If Contura Energy is successful in a bid to reacquire two Powder River Basin coal mines, it could become even more difficult for Campbell County to collect $37 million in unpaid taxes on the properties.

Campbell County lawyers objected to last week’s proposal in a West Virginia bankruptcy court on Friday. The court has had control over the mines’ fate since the mines’ operator, Blackjewel LLC, crashed into bankruptcy with hundreds of millions of dollars in unpaid debts on July 1.

Campbell County will be “left holding the bag,” said Jeffrey Liesemer, an attorney hired to represent the county, during Friday’s hearing.

“These taxes go to fund schools, they pay teachers,” he said. “We’re not trying to protect a profit margin here.”

The county’s mounting difficulty collecting ad valorem taxes is no surprise to county commissioners and officials there. It’s a problem they’ve been pleading for help with for years. But as the coal bankruptcies and unpaid tax bills mounted, elected and appointed state officials left Campbell County to fend for itself again and again, county officials say.

Recent WyoFile reporting reveals that county officials, trying to head off these dire financial losses, sought state government support for their collections efforts, only to be brushed off.

Now, several years, several coal bankruptcies and tens of millions of dollars in jeopardized ad valorem taxes later, the county is left with diminishing recourse as bankruptcies proceed.

Contura Energy seeks to buy the Eagle Butte and Belle Ayr mines back from Blackjewel after selling them to it two years ago. The deal Contura proposed last week lets it acquire the mines without most of Blackjewel’s unpaid debts, including staggering tax debts to Wyoming. Bankruptcy filings indicate the company owes $37 million to Campbell County, $11 million to the state of Wyoming and $60 million to the federal government in taxes and royalties.

Around half the money owed in federal mineral royalties is due back to Wyoming. The total revenue at risk for state coffers could be as high as $78 million.

Despite objections from several creditors including the federal government, Judge Frank W. Volk allowed Contura’s bid for the mines to go forward. The judge has struggled to protect the roughly 1,700 workers left unemployed by Blackjewel across mines in Wyoming and Appalachia and saw the deal as the best way to put miners back to work, he said in the hearing. The mines are now set for an auction on Aug. 1 — if no one makes a higher offer than Contura’s, the company could get the mines back following a final court hearing on Aug. 3.

Blackjewel isn’t the only ongoing bankruptcy where Campbell County is struggling to collect unpaid bills.

A judge’s recent order in Cloud Peak Energy’s bankruptcy put Campbell County near the back of the line to collect unpaid taxes in the neighborhood of $30-40 million, according to two Campbell County commissioners. In the same order, the judge ruled that Big Horn County, Montana, where Cloud Peak also operates, would get priority for its unpaid taxes.

But before Cloud Peak and Blackjewel, there was an early round of three coal bankruptcies in 2016. Some industry observers called them the canary in Wyoming’s coal mines, and the threat to tax dollars prompted Campbell County to turn to the state for help.

In the summer of 2016 with $19 million in unpaid ad valorem taxes on the line in Alpha Natural Resources’ bankruptcy, two Campbell County commissioners and a county attorney made the trek from Gillette to Cheyenne to meet with the Wyoming attorney general.

 

By Andrew Graham

WyoFile.com