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Blackjewel coal miners return to work as new operator sorts out permits
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Blackjewel coal miners return to work as new operator sorts out permits

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Mine shutdowns in top US coal region bring new uncertainty

This Sept. 5 photo shows a poster urging locals to stay strong amid hardship in a Gillette storefront. The sale of Blackjewel's Belle Ayr and Eagle Butte mines in Wyoming closed Friday, with several workers returning to work on Monday evening.

After enduring nearly four months of uncertainty, furloughed Blackjewel coal miners started to trickle back into work at two Powder River Basin mines Monday evening, on the heels of the sale closure between the bankrupt employer and a new operator.

Out-of-work miners started receiving calls from the new owner, Eagle Specialty Materials, after the company successfully assumed ownership of the Eagle Butte and Belle Ayr mines from Blackjewel on Friday. The long-awaited sale ushered in a new chapter for the fourth- and sixth-highest producing mines in the nation. The new owner told lawmakers it plans to bring the facilities back to full operation.

“It’s good to have the nightmare finally over,” said Michelle Young, an equipment operator who worked for Blackjewel before the company filed for bankruptcy and shut down its two Wyoming mines July 1. “We’re just getting things rolling again.”

With plans to return to work Nov. 4, Young said she is confident the transition will go smoothly.

“Everything is going to get back to normal,” she said.

In addition to the hardship caused to workers sent home indefinitely when Blackjewel filed for Chapter 11 bankruptcy, the insolvent company walked away from the mines owing Campbell County tens of millions of dollars in ad valorem, or mineral production, taxes. Under the new operator, the county will receive just half of the $17.5 million Blackjewel failed to pay. The months of turbulent bankruptcy proceedings have kept the coal-dependent state holding its breath and waiting for answers.

“The Governor would like to commend the workers for their patience and the community of Gillette for the support shown to the miners throughout the closure,” Michael Pearlman, communications director for Gov. Mark Gordon, told the Star-Tribune over email.

“He would also like to thank the Campbell County Commissioners for their efforts throughout the negotiations. There was never any doubt the welfare of the miners were the first priority for both the state and the county.”

Loose ends

Though the sale’s closure prompted public officials and workers to breath a sigh of relief, the bankruptcy saga that has captured the nation’s attention is far from over.

For instance, the mining permits have yet to transfer from Contura to the new owner, according to U.S. Securities and Exchange Commission filings. Wyoming’s Department of Environmental Quality has not received the bond package from the company either. But the mines are still fully bonded under Contura until the permits are transferred, according to a spokesman for the state agency.

In the meantime, Eagle Specialty Materials will uphold “a permit operating agreement“ established for former mine owners Contura and Blackjewel.

Regardless, operation at the mines can proceed while Eagle Specialty Materials applies for the transfer of the mining permits. That’s because the new operator received a license to mine, according to Wyoming’s Department of Environmental Quality.

“They have the ability to operate the mines,” said Keith Guille, a spokesman for the regulatory body.

“It definitely wraps up a very tumultuous chapter of Powder River Basin coal history,” said Shannon Anderson, staff attorney for the Powder River Basin Resource Council, a landowners group.

But with the number of regulatory requirements the new owner has yet to complete, Anderson is on guard.

“We remain very cautious regarding this new owner and its ability to turn things around,” she said.

Contura will likely walk away from the mines free from the burden of outstanding liabilities, according to the sales agreement. The coal firm agreed to dish out $90 million and two ranches to Eagle Specialty Materials. In exchange, the young company will take over operation of the two thermal mines and assume the facilities’ hefty liabilities. Eagle Specialty Materials would settle several outstanding debts to creditors and assume the $237 million in reclamation bonds associated with the mines too.

In turn, Eagle Specialty Materials said it will indemnify Contura for reclamation responsibilities, “royalties, taxes, penalties and other amounts owing in respect of the Western Mines,” the SEC filing outlined.

The U.S. Office of Surface Mining Reclamation and Enforcement also entered into an agreement with the involved parties to largely clear Contura of penalties for violations of the Surface Mining Control and Reclamation Act of 1977, if any such violations occur under Eagle Specialty Material’s watch.

“We will continue to closely watch these mine operations,” Anderson said. “There is going to be a real challenge here in the beginning to go from mines in limited production to mines that are operating at greater levels. We hope there’s more balance with production and reclamation work.”

“There will still be a responsible party, and that will be Eagle Specialty Materials,” said Guille, the spokesman for Wyoming’s regulatory agency. “Keep in mind that we will still be doing our enforcement and regular inspections.”

A judge approved the sale of the two mines to Eagle Specialty Materials earlier this month, the finalization of the ownership transfer hit a roadblock over insufficient surety bonds. Coal companies must demonstrate to Wyoming’s Department of Environmental Quality that sufficient reclamation, or cleanup, bonding is in place before taking over a mine.

But a surety company for FM Coal, the parent company of Eagle Specialty Materials, announced that the new operator needed to take care of Blackjewel’s additional 135 mine permits out east before it could extend additional bonds to the Wyoming coal mines. The snag in permits and bonds set the closure of the sale back several weeks.

But Contura Energy, the permit holder of the mines, announced Monday the sale had successfully closed. A sureties agreement filed Monday with the SEC signaled that the parties had found some resolution over the bonds and permits.

Unpaid wages

Meanwhile, nearly 500 employees joined a complaint filed in the U.S. District Court of Wyoming against Blackjewel for violating the Fair Labor Standards Act. Submitted Monday by the U.S. Department of Labor, the complaint alleged Blackjewel violated labor laws by withholding wages between June 24 and July 1.

In response, the defendants agreed to pay $793,847 in outstanding compensation to the workers within 90 days of the sale closure to avoid further litigation.

“If you think you have an agreement in principle, and then the settlement is not being (honored), filing a complaint puts their feet to the fire,” said Michael Duff, a professor at the University of Wyoming specializing in bankruptcy law.

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