Wyo politicians respond to Blackjewel and coal’s black times

To kick off Cheyenne Frontier Days on July 19, U.S. Rep. Liz Cheney (R-Wyo.) stood before a gathering of Cheyenne’s most eminent citizenry and read a letter from President Donald Trump.

“As president I’ve worked with your congressional delegation on issues important to Wyoming,” Cheney delivered aloud at the Greater Cheyenne Chamber of Commerce’s Pardner’s N’ Prosperity Luncheon. “We worked to unleash Wyoming’s full energy potential as the No. 1 coal producing state by reversing the industry-killing policies of the previous administration.” Those close to the stage could perhaps make out the outsized scrawl of the president’s signature through the page.

After the reading, Cheney declined to speak at the event with WyoFile about Blackjewel.

Roughly 250 miles north of the pomp and pageantry of Wyoming’s biggest party, Gillette was meanwhile grappling with the sudden collapse of Blackjewel, the closure of its Eagle Butte and Belle Ayr mines and the possible loss of nearly 600 mine jobs. The local branch of the Wyoming Department of Workforce Services was still receiving waves of recently unemployed, both from Blackjewel and collaterally damaged companies in the coal-dependent local economy. Restaurants and community organizations were offering discounts and hosting cookouts for Blackjewel employees. The Salvation Army was paying utility bills for out-of-work miners as they went first without one and then another paycheck.

Neither coal industry analysts or out-of-work miners WyoFile interviewed in Gillette described the industry as “unleashed.”

Blackjewel was not the only cause for concern. Cloud Peak Energy, also in bankruptcy, plans to auction its Cordero Rojo and Antelope mines. Combined with Eagle Butte and Belle Ayr, that makes a quarter of Wyoming’s Powder River Basin mines on the block. Together they employ 1,500 people.

“They went from having big salaries and lots of everything to having lots of everything but no salaries,” said Gillette Salvation Army Office Director Jenny Nell Hartung. She’s seen a 400% increase in food takeaways this month and helped at least 15 miner families pay their utility bills. The Salvation Army’s office has been converted into an impromptu food bank.

Responses to the calamity and what it means for the coal industry have varied among Wyoming politicians — those who serve in Cheyenne as well as in Washington D.C. But a number of familiar themes have dominated the discourse as they have for years, both in public statements and in interviews: The problem, and implicitly the solution, lies in federal regulation; Wyoming must do right by miners; New uses for coal and coal technology are critical to the industry’s (and thus Wyoming’s) future; Coal exportation is a necessity as domestic markets for thermal coal decline.

‘Get our butts to work’

On the afternoon of July 2, the day after Blackjewel crashed into bankruptcy and closed its mines, Speaker of the House Steve Harshman (R-Casper) sent an email to his 89 colleagues in the Wyoming Legislature. The email, since obtained by WyoFile, outlined the unknowns to the state.

“This is the 2nd time in 3 years the mines themselves have undergone bankruptcy,” Harshman wrote to his colleagues in a stark assessment of Wyoming coal’s prospects.

“The reports you read about unpaid ad valorem (property tax), [Federal Mineral Royalties] and severance Tax are big, 10’s of millions of dollars to the state and local governments,” Harshman wrote. “We will know the numbers as time goes on but it will be 10’s of millions. That is all in the past and likely gone. The future risk is larger with lost future production.”

Harshman was far from the only lawmaker to worry about the state’s pocketbook. Blackjewel’s collapse was just the latest in a long series of blows to the state’s bedrock revenue producer. While coal revenue has declined for years with the slow of production, mines have not closed. If Blackjewel’s mines shut their doors for good, the state could lose around $50 million a year in future revenues, according to state revenue estimators.

“The pressure will build to find ways to compensate for continued reductions in revenues as coal declines,” Senate President Drew Perkins (R-Casper) said in an interview with WyoFile the morning of July 2.

The catastrophe in Gillette soured an otherwise celebratory time for Wyoming’s political class. On July 10, legislators and other dignitaries were in Cheyenne for the grand re-opening of the State Capitol following hundreds of millions of dollars in repairs and renovations. Harshman, Perkins and other luminaries addressed a large crowd gathered to tour the new home of state government.

