. At least 60 coal companies went bankrupt between 2012 and 2022, including some of the biggest in the country. The environmental group Appalachian Voices warned in July 2021 that a wave of bankruptcies could leave 633,000 acres of coal mines in the eastern U.S. in need of cleanup, eroding the ability of communities to rebuild economically.
In theory, bankruptcy doesn’t exempt a company from its responsibility to preserve the environment. The 1977 Surface Mining Control and Reclamation Act requires coal companies to clean up damage as they mine. When mining is over, the land must be put back to “a condition capable of supporting the uses which it was capable of supporting prior to any mining.”
That’s not how it generally works in practice. Coal companies often fall behind on so-called mine reclamation and, with obligations also mounting for worker pensions and health benefits, file for bankruptcy protection. They lay off employees at mines that are no longer productive or profitable, ditch pension and health care liabilities and avoid paying for environmental damages.
For example, coal giants Peabody Energy and Arch Coal created a third company, Patriot Coal, and spun off their mines with environmental problems and pension obligations into it. All three companies eventually went bankrupt, ducking a combined $2.6 billion in liabilities, according to Macey, the University of Chicago law professor. Many of these mines have changed hands since then but still have not been reclaimed.
“Bankrupt coal companies dump their mine cleanup obligations onto communities and taxpayers who simply don’t have the money to pick up the tab,” said Peter Morgan, a Sierra Club lawyer who has tracked coal bankruptcies around the country.
The purpose of bankruptcy is to give desperate people and companies time and relief from creditors so they can get back on their feet. But not all creditors are treated equally. Bankruptcy law gives secured creditors such as banks, law firms, the Internal Revenue Service and equipment suppliers — but not environmental costs or fines — priority for payment.
“Bankruptcy courts are not doing enough to stop conduct that allows coal companies to get out of their environmental responsibilities,” Macey said.
There’s a potential backstop to pay for environmental cleanup: reclamation bonds. Federal law requires coal companies to post these bonds to receive mining permits, as a sort of insurance. The amount that companies are required to put up varies from state to state; in West Virginia, it can be as much as $5,000 per acre of the permit. To secure the bonds, companies pay a surety firm a one-time fee — typically 20% to 50% of the face value, according to Hoops. If a mining company goes belly up, state regulators can revoke its permits and use the bond money to clean up whatever mess is left. Money from forfeited bonds, sometimes along with other revenue such as environmental penalties or coal production fees, goes into state reclamation funds to restore abandoned mine sites.
But the required bond amounts often aren’t enough to cover all potential costs. Cleanup costs have soared, partly due to larger surface mines that blew up or chopped off entire mountaintops, and partly because modern studies have increasingly identified water pollutants requiring lengthy and expensive treatment. According to a 2021 legislative audit, West Virginia’s reclamation bonds have covered only one-tenth of cleanup costs. Separately, the Appalachian Voices analysis projected cleanup costs in West Virginia alone as high as $3.5 billion.
As a result, state officials are reluctant to revoke permits and take on the financial responsibility for cleanup. What often ensues instead is a game of musical mines. Knowing that they won’t end up on the hook for reclamation, other coal companies buy mines out of bankruptcy — and then often go bankrupt themselves.
The ProPublica analysis identified 2,030 mines in Kentucky and West Virginia that have been through bankruptcy since 2012 — more than a third of all coal mines in those states. Of the bankrupt mines, 491, or 24%, have gone through more than one bankruptcy.
Of the 210 bankrupt Blackjewel mines in our database, including 197 in Kentucky and 13 in West Virginia, almost half have gone through at least one other bankruptcy. The vast majority of those — 101 of 103 — are in Kentucky and had a median of 16 environmental violations, more than twice the median for nonbankrupt mines in that state.
Since Blackjewel went bust in 2019, more than 100 of its Kentucky permits have been sold out of bankruptcy — many for the second time, according to court filings. Lawyers jokingly call the second round of bankruptcy “Chapter 22,” or Chapter 11 twice over.
In 1999, Hoops went out on his own with just one mine, the Hunts Branch Mine in Phelps, Kentucky. In 2008, he founded Revelation Energy. It grew, and Hoops changed the name to Blackjewel in 2017 as part of what he called “a strategic restructuring.” The plan was to shift away from providing steam coal for power plants and toward producing more metallurgical coal for steel mills, a market where prices were increasing.
