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Energy
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COAL MINING OPERATIONS
Wyoming proposes stronger rules for ensuring clean up from coal operations

Wyoming regulators took a surprising step Tuesday, proposing changes to how coal companies secure the cost of cleaning up their massive mining operations in the state.

Two years ago, amidst a sharp decline in the coal market and a slate of bankruptcies, multiple groups were clamoring for state and federal regulators to end self-bonding for the insolvent companies. The too-big-to-fail firms had guaranteed clean-up costs with a financial fitness test. Then they had failed, with a combined $1.6 billion in cleanup costs unsecured.

The debate over self-bonding heated up during the bankruptcy proceedings, then fizzled as companies were obligated to replace self-bonds with more secure forms of insurance as part of their restructuring plans. But the question of self-bonding going forward was still unanswered.

The state’s proposed changes, released with little fan fair, don’t go so far as to end self-bonding, but they do make it harder to qualify.

***

State regulators downplayed the influence that the bankruptcies had on their rule-making process. But the downturn did highlight some problems and outmoded practices for bonding rules that were largely written in the 1980s, a very different time for coal and for the financial markets, said Kyle Wendtland, land quality administrator for the Department of Environmental Quality.

The changes in the draft proposal, particularly on self-bonding, bring the rules into the modern era, he said.

“It’s not that we took a different stance on self-bonding,” he said. “It’s that we evaluated it in today’s market place and said this would be a way to make sure the state of Wyoming’s risks are addressed in moving forward.”

In short, the proposal revises its financial fitness test for companies that want to self-bond. Instead of offering income statements and balance sheets to prove they can self-bond, companies will be judged by their credit rating from financial firms Moody’s Investor Service, Standard and Poors or Fitch Ratings. It is a forward-looking assessment, whereas the current rules call for the state to look at how the company had been performing in the past.

The state is also proposing that a secondary company can’t be the guarantor for self-bonds, which is allowed right now. Either the company operating in the PRB or its parent company is on the hook. Even if a company has a strong credit rating, meanwhile, it can only self-bond up to 70 percent of its obligation, according to the proposed rule changes.

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Industry, lawmakers and conservation groups were given a heads up on the state’s plan to revise its bonding rules earlier this year, and most are at ease with the process so far.

A spokeswoman for the largest coal company in the state, Peabody Energy, had not examined the state proposal by press time. She deferred comment to the Wyoming Mining Association.

The company has fully replaced its self-bonds in Wyoming with more conventional insurance options. But in the March announcement when the company said it would replace its $728 million reclamation obligations with insurance, Peabody CEO Glenn Kellow said self-bonding was not out of the question at a future date.

Is limited self-bonding a part of the new normal for coal? Travis Deti, executive director of the Wyoming Mining Association doesn’t think so. He defended Wyoming companies’ reclamation accomplishments during the bankruptcies and financial downturn.

But the coal sector’s very bad year did raise some valid concerns for the state, and an update to the rules is a fair approach, Deti said.

“The DEQ has a responsibility to protect the state, and our operators respect that,” he said. “We are going to work with the public process to craft a rule that works.”

Wyoming regulators were under pressure during the downturn and criticized for not acting quickly on self-bonding. Companies reached deals with the state to continue operating without secured bonds until they had finished their bankruptcies. Wentdlandt defended his agency’s choice.

“Certainly there were challenges for this agency and the state,” he said. “I think we’ve proved that it was the correct way.”

***

The proposed rule changes are seen as a favorable compromise for conservation groups, though ideally the state would simply end self-bonding, said Connie Wilbert, chairwoman of Wyoming’s Sierra Club.

“We just don’t think that it is appropriate,” Wilbert said, noting that if a company could not afford traditional insurance, they shouldn’t be in the business.

The proposals show that Wyoming has learned a lesson from the downturn in the coal sector, when companies with self-bonds to the tune of millions of dollars were in financial freefall, she said.

“I think last year was a real wake up call,” she added.

The tremendous financial pressure of the downturn is off, but long term health in the coal sector is uncertain at best, and Wyoming is proposing to be more careful about how companies secure reclamation costs.

The draft changes will go before the Land Quality Advisory board at a meeting in Gillette on Dec. 6, before the state invites official public comment.


Josh Galemore, Star-Tribune  

Beau Arionus and his friend Kiefer Maclemore fly fish on a chilly Tuesday afternoon in the North Platte River near Morad Park. Casper’s weather will continue to fluctuate as temperatures are expected to return to the high 40s and low 50s over the coming days.


Govt-and-politics
spotlight
Meant to target tourists, proposed sales tax bump would apply to Wyoming restaurants, hotels and more

CHEYENNE — What was initially billed as a “tourism tax” morphed into a leisure and hospitality tax at the Joint Interim Revenue Committee meeting here on Tuesday. Why? Because it doesn’t just tax tourism. It never did, really.

