The Belle Ayr Mine seen on Google Earth (Google Earth)

Blackjewel and Contura found a new buyer for the Eagle Butte and Belle Ayr coal mines in a deal that shorts state and county coffers but may mark the beginning of the end of a turbulent bankruptcy that has gripped Campbell County for months. 

On Wednesday the judge in a West Virginia bankruptcy court, where the effort to pick up the pieces of the catastrophic mining company collapse has played out, approved a deal for Eagle Specialty Materials to buy the properties. The buyer is a subdivision of Alabama-based FM Coal, created to acquire and run the Wyoming mines.

For miners who have been unpaid for three months, the deal offers the prospect of soon going back to work. The companies could close the deal as soon as Monday barring objections from any key parties.

For the county and the state, the deal offers only about half the amount Blackjewel owed in both county ad valorem and state severance taxes. But both governments acquiesced, with Campbell County Deputy Attorney Carol Seeger telling her commissioners it seemed like the best they could get.

To some of the commissioners, who met Tuesday to debate the offer, the new buyer offered something else: A chance to cut ties with both Blackjewel and Contura.

“It does get Contura and Blackjewel completely out of Campbell County, which I don’t think can happen fast enough,” said Commissioner DG Reardon. 

A sign greets a skeleton crew of Blackjewel employees who returned to work at the Belle Ayr mine. (Andrew Graham/WyoFile)

Contura will in fact not immediately exit Wyoming under the terms of the deal. The company holds the mine permits and associated reclamation obligations, and is granting ESM an operating license to mine coal until the permit transfers are complete. 

But the prospect was palatable enough for the majority of commissioners to swallow even what some called a final insult from Contura — $1.5 million in unpaid taxes that predate the sale to Blackjewel. 

“That’s less than the salary [and benefits] of their newly appointed CEO,” said Commissioner Mark Christensen, the only commissioner to vote against the deal with Eagle Specialty Materials. 

Now that the deal has been approved, commissioners, state officials and former Blackjewel miners who haven’t found new work hope FM Coal and ESM have a plan to mine Wyoming coal for some time. 

“That is going to be my ask,” said the commission Chairman Rusty Bell, “that they just be good neighbors and be a good company for us, not just taking everything out of Campbell County.”

High obstacles, low price

What intentions the company has for Campbell County remain to be seen. Though the bankruptcy has dragged on for months, the deal came together relatively quickly — at least the portion of the negotiation visible to the public in court filings and courtroom hearings. Lawyers for FM Coal told the bankruptcy judge the company intends to “mine under the current mine plan,” which if completed would give the two mines 10 more years of life. 

FM Coal will have to restart operations quickly because of pressing customer demand, lawyers said in Wednesday’s hearing. The new owners will likely begin shipping coal very soon to utility customers that have worried about the mines’ fates for three months. The company will need to rehire employees and perhaps lure back local contractors and vendors stung by ousted-Blackjewel CEO Jeffrey Hoops, who had a reputation for not paying bills in a timely manner. In early September, a Blackjewel human resources manager estimated to WyoFile that roughly half the workforce has found new jobs. 

If the obstacles for FM Coal seem high, the price they’re paying for the mines isn’t. Contura will hand the company $90 million to take over Eagle Butte and Belle Ayr. It is the second time Contura has paid a company to take the properties, and their reclamation obligations, off its hands. The first time was in 2017 when it paid $20 million to Jeff Hoops and Blackjewel. 

If the deal goes through and Contura is able to transfer mine permits, they’ll escape a reclamation obligation that was more than $220 million at the time of the bankruptcy filing. 

Wyoming Department of Environmental Quality’s inspection reports of Blackjewel mines included these photographs of large coal mines bereft of a full work force. (Wyoming DEQ)

For coal country as a whole, the mines’ reopening may have ramifications that Wyoming politicians are likely to look past given the imperative of getting miners back to work. Economists and industry analysts have said that what the Powder River Basin needs is consolidation. The closure of two major mines could better balance the scales of supply and decreasing demand, firming-up the remaining operations in Wyoming coal country. 

While Blackjewel has been the biggest headline grabber, it’s not the only coal bankruptcy shaking up Wyoming’s energy landscape. A deal for the Navajo Transitional Energy Company to acquire Cloud Peak’s two Wyoming mines out of another bankruptcy court advanced on Thursday. 

The company, which is owned by the Navajo tribe, has faced criticism at home on the Navajo Nation for its purchase of the Wyoming mines. Some have questioned the deal given the current economics of coal mining, according to a report in the Casper Star Tribune. 

A study commissioned by the Navajo company, however, gave the purchase a positive assessment. The report included the potential closure of Eagle Butte and Belle Ayr, which seemed increasingly likely at the time, as a sign of consolidation in the PRB and a positive for NTEC’s acquisition.

Money for miners? 

The deal includes $32 million for Riverstone Financial, a $39 billion hedge fund, with funds coming from ESM, Backjewel and elsewhere. It offers $1.8 million, meanwhile, to compensate Wyoming miners for unpaid work and withheld but never deposited retirement and health savings payroll deductions.

In unmet 401(k) deposits alone, Blackjewel was $1.2 million behind at the time of filing, according to court documents. That number, however, was for employees in mines both in Wyoming and Appalachia. ESM’s offer of $1.8 million is only for Wyoming workers. It’s unclear how much in miners’ wages went unpaid in Campbell County.

