One of the nation's largest coal producers with mines in Eastern Kentucky filed for bankruptcy protection Monday, making it the second large coal company to do so in the past two weeks.
Revelation Energy LLC., and its affiliate Blackjewel LLC., West Virginia-based companies that employ about 1,100 people in their Kentucky, Virginia and West Virginia mines, filed for Chapter 11 bankruptcy in the Southern District of West Virginia, according to court documents.
The companies also employ an additional 600 workers in Wyoming mines, making them one of the nation's largest coal producers.
Charles Raleigh, mayor of Cumberland in Harlan County, said he heard from at least two Revelation coal miners that the company shut down its mines near Cumberland.
On Monday, workers were told not to come in for their evening shifts. The company told its employees the shutdown would last at least two weeks, and could be longer, Raleigh said.
Raleigh estimated that Revelation employs between 200 to 300 people at its mines near Cumberland. While there are other mines operating in the area, Revelation is a major employer, he said.
"It's devastating for the community," he said. "It's a sad situation. I hate it for the miners."
In an affidavit filed yesterday, owner Jeff Hoops blamed adverse market conditions that began in 2012 for the producer's financial struggles.
Hoops cited declining demand for thermal and metallurgical coal, declining commodity prices, and increasingly strict regulatory oversight, in addition to heightened competition from natural gas and renewable energy.
"The entire industry either has gone through, or is currently going through, a period of financial distress and reorganization," Hoops wrote.
Blackjewel and Revelation owe millions to state and federal agencies, including $60 million to the U.S. Department of the Interior and $6 million to the Kentucky State Treasurer.
The companies also have private debtors in Kentucky, including $4 million to Aquatic Resources Management in Lexington, $3.7 million to Jones Oil Company, Inc., in Pikeville, and $2.2 million to Republic Superior Products, LLC., in Lackey.
Revelation has seen significant growth in Kentucky in recent years, according to a report from the U.S. Office of Surface Mining Reclamation and Enforcement.
Between July 1, 2013, and June 30, 2014, the company had 88 permits on about 88,000 acres in Kentucky, according to the OSMRE report. That ballooned to 240 permits on more than 331,000 acres for the 2017-18 period.
The company has also been the top violator of reclamation and environmental rules in Kentucky for the past three evaluation years, according to OSMRE.
In the 2017-18 period, regulators issued 134 notices of non-compliance of federal rules, citing 259 violations of standard. The next-closest company, Premier Elkhorn Coal, LLC., was cited for 71 alleged violations, according to the report.
Revelation and Blackjewel's filing comes just two weeks after the Chapter 11 bankruptcy filing of Cambrian Coal, LLC., which oversees multiple mining operations in Kentucky and Virginia.
According to a news release, Cambrian said it expects its mining operations to continue throughout the bankruptcy.
Cambrian operates at three primary sites: Perry County Coal, near Hazard; Premier Elkhorn Coal, LLC., near Dorton; and Clintwood Elkhorn Mining, LLC., in Eastern Kentucky and western Virginia.
Cambrian also blamed its bankruptcy on changing market demands and increased regulatory oversight.
Eastern Kentucky's coal industry has seen a sharp decline in production in recent years, particularly since 2012.
In 2011, the state's eastern coal region produced about 68 million tons of coal, according to a report from the Kentucky Energy and Environment Cabinet. That dropped to just 17 million tons last year.
The number of coal jobs in Eastern Kentucky dropped from 13,600 to less than 4,000 during the same time frame.