Blackjewel assembled mines from the bankruptcies of James River Coal, Alpha Natural Resources, Arch Coal and others. Alpha paid Hoops $200 million in cash and more than $100 million in installments to take about 250 of its mining permits. Every acquisition “was based on a detailed economic model that demonstrated the mines could make money even in a down market,” Hoops said.
Arch Coal strip mines in Letcher County, Kentucky, in 2013 (Charles Bertram/Lexington Herald-Leader/Tribune News Service via Getty Images)The strategy, Hoops said, was working. Blackjewel expanded from central Appalachia to Wyoming’s Powder River Basin. It employed 1,700 miners and boasted 1.2 billion tons of coal available for mining, enough to keep going for many decades.
But in April 2019, two bankruptcy experts questioned whether Hoops would be able to honor his companies’ environmental obligations.
“Rather, his businesses have begun to exhibit a pattern,” Macey and Jackson Salovaara wrote in “Bankruptcy as Bailout,” an article in the Stanford Law Review. “Hoops takes over abandoned mines, receives cash from the company that wants to get rid of them, and then fails to actually remediate the environmental problems.”
Three months later, Blackjewel declared bankruptcy. It cited a roof collapse at a Virginia mine, a spike in workers’ compensation costs and flooding that prevented railroads from moving coal out of Wyoming. It also blamed adverse market conditions, including the rise of cheap natural gas, greater use of renewable energy and increased regulatory pressures.
Energy industry researcher Clark Williams-Derry pointed instead to questionable business decisions, such as Blackjewel locking in prices for steel-making coal just before prices increased sharply. “The signs of financial distress have been evident to anyone who cared to look,” he wrote in a blog post titled, “Seven Bombshells in the Blackjewel Bankruptcy.” Hoops said that lenders forced the timing of the price locks on Blackjewel, costing the company millions of dollars.
Hoops said that key lenders — United Bank and the investment firm Riverstone Holdings — cut off credit for Blackjewel, forcing the firm into Chapter 11. “They had managed to get my funds put on hold before and during the bankruptcy, as I would have never allowed the company to file but for their actions,” Hoops said. United and Riverstone declined comment.
In a press release, Hoops portrayed the bankruptcy as part of an effort to “position the company for long-term success.” But it didn’t feel that way to many Blackjewel miners. Some mines closed, sending workers home without any notice, and without their most recent paychecks. A mine in Wyoming was on fire, and Blackjewel was scrambling to pay employees to put it out.
Joseph Fox, who worked at a Blackjewel coal preparation plant in Virginia, had just taken his family on vacation to Myrtle Beach, South Carolina. Then, his paycheck bounced. Fox, his wife and their son and two daughters cut their beach trip short.
“They’re kids. All they wanted was a vacation,” Fox recalled. “They didn’t understand, and you don’t want to be telling them your paycheck bounced.”
In Kentucky, a group of miners who missed paychecks blocked a Blackjewel coal train in Harlan County. Hoops said that all of the miners have been paid. Still, they filed claims and lawsuits alleging that they were laid off without due notice.
Unpaid Blackjewel coal miners, who lost their jobs because of the bankruptcy, block the railroad tracks that lead to the mine where they used to work in Cumberland, Kentucky, in 2019. (Photo by Scott Olson/Getty Images)The bankruptcy trustee settled the lawsuits with a promise that miners would be bumped up in the ranking of creditors. But court documents suggest there will be little money to go around, maybe only enough to pay the lawyers, accountants and consultants managing the liquidation, lawyers monitoring the case said.
By the time of the bankruptcy, Hoops was already preparing for a future outside coal. He set up a family holding company, Clearwater Investments, with his three sons as trustees. Its purpose was to “leave a financial dynasty to Jeff and Patricia’s heirs by investing in several businesses as well as by collecting royalties on various investment properties,” said an internal “executive overview” filed in the bankruptcy case.
Some of the listed holdings retain a connection to coal, including a trucking firm and a mining equipment sales service. Others don’t, like a wheelchair and brace sales firm with sales in 2018 of $8.7 million.
