The collapse of coal mining hit home in rural Oak Creek this week after a bankrupt industry giant missed a tax payment, catapulting a community into turmoil.
Peabody Energy’s failure to pay a $1.2 million June installment translated almost instantly to trouble for fire protection, the library, cemetery and school for 325 children.
“It’s a huge hit. We definitely need help from the state,” South Routt School District superintendent Darci Mohr said. “And it is not just our schools struggling to pay bills. It is also our families. We have a lot of Peabody Energy retirees, and we have a lot of current employees who do not know what their future will be.”
It is an example of how the shaky status of coal-mining companies — with Colorado operators Peabody and Arch Coal among 50 nationwide in bankruptcy — reverberates around the West. One missed tax payment may amount to a hiccup inside a huge corporation, but industry failure threatens the survival of Colorado communities such as Oak Creek, where residents depend on a century-old extractive energy tradition.
State regulators, too, are increasingly wary. Colorado Department of Natural Resources officials said Wednesday they will take a more cautious approach toward coal companies to make sure they don’t walk away from environmental cleanup obligations.
Colorado officials in the past have trusted some companies to “self-bond” — pledging their own assets as collateral, rather than deposit a surety bond, to guarantee that damaged land is restored as laws require. Self-bonding still is allowed, and state officials rely on self-bonding at three mines run by Tri-State Generation and Transmission-New Horizon ($5,300,000), Colowyo ($80,517,829) and New Horizon North ($5,500,000).
But “going forward,” state spokesman Todd Hartman said Wednesday, “we’d move very cautiously if one were proposed. … Other bonding approaches better ensure reclamation funds will be available.”
Natural Resources Defense Council advocates this week urged state governments to eliminate the practice of self-bonding.
“We have adequate reclamation bonds in place from all coal companies operating in Colorado,” Hartman said.
Coal production in Colorado has decreased by 50 percent since 2004, and hundreds of jobs have been lost. About 1,200 remain.
And coal-dependent communities largely are left on their own as fossil fuels’ future starts to fizzle. State and federal agencies have encouraged a market shift away from coal toward renewable wind and solar energy — to try to limit climate change linked to carbon emissions.
Meanwhile, federal officials are poised to reform a leasing program for coal mining on public land that traditionally has favored the coal industry. White House economic advisers on Wednesday issued a report saying the royalties feds collect from companies aren’t fair to taxpayers. The royalties companies pay in Colorado, less than 6 percent of the value of coal, rank among the lowest in the nation.
“That means Colorado taxpayers and coal-impacted communities are getting less than they should at a time when the communities need it the most,” Earthjustice attorney Ted Zukoski said.
Bureau of Land Management officials are holding a hearing Thursday in Grand Junction as part of their process for reconsidering the terms for companies that mine coal in national forests and on BLM land.
Yet, in Routt County, Peabody Energy is “unable to pay” taxes, according to a corporate statement sent in response to Denver Post queries. Peabody officials “pride ourselves on being a good neighbor,” the statement says. They did not pay the taxes “as a result of the Chapter 11 filing,” it says.
Routt County’s tax money “will ultimately be subject to a final plan of reorganization and court approval, and we will work with local officials to maintain communications and manage expectations as we move forward.” Peabody vice president for communications Beth Sutton declined to elaborate.
Colorado revenue officials said collecting property taxes is up to local authorities. Neither Peabody nor Arch appear on the state’s list of tax delinquents.
Coal companies in the past have paid up to $8.5 million a year in severance taxes to the state, in addition to the taxes paid to local and federal governments.
Routt County commissioners are considering legal action to try to collect taxes from Peabody.
Peabody runs the Twentymile coal mine, which opened in 1983 and employs 470 workers on 200,000 acres. This corporation normally pays Routt County about $2.9 million a year, a significant chunk of the $54 million in total taxes the county collects, Treasurer Brita Horn said.
That money helps sustain areas including the South Routt School District, which would have received $1 million in June — funds needed for nearly one-fifth of the district’s $5.3 million budget. District officials said they will get state funds early from the Department of Education to get by.
“I am looking for an expedited way to get this cash back for Routt County,” Horn said. “Peabody is one of the biggest pieces of our economy. It will make a difference for everybody. Are they going to be able to reorganize? Are they going to come back?”
In southwestern Colorado, the bankruptcy of Arch Coal also is rankling communities, including Delta and Paonia, where the West Elk Mine now is the only one still producing.
The Gunnison-based Sustainable Development Strategies Group concluded a study this week that recommends increased state and federal action to support communities that have grown dependent on coal.
It recommends creation of “local stabilization funds,” money saved when resource prices are high that can be used when prices fall to ease impacts.
The SDSG team also suggested putting revenue from mining into trusts that can support schools, clinics and businesses after mines close. Federal and state authorities should provide technical and financial help for hard-hit communities, they said.
Gov. John Hickenlooper has indicated he favors job training opportunities, using better internet connections.
“There’s an obvious decline in the number of coal mining jobs in Colorado,” the report said, urging smart advance planning to diversify local economies.
“Where diversification is delayed until closure is occurring, it is far too often unsuccessful.”
