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Coal Leasing Climate Change

A truck hauls coal in March 2017 at Eagle Butte Mine near Gillette. The mine is owned by Blackjewel LLC.

A northern Wyoming landowners’ group is suing the state for declining to prove that $27 million in ranchland used as collateral for a coal mine’s cleanup is really worth that much money.

The dispute concerns Blackjewel LLC, a relative newcomer to Wyoming coal country. The firm announced that it had acquired Eagle Butte and Belle Ayr mines from Contura Energy in December 2017, but in order to take full operation of those mines, the newer firm has to provide financial assurances — insurance or property that can be used to cover the cost of mine cleanup in Wyoming should the coal company go under.

To date that permit transfer has not taken place, but the bonds have been proposed. They are the same as the last coal company’s bonds.

Of the $247 million in cleanup liability at the two mines, $26.7 million is covered by real property: 20,000 acres of Campbell County ranchland owned by Contura. The Powder River Basin Resource Council is arguing that a 20,000-acre ranch in northern Wyoming isn’t worth that much cash.

The Sheridan-based group filed a public records request in October with the Wyoming Department of Environmental Quality — which had approved that the land be used as collateral — asking the agency to prove the property was valued at that amount. The state declined at the time, saying that the coal firm had requested its appraisal information be kept private.

Now the landowners’ group, which has been critical of Blackjewel’s reputation for environmental failings in its past dealings in Appalachia, is suing the state for denying its public records request.

The Department of Environmental Quality deferred comment on the suit to the Wyoming Attorney General’s Office. The AG, Peter Michael, declined to comment.

“I must confess that this case has not come to my attention,” Michael wrote in an email, adding that the office rarely comments on litigation, particularly this early in the process.

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The land involved is actually two separate properties. Together, they account for about 22 percent of the bonding obligation for the Belle Ayr mine, an operation that lies about halfway between Wright and Gillette on the east side of Highway 59.

The Powder River Basin Resource Council voiced its members’ doubts about the land value when Contura Energy applied for a permit renewal for the Eagle Butte and Belle Ayr mines last year.

The mines had been acquired by Blackjewel LLC, but the permits still belonged to Contura, as is still the case today. Blackjewel is the owner and operator of the mines, but the permits are still held by the older firm.

Compared to other ranches in northern Wyoming, the landowner group argued, a $27 million property appeared unlikely.

The group asked DEQ, in a public records request in October, for documentation from the coal company — Blackjewel — proving the land was worth $27 million. The department refused.

“Blackjewel has requested that the appraisal be confidential,” the agency wrote in response, according to records included with the lawsuit.

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Contura was an offshoot of the Alpha Natural Resources bankruptcy, formed in 2016 in order to take over Eagle Butte and Belle Ayr. Like most of the big coal players in Wyoming at the time, Alpha had some of its bonding covered by self-bonds — promises of eventual reclamation based on the financial health of the company. Post insolvency, firms like Alpha (and new firms like Contura) didn’t qualify for self-bonds.

Contura Energy’s bonds were approved in 2017, around the same time that the company replaced $71 million in personal property collateral bonds with sureties. The move pleased environmental groups that viewed some bond instruments as riskier than others.

The ranch property was also approved by the state at that time.

When Contura then unloaded the Eagle Butte and Belle Ayr mines to the newcomer from Appalachia, Blackjewel LLC, the land used as collateral was meant to go with the sale, performing the same bonding role for Blackjewel as it had for Contura.

But Blackjewel has been slow to move through the paperwork necessary to get Wyoming’s DEQ to allow Contura’s permits to transfer to Blackjewel. It was delayed in obtaining the leases for Eagle Butte and Belle Ayr by a history of environmental concerns in other states. The company finally applied to transfer permits from Contura in November, nearly a year after acquiring the mines.

The landowers’ group argued in a press release that transparency on the land value was critical because Contura, and now Blackjewel, has set a precedent as the first coal firm to use real estate bonds against cleanup costs.

“This is a complicated situation with both the mine permit renewal and the same permit’s proposed transfer to a different company,” said Resource Council Chairwoman Joyce Evans in a statement. “We need to make sure the federal and state laws are being followed before allowing these actions to be finalized.”

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Energy Reporter

Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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