In his speech, Harshman touted the Legislature’s problem-solving and said lawmakers were ready to work for miners. “If Gillette needs help after a mine closes, we’re going to get our butts to work and help out,” he said.

What might actually be done for the families impacted in Gillette was still a topic of discussion, Harshman said in an interview July 29. “We’re working on it,” he said. “The [lawmakers] in Campbell County are doing a great job working on it. They’re taking the lead on it. I’m trying to facilitate all this with staff,” Harshman said, along with the governor’s office and D.C. delegation.

“We’re doing a lot of phone calls, a lot of emailing,” he said.

The speaker even suggested that a special session of the Legislature — called following the regular budget session scheduled for January — could be in order. A special session would enable lawmakers to take action without having to deal with the budget session’s stringent two-thirds majority requirement of non-budgetary bills.

Harshman also expressed sympathy for miners left high and dry by bankruptcies and antipathy toward what some have seen as the looting of the struggling industry by corporate owners.

“The thing that sticks in my craw is you’ve got executives that pay themselves bonuses and then they go bankrupt and then workers’ pensions are threatened,” he said. “That’s not right by any standard that I know of.”

There is room, the speaker said, to strengthen workforce training programs to help coal miners who might look to transition to other industries. He suggested the state might offer “bridge loans” to local governments feeling the pain of lost tax revenue, and that the state could then “double down on workforce development and retraining.”

When it comes to lost ad valorem taxes, however — something Campbell County has tried and failed to get help with from the state — and the possibility of more tax collection being jeopardized by coal company bankruptcies, Harshman preached caution on strengthening regulations.

“We’ve got to be careful not to exacerbate the problem,” he said. “You come in and say we’re going to have this, this and this and all these regulations and rules. What does that do to the rest of the folks out there operating? We certainly don’t want to cause a bunch of jitteriness in the market and do more to add instability.”

Another leading lawmaker suggested maintaining demand is the key to protecting miners. “Figure out a way to stabilize our production,” said Senate Appropriations Committee Chairman Eli Bebout (R-Riverton). “It’s the volatility of the commodity prices” hurting coal, he said in an interview this week.

Policy makers should find a way to “fight these attacks of anti-fossil-fuel and anti-coal [groups] and sustain a 300-million-ton-a-year output from the Powder River Basin,” Bebout said. Mines in the PRB last produced 300 million tons in 2017. Wyoming’s Consensus Revenue Estimating Group, which sets revenue projections for the state, anticipates 285 million tons per year by 2024. That prediction was made in January, however.

The Legislature should continue efforts begun last session to make it more difficult to close coal-fired power plants in the state, Bebout said. Mine “300 million tons a year and [the mines] survive for another 10 years.”

Harshman was more skeptical about the effort to slow coal plant closures, which hinges on forcing utilities to look for a buyer for power plants before closing them. “It all comes down to economics,” he said. “You gotta have somebody to buy it and nobody is going to buy it if they’re going to lose money.”

Doubling down on coal tech

“Folks, this is not going to be made up by making car bodies or carbon sequestration,” Harshman wrote in his July 2 email to lawmakers. “Let’s go to work.”

He was referring to the idea that the dwindling demand for the PRB’s thermal coal, currently used to create electricity, could be replaced by demand for other coal products like light carbon-fiber materials. There’s little indication such products would come anywhere close to sparking the volume of mining, and thus tax revenue, that thermal coal does.

Gov. Mark Gordon has emerged as a vocal advocate for such alternatives as well as carbon capture and sequestration. Gordon also is backing a largely experimental technology called BECCS, which would see coal-fired power plants burn biomass and capture CO2 in what Gordon calls “a carbon negative coal solution.”

The recent events in coal country are driving the governor to double down on, not rethink, his commitment to technological solutions to coal’s social unpopularity, spokesperson Michael Pearlman told WyoFile.

“These recent events have only increased Governor Gordon’s focus on implementing his goals of advancing carbon capture and utilization technologies and standing firm in defense of the coal industry,” Pearlman wrote in response to questions from WyoFile.

“The issue is keeping carbon out of the atmosphere,” Pearlman wrote. “Even the Paris Climate Accord calls for carbon capture and utilization.”

Economists are skeptical that carbon capture technologies can be made cost effective in time to stop utilities from retiring coal plants. Today, installing and running the technologies would make coal-burning plants uncompetitive with other electricity producers.

