W.Va. governor’s efforts to save coal plant raise conflict-of-interest concerns

By Scott Waldman | 12/20/2023 06:26 AM EST

Gov. Jim Justice in 2019 helped pass a tax break for a struggling coal plant. The plant’s owners later settled a lawsuit against the Justice family’s coal business for a fraction of what they initially wanted.

Gov. Jim Justice speaks during a bill-signing ceremony at a power station.

Gov. Jim Justice speaks during a bill-signing ceremony July 30, 2019, at Pleasants Power Station in West Virginia. Gov. Jim Justice/Flickr

West Virginia Gov. Jim Justice went to unusual lengths four years ago to save a single coal-burning power plant.

Now with the Republican running for Senate, his efforts to rescue that plant, known as Pleasants Power Station, are coming under new scrutiny as he tries to step onto the national stage.

Justice leaned on state lawmakers in 2019 to pass an annual $12.5 million tax break for the plant, which was owned by a subsidiary of utility giant FirstEnergy. At the time, FirstEnergy was suing a Justice family coal company, BlueStone Energy Sales, for $3.1 million over a contract dispute.


Justice did not disclose the lawsuit when he was pushing legislators to approve the tax break — though he was not legally required to do so — and his potential conflict of interest came to light only after they approved the bill.

Now, new details uncovered by E&E News show that the $3.1 million lawsuit against the Justice family coal business was settled in 2021 for a fraction of what the plant owners were asking.

The terms of the settlement also were not illegal, and Justice says he didn’t know about the lawsuit. But pushing a tax break for a family coal business customer and then settling a lawsuit with that same entity for a fraction of the cost afterward is the latest in a string of potential ethical quandaries for a coal state politician whose fortune is intertwined with the industry itself.

Justice has built a political career identifying himself as a coal ally because the industry is central to his state’s economy. But he is less willing to talk about the dozens of coal-related businesses his family owns and how his policies may affect their fortunes. The governor’s actions around Pleasants Power offer a window into how political and personal fortune can intersect.

As Justice tries to transform from a state politician into a national one, his business interests likely will attract more scrutiny from political opponents. And his growing ambitions come at a critical time when Justice’s family coal empire is in a precarious state, crippled by bankruptcy proceedings, fines over safety violations, unpaid bills and multimillion-dollar contract disputes.

West Virginia has notoriously lax ethics laws for state officials, and there is no indication that Justice or FirstEnergy broke the law. Nor is there any public evidence that he is under investigation. Justice has previously denied knowing that his family business had been sued by FirstEnergy and said he made the deal to save more than 150 jobs.

Justice Senate campaign spokesperson Roman Stauffer echoed that point.

“Governor Justice has turned over operations of his family businesses to his children, and it has already been reported several years ago that [neither] he nor anyone in the governor’s office was aware of any litigation or settlement negotiations,” Stauffer said.

The newly revealed details come as federal and state prosecutors are scrutinizing FirstEnergy’s action in the neighboring state of Ohio. That case has already yielded several convictions on racketeering and bribery charges.

The Public Service Commission of West Virginia also is investigating FirstEnergy’s actions in the state in the aftermath of the Ohio scandal.

Part of that audit will examine expenses filed by Larry Puccio, a Justice ally and FirstEnergy lobbyist, state documents show.

The findings are due later this year.

A FirstEnergy spokesperson declined a request for comment.

Tax break saves the plant

Perhaps the most remarkable thing about Pleasants Power Station is its bloody past.

In 1978, the coal-fired power plant was the scene of one of the deadliest construction disasters in U.S. history when a half-built cooling tower collapsed and sent 51 workers plunging to their deaths.

The plant went online the following year, and since 1979 it has brought 1,300 megawatts of coal-fired power to the region.

But by 2019 the plant was in danger of closing, and FirstEnergy Solutions, a subsidiary of the utility, wanted an annual $12.5 million tax break to keep it open.

That July, after pressure from FirstEnergy lobbyists and executives, Justice pushed to fast-track a tax break bill.

It was a tenuous proposition. Coal power has grown increasingly unpopular in the U.S., squeezed by cheaper sources of power and a growing desire to find cleaner ways to generate electricity.

But lobbyists and executives with FirstEnergy, the owner of the Pleasants Power Station, argued to Justice’s top aides that it should keep running. A few days later — at Justice’s urging — a bill was introduced in the Legislature that granted their wish.

What Justice did not disclose at that time was that in 2018, FirstEnergy Solutions had sued Bluestone Energy Sales — a Justice family coal business — over a contract dispute.

The FirstEnergy subsidiary accused Justice’s coal company of failing to honor a 2016 agreement to buy $3.1 million worth of coal. Its filing in the U.S. Bankruptcy Court of the Northern District of Ohio claimed Bluestone “breached its obligations under the agreement by failing to” buy back about 80,000 tons of coal.

That lawsuit was ongoing when representatives from the Justice administration, including senior adviser Bray Cary, met with FirstEnergy Solutions CEO John Judge and other company officials in July 2019 to discuss Pleasants Power Station, according to an email obtained by the Energy and Policy Institute and provided to E&E News.

The Energy and Policy Institute is a utility watchdog organization that advocates for clean energy.

“The purpose of the meeting is to discuss the future of Pleasants Power Station, particularly the B&O tax issue that has a huge impact on the plant moving forward,” FirstEnergy Manager Gregory Hefner wrote to a Justice official, referring to business and occupancy taxes.

