The legal storm is colliding with the justice campaign to unseat the Democratic senator. Joe Manchin in next year’s election, and offers a test for the popular governor whose fossil fuel wealth defined his political ascendancy in coal country.
The latest legal challenge came Wednesday as the Justice Department sued the business venture of Justice and his son, James C. Justice III, for more than $7.6 million in fines and unpaid taxes for federal violations on mining and safety, as well as mining land reclamation costs.
« Our environmental laws serve to protect communities from the adverse effects of industrial activities, including aboveground coal mining operations, » Assistant Attorney General Todd Kim said in a statement. « Through this lawsuit, the Justice Department is seeking to account for the defendants’ repeated violations of the law and to recover penalties owed as a result of those violations. »
The judges’ campaign manager, Roman Stauffer, said the lawsuit was politically motivated.
« Joe Biden, Chuck Schumer and the Democrats have seen the polls that show Jim Justice has won this race and are panicking, » he said in a statement. « So now Biden’s Justice Department has decided to play politics. »
The department did not respond to a request for comment.
The lawsuit, which targets 13 Justice-family coal companies that regulators said had been ordered to stop mining more than 50 times, adds another legal risk to a long list of challenges facing Justice and his family businesses.
In April, lawyers for his family businesses indicated in judicial documents that his empire is short of cash. The case was initiated by Fivemile Energy Co., which is suing law firms on behalf of the New London Tobacco Market over a mining contract dispute. The case dates back years and is still moving through the courts.
Defending in that case, attorneys for Justice’s firm characterized his family business as « a somewhat disorganized organization whose resources are stretched to both finances and personnel. »
Justice’s Republican and Democratic opponents have indicated they will follow his personal financial challenges into the Senate campaign.
Representative. Alex Mooney
a conservative firebrand running against justice in the GOP primary, tweeted last week« My opponent RINO @JimJusticeWV will bankrupt America just like his businesses and the workers he won’t pay. »
In the meantime, the Democratic Senatorial Campaign Committee subpoenaed Justice last week for Justice’s schedule as governor. Programs previously obtained from The Associated Press they pointed it out Justice spent little time in her Capitol office and devoted much time to her private pursuits. (The Justice Department told the AP that its calendars don’t accurately reflect his activities.)
« Since he entered the US Senate primary, Jim Justice’s financial scandals have come under increasing scrutiny, » DSCC spokeswoman Amanda Sherman Baity said last week. « With court cases piling up, Alex Mooney is attacking justice for his many debts and financial failures in the Republicans’ battle royale Senate primary. »
The National Republican Senatorial Committee, which did not endorse a candidate in the West Virginia primary, countered by saying that Biden’s administration has gone « totally rogue. »
« Democrats weaponizing the federal government to attack the family of a Republican Senate candidate is a complete abuse of power, » NRSC spokesman Tate Mitchell said in a statement.
‘Decade of economic disaster’
Justice largely made its fortune on coal. His state financial reporting show that his family owns more than 100 businesses. They include dozens of coal-related businesses and the 6,500-acre Greenbrier luxury resort in West Virginia.
But the boom times for coal are fading, and justice company lawyers admit his empire is suffering as a result.
The family is explore the sale of its main coal business, Bluestone Resources, to pay off more than $850 million in personally guaranteed loan debt, the Wall Street Journal reported in March.
Citizens Bank of West Virginia is taking legal action to recover an $850,000 debt, raising the possibility that a portion of Justice’s salary as governor could be foreclosed. The bank alleges that Bluestone Resources defaulted on a loan used to purchase coal equipment. Justice called that effort a « political tribune. »
In a second case, Pennsylvania-based Xcoal Energy Resources asked a West Virginia federal judge last month to ask US marshals to personally seize $1.8 million from the justice, court documents prove.
In that case, a judge ruled that the Justice family companies failed to deliver more than 70,000 tons of coal owed to Xcoal. Two of Justice’s companies — Southern Coal Corp. and Bluestone Energy Sales Corp. — paid $5 million as part of a judgment in the case, but they owe the remaining amount that Xcoal is seeking to recover via the marshals.
In a third case, Carter Bank & Trust in West Virginia is seeking to collect a $300 million debt from Justice’s family businesses related to loans due in April. James Justice, the governor’s son, accused the bank of « predatory behavior » in a statement and noted that the family companies had proposed a plan to repay $250 million immediately, followed by $57 million four months later. He said the bank turned down that plan because it didn’t want to lose $20 million in annual interest from the loan.
« The Justice family will prove that the bank’s new court filing is nothing more than an illegal attempt to prevent us from working with other lenders, » said James Justice. « It is unimaginable for a bank to deny a customer the ability to pay off a loan. »
In a fourth case, Kentucky-based Fivemile Energy Co. is seeking an $18 million judgment against Justice Companies as part of a years-long dispute over a mining contract, reported MetroNews, an online and radio news program from West Virginia. Fivemile’s attorneys have asked a judge for a fast-track decision on the case, citing the possible sale of Justice’s coal companies and their ability to pay Carter Bank & Trust $250 million for overdue loans.
In court documents for the Fivemile case, justice company lawyers described the firms as struggling to pay their bills.
Some business accounts start with just $1,000 each month, the lawyers wrote. Then millions of dollars are transferred to cover expenses, followed by account balances plummeting to nearly zero, court documents show.
“Money that arrives is almost immediately transferred from those entities that have it to those that need it,” lawyers for the justice family businesses said in the court records.
The more than 100 companies listed in Justice’s state financial filing grossly overstate the number that are actually in business, the family’s attorneys said in a recent court filing.
The lawyers argued in the Fivemile case that “scarcely a dozen of Justice’s hundreds of coal and agricultural companies continued to operate actively; that companies are only beginning to emerge from a decade of economic disasters; that operational cash is chronically scarce and is transferred between companies on a just-in-time basis… It is evident from testimony that the defendants are legitimately without assets to pay the default judgments issued against them.
It’s unclear whether Justice’s financial woes will cost him significant political support. A poll of registered voters released on Tuesday shows Justice was up 54 percentage points from Manchin’s 32 points. In the Republican primary, Justice is leading Mooney by 53 to 12 percentage points, according to the East Carolina University survey.
Justice has survived political attacks for years citing its legal challenges.
He has won four races — two primaries and two general elections — against opponents who have targeted his finances, noted Mark Blankenship, a West Virginia Republican pollster who worked for Justice’s 2020 gubernatorial campaign.
They spent millions of dollars airing announcements about his woes in court, but Justice’s popularity has only grown.
“He’s widened his margins,” Blankenship said, adding that “many voters in West Virginia are aware of similarly positioned lawsuits against the president [Donald] Trump, and his popularity is skyrocketing. »
« So there might be an expectation there that if you’re successful on some level in business or whatever, there might be a built-in expectation that there’s lawsuits. » he added.
A version of this report was first published in E&E News’ Climatewire. Get access to more comprehensive and in-depth reports on the energy transition, natural resources, climate change and more in E&E News.