PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON * * * * * * * * * * * * * * * * * * HEARING TRANSCRIPT * * * * * * * * *
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1 PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON * * * * * * * * * KENTUCKY FUEL CORPORATION * --COAL-SC-GI * * * * * * * * * * HEARING TRANSCRIPT * * * * * * * * * BEFORE: MICHAEL A. ALBERT, Chairman RENEE A. LARRICK, Commissioner BROOKS F. MCCABE, JR., Commissioner HEARING: Monday, October, :00 a.m. LOCATION: PSC Howard M. Cunningham Hearing Room Brooks Street Charleston WV Reporter: Guy Starrett Any reproduction of this transcript is prohibited without authorization by the certifying agency.
2 A P P E A R A N C E S LINDA BOUVETTE, ESQUIRE Public Service Commission of West Virginia Brooks Street P.O. Box Charleston, WV Counsel for the Public Service Commission NONE PRESENT For Kentucky Fuel Corporation ALSO PRESENT: Greg Birurakis, PSC Kathy Dempsey, PSC
3 INDEX TO WITNESSES DISCUSSION AMONG PARTIES - WITNESS: Greg Birurakis DIRECT EXAMINATION By Attorney Bouvette - EXAMINATION By Chairman Albert -
4 E X H I B I T S Page Number Description Offered STAFF EXHIBITS: Internal Memorandum Notice of Violation Staff's Final Recommendation Final Orders Letter from Bluestone Resources
5 P R O C E E D I N G S Good morning. I'm Mike Albert, Chairman of the Commission. With me are Commissioners Brooks McCabe and Renee Larrick. We're here to conduct an evidentiary hearing in a case captioned PSC Case --COAL-SC-GI. It is a case involving Kentucky Fuel Corporation. That is the proceeding that requires Kentucky Fuel, as the coal shipper, to show cause why the Commission should not enforce outstanding Notices of Violation in the Circuit Court and assess costs and investigation of the tonnage fees, and whether administrative penalties or costs should also be imposed. Under Chapter C, Article A of the West Virginia Code, the law establishes requirements for the shippers of coal, vehicle operators, vehicle owners and receivers of coal that operate on the Coal Resources Transportation System, CRTS, referred to as the Coal Resource Transportation System, to adhere to rules and regulations. The Legislature has delegated the Commission the administration and enforcement of the CRTS statutes. Kentucky Fuel is registered with the Commission as a shipper of coal on CRTS.
6 In four separate proceedings, the Commission imposed administrative penalties on Kentucky Fuel, a total of $,00. As a shipper of coal, there are two Final Orders related to Notices of Violations of Kentucky Fuel for failure to report coal shipments. two Final Orders related to Notices of Violations for And failure to accurately report coal shipments. Kentucky Fuel did not pay these administrative penalties. The Commission also collects permit fees and tonnage fees for operations of the CRTS and deposits those amounts in the Coal Resource Transportation Road Fund, which the West Virginia Division of Highways then uses to construct, maintain and prepare public highways and bridges over which these substantial commodities of coal get transported. The shippers that load and permit an amount of coal that exceeds --- any shipper that loads a permitted amount of coal that exceeds,000 pounds must remit to the Commission, on the tenth day of each month, the payment of five cents per ton by the total tonnage of coal involved in each such shipment during the prior month. Kentucky Fuel has not remitted the tonnage fees that are required by West Virginia Code C-A-(b)(). The record in this case so far does not
7 reflect that Kentucky Fuel has complied with the reporting requirements for the CRTS statutes or submitted the tonnage fee rates. Kentucky Fuel's failure to comply with the coal shipping reporting requirements prevents the Commission from calculating the tonnage fees that are owed. Our Staff has estimated that Kentucky Fuel owes approximately $,000 in overdue tonnage fees. On July th of, the Commission opened this proceeding and required Kentucky Fuel and other coal haulers to show cause why the Commission should not enforce the Circuit Court the administrative penalties imposed by the Commission's Final Orders and assess costs to Kentucky Fuel. In the July th Order, the Commission also ordered an investigation into the amount of tonnage fees owed by Kentucky Fuel for its operations from July to June 0, --- from July to June 0, and administrative penalties, costs and fees that should be imposed. To date, Kentucky Fuel has not filed a response to the Commission Order that opened the show cause general investigation proceeding. Kentucky Fuel is required to keep records related to its operations on the CRTS for three years. In this case, Kentucky Fuel did not ---
8 did file responses to data requests from Commission Staff. But those responses stated by Kentucky Fuel that they are unable to locate certain records. Today's hearing is an opportunity for Kentucky Fuel and our Staff both to present evidence. If Kentucky Fuel fails to appear at this hearing or fails to address the issue of inadequate or incomplete records, or the issue of unpaid tonnage fees, the Commission may enter a final order based upon the evidence or lack of adequate evidence or some --- on some or all of the matters at issue in this case. The Final Order could be adverse to Kentucky Fuel. The Commission may also decide to continue its investigation into some or all of these matters. At this time please check your cellphones and make sure that they are off. And if you need to make a call or take a call during the proceeding, please adjourn into the lobby and do that. At this time, let's go ahead and take appearances of Counsel. ATTORNEY BOUVETTE: Staff? Linda Bouvette, Staff's attorney. And I have with me Greg Birurakis and Kathy Dempsey from the Transportation Division.
