Wyoming’s newest mining company is at the center of a dispute over $4 million in unpaid taxes in Campbell County, officials say.
The two tax bills for the Eagle Butte and Belle Ayr mines were due May 10. They were billed to Contura Coal West.
But the two mines, Eagle Butte and Belle Ayr, no longer belong to Contura. They were acquired by Appalachia-based Blackjewel LLC in December, a firm troubled by environmental concerns and court cases in Appalachia.
Contura was not paid cash when it unloaded the two mines last year, but received rights to $50 million in deferred royalty payments. Additionally, Contura paid Blackjewel $21 million to take the mines and their accompanying reclamation liabilities.
Contura officials confirmed the $4 million tax liability, but said from the company’s perspective that bill has been paid — by Contura to Blackjewel during the transfer of mines. The $21 million payment was for taxes not yet due, including these two tax bills specifically, they said.
But the county argues that Contura’s deal with Blackjewel has no bearing on what they do. The company assessed for those taxes was Contura. Blackjewel isn’t even on their books, said Carol Seeger, county attorney.
“It’s Contura’s legal obligation to us,” she said. “If they have contractually passed that on to Blackjewel, we have no legal authority to pursue Blackjewel.”
The recent history of taxes and ownership of the two mines is dizzying.
Before the downturn in the coal industry, Eagle Butte and Belle Ayr were the “crown jewels” of Alpha Natural Resources. During the firm’s bankruptcy, its senior lenders formed Contura to acquire the two mines. A little over a year later, Contura unloaded the hefty clean-up costs of Eagle Butte and Belle Ayr on Blackjewel, a move that surprised many in the basin.
The no-cash sale appeared to have dropped the value of the crown jewels significantly.
Contura announced its intention to merge with Alpha in April, further muddying the lines of ownership and tax liability for Campbell County.
The county recently settled a court case seeking $19 million in unpaid taxes from Alpha — debt owed from before the company’s bankruptcy and before Contura was formed to take the mines. As of January, the county has spent about $400,000 on legal fees going after that debt. Alpha had offered the county $7.7 million which currently sits in a county account, but disputed the full $19 million debt.
The county didn’t get what it was seeking, and now it appears Contura owes again, said County Commissioner Mark Christensen.
“We settled that at a substantial loss,” he said. “It looked like they [weren’t] getting anywhere and we needed to get some amount of money.”
Alpha agreed to pay $14.7 million, which includes the $7.7 million in account. Alpha recently paid $3.5 million of the remainder, with another $3.5 million due in October, according to Seeger, the county attorney.
Blackjewel was an unknown in Wyoming when it showed up to take Eagle Butte and Belle Ayr. It was registered in Wyoming in 2017 by CEO Jeff Hoops.
Hoops has a long history of coal mining in West Virginia and Kentucky, starting as a laborer at 17-years-old, he said in previous statements to the Star-Tribune. His firm, Revelation Energy, has been busy during the coal downturn, picking up assets at a bargain across Appalachia. Hoops is also the founder of Lexington Coal Company.
Hoops did not respond to a request for comment on this story, but has noted in earlier emails to the Star-Tribune that he is optimistic about his thermal coal assets, despite being primarily a metallurgical company in the east.
The unpaid taxes in Campbell County add to the problems on Hoop’s plate at the moment.
Revelation is in court for allegedly not paying back its debt to Fifth Third Bank of Ohio. The bank says Revelation broke the contract by acquiring the Eagle Butte and Belle Ayr mines — which the bank considers potential collateral against loans that Revelation has failed to make payments on.
Blackjewel has responded in court that the bank is trying to extract additional money and that the company would not have defaulted if the bank had not failed to answer calls from Blackjewel.
Additionally, Blackjewel’s two mines in Campbell County are currently bonded through Contura. Blackjewel took over as operator, but has not initiated the process of transferring bonding and obtaining mining permits.
Hoops said in a Feb. 2 email that the company was days away from posting bonds.
Blackjewel has the right to operate, but also $254 million in clean-up costs that have yet to be secured, according to state records.
“They have a license to mine, but the permit’s under Contura,” said Keith Guille, spokesman of the Department of Environmental Quality. “They are covered and they are meeting all regulations.”
Meanwhile, Contura — which is still on the hook for those obligations, according the Department of Environmental Quality — is once again a part of Alpha Natural Resources.
The two mines, one north of Gillette and one to the south, employ about 500 miners.