Legislature Forms Committee In Response To Coal Bankruptcies

Sep 9, 2019

Agenda of topics to be discussed in the coming committee
Credit Legislative Service Office

Wyoming's Management Council has started a new, one-year legislative committee in response to the recent spate of bankruptcies in the coal industry. The hope is to produce legislation that puts Wyoming in an improved position in future reorganizations.

Eric Barlow, House Floor Leader and Gillette Representative, said this committee could help streamline how certain issues are addressed without overburdening other interim committees.

"I think this will give us a chance, give the committee a chance, to take a broader look," he said. "We can we have time and ability to now in this session to work on some solutions."

The council's September 5 agenda listed eight topics to be discussed including fixes to tax collection issues, lack of enforcement with unpaid benefits to energy workers, and an effort to incentivize the export of coal.

Addressing Ad Valorem Taxes
Half of the proposed topics referenced challenges with collecting ad valorem taxes - funds that support local services and state education. Barlow said that stems from recent feedback from federal courts; its shown that Wyoming has put itself at a disadvantage within its own statutes. In particular, the statute that allows an 18-month lag between mineral extraction and tax collection. In addition to the tens of millions of dollars in delinquent taxes from energy companies, Blackjewel now owes Campbell County about $37 million.

"If we don't adjust something, then we should expect to continue this," Barlow said. "This road is paved now. Enough companies have gone down this road, where they can avoid the tax liabilities, and pay off their creditors, and the taxpayers are left holding nothing."

In the 2018 session, the state legislature passed a "Tax Liability Mineral Production" bill, which gives counties priority to collect ad valorem taxes in bankruptcy situations. Barlow was a co-sponsor.

Worland Representative Mike Greear voted against the committee. He said several of these issues have already been discussed and others can be brought as individual bills. Still, he said the ad valorem tax issue is a big one leftover from a different time.

"We've left that gap in place. Over time, it wasn't that big of an issue. It was there to make it easier to get financing in the extraction area, but I also don't know we've ever had this big of bankruptcies," Greear said.

A New Approach
Blackjewel's bankruptcy hasn't just highlighted current weaknesses in the state's ad valorem tax structure. It's also underlined the need to help employees who are left without paychecks and employee-guaranteed benefits. Barlow has heard from former Blackjewel workers who never received contributions to their retirement or healthcare savings accounts. He said it's particularly important to him to address that issue.

"You don't get to rob from your employees, our citizens. I want to understand where we can actually get some enforcement. Maybe not for this current one, but for future companies that choose to take their employees money without permission," Barlow said.

If a committee does discuss enforcement methods to defend unpaid workers, Representative Greear said it would be for the first time. Ad valorem issues, on the other hand, have been discussed for years.

Steve Harshman, Management Council Chairman and Speaker of the House, said there's more urgency now to resolve systematic issues.

"It's one thing to say we should change this law because this is what could happen. Now, you can say, we need to change this law, because this is what happened," Harshman said.

The Committee
Harshman said a committee is the best approach to tackle these issues. For one, leadership had chosen legislative topics long ago. If he now added in these eight topics, "you'd have to mess with the schedules of three or four committees."

A new one, Harshman said, allows for interested legislators to help produce legislation right away.

"There'll be some controversy about finding that right balance and I think a committee is the right vehicle to do it because you get everybody to take all the public testimony: bankers, producers, environmentalists, workers. Everybody will be at the table giving their perspective." Harshman said, "and that's how you get the best pieces of legislation."

Harshman will choose four of the eight members of the committee. Senate President Drew Perkins will choose the other half. Each will choose one member of the minority party to participate in the committee. Harshman said e-mails have been sent to both houses to request participants. He hopes the group will feature a cross-section of Wyoming citizens.

The group will meet six times prior to the upcoming budget session. Harshman expects to choose the final make-up by next Wednesday at the latest.