The U.S. Department of Labor is asking a federal judge to halt the movement of coal from two Virginia facilities owned by bankrupt coal operator Blackjewel LLC until idled workers receive overdue pay.

The federal government considers coal at Blackjewel facilities in Raven and Honaker “hot goods” produced in violation of the Fair Labor Standards Act, which prohibits the transportation of goods made in violation of minimum wage and overtime requirements, Department of Labor attorneys wrote in an emergency motion filed Aug. 9.

As a result, the federal government requested an order in bankruptcy court prohibiting the transport of coal at these locations and requiring that any sales proceeds from the coal be held in an escrow account until the issue of uncompensated work is resolved.

Blackjewel is cooperating with federal authorities, the company’s attorneys wrote in a preliminary response filed Aug. 10.

The federal bankruptcy court in Charleston, West Virginia, had not ruled on the motion as of Tuesday afternoon.

Department of Labor investigators interviewed Blackjewel employees in Virginia, who said they were owed pay from between June 10 and July 1. About 20,000 tons of metallurgical coal — with an estimated value of at least $2.5 million — were observed stockpiled in train cars at a facility called Raven Dock, and employees told investigators 1,800 tons of clean coal and 15,000 tons of raw coal were at the Flat Rock Prep Plant in Honaker, according to the government’s filings.

Blackjewel — the country’s sixth largest coal producer in 2017, according to the most recently available federal data — filed for Chapter 11 bankruptcy protection on July 1 in U.S. Bankruptcy Court for the Southern District of West Virginia. At the same time, the company halted operations at its facilities in Virginia, Wyoming, Kentucky and West Virginia, and most of the company’s 1,700 employees found themselves out of work.

Miners reported that paychecks from the end of June bounced, creating dire financial straits for many who suddenly found themselves with bills to pay and little information about whether they would return to work.

“Employee statements indicate Blackjewel employees worked on the coal at Raven Dock facility and Flat Rock Prep Plant during the relevant period and were not compensated for the work they performed on the coal,” Department of Labor attorneys wrote in the Aug. 9 filing.

In accordance with the Fair Labor Standards Act, “the transporting and transferring of the coal in dispute should be halted in light of the violations of the ‘hot goods’ provisions of the FLSA and the evidence that these goods were produced by uncompensated employees,” the attorneys added.

This follows a similar request earlier this month, when the Department of Labor sought to halt a shipment of coal from Harlan County, Kentucky. That coal had been sold to Blackjewel Marketing and Sales Holdings LP, an entity formed by Blackjewel, Javelin Global Commodities and Uniper SE that marketed Blackjewel’s coal.

Blackjewel is working with federal authorities to reach an agreement to resolve the situation in Kentucky, the company’s attorneys said in an Aug. 10 filing.

When Blackjewel learned of the possible FLSA violation in Virginia, it “again cooperated fully with the DOL and DOJ,” the attorneys said in the same filing. Some of the Virginia coal was also sold to the marketing company, and Blackjewel agreed not to move it “until a similar agreement to that proposed in Kentucky could be structured related to the Virginia coal.”

Blackjewel has asked the Department of Labor to withdraw the motion related to the allegations in Virginia.

It remains to be seen when and whether Blackjewel’s Virginia employees will receive their back pay. State data shows the company employed about 480 Virginians in 2018.

After filing for bankruptcy, the company failed to obtain long-term financing that would have allowed it to fully resume operations at its facilities. It has since sought court approval for a number of sales, most notably a $33.75 million sale of three mines in Wyoming and West Virginia to Bristol, Tennessee-based Contura Energy. Although a judge approved the sale, the federal government still needs to approve the deal.

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tdodson@bristolnews.com | 276-645-2567 | Twitter: @Tim_Dodson

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