“Take an old car that runs fine now but it’s old,” is how Rob Godby, the director of the University of Wyoming’s Center for Energy Economics and Public Policy put it in a June interview. “Why would you put a new motor in it? Or not even a new motor, an entirely new interior. A really expensive stereo. At a certain point you just say I’m going to invest in a new car and get rid of the old one.”

Still, Godby supports the effort. In May, Gordon told WyoFile he would be asking the Legislature to spend more money on carbon capture and sequestration research in his first proposed budget, which will come this fall.

Harshman said he too was open to such efforts, despite his skepticism that they could stop coal’s decline in the short term.

“You continue all those efforts on research,” he said. “I’m not waving the white flag. I think this [shift away from coal] is a horrible mistake for our country. Don’t get me wrong.”

But renewed demand for coal in a carbon-conscious world “might not come in any of our lifetimes,” Harshman said. “I don’t think coal is going away forever but right now in this current environment we’re in … it’s driven by consumers.”

Fighting regulations

In a statement the day after Blackjewel’s closure, Cheney pinned the blame on Obama: “While the Trump Administration has made great strides in reversing President Obama’s War on Coal,” Cheney said, “a number of factors, including the far-reaching impact of regulations that unfairly penalize this industry, are still causing pain in Wyoming.”

Since then, evidence has emerged of a legacy of financial chaos at Blackjewel. In a later committee hearing, Cheney said that “what happened with respect to Blackjewel has to do with — the best way you can describe it is significant financial mismanagement.”

But she again pointed to Obama. “There’s no question but that the policies adopted by the Obama administration were an attempt to kill coal,” Cheney said. “That’s exactly what the Clean Power Plan was, and those have had an impact.”

Opposing federal regulations has long been a stance held by Wyoming politicians. In response to emailed questions from WyoFile about how Cheney planned to react to the Blackjewel closing and other warning signs for Wyoming coal, a spokesperson for the congresswoman provided a compilation of federal regulations on the coal industry that Cheney has opposed.

Gordon took a broader view of the causes of recent coal bankruptcies: “The margins in the coal industry are razor thin,” his spokesperson wrote to WyoFile. “The bankruptcies are indicative of that. Past policy decisions played a role, as did the availability of natural gas as well as changing market conditions. Today there are many factors compounding to make profitability difficult, but far from impossible. Coal mines can still be profitable.”

Trump’s reelection would “stabilize the marketplace for a longer period,” gubernatorial spokesperson Pearlman wrote. “Additionally, Wyoming coal is being outcompeted by wind in places like Texas and wind is definitely benefiting from friendly regulations and tax incentives.”

Then there’s proposed coal-export ports on the west coast, which Washington and the other coastal states have blocked out of concern for climate change as well as more localized water and air pollution worries.

Cheney sponsored legislation to support the Millennium Bulk Terminal, for which Washington’s environmental regulators denied a permit, and is “pressing” the Department of the Interior to find a way to export Wyoming coal, her spokesperson said.

Open the ports

Few things drew more consensus from political leaders in recent weeks than the idea that Wyoming should fight for access into foreign coal markets. The idea is also popular among frustrated coal miners in Gillette.

Shawnna Punteney, a Gillette resident and conservative activist, collected signatures last week in front of Walmart for a petition to be sent to Gordon, the Wyoming Legislature and the D.C. delegation. The petition calls for defunding “any government entity that uses its authority to block shipping corridors and ports,” “quasi-government agencies that are complicit with the environmentalist’s anti-coal agenda,” as well as pulling government grants from “anti-coal Non-Governmental-Organizations” and defunding “any bureaucracy that regulates the coal industry with its heavy hand.” Such bureaucracies would presumably include the Wyoming Department of Environmental Quality, the federal Department of Energy and Environmental Protection Agency among others.

The group behind the petition, called Wyoming Citizens for Coal, Oil and Gas, has a website and is an initiative of Punteney and Rep. Chuck Gray (R-Casper), according to Gray.

Through his Casper-based talk radio show and his three years in the state Legislature, Gray has criticized Wyoming’s Republican political establishment. He has brought 24 bills in his first term and a half and seen one become law — a bill requiring doctors to offer patients an ultrasound before performing an abortion.