In January 2019, Hoops sent the Clearwater overview to his sons, Jeffrey Jr., Jeremy and Joshua. “I hope by the end of this year to have a nice package together that shows everything we own as it is a vast company now,” he wrote. “Love you guys …. Dad.”
It didn’t take long for Clearwater to surface in the Blackjewel case.
Creditors discovered that in the six months prior to Blackjewel’s bankruptcy filing, as the company was becoming increasingly insolvent, Hoops had transferred at least $34 million from Blackjewel to Clearwater.
Hoops said that these transfers were appropriate because they represented partial repayment of $51.5 million in loans that he and his family had made to Blackjewel since January 2019 via a revolving line of credit. But this explanation didn’t satisfy creditors, who accused him of violating bankruptcy rules by putting himself at the head of the line.
It was a “sweetheart deal,” then-bankruptcy trustee David Bissett told the judge during a July 2019 hearing. Hoops was “protecting his own self-interest” rather than Blackjewel’s employees or creditors, Bissett said.
Lenders were so outraged at Hoops’ money transfer that, as a condition for providing Blackjewel with emergency financing, they forced Hoops to step down as an officer of the company. They also blocked any Hoops family members from taking a management role.
In a farewell email to employees, Hoops defended himself. “No one is hurting more than me over what has occurred,” he wrote. “There has not been one cent taken out of the mining company, the exact opposite I have loaned more money to try to get this company through these difficult times.”
The email continued: “I accept responsibility for being unable to lead this company through these difficult times.” Hoops wrote, “I know in my heart how hard I fought for each of you and this company and to have people threaten me and say I took money out of this company for other projects hurts more than words can express.”
The liquidation trustee sued Hoops and seven family companies, including Clearwater, over the money he shifted from Blackjewel to them in the months before the bankruptcy.
Last August, the trustee settled these cases. Few details were made public, except that as part of the deal Hoops dropped a $2.6 million claim for money he argued Blackjewel owed him.
Hoops said only that the lawsuit was “resolved amicably.” The liquidation trustee declined comment.
Another bankruptcy court fight focused on the Foresters mine.
This wasn’t the mine’s first brush with bankruptcy. U.S. Coal, its original owner, went bankrupt in June 2014. By the time Hoops took over the permit in 2016, the mine was down to fewer than 20 workers, and production was a third of its 2013 peak of 550,000 tons. In 2018, it stopped producing coal altogether, and had only three employees, according to the federal Mine Safety and Health Administration.
A year into Blackjewel’s bankruptcy, a flood from Foresters eroded part of a local road and damaged a drinking water line. The rest of Blackjewel’s now-idled operations across Kentucky were also polluting their surroundings. Alarmed by the worsening conditions, the state’s Energy and Environment Cabinet sought the court’s help. In June 2020, the environmental regulator asked the judge to order Blackjewel’strustee to bring all of the company’s permits into compliance with mining standards and pollution rules.
In a court filing, agency officials warned that Blackjewel sites not only weren’t being restored to pre-mining conditions but weren’t even being maintained to prevent contaminated water from pouring downstream into water supplies. The agency warned of flooded holding ponds being at high risk of “discharging metals and suspended solids into adjacent rivers and streams” and of landslides “that could endanger the lives and the property of residences below.”
In September 2020, a week after state inspectors again cited Foresters for erosion and drainage, U.S. Bankruptcy Judge Benjamin A. Kahn held a hearing on the regulators’ complaints. But the concerns about environmental fallout ran smack into a wall of decades-old law. While noting that crews were already responding at Foresters and other sites, the bankruptcy trustee argued that legal precedent gave the judge little scope to intervene. The judge agreed. Citing U.S. Supreme Court and federal appeals court decisions, Kahn instructed the trustee to clean up only "imminent” threats to public safety, not “speculative” threats.
Some problems at Foresters met this standard, and Kahn ordered them fixed. Still, violations for muddy runoff and sediment from holding ponds have persisted there.
Kahn deferred action at dozens of other Blackjewel sites with hundreds of environmental violations that he deemed less severe. Kahn’s analysis didn’t address the risk that if bankrupt mining companies can avoid routine maintenance and reclamation, speculative threats can turn imminent in a hurry. Once the judge’s criteria are met, “it’s too late,” said Lena Seward, lawyer for the Kentucky state regulatory agency. “The road is washed out.”
