Legislators look at ways to ease sting of coal bankruptcies
A string of bankruptcies have ravaged Wyoming coal country this year leaving counties and taxpayers facing unexpected budget shortfalls.
October 14, 2019
CASPER – A string of bankruptcies have ravaged Wyoming coal country this year leaving counties and taxpayers facing unexpected budget shortfalls.
But state lawmakers have begun to investigate ways to mitigate the harm caused when mammoth coal companies spiral into insolvency. Meeting Monday as a select committee, the lawmakers convened with the goal of considering effective policy changes that could protect the state and counties from the outbreak of bankruptcies.
Half-a-dozen cash-strapped coal companies that operate in Wyoming have filed for bankruptcy since 2015 as demand for coal sinks nationwide. Hefty legal fees, along with unpaid labor and tax obligations, have wound up leaving some coal-dependent communities in the red. This summer, Campbell County witnessed the closure of two mines when coal supplier Blackjewel ran itself into debt and failed to secure interim funding to continue operation of its mines during its bankruptcy proceedings. The company sent some 600 workers home on July 1 indefinitely and left behind millions of dollars in unpaid taxes. Though a new limited liability company called Eagle Specialty Materials agreed to purchase the idling Eagle Butte and Belle Ayr facilities, the mines have yet to resume full operation due to issues over permit transfers and reclamation liabilities.
Wyoming-based coal company Cloud Peak Energy has also been navigating through bankruptcy since May, leaving behind approximately $8 million in unpaid ad valorem, or mineral production, taxes. The sale of its three Powder River Basin mines to out-of-state bidder Navajo Transitional Energy Company has yet to close.
“There are no winners when a company goes into bankruptcy, particularly when a coal company becomes bankrupt,” said Randall Luthi, chief energy adviser for Gov. Mark Gordon. “...No one is made whole in a bankruptcy … we have remained united in our position that the best result would be to have the miners return to work.”
Multiple people at Monday’s meeting urged lawmakers to consider resurrecting a 2016 bill that would have required coal companies to dish out mandatory mineral production taxes to counties on a more regular, monthly basis (similar to the state’s severance tax). The annual tax payment plan in place enables struggling coal companies to fall behind on the payment, advocates of the 2016 proposed bill reasoned.
“That (tax) money — that is actually owed revenue from minerals that have been sold a year to one and a half years prior; that coal is gone and has been burned,” said Rusty Belt, chairman of the Campbell County Commission. “That money is not really theirs. It’s taxes.”