Coal Industry Continues Pursuit Of State, Federal Government Support

Mar 31, 2020

The three eastern coal companies are making changes and some mine closures amidst COVID-19
Credit Rosebud Mining Company, Corsa Energy, Consol energy

Over the weekend, the U.S. Department of Homeland Security, Cybersecurity & Infrastructure Security Agency (CISA), added the coal industry to its list of critical infrastructure - a list of what's considered vital to public health, the economy, and national security.

On March 20, the National Mining Association requested the explicit designation along with several financial easements to help keep the industry afloat. Rich Nolan, president and CEO of the National Mining Association, applauded the decision.

"Our nation needs stability right now. We need a dependable supply chain for our manufacturing sector. And we need to know that our power sector is secure across the country," Nolan said.

The designation serves as an advisory to states; it would allow employees to continue work despite public health restrictions. West Virginia explicitly defined the coal industry as essential, but Wyoming has not released a public list.

Last week, the Wyoming Mining Association said the "essential" status would certainly be helpful in case a mandatory closure went into effect; deliveries from suppliers and vendors was also an issue without the designation, according to WMA.

In a press conference on March 25, Gov. Mark Gordon said many state industries have requested to be designated essential, but no decisions have been made.

"It is important that our coal mines keep working. It is important that the rigs we have running continue to run, and that essential for Wyoming's economy to survive," he said.

Since then, Travis Deti, executive director of the Wyoming Mining Association, said companies have worked out issues with vendors and that the federal designation will help.

"We're pleased with the modifications to the federal rules and we know that a number of other states are operating off of those and wouldn't be surprised if the state worked off of those as well," he said.

The Governor's office did not respond for an update directly, but in a press conference yesterday the Governor said a shelter-in-place order would be a true shelter-in-place order.

"It's not going to have multiple exemptions. Let me repeat: it will not have multiple exemptions," he said.

Financial Status

In its March 18 letter, the National Mining Association also requested reductions to the Black Lung Excise Tax and royalty tax rates.

"To maintain this essential role, it is imperative that coal companies have access to the necessary cash flow they need to continue operations. Even before the recent crisis, the coal industry was struggling to recover from a series of disabling public policies impairing coal demand and production," wrote NMA's Nolan.

Andy Blumenfeld, IHS Markit's head of market analytics, said his company estimates the equivalent of about 70 million tons of annual production will be affected based on 2019 production volumes. That would be a roughly 10 percent hit.

He said many companies are announcing impending closures, but none have been located in the Powder River Basin.

The NMA does specify the PRB though in its request to cut royalty rates.

"Between taxes, fees and royalties, the federal, state and local governments receive almost 40 cents on every dollar of coal sold from the Powder River Basin," wrote Nolan.

Deti said that is indeed the big one for Wyoming.

Last week, Gov. Gordon said in a press conference that the state is looking at ways to help businesses get through difficult times.

"We're looking broadly at the energy sector to see what sorts of things can we do to ease the regulatory burdens that are on them now. Are there relaxations of shut-in laws that we might want to consider? Things like that that," Gordon said. According to the Governor's office, shut-in laws refer to public health restrictions.

Matt Micheli, parter at Holland & Hart LLP, a law office in Cheyenne, has followed requests in the works from the coal industry. He said it's in everyone's interest to keep the economy moving and the lights on.

"If there's a chance to provide some more relief on some of those... whether it's royalties, or other taxes, they're certainly looking at all those," he said.

Micheli said the industry hoped to have relief come in the first stimulus package, signed last Friday by the President, but that didn't happen.

"The practical reality was that some of the more potentially controversial stuff was left on the side to be handled in the next round," he said.

The New York Times and Wall Street Journal reports Congress is looking at an even larger stimulus package in April then what came last week, which, estimated at $2 trillion, is considered the largest relief bill in history.

Have a question about this story? Contact the reporter, Cooper McKim, at cmckim5@uwyo.edu.