Despite troubles, coal companies on time with taxes
Despite troubles, coal companies on time with taxes
By Jonathan Gallardo
Gillette News Record
Via Wyoming News Exchange
GILLETTE — Last year was not a good one for the coal industry, with production dropping significantly again partly due to the COVID-19 pandemic.
But there is one problem that Campbell County Commissioners have not had to deal with — fighting with coal companies to collect tens of millions of dollars in unpaid production taxes.
Campbell County Treasurer Rachael Knust said that since late 2019 when Eagle Specialty Materials bought the Eagle Butte and Belle Ayr coal mines from Blackjewel and the Navajo Transitional Energy Co. bought Cloud Peak’s assets, both companies have been on time with their payments, despite all the difficulties presented by the COVID-19 pandemic.
“Both have been paying when they’re supposed to,” she said.
The county worked with the companies to set up a schedule to pay unpaid taxes left from Blackjewel and Cloud Peak, as well as keeping up with paying on current production.
Knust said Campbell County is owed $35.5 million in unpaid taxes from 2011 to 2019. Most of that — $31.3 million — is from 2019 and comes from the bankruptcies of Cloud Peak Energy and Blackjewel. But NTEC and ESM are working to pay the county that $30-plus million.
NTEC has been paying delinquent taxes from 2014 through 2016, 2018 and 2019, as well as mineral production tax for 2020. After paying $12 million in 2020, NTEC will pay the remainder in 72 equal monthly payments starting Jan. 31.
ESM has been paying its production taxes monthly, on the same schedule as severance tax, said Commissioner Rusty Bell.
In 2020, the state Legislature passed a bill requiring mineral production companies to pay their ad valorem production taxes every month. It changed a provision in Wyoming law that for decades has allowed companies to delay paying production taxes for up to 18 months.
The issue is not yet settled. There are two bills regarding the monthly payment schedule that are sponsored by the Joint Interim Revenue Committee to “fine-tune” what was passed in 2020. Those bills will go before the Senate Revenue Committee on Tuesday afternoon.
Bell said he’s glad things are working out so far.
“They’ve been up to date, those guys have been really good,” Bell said.
He noted that ESM and NTEC are in a different situation than most companies, because they are paying their own production taxes as well as paying back the unpaid taxes that Blackjewel and Cloud Peak owed. The county’s payment with ESM and NTEC shouldn’t be seen as blueprints for other companies, but more as examples to the rest of the state that the monthly payment schedule can work.
“It does set a good example,” Bell said. “They do want to be good players, good partners.”
As far as Bell knows, Lincoln County is the only other county so far that has worked out a monthly payment schedule with a company. But under the law that was passed last year, mineral producers must pay their ad valorem taxes monthly starting Jan. 1, 2023. They also can choose to start paying monthly earlier than that deadline beginning in 2021 or 2022.
“Eventually, this makes everything much easier,” he said. “Having somebody paying taxes 18-24 months in arrears can be problematic, as we’ve seen.”
The county has spent millions of dollars just in legal expenses over the years trying to collect unpaid ad valorem taxes.
For example, in 2019, Campbell County finally settled the outstanding tax debt left when Alpha Natural Resources filed for bankruptcy in 2015, leaving about $19 million unpaid.
It took four years and more than $1 million in legal expenses for the county to reach a settlement, which was still several million less than what was originally owed.