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Blackjewel

In this Friday, Sept. 6, 2019 photo shows Blackjewel LLC's Eagle Butte mine just north of Gillette, Wyo.

CASPER, Wyo. — Federal and state regulatory agencies dismissed complaints leveled by a Wyoming landowners group against the operator and permit holder of two Powder River Basin coal mines this month. The pair of coal mines did not violate reporting requirements because they have still been producing coal, the regulatory bodies concluded.

But several coal miners and landowners remain skeptical as they await additional information on the fate of bankrupt coal operator Blackjewel’s Eagle Butte and Belle Ayr mines.

The Wyoming Department of Environmental Quality said in a Sept. 10 letter addressed to the Powder River Basin Resource Council it had considered the group’s allegations and “concluded that no violations exist.” In a Sept. 23 letter, the Office of Surface Mining Reclamation and Enforcement said it would not take steps to investigate the coal mines.

The pair of thermal coal mines ground to a halt July 1 when Blackjewel filed for bankruptcy and backup funding needed to maintain normal operations at the mines during proceedings foundered. Contura Energy, another coal company and the mines’ permit holder, placed the winning bid for the nation’s fourth- and sixth- largest coal mines, but the sale has yet to close.

In the midst of the bankruptcy proceedings, Powder River Basin Resource Council filed a citizen complaint alleging Contura and Blackjewel violated both state and federal law by failing to submit required updates outlining the status of the two mines.

Both companies have reporting responsibilities under the Surface Mining Control and Reclamation Act if a mine has idled for more than 30 days, according to the group’s complaint. The landowners urged the Wyoming Department of Environmental Quality to act or risk a federal investigation of the two mines.

But the state and federal government thought otherwise. Though the mines have not returned to full operation, activity at the mines is still occurring, asserted the two agencies, which are tasked with monitoring Wyoming’s mines. The mines only ceased operations from July 1-5.

The coal companies have not violated reporting obligations, as alleged by the landowners, because Blackjewel’s bankruptcy resulted in a “reduced operational status” of the mines, not a full cessation that requires updates and revised permits, the state and federal agencies concluded.

Wyoming’s Department of Environmental Quality also said it would be “premature” for state regulators to request a revised permit given the sale of the mines has yet to close.

Inspections show mining activity

The state agency inspected both mines Aug. 27 and 28. It reported approximately six to eight unit trains of coal have been shipped from the mines every week. About 100 to 120 rail cars typically make up a “unit train.”

“Coal extraction and shipment continues to occur at both mine sites,” Todd Parfitt, director of Wyoming’s Department of Environmental Quality, wrote in the letter.

An Aug. 10 inspection report obtained by the Star-Tribune through a public records request said a small crew on both mines sent out approximately “one train of coal per day.” In another inspection report dated Aug. 28, the inspector indicated both mines exhibited “visual evidence that coal recovery and shipment had occurred from the coal faces since the last inspection.”

But according to court documents, Blackjewel was maintaining the skeleton crew to “ensure the safety of our mines and our equipment” and did not specify that it would commercially mine or ship coal.

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“The company has been telling bankruptcy court and creditors that they are idle and not making money,” said Shannon Anderson, a staff attorney for the Powder River Basin Resource Council. “Here, the DEQ said that they are mining and selling coal.”

Blackjewel did not respond to a request for comment.

The insolvent company has yet to submit its operation reports for August and September to the bankruptcy court.

For its part, the Office of Surface Mining Reclamation and Enforcement affirmed the state’s response to the complaint and said it would not investigate the mines, according to the Sept. 23 letter.

“OSMRE finds that Wyoming has good cause for not taking enforcement action, because no violation exists,” the letter from the federal agency stated. “Because OSMRE has no reason to believe a violation exists, there is no need for OSMRE to conduct a federal inspection.”

But to Anderson, the lack of reporting and updated permits for the mines leaves the landowners, miners and regulators in a lurch and potentially threatens the safety of workers and the surrounding communities.

“We’re still evaluating our options and next steps going forward,” Anderson said in response to the letters. “But as far as we know, the company said these mines are idle, and that means that is cessation. You can’t have it both ways. Either they’re idle and they are not producing, or they’re out of compliance.”

Where’s the coal going?

Even with the reported coal shipments coming from the Eagle Butte and Belle Ayr mines as the company slogs through bankruptcy court, the rate of production has significantly contracted.

In the third quarter of 2018, Blackjewel mines produced 17.1 million tons of coal, according to Mine Safety and Health Administration. If the current shipment rate of six to eight trains a week stayed constant for a year, Blackjewel would produce roughly 5.8 million tons of coal, about one-third of last year’s load.

According to 2017 data from the Energy Information Administration, the Belle Ayr and Eagle Butte mines had about 40 power plants as customers. The Star-Tribune contacted each of the mines’ major customers for comment. Several utility companies overseeing the power plants considered the transactions with Blackjewel commercially sensitive information and declined to comment. Others have revised their energy portfolios since the company filed for bankruptcy and halted full production.

Xcel Energy, which oversees the Comanche Power Plant, one of Belle Ayr mine’s top customers, and Pawnee Power Plant, a customer of Eagle Butte mine, has had to make adjustments since the closures. But it declined to provide details on sales conducted with Blackjewel since July 1.

“The Powder River Basin is the major supply area for coal, for both our Comanche and Pawnee generating stations in Colorado,” a spokeswoman for Xcel Energy said in a statement. “Xcel Energy has been monitoring the issues with Blackjewel and had already adjusted for limited production from this supplier and have found other suppliers to keep up with our demand. We will not have further comment, and we do not disclose individual contractual information concerning our coal suppliers.”

NRG Energy owns the Limestone Generating Station in Texas and WA Parish Generating Station in Texas along with other power plants fed with Blackjewel coal. The company said it has had to adjust since the unexpected closures.

“While we don’t talk about strategies and specifics of the company’s sales, we have a very diversified portfolio and, to be honest, if somebody decreases (production), someone else’s supply to us will increase,” a spokesman for NRG Energy said. “We are continuing to get the (Powder River Basin) coal for our plants.”

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