SHERIDAN -- A legal dispute over surface access threatens to derail a Kentucky company's plans to open a new coal mine here, jeopardizing the firm's permit application with the state and casting doubt over what would be the first new mine in Sheridan County in more than 50 years.
Ramaco Wyoming Coal's plans to mine 8 million tons of coal annually from the newly dubbed Brook Mine northwest of Sheridan were greeted with considerable fanfare when the company applied for a state permit last year. Gov Matt Mead called the proposal "a tremendous development for Wyoming's economy," citing a study that found the mine would create 600 jobs and $30 million in annual wages.
But the Lexington-based firm has failed to reach a surface use agreement with a second coal company, Lighthouse Resources Inc., over access to the proposed mine site, court filings show. Ramaco filed a lawsuit in Sheridan District Court in November claiming a 1954 deed to the property gives it the right to mine coal at the site. Big Horn Coal Co., a Lighthouse subsidiary, has sought to block Ramaco's right to access the property, saying it has not consented to the Kentucky firm's development and reclamation plan.
The outcome of the case is pending.
The dispute has thrown the company's permit application to the Wyoming Department of Environmental Quality into limbo. DEQ initially issued Ramaco a letter in November saying its application was complete. But in an April 2 letter, the department said it had identified deficiencies in the application. The letter included comments from the Wyoming Attorney General's office, which noted the company failed to include surface access agreements and consent forms in its application to the DEQ's Land Quality Division. The Attorney General's office requested the company supply documents related to the ongoing court case as well as the necessary surface use agreements.
"The Land Quality Division has determined that this application is deficient and is not yet technically adequate and suitable for publication," the Attorney General's office wrote.
Keith Guille, a DEQ spokesman, said it is not uncommon for the agency to ask for more information during a permit review. Permits are highly technical documents and companies rarely submit all the needed information on first go-around, he said, noting Ramaco has yet to respond to the state's inquiry.
Randall Atkins, Ramaco CEO, did not respond to a request for comment.
The involvement of the Attorney General's office is unusual in a permit review, said Shannon Anderson, a lawyer at the Powder River Basin Resource Council in Sheridan.
"The fact the AG’s office is involved shows some pretty big deficiencies and a big controversy Ramaco didn’t mention to the agency in their permit application," Anderson said. "Both of these companies have not been transparent with the community on their plans and what they want to do with the property out there."
Sheridan County has a long mining history, but the area has not had any active coal mines since the Big Horn Coal mine closed in the 1980s.
Ramaco's plans for the Brook Mine call for using a technique called highwall mining, where a 12-foot auger is drilled into the side of a coal seam. The process is cheaper than traditional methods because it requires fewer miners and there is no need to remove the topsoil covering the coal.
Plans for the mine come at a time when coal prices are mired in a rut. Supply is outpacing demand, and low natural gas prices have eaten into mining firms' margins, prompting speculation about some companies' ability to stay in business.
Ramaco executives have nonetheless expressed confidence in the Brook Mine.
In a recent interview with the Star-Tribune, Atkins said the mine's low production costs and the high heat content of its coal make the operation viable even at low prices.
“We’re contrarians. We’ve not acquired any of our assets with any idea that we are buying them for a huge price rebound,” Atkins said then. “We felt comfortable that (the coal) could be mined at a low enough cost structure that it would be competitive even in today’s market.”
Lighthouse Resources was formerly Ambre Energy North America. The company, which owns the Decker Mine in Montana and the Black Butte Mine in southwestern Wyoming, changed its name in April. It marks the firm's second rebranding within a year.
Ambre Energy, based in Brisbane, Australia, revealed in regulatory filings last year it had accumulated $32 million in debt since 2013 and was struggling to raise money to finance its operations. The firm's troubles prompted one of its long-time investors, Resource Capital Fund, of Denver, to purchase Ambre's North American assets in December. The new company was initially rechristened Ambre Energy North America before changing its name to Lighthouse Resources.
Lighthouse Resources CEO Everett King did not respond to a request for comment.
The dispute over access to the Brook Mine site centers on a 1954 deed. The deed gives Ramaco the right to the property's mineral estate and Big Horn Coal, the Lighthouse subsidiary, ownership of the surface. Ramaco contends that the deed gives it the right to mine the property while Big Horn Coal argues the document entitles it to review and approve development plans.
Ramaco filed a lawsuit seeking a court judgement to give it the right to mine at the site. The company maintained it has regularly informed Big Horn Coal of its intent to mine the property since 2011. Big Horn Coal chose not engage Ramaco about its plans, the Kentucky firm claimed.
In January, Sheridan District Court Judge William J. Edelman rejected a motion by Big Horn Coal to dismiss Ramaco's lawsuit.
Big Horn Coal tells a different story about its relationship with Ramaco. The two firms signed an exploratory agreement, which allowed Ramaco to probe the property's potential, Big Horn Coal attorney Lynne Boomgaarden wrote in a letter to the DEQ in March. The agreement ended in 2014. Big Horn Coal has written to Ramaco to express its support for coal mining. But in October 2014, the company sent a letter to Ramaco saying the mining plans did not conform with its own development plans for the property, Boomgaarden said.
In the DEQ's letter to Ramaco, the state also sought a surface use agreement from the Padlock Ranch Co. It is unclear if Padlock and Ramaco have come to an agreement over access to Padlock's surface lands. An attorney representing the ranch did not respond to request for comment.