Wyoming’s newest coal company and the state’s biggest coal county agreed on a payment plan for the delinquent miner, as of a Campbell County Commissioners meeting last Tuesday.
Blackjewel LLC, the owner of the Eagle Butte and Belle Ayr coal mines, had contacted the county prior to going into default on an $8.6 million tax bill last year and requested more time. The county did not grant that request at that time and Blackjewel failed to pay by the Nov. 1 deadline. Now the firm will make weekly, then monthly, payments to cover its delinquent bill, an additional $8.6 million and accrued interest by the end of the fiscal year — summer 2020.
Blackjewel CEO Jeff Hoops’ original ask for deferred payment would have spread the debt out over a period of years and made it less likely that that money would be paid, said County Commissioner Mark Christensen, who found the deal bartered prior to Tuesday’s hearing acceptable.
“The initial proposal was not even what I would considerable reasonable,” he said.
Wyoming’s coal industry has seen notable declines in recent years, a reduction of unprecedented cost in jobs and revenue for the coal county and the state.
The Eagle Butte and Belle Ayr mines have been shuffled through hands multiple times in that period of downturn. The mines were acquired by Contura Energy, a spinoff of Alpha Natural Resources, after Alpha filed for bankruptcy in 2015. Contura held the mines for over a year before the mines were acquired by Hoops’ newly-formed Blackjewel LLC. The sale granted $50 million in deferred royalty payments to Contura, and Contura paid $21 million in upcoming taxes for Blackjewel but no cash for assets changed hands.
Hoops, a longtime coal player in Appalachia, also picked up other assets for a bargain during that coal restructuring period.
Despite losses in demand for Powder River Basin coal, Blackjewel has gained market share, increasing production at Belle Ayr over the last year. Between its two Wyoming mines, both lower-heat quality assets sitting to the north and south of Gillette, Blackjewel employs about 600 workers.
Christensen, of the Campbell County commission, said keeping the mines running and people paid was a pressing factor in bartering a deal with Blackjewel over unpaid taxes. But the county leaders were also concerned about setting a precedent in the basin.
“We don’t want to be in a spot where we put all of these people out of jobs, but we can’t allow this person to extract this mineral and not pay this tax,” he said.
A call to Hoops was not returned by press time.
Shannon Anderson, of the northern landowners group, The Powder River Basin Resource Council, said the Blackjewel tax issue is confirmation that industry should be paying its county taxes on a monthly schedule.
The issue was broached before lawmakers last year but failed to convince the state’s mineral committees due to the pressure of a new monthly bill that some coal firms had told lawmakers they’d struggle to pay. The Powder River Basin Resource Council has been one of the loudest voices in favor of the monthly payments, however, arguing that mineral firms from oil and gas to coal put counties in difficult positions when large tax bills go unpaid.
Wyoming’s counties collect production taxes up to 18 months after production. The state collects those taxes every month.
“It’s interesting because there was all that pushback on monthly payments,” Anderson said. “But this shows you monthly payments sort of work.”
The landowners group has also protested the transfer of permits from Contura to Blackjewel, arguing that property offered as collateral for eventual cleanup costs of the mines is overvalued. The group has also criticized Hoops as an owner due to environmental concerns in his Appalachian companies.
Hoops did not respond to request for comment Thursday but told the Star-Tribune in emails last year that concerns over cleanup, and environmental violations at his other mines, are overblown. His record — which held up the transfer of leases to Blackjewel after Hoops acquired the Wyoming mines, was due to the sheer number of coal permits attached to his name and the frequency of inspections in Appalachia. Serious violations that were recorded on a federal violation database were misunderstandings that Hoops rectified, he said at the time.
Campbell County is no stranger to dealing with unpaid taxes. Home to most of Wyoming’s large coal mines, the county had to fight for more than $20 million that it argued Alpha Natural Resources owed from when it was still operating these mines. After spending more than $1 million to chase the debt, the county agreed on a settlement with the firm.
For a short period after Blackjewel acquired the mines from Contura, the county again was seeking tax payments. Technically due from Contura, the firm argued it did not owe Campbell County as it had paid Blackjewel some $20 million specifically for those taxes as part of the sale. Blackjewel later paid those taxes.
For Christensen, Blackjewel’s new payment schedule will allow the county to know if Blackjewel is falling behind at any point in the deal. And the county is ready to fight for those taxes, he said.
The county went back and forth with Hoops over the payment plan before settling on something that the county felt comfortable with, Christensen said.
The commissioner said he hopes the interest on the taxes, which could be upwards of $3 million by the end, is a deterrent from this unpaid tax problem continuing with the firm’s future tax obligations.
At least the county has given the company the opportunity to pay its debt over time, he said.
“We can tell the public that we attempted to work with them,” Christensen said. “He doesn’t have to worry about us showing up tomorrow and putting a chain on the gate.”