First proposed in September by the travel industry itself, the bill would impose a 1 percent sales tax on a host of businesses that cater at least in part to tourists. The bill is intended to ensure a dedicated source of funding for the state tourism office by taxing tourists themselves in the places they are likely to be spending money.

Some of these are obvious — museums and RV parks, for example — but most are not. The tax would also target restaurants, bars and sporting events.

“Go to a bar in northeast Wyoming or south-central Wyoming and try asking some roughnecks if they’d be OK paying another 1 percent tax on their beer and nachos,” Mike Moser, executive director of the Wyoming State Liquor Association, told lawmakers. “If you do ask them that I would recommend wearing running shoes and keeping your car door unlocked.”

The committee agreed to strip the measure of its “tourism” label at the behest of revenue department director Dan Noble who said that after consulting with colleagues in South Dakota, which already has a similar tax, he learned that many residents there were angry to find themselves paying a tax supposedly meant to target out-of-towners.

So was born the “leisure and hospitality tax.”

“I realize it’s semantics,” Noble said. “But the fact is if it avoids having a huge amount of phone traffic associated with it, it might be better calling it something else.”

Wyoming Tourism Office Executive Director Diane Shober said that about 80 percent all of travel-related spending in Wyoming — including fuel and other sales not included in the proposed tax — comes from out-of-state visitors.

The tax would generate between roughly $16 million and $18 million to be spent on tourism promotion each year, depending on how much sales tax is collected.

Neighboring states like Montana and Colorado currently spend nearly twice as much as Wyoming does on tourism promotion.

Novelist C.J. Box, who sits on the state tourism board, said that the tax would allow Wyoming to properly compete for Mountain West visitors.

“Wyoming — by far in comparison to our surrounding states — has the best tourism product,” Box said. “But ... the budget for Wyoming tourism has fallen behind every other competitor because every other state has a dedicated funding mechanisms while we do not.”

Tourism efforts are currently appropriated out of the state’s general fund. Lodging taxes are funneled to county and city travel boards.

As they did in September, the travel industry turned out in force to speak in favor of the tax. John Johnson, who owns a Casper-based restaurant chain, said that many of his establishments are located near hotels and that the more travelers in Wyoming, the better business he does.

“We are very supportive of this leisure and hospitality tax,” he said. “We think it’s the most fair way to spread it across the broadest category and it provides that permanent solution.”

An owner of several Wyoming hotels said she was far more concerned about empty rooms than slightly higher taxes.

The committee amended the measure slightly to clarify where and how the funds were to be deposited into state accounts, but otherwise moved it along to its December meeting, where members will vote on whether to sponsor the bill and recommend that the full Legislature pass it.

Because the revenue committee has been tasked with generating proposals to raise revenue, many of the tax bills it has considered this year are purely speculative as opposed to measures that members genuinely support. However, the lodging and hospitality tax might stand a better chance of being sponsored by the committee and approved by the Legislature.

Senate President Eli Bebout, R-Riverton, a staunch opponent of new taxes despite the state’s $770 million deficit, has indicated he may be open to a tax targeting tourists and its passage would help reduce the budget gap.


International
AP
Trump warns North Korea: Do not 'try us'

SEOUL, South Korea — President Donald Trump delivered a sharp warning to North Korean leader Kim Jong Un on Wednesday, telling him the weapons he's acquiring "are not making you safer. They are putting your regime in grave danger."

In a speech delivered hours after he aborted a visit to the heavily fortified Korean demilitarized zone due to bad weather, Trump called on all nations to join forces "to isolate the brutal regime of North Korea — to deny it any form of support, supply, or acceptance."

"Today, I hope I speak not only for our countries, but for all civilized nations, when I say to the North: Do not underestimate us. And do not try us," he told South Korean lawmakers. "We will defend our common security, our shared prosperity, and our sacred liberty."

Trump had been scheduled to make the unannounced early morning trip to the DMZ amid heightened tensions with North Korea over its nuclear program.

The Marine One presidential helicopter left Seoul at daybreak and flew most of the way to the DMZ but was forced to turn back just five minutes out due to poor weather conditions. Reporters traveling in a separate helicopter as part of the president's envoy saw fog through the windows, and weather reports from near the heavily fortified border showed misting conditions and visibility below one mile. Pilots, officials said, could not see the other helicopters in the air.

White House press secretary Sarah Huckabee Sanders said the president was disappointed he couldn't make the trip. "I think he's pretty frustrated," she told reporters. "It was obviously something he wanted to do."

Before he left for Asia, a White House official had ruled out a DMZ visit for Trump, claiming the president didn't have time on his schedule and that DMZ visits have become a little cliché.

But Sanders said the visit had been planned well before Trump's departure for Asia. The trip was kept secret for security reasons, she said.

