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Contura Energy's merger with new coal firm in Powder River Basin is legal, state says
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POWDER RIVER BASIN

Contura Energy's merger with new coal firm in Powder River Basin is legal, state says

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Belle Ayr Mine

Belle Ayr Mine operates in July 2019 south of Gillette. Contura Energy sold the mine to Blackjewel in 2017, and the company is now departing from the Powder River Basin altogether.

In a surprise announcement, coal supplier Contura Energy announced late last month it was severing all ties with the Powder River Basin, the epicenter of coal production in the nation.

The company was once the owner of the Belle Ayr and Eagle Butte coal mines in Wyoming — two of the largest mines in the nation. But in a game of hot potato, Contura sold the facilities it once considered “crown jewel assets” to coal firm Blackjewel in 2017. Not long after, Blackjewel filed for Chapter 11 bankruptcy and auctioned off the coal mines last year to a brand new company, Eagle Specialty Materials. The bankruptcy temporarily ground the two mines to a halt, affecting nearly 600 coal miners.

All the while, Contura Coal West maintained the permits to the coal sites, and therefore continued to shoulder the approximately $237 million in reclamation obligations.

But the recent merger shows the firm may have shaken the hefty liabilities associated with the mines. Contura Energy merged two of its wholly owned subsidiaries — Contura Coal West and Contura Wyoming Land — with the current owner of the pair of coal mines, Eagle Specialty Materials.

In other words, Contura Coal West and Contura Wyoming Land are now subsidiaries of Eagle Specialty Materials. (Eagle Specialty Materials is a newly formed affiliate of Alabama-based FM Coal).

“Contura has completed the final element of its years-long exit from the Powder River Basin,” David Stetson, Contura’s chairman and chief executive officer, said in a statement on May 29. “We are pleased to conclude this clean-up transaction and continue our focus on operating and developing our Central Appalachian metallurgical properties.”

Eagle Specialty Materials paid Contura Energy $625,000 for the transaction. Though Eagle Specialty Materials has been operating the coal mines since October, the federal leases still reside with Blackjewel.

As it stands, the merger “meets all rules and regulations,” according to Keith Guille, the public information supervisor at Wyoming Department of Environmental Quality. “(Contura West Coal) still (has) an active permit and all bonds are in place.”

But Powder River Basin Resource Council, a grassroots landowner group, remains skeptical of the latest assignment of the permits. Earlier this month, the organization’s counsel submitted a letter to Wyoming environmental regulators asking why the merger had not prompted a public notice or opportunity to comment.

According to Department of Environmental Quality regulations, “if a permit is transferred, sold or assigned there must be public notice and a public comment opportunity, with public participation rights the same as an initial permit application, before that permit is transferred, sold or assigned,” staff attorney Shannon Anderson wrote in the letter.

But Guille said the merger will not prompt a public comment period. “(Contura Coal West) still holds the permits and bonds, so it doesn’t trigger any type of action ... (the fact) that it is now a subsidiary of ESM doesn’t change that.”

In addition, a motion filed in bankruptcy court Tuesday by Kentucky environmental regulators states Blackjewel has 606 outstanding environmental and mining violations at several mine sites in the state, many now owned and operated by Eagle Specialty Materials.

In response, the Powder River Basin Resource Council has asked Wyoming Department of Environmental Quality officials to consider this information when determining the fitness of Eagle Specialty Materials as the holder of permits in Wyoming. The group has long expressed alarm over mounting reclamation, or cleanup, liabilities associated with coal mines in the Powder River Basin. Half a dozen coal company bankruptcies have rocked the basin in the past five years.

It wasn’t long ago when the organization fought the transfer of the permits from Contura Energy to Blackjewel, due to Blackjewel’s shaky mining record and outstanding violations out east. The Wyoming Environmental Quality Council ultimately stayed the transfer of permits from Contura Coal West to Blackjewel after holding a two-day hearing in May.

The Department of Environmental Quality has not issued a formal response to the resource council’s letter, but is in the process of reviewing both the group’s comments and Tuesday’s bankruptcy motion.

Follow the latest on Wyoming’s energy industry @camillereports

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Energy and Natural Resources Reporter

Camille Erickson covers the state's energy industries. She received her master's degree at Northwestern University's Medill School of Journalism. Before moving to Casper in 2019, she reported on business and labor in Minneapolis, Chicago and Washington.

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