By Andrew Graham

July 2, 2019 - Shockwaves hit the Powder River Basin as coal company Blackjewel LLC filed for bankruptcy and then laid off hundreds of workers Monday.

Blackjewel LLC — which operated the Belle Ayr and Eagle Butte mines — filed for bankruptcy Monday morning in a West Virginia court. By day’s end, Blackjewel had sent its employees home and closed the mines, the Casper Star-Tribune and Gillette News Record reported. Company CEO Jeffrey Hoop told the Star-Tribune the mines “are out of order until further notice,” after his company failed to secure fresh financing to continue operations. 

In a statement, Gov. Mark Gordon said he had directed the Wyoming Department of Workforce Services to “mobilize” for affected workers. “We are not unprepared for this set of circumstances and are eager to do all we can for the hardworking employees of these mines,” Gordon said. 

But the devastating news for Wyoming coal miners came even as politicians continue to grasp for the right way forward. In an interview Monday as the news unfolded, a Democratic leader’s priorities for coal miners clashed with Gov. Mark Gordon’s carbon-capture ideas.

To help Wyoming coal miners, Gov. Mark Gordon wants to first help the struggling coal industry develop carbon emission solutions, he told reporters last week, before the most recent bankruptcy of Blackjewel LLC. At the same press conference, the governor suggested the state could get more involved as miners lose jobs and benefits.

But one of the state’s leading Democratic lawmakers said miners need stronger action.

The state needs to start looking for ways to ensure coal companies don’t abandon obligations to miners, House Minority Floor Leader Cathy Connolly (D-Laramie) said. The state may be able to write new statutes to ensure companies honor commitments to retirement and healthcare benefits, she said.

“I think that while the governor’s strategy is kind of long-term thinking, I do think that we need to be able to respond quickly to worker needs and that becomes family and community needs,” Connolly said. “We need to hold these companies accountable to their workers and people don’t talk enough about that.”

Meanwhile, in the press conference last week Gordon responded to questions about the state’s response to miners’ woes by outlining his plans to help the coal industry counter concerns about climate change. Societal worries about carbon dioxide emissions have helped drive a shift toward renewable energies, though much of coal’s immediate woes are derived from cheaper natural gas.

Gordon had been speaking to new Wyoming Workforce Services Director Robin Sessions Cooley about “the potential disruption” the industry’s decline could mean to Wyoming workers, he said last week. But the governor largely focused on carbon-capture technologies and his vision to create “carbon negative” solutions for the coal industry. Gordon also said diversifying the state’s economy would provide new careers if mining jobs dry up.

Blackjewel Was Risky for State

Blackjewel’s operations in Wyoming were themselves a result of a bankruptcy, acquiring the two mines through a buyout deal with Contura Energy, an offshoot of the bankruptcy of Alpha Natural Resources

Observers of the Wyoming coal industry already saw Blackjewel as an example of riskier operators moving into the state as more stable coal companies withdraw. The company had already fallen behind paying ad valorem taxes to Campbell County. Its compliance record with regulators in eastern states also raised eyebrows, enough so that the Wyoming Environmental Quality Council delayed approving a mine permit transfer after landowner group the Powder River Basin Resource Council challenged it. The bankruptcy is likely to add further questions in that affair.

“Blackjewel’s bankruptcy filing is hardly a surprise,” the Powder River Basin Resource Council said in a statement on Monday. “We have been raising questions with Wyoming regulators about the company’s financial stability and operatorship because this is exactly what we feared would happen. The entire history of the company’s involvement in Wyoming has had red flags, starting with the fact they were essentially gifted the Belle Ayr and Eagle Butte mines by Contura to rid themselves of the liability.”

Contura sold the mines at a loss, but said it would receive tax write-offs against future income and escape from under more than $200 million in reclamation obligations attached to the two mines.

Blackjewel is now the fifth operator in Wyoming to file for bankruptcy in three years. The mines operated by Blackjewel employ a combined 580 people, according to federal data compiled by the Wyoming State Geological Survey in April. 

The newest bankruptcy comes less than two months after Cloud Peak Energy, once considered a prominent and safe player in the Powder River Basin, filed for bankruptcy. That company already reduced benefits for its employees, while executives have received large bonuses.

In its statement, the Powder River Basin Resource Council urged the state to take action. “As we said less than two months ago when Cloud Peak filed for bankruptcy, we urge the State of Wyoming and county government to assert themselves in these bankruptcy proceedings on behalf of miners, taxpayers, and our environment,” the group said. 

In his statement Monday, Gordon acknowledged the company’s poor position. “Other companies have faced similar challenges,” he said. “However, I recognize that this circumstance may be a bit different. That is why I have been in contact with Director Parfitt of the Department of Environmental Quality to make sure Wyoming’s interests are protected. DEQ has been diligent in making sure adequate bonding is in place.

“This announcement is hardest on the individuals who work at these important mines and their families, and our most immediate concerns lay with them.”

Carbon-Negative Kemmerer?

Outside the Powder River Basin, coal country in southwestern Wyoming also worries. Westmoreland Coal Company, which once owned a mine outside Kemmerer, shed obligations to its employees and retired union miners, while also reportedly awarding bonuses to higher-ups. Union miners were forced to appeal, so far unsuccessfully, to a bankruptcy judge in Texas to try and secure healthcare for retirees.