An unreclaimed strip mine on a mountaintop along the Kentucky-Virginia border in October 2014 (David Goldman/AP)Kentucky also tried to forfeit bonds for some Blackjewel mines so that the state could begin cleanup. But that’s tied up in a legal challenge by the surety company, which contends that it has the right to restore the sites itself instead of losing the bond money. For other mines, the state and the bond company are still working out terms for cleanup.
Meanwhile, the companies that bought most of the mines haven’t gotten very far with cleanup, sometimes because the state blocked final approval of the purchases due to unresolved violations at mines they already owned. Kentucky regulators acknowledged in an email that they “would like to have seen a faster transfer applications/reclamation process.”
As it acquired mines, Blackjewel posted a total of more than $500 million in reclamation bonds in four states. But that sum may not be enough. State regulators warned the bankruptcy judge in late 2020 that, for the 32 Blackjewel mines without buyers, conditions had deteriorated so much that cleanup costs were estimated at $20 million more than the bonds would cover.
Hoops disputed that the bond amounts were inadequate. The regulators were “wrong,” he said, but he did not elaborate.
In February 2021, the Kentucky cabinet went back to the judge. A Blackjewel mine was showing severe erosion, with sediment ponds so full that they posed what an inspector called “an immediate danger to the public and environment downstream.”
Kahn ruled against the regulator again.
“The violations just continue to mount,” said Kentucky attorney Mary Varson Cromer, who represents coalfield residents in the Blackjewel case. “The whole system is not functioning, and it ends up costing more to reclaim, and it’s the residents and the community that are at risk.”
The game of musical mines is slowing down. Across Appalachia, coal production is forecast to drop more than 20 percent over the next decade. In a market where coal production and prices continue to drop, there’s little demand for Blackjewel’s coal. Almost all its mines in Kentucky, including Foresters, have been sitting idle for four years.
Blackjewel’s case has also bogged down in paperwork, or the lack of it. “The books and records inherited by the trust were woefully incomplete (and largely nonexistent in some instances),” the trustee complained in March 2023, explaining yet another delay.
With Blackjewel behind him, Hoops is looking to the future. Clearwater is building a resort in Milton, where Hoops lives. The project is meant to invoke the splendor of ancient Rome. Hoops named it the Grand Patrician Resort. Patrician has a double meaning: It refers to the ruling class of ancient Rome and also honors Hoops’ wife, Patricia.
Patricia and Jeff Hoops speak at a press conference announcing the Grand Patrician Resort in Milton, West Virginia. (Sholten Singer/The Herald-Dispatch via AP)Hoops wept as he announced the resort project, which is located on the site of a former children’s hospital. His aunt and his brother-in-law had both been patients there, he told a local newspaper. “I get emotional,” he said. “To see God take something that was used to treat kids that were hurting, a lot of them crippled for life, he always takes something bad and turns it for good.”
The resort’s golf course had a soft opening last August. Construction of a luxury hotel continues. Local press accounts say the site will include a 400-seat steakhouse, a wedding chapel and ballroom and two indoor pools. A second phase is expected to feature another hotel, equestrian trails and a 3,500-seat outdoor arena modeled on the Roman Colosseum. This month, Hoops hosted a ribbon-cutting ceremony for a new hiking trail at the resort.
Even though Hoops left Blackjewel four years ago, one of his family-run businesses is still connected to its mines. The insurance company holding the reclamation bonds for the Blackjewel mines that weren’t bought out of bankruptcy has hired Lexington Coal to reclaim them. Its manager is one of Hoops’ sons. Lexington Coal “has not benefited in any way economically” from the reclamation contract, Hoops said.
Do You Have a Tip for ProPublica? Help Us Do Journalism.
Joel Jacobs and John Templon contributed data reporting.
The Riverboats at the Gateway Arch award guests one of the best views of St. Louis’ working riverfront, the Gateway Arch and the city skyline. Narrated by the captain
The post St. Louis Riverfront Cruise appeared first on Explore St. Louis.
stLouIST