Gray has twice introduced bills to facilitate the Wyoming Legislature suing west-coast states for declining to authorize coal export terminals.

“The Black Jewel bankruptcy is a reminder that there is action needed on the issue of coal exports,” Gray wrote in response to WyoFile questions.

Gray’s 2019 coal-suit bill passed both chambers with veto-proof majorities but was vetoed by Gordon. The veto stood because it was issued after lawmakers departed Cheyenne.

In the letter that accompanied his veto, Gordon wrote that he wasn’t against the idea of such a suit, but rather that having two branches of government — his executive branch and the Legislature — pursuing legal action could muddy the waters. He preferred leaving the matter to the Wyoming Attorney General’s office to litigate, he said.

In May, Gordon told WyoFile he had directed his attorney general, Bridget Hill, to strategize a state-to-state lawsuit against Washington.

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The news was not included in the Gillette citizens’ WCCOG’s petition that reads: “Governor Mark Gordon vetoed legislation in 2019 that would have funded a legal battle against blocked shipping corridors and ports!”

The message has traction in Gillette, where coal miners have for years felt they labored under national scorn that turned customers away. “I’m trying to figure out how this works where a couple states on the coast say you can’t use our ports,” said Will Collier, a Blackjewel miner.

Gordon and other Wyoming policy makers have two choices when it comes to Gillette, Collier said. “You either open the ports or you bring more industry here.” Bringing in new industries is “a no brainer and for whatever reason hasn’t happened,” Collier said.

Collier met with Gray in Gillette, Collier said, and was asked to speak on Gray’s radio show.

Gordon is moving too slowly, Gray wrote to WyoFile. “We have not yet seen action from the Governor on this issue,” he wrote. “The actions of Washington state are clearly unconstitutional and we need to take action to challenge them. The state of Wyoming needs to take action on a state to state lawsuit and there has not yet been action on this issue.”

Legal research is ongoing, governor’s spokesman Pearlman told WyoFile.

“The Attorney General’s office is currently looking into the feasibility of that approach,” Pearlman wrote. “Once that effort is complete, the Attorney General will discuss options and costs with the Governor. Governor Gordon continues to believe strongly that interstate commerce is being improperly impeded.”

Nearly every politician interviewed for this article agreed and brought up the need to fight west-coast states — mainly Washington — for export access.

Harshman advocated for the state to spend money on a coal-port lawsuit as early as 2014. Bebout said opening the ports is a key way to maintain his 300 million tons-per-year target.

What access to foreign markets could do for Wyoming remains to be seen. A report by Moody’s Investment Services released earlier this month contained dire predictions for Wyoming coal. The black rock’s share of American electricity production could drop to 11% by the end of 2030, the report concluded. In 2018 coal produced about 27%, according to the U.S. Energy Information Agency. “Mines in the Powder River Basin are expected to be hit the hardest,” one coal industry reporter wrote of the Moody’s analysis.

Moody’s concluded that coal exports would grow, but that this would bring increasing volatility to the industry. Many U.S. coal producers don’t have the ability to compete if prices drop as a result of global trade, Moody’s concluded, and though the market looks promising in Asia now, there are signs that won’t continue.

“A meaningful and sustained increase in the volume of coal exported will be challenging, particularly with risks to the economics of coal-fired generation rising in Asia,” Moody’s wrote.

Still, it’s not clear how much impact such analyses will have on political debate in Wyoming, or on how those messages are received.

As many of his former Blackjewel coworkers turned their ire on the company’s ousted CEO and owner, Jeffrey Hoops, miner Collier urged them to eye the reality of the industry, he said. Working coal miners should save their money and prepare for hard times, he said.

Though Collier believes political pressure made coal uncompetitive with wind, solar and natural gas, the cause doesn’t change the current reality for Gillette, he said.

“Here we are,” he said, but “it didn’t have to be this way.”

Government bailouts have happened in other industries, he said, so why shouldn’t politicians invest in and defend coal? “Look at Detroit,” he said. “We didn’t say ‘Well, those cars suck let’s move on.’ We didn’t let the banks fail… ‘too big to fail,’ well, what is coal?”

Years of the same talking points made by Wyoming politicians didn’t keep the out-of-work miner from pinning some of the blame on them. “What the hell were you guys doing for seven years?” Collier asked.