The miners’ union also is seeking help for retired miners at the federal level, efforts Wyoming’s D.C. delegation has not supported. The Kemmerer Mine was sold to Westmoreland’s debtors after the company was unable to find another buyer, according to reporting by Wyoming Public Media. It’s now operated by a Canadian contractor that does not have coal mining experience.

The mine employs 283 people, according to April data.

Asked at his press conference about Kemmerer, which is also the home of a power plant that has shut down one of its units and may follow with more, Gordon said the town could one day play host to new coal technologies.

“One of my major pushes has been to refine the conversation we’re having nationally to understand the value that coal and new coal technology specifically can have as we talk about climate change,” Gordon said.

He pinned his hopes for national refinement on an experimental carbon capture technology he’s discussed in recent public appearances, called bioenergy carbon capture and storage. The technology seeks to pair coal fired power plants with the burning of biomass. Because trees and other growing things lock up carbon as they grow, regrowing the biomass would then lead to a net negative in atmospheric carbon, proponents of the technology suggest.

Gordon has called it a “carbon-negative coal solution.”

On Thursday, Gordon called Kemmerer a possible home for the technology.

“Kemmerer is a great example where if we were able to start to incorporate some of the dead trees that are in the forests there and burn that in a carbon capture and sequester scenario we would actually have carbon negative projects that would help our forests, help our climate and keep good jobs and employees working,” Gordon said.

The technology Gordon is championing, often referred to by its acronym BECCS, remains experimental. Environmentalists opposed to the technology say its not clear burning large amounts of biomass will lead to negative emissions, and that the ecological costs of harvesting the biomass may be too great. Carbon-capture technologies themselves remain prohibitively expensive for utilities to install on coal plants, the EPA recently found.

When a reporter pressed Gordon about a more immediate concern — miners who have lost health care and other benefits through bankruptcies — Gordon said it’s a discussion he’s having with the new director of the Department of Workforce Services.

“There may be a role for Wyoming to play,” in helping miners maintain their benefits, Gordon said. Department of Workforce Services Director Robin Sessions Cooley and Gordon “have been in conversation really since I took office about the potential disruption that this could mean,” Gordon said.

On Monday, a spokesperson for the agency said discussions on the topic between Gordon and Cooley were ongoing and there were no concrete steps planned. When mines lay off workers, the agency responds accordingly by sending teams to the impacted business and community, offering unemployment insurance and help looking for new work.

Gov. Mark Gordon reads from prepared remarks before a press conference on June 27. (Andrew Graham/WyoFile)

“Anybody that loses their jobs in Wyoming we step in where we can and how we can,” said Ty Stockton, spokesperson for the agency. But the agency is limited in what it can do for workers who are still employed but lose their health insurance as coal mining companies shed obligations in bankruptcy proceedings, he said.

“There’s currently no state law or anything that would assist with that,” Stockton said.

Connolly would like to see that change, she said, but it could be a difficult lift for lawmakers. “These are overwhelmingly out-of-state corporations,” she said, calling the state’s ability to regulate them limited. Cloud Peak Energy would be an exception. The company is based in Wyoming.

But there are plenty of examples of ways the state regulates the coal mining industry, from workplace safety to environmental rules. As such, the state should be able to pass laws to hold companies to obligations made to Wyoming miners, Connolly said. 

“It’s not an easy road but given what’s happening — workers spent their lives working for a company with the promise of health insurance and retirement, which is what we say the private sector is supposed to supply. We should hold [mining companies] to it,” she said.

Connolly noted that the state’s solons acted to protect Wyoming counties’ financial interests in bankruptcies. Last year, lawmakers passed a law that gave counties more authority to collect taxes owed to them in bankruptcy proceedings by giving them a higher priority among debtors.

“We were able to do that and we should be able to look at health insurance and retirement as a debt that’s owed in a different kind of way,” Connolly said.

Connolly was skeptical about the governor’s interest in new coal technologies, she said, because she believes the electricity market is moving on. The Wyoming Legislature already appropriated $5 million Gordon asked for to develop carbon capture technologies, along with significant sums for similar causes under past administrations. Gordon is likely to ask for an as yet undetermined amount in the coming Legislative budget session to chase matching grants from the U.S. Department of Energy, he told WyoFile in May. 

Connolly expressed wariness over spending more money in that area.

“I want to make sure that we’re not throwing good money after bad,” she said. “We need to acknowledge our markets for coal are acknowledging climate change far more readily than we are and they’re certainly not building new coal plants.”

Gordon was also asked Thursday about a recently proposed merger between two coal giants, Arch Coal and Peabody. The companies are proposing to merge their Wyoming and Colorado mining operations, which would include the merger of two of the Powder River Basin’s largest coal mines. Politicians and the companies have largely painted the move as a positive for Wyoming’s coal industry that will give it some staying power by dramatically reducing the cost of production.

Some analysts however worry the merger will make it harder for bankrupt companies like Cloud Peak, and now maybe Blackjewel, to sell off mines if needed. If it passes the scrutiny of federal regulators, the merger will create a giant in the Powder River Basin that could stifle other, smaller operators.

Gordon has met with representatives of the companies and is optimistic about the proposal, he said.

“Generally speaking, I think it’s good for Wyoming,” he said. “It provides a stronger opportunity for [mine reclamation] bonding — it makes the coal coming out of the Powder River Basin more competitive with renewables and gas. I think generally speaking it’s very positive for the employees in Wyoming.”