Workers in limbo and uninsured as Blackjewel deal languishes

Blackjewel employees hoping to return to work still lack answers, and now lack health insurance, as the sale of the Eagle Butte and Belle Ayr mines to Contura Energy languishes.

Meanwhile, uncertainty about the mines’ reopening is mounting as they enter the third month of closure. The federal government, concerned about unpaid federal mineral royalties, has yet to give its blessing to Contura’s purchase. A Wyoming landowners’ group, the Powder River Basin Resource Council, has filed a complaint with state and federal regulators, arguing Contura is out of compliance with statute for not updating its mine plans. And media reports suggest Contura may not be interested in operating the mines for long, even if it’s able to acquire them. 

Roughly half of Blackjewel’s Wyoming workforce has likely found employment elsewhere, Blackjewel Human Resources Manager Brandy Elder estimated in an email to WyoFile. The company employed around 580 people at the two mines when they closed, according to federal mine employment data maintained by the Wyoming State Geological Survey. 

Nationwide, the company has around 150 employees working as the bankruptcy proceeds, according to court filings. 

Those employees who haven’t found new work got another piece of bad news on Aug. 30 when Southern District of West Virginia Judge Frank W. Volk approved the proposal by Blackjewel to jettison its health insurance plan. The company could no longer maintain the plan, its lawyers wrote, without cash from mine sales and without a transference of employee obligations to mine buyers like Contura and other companies seeking to acquire Blackjewel’s eastern assets.

The company has paid $2.3 million in premiums and claims since the bankruptcy began on July 1, lawyers wrote, and can’t afford to pay much more. Blackjewel expected that “a large number of employees would have been hired by one of the asset purchasers and would have been provided with replacement health coverage” by now, the lawyers wrote. The company also expected “that cash from the sales proceeds … would be available to pay the amounts due under the Health Plan.”

Blackjewel lawyers couched the plan’s termination as the safest path forward for the out-of-work miners as the company’s own resources dry up. “It is the only viable option to avoid the risk that the accumulation of new claims for medical expenses will exceed [Blackjewel’s] ability to reimburse such claims,” the lawyers wrote. With the plan terminated, employees must seek insurance elsewhere. 

The company informed employees about the loss of their insurance through a letter to employees posted online.The letter was dated Aug. 24, giving the employees a week’s notice that they would lose their insurance on Aug. 31. 

In the aftermath, state officials have scrambled to provide assistance. Gov. Mark Gordon on Aug. 30 issued a press release stating he’d directed the Department of Workforce Services to team up with Enroll Wyoming, which helps state residents sign up for healthcare plans. The agencies will host a meeting in Gillette on Thursday to help Blackjewel employees register for new plans.

New insurance may not come cheap to miners who haven’t seen a paycheck in weeks. Because their plan is being terminated outright, the miners do not qualify for COBRA, which would allow them to maintain their old insurance plans. Instead, miners will likely have to turn to the federal Health Insurance Marketplace developed by the Obama administration, or look for plans on the private market. 

The federal marketplace offers tax credits to lower monthly premium payments based on income level.

“It’s based on a year’s worth of income,” said Cynthia Nunley with Enroll Wyoming, who will travel to Gillette this week. “They’ve gotten a monthly income up until whenever they got locked out and they quit paying them,” she said of the Blackjewel employees. The annualized nature of that calculation may prove problematic for some, she added. 

“Sometimes these guys get good money and they might not qualify for tax credits,” Nunley said.

Ripple effects

In another symptom of coal’s intertwined relationship with the Campbell County and Gillette economies, Blackjewel’s health plan elimination could have further ripple effects. 

Blackjewel is one of three coal companies that pay to support a primary care clinic in Gillette called the Coalition Family Health Center. Along with coal company workers, Campbell County and City of Gillette employees also use the clinic. One of the other coal company funders, Cloud Peak Energy, is also in bankruptcy proceedings. The third company is Peabody Energy. Coal companies began the program in 2008 to lower their healthcare costs and create more primary care options for their workers, according to a Gillette News Record article.

For now, Blackjewel remains a member of the coalition, Blackjewel’s Elder said. “Employees that no longer have health coverage are allowed to utilize the Coalition and will be billed the rate to pay from [Health Savings Accounts] or cash,” Elder wrote. 

Staff at the clinic and a representative for Peabody Energy told WyoFile they were unable to comment on how Blackjewel’s termination of its health plan might impact the clinic or its other members. City and county employees use the clinic, which is less expensive than other healthcare options, said City of Gillette spokesperson Geno Palazzari.

City staff have been been inquiring what may happen next, he said. 

“Our staff has asked that question of them but we haven’t gotten a definitive answer from them,” Palazzari said.

The city and county have their own health insurance plans through Blue Cross Blue Shield, Palazzari said, and the clinic is just one facet of healthcare for local government employees. Still, he said, the news of Blackjewel eliminating its health insurance plan is “definitely a concern.” 

“Dead” deal?

On Aug. 27, the hedge fund Riverstone Financial Services, which has played a pivotal role in the bankruptcy, alleged in a court filing that Blackjewel had described the deal with Contura Energy as “dead” — an ominous sign for employees and the broader community wading through court filings and hearings for some clue of what comes next. 

Lawyers for the coal companies have denied that characterization and said they continue to negotiate with parties including the federal government, which is owed $60 million in royalties. 

The bankruptcy judge recently left it to the federal government to hash out a satisfactory deal with Contura. That process takes place outside of the courtroom and off the record, leaving the public largely in the dark about the specifics of negotiations and what the sticking points could be. But, as the company’s motion to end its insurance plan for employees’ indicates, a deal that would allow the sale to proceed has yet to be struck.

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Meanwhile, the landowner group Powder River Basin Resource Council has filed a citizen’s complaint with both the Wyoming DEQ and the Federal Office of Surface Mining, alleging that Contura is violating federal and state rules by not updating its permits or annual reports for the two mines. State rules require coal companies to submit notice and update an annual mine report if they intend to cease operations for longer than 30 days, PRBRC attorney Shannon Anderson argued in the complaint, including with information about how long the cessation will last. Such notification is overdue from Contura and is leaving the public in the dark, Anderson wrote. 

“This violation is significant,” she wrote in the complaint that was filed on Aug. 26. “The update to the annual report is required to provide notice to the DEQ, mine employees, and the community of the permittee’s plans.”

Though Blackjewel owns the mines, Contura continues to hold the permits after state regulators delayed a transfer between the two companies this spring following a Powder River Basin Resource Council objection. 

As permit holder, the PRBRC argued in its complaint, Contura has failed to update its permit and reclamation plans to indicate its intentions with the mines. Various media outlets have reported that even if the deal with Blackjewel goes through, Contura may not intend to operate the mines for long.