9 All right. Good morning. Since I know everybody else in the audience, I assume that there is nobody here from Kentucky Fuel to make an appearance. But I will call for the record the appearance of Kentucky Fuel. All right. There is no response. So we will assume that Kentucky Fuel has elected not to attend our meeting this morning. We have served them with all of these matters by certified mail. We have receipts for the receipt of the materials that have been provided to them. In view of that, and in order to develop a record, we will go ahead with the presentation of the Staff case. And Ms. Bouvette, do you want to make a statement or call your witness? ATTORNEY BOUVETTE: Yes, Your Honor. I would like to state that we have placed all of our exhibits in the packet with a pink cover. Those are the exhibits that we would ask to be admitted over time, we will receive through our testimony. And I'd like to call Greg Birurakis. All right. come up to the stand, please? Mr. Birurakis, would you
10 GREG BIRURAKIS, HAVING FIRST BEEN DULY SWORN, TESTIFIED AS FOLLOWS: Good morning, Mr. Birurakis. A. Good morning. You need to make sure the bright blue light is on. And you're going to have to speak into the microphone because they're directional. All right. ATTORNEY BOUVETTE: Okay. DIRECT EXAMINATION BY ATTORNEY BOUVETTE: So like that. Q. Please state your name and your business address. And please spell your last name. A. Greg Birurakis, B-I-R-U-R-A-K-I-S. Business address is Brooks Street, Charleston, West Virginia, 0. Q. And what is your position with the Commission? A. I'm a CRTS Supervisor for the Transportation Division. Mr. Birurakis, pull the microphone up
11 to you a little bit. A. Is that okay? Yeah, that's better. A. Thanks. BY ATTORNEY BOUVETTE: Thank you. Q. And how long have you been in that position? A. Twelve () and a half years. Q. And what --- what constitutes the duties of a CRTS supervisor? A. I manage the operations and staff of the CRTS Program, keeping the director informed. Q. And what is your educational background? A. High school diploma, a few credit hours from WVU, and educational classes from here at the PSC. Q. Okay. And what is your experience outside of the Commission employment? A. Twenty () years as an owner-operator, bookkeeper of a family-owned retail business. Two years as the truck transportation manager for Bluestone Coal. And I periodically do consulting work for an engineering firm. Q. Okay. Please describe the CRTS Program for the Commission. A. The CRTS Program was created in 0 by the West
12 Virginia Legislature. Under the program, coal companies are allowed to transport coal and legally-enhanced waste to decrease transportation costs. As a counterbalance, the Legislature established a new administrative decree to encourage compliance through a sanction process. The West Virginia Public Service Commission was tasked with implementing the program, registering shipping and receiving sites, issue CRTS permits, auditing electronic records submitted by the industry, collect tonnage fees and issuance of administrative sanctions, as well as other fees associated with the program. The West Virginia Department of Highways was tasked with designating CRTS routes. To date, the West Virginia Department of Highways has designated almost,0 miles of public highways in counties as CRTS routes. Q. How many companies are registered in the CRTS Program? A. There are active sites registered under companies currently reporting to the Public Service Commission. Q. Okay. And how many employees report to you as part of the CRTS Program?