The $1.8 million will also go toward health expenses idle employees racked up in the months since the bankruptcy filing that have not been covered by Blackjewel. The company cancelled health insurance for idle employees at the end of August, with court approval. Lawyers told the bankruptcy judge they wouldn’t be able to keep up with further expenses. Other medical expenses haven’t come due yet, lawyers said at Wednesday’s court hearing. 

FM Coal’s owner, Michael Costello, agreed to pay as many of those costs as possible while staying under the $1.8 million cap.

Some taxes reclaimed 

Under the deal, Campbell County will collect half of the $17.5 million that Blackjewel owes in unpaid ad valorem mineral taxes. ESM will pay that debt over five years, according to testimony at the county commissioners’ meeting. The company will not have to pay interest on the taxes unless it falls behind on payments. 

The state of Wyoming, which was owed $11 million in mineral severance taxes, has also agreed to accept half the amount, according to Michael Pearlman, a spokesperson with the governor’s office. 

Blackjewel also owed the federal government $60 million in royalties. No settlement with the federal government has yet been made public. 

For its part, Contura Energy will pay the county $13.5 million of the $15 million in ad valorem taxes it owed before handing the mines to Blackjewel. The $1.5 million that so irked commissioner Christensen will go unpaid. Seeger, however, counseled the commission that it likely wouldn’t get a better deal. 

“We’ve got this agreement to the best case scenario,” she told the commissioners. 

Campbell County has spent $272,772 on legal fees in the Blackjewel case since the beginning of August, Seeger told WyoFile via email.

For Campbell County, which has fought for years to change Wyoming law to better protect themselves from losing taxes to energy company bankruptcies, the deal contains another win. ESM will pay ad valorem taxes monthly, rather than yearly as dictated by statute, Seeger said.

Monthly payments on ad valorem taxes could significantly lessen the tax debts that coal companies can carry into bankruptcy, which have consistently stretched into the tens of millions of dollars. Though collected by counties, ad valorem taxes fund public schools throughout the state. Coal companies in the past have successfully convinced Wyoming lawmakers not to alter the collection schedule. 

The deal with ESM could offer a road map for a new Wyoming Legislature committee that will meet Oct. 14 to examine statutory responses to a wave of coal bankruptcies. 

Deal ‘sets a precedent’

Unlike Blackjewel, Contura is not in bankruptcy proceedings. There’s no reason it should be able to escape its tax obligations, said Shannon Anderson, an attorney with the Powder River Basin Resource Council. “That is letting Contura off the hook,” she said. “We get that Blackjewel, at least supposedly, doesn’t have any money to fulfill all of these obligations. But Contura does.”

Anderson’s organization played a key role in the bankruptcy. Before Blackjewel filed, the group challenged a transfer of the mine permits from Contura to Hoops’ company, arguing that the Wyoming Department of Environmental Quality had not sufficiently scrutinized Blackjewel’s history in other states. A citizen oversight board of the DEQ agreed, and delayed the permit transfer. The delay kept Contura on the hook for reclamation and other regulatory obligations.

Anderson worries a deal between Contura and the federal Office of Surface Mining Reclamation and Enforcement doesn’t hold the coal company accountable for any violations that occur at Eagle Butte or Belle Ayr while Contura still holds the mine permits. Language in the deal prevents OSMRE from “attempt[ing] to link” any violations by Eagle Specialty Materials to Contura. 

“Both [companies] should be responsible and liable,” Anderson said, “but definitely the permit holder.”

Support in-depth coal reporting with a tax-deductible donation

As the coal mining industry grows more turbulent and bankruptcies increase, Anderson worries the deal sets an irresponsible precedent that could have ramifications as companies seek to distance themselves from failing coal mines and the associated reclamation obligations. 

“It definitely sets a precedent on this whole new world that we’re going to start seeing more prevalently where one company holds permits and another is operating,” she said. 

That worry seemed to be on federal lawyers’ minds too: “The OSMRE Contura Settlement does not establish any precedent and cannot be used by Contura Coal West or ESM or any other organization in an attempt to justify similar terms in any subsequent SMCRA case, administrative appeal, complaint, claim, case, or matter before the courts or administrative tribunals of the United States of America or any state,” the deal reads. 

Anderson does not think such language alone can prevent creating a precedent, she said. 

Andrew Graham is reporting for WyoFile from Laramie. He covers state government, energy and the economy. Reach him at 443-848-8756 or at, follow him @AndrewGraham88

Join the Conversation

1 Comment

Want to join the discussion? Fantastic, here are the ground rules: * Provide your full name — no pseudonyms. WyoFile stands behind everything we publish and expects commenters to do the same. * No personal attacks, profanity, discriminatory language or threats. Keep it clean, civil and on topic. *WyoFile does not fact check every comment but, when noticed, submissions containing clear misinformation, demonstrably false statements of fact or links to sites trafficking in such will not be posted. *Individual commenters are limited to three comments per story, including replies.

Your email address will not be published. Required fields are marked *

  1. Just a quick comment on the 1st photo. The photo and legend are misleading in regards to the area impacted by the Belle Ayr mine. The photo includes Peabody’s Caballo mine to the north of Belle Ayr and the Cordero Rojo mine, now owned by NTEC, to the south of Belle Ayr.