On July 22, at the request of Justice, Republican House Speaker Roger Hanshaw and Democratic House Minority Leader Tim Miley introduced House Bill 207 — which granted Pleasants Power a break on its business and occupancy taxes.

Lawmakers suspended their usual rulemaking process to pass the bill more quickly. In the end, only five lawmakers voted against the measure.

A reporter with The Parkersburg News and Sentinel later discovered Justice’s family coal business connection. Senate President Mitch Carmichael, a Republican, told the paper that Justice “should have absolutely disclosed the fact that he had an ongoing legal dispute that involved $3 million.”

West Virginia Del. Mike Pushkin, who is now head of the state Democratic Party, said in an interview that he and many other lawmakers voted for the tax break because they wanted to help save jobs in the state.

He said they immediately felt misled after the vote when it was revealed that Justice potentially had a personal financial stake in the process. Pushkin said he wants a deeper probe into the circumstances surrounding the tax break.

“I definitely think it’s an issue, and I think it’s something the citizens of West Virginia deserve to know all the answers to,” he said in an interview. “People deserve to have public servants who are more interested in serving the public than serving themselves.”

Lawsuit resolution follows tax break

Justice quickly moved on after the vote.

After the Pleasants Power tax break was secured, Puccio — a West Virginia lobbyist and political consultant for Justice — threw a fundraiser for Justice at the Wonder Bar Steakhouse he owned, The News & Sentinel reported. More than $20,000 in donations to Justice from FirstEnergy’s political action committee, executives and allies followed.

Puccio served as a bridge between Justice and FirstEnergy, because he is a lobbyist for each side of the legal dispute.

Puccio is also Democratic Sen. Joe Manchin’s “unconditional friend,” according to Manchin, and Puccio served as his chief of staff when Manchin was governor.

At that time, Puccio also played a role in brokering a deal that kept open a money-losing coal plant that buys coal from Manchin’s family business. As Justice’s predecessor in the governor’s office, Manchin also had a history of shaping policy that benefited his personal bottom line.

Manchin and Puccio declined to comment.

The issue faded from the public consciousness until 2020, when Justice’s Democratic opponent in the governor’s race, attorney Ben Salango, called for an investigation of the deal and said it “absolutely warrants more information from Justice.”

Justice dismissed it as a political attack, and the issue never went further. Justice won the 2020 governor’s race in a landslide and solidified Republican control in Charleston.

Salango did not respond to a request for comment.

Then, in 2021, according to a draft settlement buried in a legal filing, FirstEnergy Solutions agreed to settle the $3.1 million lawsuit.

The company, which had been renamed Energy Harbor after a bankruptcy restructuring, agreed to receive about $475,000, the draft settlement shows. That includes a $75,000 payment and the equivalent of about $400,000 worth of coal, according to the original terms of the contract.

The draft document shows a signature from Bluestone’s general counsel. The final settlement document was sealed by the court.

A plan administrator working on behalf of Energy Harbor said the deal was “fair, equitable and reasonable.”

Still, one ethics official said Justice needs to assure the public that his actions as governor are not motivated by the bottom line of the dozens of companies his family owns.

The facts of the Pleasants Power case make it look as if Justice is getting a “sweetheart deal” for boosting the company, said Richard Painter, former chief White House ethics lawyer in the George W. Bush administration.

“He should not be participating in decisions at all about the position of the government of West Virginia against that company because he could be perceived as using the power of the state to extract a better settlement from that company, beating up on them if they won’t settle or giving them a sweetheart deal if they do settle,” Painter said.

FirstEnergy scandal in Ohio

At the same time FirstEnergy officials were seeking a tax break in West Virginia, they also were funneling millions of dollars through a dark money group in Ohio to build support for efforts to bail out FirstEnergy Solutions’ coal-burning and nuclear power plants in that state.

The effort was successful and the Ohio bill passed July 23, 2019, the same day as the West Virginia tax break.

FirstEnergy’s work in Ohio around the power plant bailout, called H.B. 6, now has been revealed to be part of one of the most brazen corruption schemes in U.S. history, which involved funneling $61 million in dark money into a front group, Generation Now, which was controlled by former Ohio Republican House Speaker Larry Householder.

In 2021, FirstEnergy paid a $230 million fine for its role in the scandal. In a court settlement, FirstEnergy stated that it “admits, accepts, and acknowledges that it is responsible under United States law for the acts of its current and former officers, employees, and agents.”

Householder was convicted of racketeering and in June was sentenced to 20 years in prison. Federal and state probes continue. More charges are likely, including some that may be brought against former FirstEnergy officials fired in the wake of the scandal.

After the scheme was revealed, states where FirstEnergy operates, including Maryland, New Jersey and Pennsylvania, quickly launched probes into the utility’s lobbying efforts.

West Virginia resisted conducting a similar audit for more than a year.

The state Public Service Commission is chaired by Charlotte Lane, a former FirstEnergy lobbyist who was appointed by Justice to her role in June 2019, about a month before Justice signed the tax break bill.

In August, after months of pressure, Lane said an outside firm would conduct a “focused management audit” around lobbying expenses related to the “FirstEnergy lobbying scandal in Ohio.”

Puccio, the Manchin and Justice ally, is one target of that audit, according to the Public Service Commission.