13 A. Four. Q. And what are their duties? A. There are two utility inspectors, one supervisor and one office assistant. Q. The inspectors are the guys that go out to the coal mines and do inspections? A. As well as in the office they monitor CRTS reports submitted by the coal companies. Q. This case involves a number of Notices of Violation? For what type of violations are NOVs issued? A. The Public Service Commission can issue, by approval, rate sanctions or erroneous or nonreporting violations. Q. And what type of notice is given to someone or to a coal company? A. The company is notified by certified mail. Q. And if certified mail does not pick up, is there a different way to give notice? A. The CRTS is tasked to deliver the notice in person. Q. And what are the time frames when issuing a Notice of Violation and a Final Order being entered by the Commission? A. Once the NOV has been received by the company, they have days to request a hearing. If no hearing is
14 requested, Staff issues a recommendation that a Final Order be entered by the Hearing Examiner. Once the Hearing Examiner has filed the Final Order, the company is given ten days to appeal the Order with an Administrative Law Judge. the Order becomes final. If no appeal is made, Q. Okay. We're going to go to look at Kentucky Fuel Corporation now. You prepared an internal memorandum, dated October rd, ; correct? ATTORNEY BOUVETTE: And for purposes of the record, that would be found in Staff Exhibit. Do you want to mark --- identify it as Staff Exhibit? ATTORNEY BOUVETTE: Yes. All right. We'll have the exhibit that is Mr. Birurakis's internal memorandum to Staff Attorney dated October rd, marked as Staff Exhibit. (Staff Exhibit was marked for identification.) BY ATTORNEY BOUVETTE:
15 Q. Okay. And you have a copy of your memorandum. Is that a true and accurate copy of your memorandum? Q. Did you prepare this memorandum or have someone else prepare it on your behalf and at your direction? A. I prepared this memorandum. Q. Okay. Do you have any changes or corrections to your memorandum? A. No, I do not. Q. And the memorandum lists a total of four Notices of Violation; correct? Q. And these represent violations of the CRTS Program. cited? And for what violations was Kentucky Fuel A. You want me to list each case --- name each case or just in general? Q. In general. A. In general, they were filed for inaccurate reporting or nonreporting of the CRTS shipments. Q. And inaccurate reporting, that means they didn't provide all the information or the information that they reported was inconsistent with other records? Q. It's one or the other?
16 A. Inconsistent --- Q. Okay. A. --- or invalid data. Q. And the total amount of administrative sanctions is $,00; correct? Q. Now, who determines the amount of the sanctions imposed on that NOV? A. The overweight sanctions are set by statute. The administrative sanctions are set by Rule of the Public Service Commission rules and allows the Staff to use their own discretion. $0. Those penalties would be up to Q. And in this case, you imposed a hundred dollars for each one of the violations or transactions? ATTORNEY BOUVETTE: Okay. Turning to Exhibit, Staff Exhibit, which are the Notices of Violation. ask those be entered as Staff Exhibit. We would All right. We will have it marked as Staff Exhibit, Notices of Violation. There is a notice dated December th of, a notice May,, a notice May,.
17 Did I miss one? ATTORNEY BOUVETTE: Yes. There's one for August th,. All right. Hold on just a second. As it runs right now, there's also one dated August,. Those Notices of Violation will be marked collectively as Staff Exhibit. (Staff Exhibit was marked for identification.) BY ATTORNEY BOUVETTE: Q. And are you familiar with these Notices of Violation that were issued to Kentucky Fuel? Q. Are there any other Notices of Violation issued to Kentucky Fuel that are not included in Staff Exhibit? A. No. Q. Did Kentucky Fuel ask for a hearing on any one of these Notices of Violation? A. No. Q. Following the Notices of Violation, in the --- how long do you have to wait before you proceed with the next step with the Notice of Violation?
