GILLETTE — The only thing in the way of hundreds of Eagle Butte and Belle Ayr coal miners going back to work is $60 million that nobody has.

That’s what bankrupt Blackjewel LLC owes the federal government in royalty payments, taxes and fees associated with the Wyoming mines that produced about 35 million tons of coal in 2018. It’s also what has kept officials with the U.S. Department of the Interior from signing off on Tuesday’s sale of the mines, along with Pax Surface Mine in West Virginia, to Contura Energy Inc. The sale is contingent on Contura reaching a settlement with the federal government.

It’s also what prompted a Blackjewel attorney to call out to the Trump administration to step in and make the deal happen.

“The Trump administration has repeatedly said it wants to do everything it can for the nation’s coal miners,” said Stephen Lerner of the Cincinnati-based law firm of Squire Patton Boggs representing Blackjewel. A lack of a deal with the feds “may be what kiboshes this deal. … If they want these coal miners to get their jobs back, they need to approve these (leases).”

While that may seem a large hurdle to still clear before nearly 600 coal miners can get back to work, it seems likely an agreement is reached and the sale finalized, said Robert Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming.

That’s because the dispute is over a lot of money that nobody has, he said. The federal government’s problem is it hasn’t been paid the money Blackjewel filed for Chapter 11 bankruptcy July 1 and since has been insolvent and cash-strapped, and Contura Energy doesn’t have that kind of money either.

In the end, however, the government digging its heels in over money it will definitely not recover if the sale is killed and the mines remain closed doesn’t make much sense, Godby said.

“All things considered, the Department of the Interior is in an awkward situation, especially if Blackjewel lawyers are successful in getting the administration’s attention,” he said. “They’re potentially the last barrier in reopening those mines or not.

“On the other hand, it’s very clear there isn’t $60 million to pay them. Clearly, there’s a deal to be made here and the only chance to create that kind of value is to operate the mines.”

As of press time Wednesday, there was no word about whether a deal has been reached and the sale made final. A lawyer for Contura Energy said at Tuesday’s hearing that once that happens, the company wants to bring back about 500 Eagle Butte and Belle Ayr workers and get production going again as soon as possible.

A Contura Energy spokesperson declined to comment on the sale because it hasn’t closed yet.

Overall, about 1,700 Blackjewel workers at the company’s 32 operations were abruptly locked out of their jobs July 1 after the company filed for Chapter 11 bankruptcy protection. When emergency financing to keep the mines operating through bankruptcy fell through, Blackjewel shut down the mines, affecting about 580 employees at the Eagle Butte and Belle Ayr mines in Campbell County.

Since then, an unprecedented and accelerated Chapter 11 case has unfolded, including several failed attempts to secure emergency financing and a deal that forced the resignation of former Blackjewel CEO and president Jeff Hoops Sr.

Along with the sale of the Western and Pax mines to Contura, the court approved a pair of sales for most of the company’s operational Eastern assets in Virginia, Kentucky and West Virginia.

When the sale to Contura closes, it will be the second time the company has owned the Eagle Butte and Belle Ayr mines. Contura was created from a group of Alpha Natural Resources creditors that bought the mines as a stalking horse bidder during Alpha’s 2015 bankruptcy. Contura sold the mines to Blackjewel in late 2017, but still retained the state mining permits and about $250 million in reclamation obligations.

The sale also includes striking an agreement with Campbell County, which was owed more than $37 million by Blackjewel and Contura from its first time owning the mines. During Tuesday’s sale hearing, an attorney for the county said the county and Contura have come to an agreement about those taxes, but the specifics about the deal weren’t immediately disclosed.

Campbell County Commission Chairman Rusty Bell said Wednesday morning he couldn’t give any details of the agreement because the sale hasn’t closed. Once the deal is final, he said the county can discuss those details.

The most important thing now is local coal miners are close to getting back to work, Bell said.

While the attention this past week as been on Blackjewel’s auction and sale process, another of the Powder River Basin’s large coal producers also is selling assets at an auction scheduled for Thursday.

Cloud Peak’s auction includes the Spring Creek mine in southern Montana and the Cordero Rojo and Antelope mines in Campbell County. Combined, they employ more than 1,200 people.

Between the auction and pending sale for Blackjewel and Cloud Peak’s auction, “this is a huge week for coal in the Powder River Basin,” Godby said. “This is the week we figure out what’s going to happen in the short run and possibly get an indication of what may happen in the longer term.”

Unlike the Blackjewel bankruptcy, which has been fast-moving, very public and has included many unusual twists, Cloud Peak’s has been a good example of how a Chapter 11 reorganization should play out, Godby said. Its mines have continued operating as usual.

Whether that will be true for the future is what’s unknown about Cloud Peak, he said.

“This is a company with, arguably, more important mines in the Powder River Basin, especially with Antelope,” Godby said, referring to the Antelope mine, the PRB’s third most productive coal mine at about 23 million tons produced last year.

“The bottom line is these are pretty important mines, but we haven’t really talked about it because their Chapter 11 went a lot more smoothly,” he said.

It’s also not surprising that Cloud Peak hasn’t named a stalking horse bidder for its assets. In its case, there is likely more of an advantage to not announce what assets Cloud Peak’s creditors are more interested in, Godby said.

The outcome of the Cloud Peak auction could ultimately be more impactful on the local coal industry and community than Blackjewel because it could affect more than 900 employees at the Cordero Rojo and Antelope mines, he said.

“This affects more people than Blackjewel’s (bankruptcy) did — potentially — and we saw how 600 jobs being (on hold) can disrupt a community,” Godby said.

For those hundreds of Blackjewel employees who still haven’t found other jobs and are looking forward to going back to work, they can feel good about the sale to Contura and prospect of a deal with the federal government over its leases.

“I would be optimistic if I were them,” he said. “It looks like we’re about to turn a page and move on. … But clearly, after the last five weeks of this bankruptcy, all we’ve learned is to expect the unexpected.”

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