Trump had been scheduled to make the visit with South Korean President Moon Jae-in, who traveled separately and landed about a 20-minute drive from the DMZ. Sanders said the military and the U.S. Secret Service had deemed that landing would not be safe, and Trump deferred to them.

After returning to Seoul, administration officials had hoped they might be able to wait out the bad weather and make a second landing attempt. At the U.S. Army's Yongsan Garrison landing zone, White House Chief of Staff John Kelly and Sanders frequently glanced up at the clouds to see if the sky was clearing. But time would not allow it.

The aborted visit came hours before Trump addressed the South Korean National Assembly before closing out his two-day visit to the nation and heading to his next stop, Beijing.

Visiting the border that has separated the North and South for 64 years has become something of a ritual for U.S. presidents trying to demonstrate their resolve against North Korea's ever-escalating aggression. Every American president since Ronald Reagan, save for George H.W. Bush, has made the trip, peering across the barren north through binoculars, hearing broadcast propaganda and reaffirming their commitment to standing with the South.

The attempted visit was scheduled for a day after Trump made a striking shift in tone for a president, who for months has issued increasingly dire threats to answer any hostile North Korean action with "fire and fury." In a recent speech at the United Nations, Trump said he would "totally destroy" the nation, if necessary, and has derided Kim as "little Rocket Man."

But on Tuesday, his first day on the Korean Peninsula, Trump signaled a willingness to negotiate as he urged Pyongyang to "come to the table" and "make a deal." He also he'd seen "a lot of progress" in dealing with Pyongyang, though he stopped short of saying whether he wanted direct diplomatic talks.

"It makes sense for North Korea to come to the table and make a deal that is good for the people of North Korea and for the world," Trump said at a news conference with Moon. "I do see certain movement." He also sounded an optimistic note on disagreements with the North, saying confidently, if vaguely: "Ultimately, it'll all work out."

North Korea has fired more than a dozen missiles this year but none in nearly two months. Analysts caution against reading too much into the pause.

There's no public sign of any diplomatic progress between Washington and Pyongyang. U.S. officials say the back channel between the State Department and the North Korean mission at the United Nations in New York remains intact, but contacts have not been substantive other than achieving the release of American college student Otto Warmbier in June. He died days after his repatriation to the U.S.

Still, Trump's conciliatory comments would be welcome in South Korea, where both the government and the wider population have been unnerved by the president's threats against the North.

Trump did note the United States' military options, mentioning that three aircraft carrier groups and a nuclear submarine had been deployed to the region. But he added that "we hope to God we never have to use" the arsenal. And he accused Kim of "threatening millions and millions of lives, so needlessly."


Govt-and-politics
top story
Money shuffling could turn up $130 million to shrink state budget deficit

CHEYENNE — Wyoming is incredibly wealthy for a state facing a $770 million budget deficit. But a lot that wealth can’t be spent. Much of it, billions in all, is squirreled away in investment funds fed by taxes on minerals extracted in the state.

Now lawmakers are considering whether it is possible to divert some of the revenue that currently goes into those funds and spend the money on government operations or education.

The Joint Interim Revenue Committee moved forward with two proposals to divert approximately $130 million from investment accounts on Tuesday. Forty-two million dollars would go into an education fund while the remaining roughly $90 million would go into the general fund, which the Legislature can choose how to spend.

The $90 million, which comes from severance tax payments, has regularly been diverted to the general fund. But the bill tentatively approved by the revenue committee would make that diversion permanent.

The $42 million comes from an account that receives about $150 million a year from royalty payments on state-owned land. While one-third of the revenue is intended to be spent on school capital construction, the Legislature passed a law in 1994 to cap the amount sent to schools at $8 million. The committee moved forward a bill that would eliminate that cap, freeing the full $50 million to go toward school construction costs.

Sen. Dave Kinskey, R-Sheridan, opposed lifting the cap because it would allow inflation to eat away at the fund.

“If we permanently divert those funds aren’t we robbing future generations?” he asked.

Rep. Mike Madden, R-Buffalo, noted that the Legislature could always reimpose the cap if the energy industry in Wyoming recovered and the money was no longer needed.

The revenue committee has been tasked with finding new sources of revenue for both education funding and state government operations through new taxes and diversions of existing revenue.

Members decided not to pursue more radical diversions, such as sending the entire $150 million in revenue from state-owned land to be spent on education, a move that would have required a constitutional amendment.

Rep. Tim Hallinan, R-Gillette, said it would solve much of the education funding gap without raising taxes or cutting spending on schools. The committee may consider his measure at its December meeting.

The risk of diverting funds that otherwise go into savings accounts or investment funds is that the fund might then struggle to keep up with inflation and actually decrease in value over time.

“That’s a question that governments have wrestled with forever,” State Treasurer Mark Gordon told the committee.