18 A. Twenty () days. Q. Twenty () days. So following the days, was an internal memorandum then prepared? A. It was. ATTORNEY BOUVETTE: Okay. And that would be in Staff Exhibit. BY ATTORNEY BOUVETTE: Q. And what is the purpose of this internal memorandum in Staff Exhibit? A. It's a staff recommendation that the sanctions set forth in a Notice of Violation be embraced by the Final Order of the Hearing Examiner or Administrative Law Judge. ATTORNEY BOUVETTE: And Your Honor, we would ask that Staff --- these Staff final recommendations be identified as Staff Exhibit. I'm sorry. Did you ask that it be marked as that? ATTORNEY BOUVETTE: I'm asking that they be marked as such. They will be so marked.
19 (Staff Exhibit was marked for identification.) ATTORNEY BOUVETTE: Okay. BY ATTORNEY BOUVETTE: Q. And what exactly do these final recommendations state? A. The final recommendations state that the Hearing Examiner or the Public Service Commission should proceed to a Final Order. ATTORNEY BOUVETTE: Okay. And then turning to Staff Exhibit, which are the Final Orders of the Commission. And we would ask that these Final Orders be identified as Staff Exhibit. All right. We'll have marked for identification as Staff Exhibit, Final Orders entered in these cases. The first being entered on February the th of. The second on June rd of. That was the second. The third on July of. And the fourth on September the th of. (Staff Exhibit was marked for identification.) BY ATTORNEY BOUVETTE:
20 Q. And to your knowledge, are these Final Orders? Q. Okay. And do these Orders impose administrative sanctions for the Notices of Violation? Q. So it is your position that Kentucky Fuel owes $,00 in administrative sanctions; correct? Q. When an administrative sanction is paid, where does the money go? A. To the Public Service Commission. Q. And what can it be used for? A. It's used to offset the cost of operation of the program. Q. Okay. Turning now to the CRTS tonnage fees, explain to the Commission how those tonnage fees are calculated. A. The tonnage fees are calculated on the net weight of coal of any shipment that is greater than,000 pounds. A gross vehicle weight exceeds,000 pounds. The way that those calculations are made at the Public Service Commission, we take all of the records that the shippers and receivers have transmitted to the Public Service Commission electronically, along with
21 reports collected by the inspectors. We take an estimated total based on the permit that is issued to the truck that transported that shipment of coal, deduct that from the gross vehicle weight, and apply the five cents a ton to the relative tonnage. So that was also --- the weight of the coal being the penalty? A. Yes, Your Honor. All right. BY ATTORNEY BOUVETTE: Q. Okay. And who receives the money for the CRTS tonnage fees? A. The Public Service collects the money and divides it into the Coal Resource Transportation Fund that is administered by the West Virginia Department of Highways. Q. Okay. And what is the purpose of the money? A. The money is collected and used, I assume, to supplement revenue needed to maintain CRTS routes and bridges. Q. Okay. Explain a little bit more about the reporting system, how you can track shipments from the shipper and the receiver.
22 A. When the registered shipper sends a load of coal out of their facility, they give it a unique transaction number. And that becomes the identifier for that shipment of coal. So when that shipment of coal leaves the shipping point, the shipper reports that number to the Public Service Commission. And their transaction includes the origin, the destination, the date and time that it left, the permit issued to the truck that transported that load of coal and an estimated weight. They may have certified scales on a shipping point, but they're not required to have certified scales at the shipping point. When that shipment is received at the receiving point, the receiver collects that unique number from the truck driver. And he uses that to report his information for that transaction to the Public Service Commission, which includes the date, the time it was received, the truck that loaded it, the origin. And when that information comes from the shipper and the receiver, those records are married and compared. Q. Is that the information that you used to calculate the tonnage fees? One of the fields --- actually, there are four fields used in that record to determine who owes in how much tonnage fees.
23 Fields? A. Field. Data fields. Okay. A. So one of the --- part of the information that is provided by the receiver is who the shipper was, the scale, date and time, the truck that delivered that shipment, which is where we get the estimated tare weight to use and the gross vehicle weight of the shipment. BY ATTORNEY BOUVETTE: Q. Is there a separate report that the shipper provides the Commission? A. The shipper is required to provide a --- by the tenth day of a preceding month (sic), the shipper is required to provide a report that this indicates the tonnage for the preceding month. Q. And on that form, do they calculate the tonnage fees that are due? A. Yes, they're supposed to. They do. Q. They usually send a check with that for that amount of money? Q. In this case, did Kentucky Fuel do that? A. They did not.
24 Q. They didn't do the monthly tonnage report? A. No, ma'am. Q. Okay. Can you determine fees based solely on the electronic reporting? A. We can calculate an estimated number of fees due. Q. And would that be a close estimate of the fees that are due and owing? A. If the records provided by the Company and collected by the inspectors is accurate and complete, it's a relatively accurate number. Q. All right. And one of the reasons the Commission filed a GI against Kentucky Fuel is that they were not reporting coal tonnage for the time period July st of through June 0th of ; correct? A. Correct. Q. During that time period, to your knowledge, was Kentucky Fuel operating? Q. And how do you know that? A. Site inspections conducted by the inspectors and also some reports that may have been received from the other side of Kentucky Fuel shipping coals to receiver. We may have received records from the receiving side, which may have been another company.
25 Q. Kentucky Fuel responded to the Staff data request; correct? Q. And in its response to data request one, Kentucky Fuel listed six companies that received coal from Kentucky Fuel. Was that a complete response? A. Public Service Commission --- I'm sorry, could you repeat the question? Q. In response to data request number one, and as you listed in your internal memorandum, which is Exhibit, Kentucky Fuel listed six companies that received coal from Kentucky Fuel. complete response? And I'm asking you if that was a A. Commission records indicate that there were additional receiving points. correct response. And no, that would not be a Q. And those records would be tonnage reports received from the receivers? A. Electronic reports received from the receivers. Yes, ma'am. Q. Okay. And in response to data request two, Kentucky Fuel listed three trucking companies that transported coal for them. agree with that total? A. No, they did not. Did the Commission records
26 Q. And how many trucking companies did the Commission have record of? A. Based on the records received, the Public Service Commission identified trucking companies registered with the PSC in transporting coal from Kentucky Fuel Corporation during that period. I'm sorry, what was the number? How many? A. Eighty-seven (). Some of those companies may have been operating as contractors under others. So Kentucky Fuel may have paid one company, but that money was then disbursed throughout ten companies as subcontractors. BY ATTORNEY BOUVETTE: Q. And in response to data request two --- three, Kentucky Fuel stated that it transported 0,0 tons from January st of through July st of. You estimated that they shipped,0 tons. So how did you estimate this amount of coal being shipped as compared to their total? A. From electronic record received from shipping and receiving plants and records retrieved from the inspectors. Q. Is your estimate documented in Exhibit A to your
27 internal memorandum found in Staff Exhibit? Q. And what exactly do these --- attachment one, what does this represent? A. An estimated number of loads and tons shipped during the period of January of and July. Q. And the load count, that's the number of trucks? A. Number of shipments. Q. Okay. In a response to data request four and five, Kentucky Fuel stated it had no records for the time period in question. rules? Is that a violation of our CRTS Q. In response to data request seven, Kentucky Fuel stated it had no active operations in West Virginia during the time period in question. statement, true? And that's a false They had active operations during that period. Q. Based on your tonnage estimate, you claim Kentucky Fuel owes $,.; correct? A. Based on those records, yes. Q. And how did you calculate that amount? A. Reading the net vehicle weight reported in the
28 transactions to the Public Service Commission or records retrieved from the inspectors and deducting an estimated tare weight from that amount. Q. Okay. And do you believe that's a close estimation of what Kentucky Fuel owes the State of West Virginia? A. Based on the information I have today, yes, I do. ATTORNEY BOUVETTE: We're going to look at one other thing. If you would turn to Exhibit. (Staff Exhibit was marked for identification.) BY ATTORNEY BOUVETTE: Q. And this is a letter from Bluestone Resources and affiliates, fines and penalties, dated September rd of. This will be marked as Staff Exhibit. ATTORNEY BOUVETTE: Yes, please. And this is a copy of a letter from Patrick M. Graham to the Public Service Commission under the caption Bluestone Resources, Inc. and Affiliates
29 Fines and Penalties. And attached to it is a two-page schedule and an from Mr. Tom Lusk of the Justice Corporation to Greg Birurakis. The date of that is dated Tuesday, September the th of. BY ATTORNEY BOUVETTE: Q. Mr. Birurakis, could you explain to the Commission exactly what transpired with this letter and the attachments in the ? Just walk us through it. A. September of it was determined that Bluestone Coal or sister companies, subsidiaries, owed approximately $,000, $,. in Notice of Violations and tonnage fees. At that time, Bluestone Resources agreed to make payments to resolve those outstanding fees and penalties due. Q. In the attachment to the letter, Exhibit, it lists tonnage fees for the first one would be Tam's No. Surface Mine; correct? Q. It also lists WV, estimated outstanding tonnage fees. Q. The second page shows tonnage fees owed by Red Fox. Q. And then there's some outstanding Notices of
30 0 Violation penalties. Q. Now, is it your understanding that the payments received from Bluestone paid the outstanding Notices of Violations? Q. Okay. And Tam's No. in WD are Kentucky Fuel Company; correct? Q. Okay. When you say those violations, are you talking about the amount set forth in Staff Exhibit? The second page, second section says outstanding Notice of Violation penalties of $,., Your Honor. Well, I was talking about there's a number of $,000. A. I'm sorry. That is outstanding fines and penalties as of the date of the letter. Has that been paid? A. $,. has been paid.
31 Of that ---? BY ATTORNEY BOUVETTE: Q. Looking at the Tam's No. Surface Mine, there are tonnage fees due from January of through June of. Did you include, in your estimate total of tonnage fees, the $,000 number that you gave us earlier? that include all of the amounts? A. Yes, it does. Does Q. For Tam's? So what's remaining is $, for the year? Q. And then for WD, the tonnage fees from January through May are included in your total --- Q. --- that you said earlier, the $,000. Q. So the tonnage fees for January through December of have not been paid? A. No. Q. And that total's $,.? Q. Okay. Thank you. So is it your position that the Commission should proceed to Circuit Court to ask for
32 a judgement for the $,00 in Notices of Violation? A. Since Kentucky Fuel has no --- did not show any reason why these numbers are inaccurate, the answer is yes, if nobody can be reached. Q. And is it your opinion that the Commission should proceed to Circuit Court to seek judgement for the $,.? A. Because they are not here to add any additional information, the answer is yes. Q. And then you also would recommend that the Commission seek payment for the fees for Tam's No. and WD? Q. Okay. Do you believe additional penalties and costs should be imposed on Kentucky Fuel for their failure to promptly pay their Notices of Violation and pay their tonnage fees, and also for not having the required records? A. I can say that there were numerous hours --- extra overtime hours applied to this case. And I would leave the fee assessment up to the discretion of the Commission. Q. And do you have any other information to provide to the Commission at this time regarding this case? A. No, I do not.
33 ATTORNEY BOUVETTE: Okay. Your Honor, I have no other questions. All right. admission of your exhibits? You want to move the ATTORNEY BOUVETTE: I move the admission of my exhibits. Okay. Do you have any questions? COMMISSIONER LARRICK: No, Your Honor. Thank you, Mr. Birurakis. We appreciate your testimony. There's --- I know the answer to this, but just for the record. There's signatures and so forth in here of Mr. Bob Blankenship. Blankenship? Who is Mr. A. Mr. Blankenship is the director of the Transportation Division of the Public Service Commission. And do you report to him? A. Yes, sir, I do. And are you the person in charge of the
34 CRTS system for the State of West Virginia under his direction? I don't think I have anything else. I think that's an adequate description of what's before us. Is there anything further, any other witnesses you have? ATTORNEY BOUVETTE: No, Your Honor. All right. All right. We'll --- we will take this and we'll consider the case closed. We appreciate your testimony, sir. And Counsel, thank you. And we will make one further call to see if Kentucky Fuel Corporation happens to be present in the hearing room. It's clear they are not. So we will conclude our hearing. And thank you for your effort. * * * * * * * * HEARING CONCLUDED AT : A.M. * * * * * * * *
35 CERTIFICATE I hereby certify, as the stenographic reporter, that the foregoing proceedings were taken stenographically by me, and thereafter reduced to typewriting by me or under my direction; and that this transcript is a true and accurate record to the best of my ability. I certify that the attached transcript meets the requirements set forth within article twenty-seven, chapter forty-seven of the West Virginia Code. Guy Starrett
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