As demand shrinks and the industry retracts, counties and the state are in an untenable situation.
Over the last few months, Wyoming’s struggling coal industry has gone from bad to worse. In May, the third-largest mining company, Cloud Peak, filed for bankruptcy, leaving the pensions and future of hundreds of employees in jeopardy. Less than two months later, Blackjewel, Wyoming’s fourth-largest coal company, abruptly declared bankruptcy, idling mines and putting hundreds out of work.
As the hits against coal pile up, so do questions about the future of Wyoming’s coal mines and the economy they support. With even the Trump administration’s regulatory rollback’s offering no relief, the largest coal-producing state in the country is being forced to grapple with the decline of the industry that has long undergirded its economy.
Spring Creek Coal Mine. Photo credit: Cloud Peak Energy
Wyoming’s politicians have gone to considerable lengths to prop up the coal industry. Now, the state is walking an increasingly threadbare tightrope as it manages coal’s future. Lean too far towards promoting mining, with lax tax collection standards and cleanup requirements, and state and local governments may get stuck with cleaning up the mess the failed businesses leave behind. Tilt towards proactive tax collection and strong reclamation requirements, and risk becoming another factor pushing the coal economy into oblivion.
The depth of the current downturn was unforeseen even a couple years ago, said University of Wyoming economist Rob Godby. The Obama administration’s Clean Power Plan, which sought carbon emission reductions from the power sector, was expected to deal the industry a blow, and it was discarded by the Trump administration, anyway. Instead, it was cheap natural gas and to a lesser extent renewable energy sources — and the resulting shrink in demand for coal — that ended up knocking coal companies to their knees, said Godby.
The diminishing value of coal draws ominous parallels to the subprime mortgage bubble that precipitated the Great Recession of 2008. But the coal free-fall is likely to be even worse than the housing market crash, because houses always retained some value, while coal mines could end up worthless if investors see costs that outstrip potential income, said energy analyst Clark Williams-Derry of the Sightline Institute, a sustainability think tank.
With mines likely to close, Wyoming is entering a new and untested paradigm for coal — reclamation without production. Typically, mines clean up their mess as they go; if they don’t, then the state can shut down operations until they do. But once a company goes broke and the mine shuts down, the only funds for cleanup are reclamation bonds, which critics say are inadequate in Wyoming.
The Powder River Basin Resource Council has been pushing Wyoming’s Department of Environmental Quality to look harder at the balance sheet of companies before it allows them to buy mines. This effort has kept cleanup obligations from being transferred to Blackjewel and then possibly going unfunded during the company’s bankruptcy. Williams-Derry called that a “heroically smart move,” because now the cleanup costs are staying with the mines’ former owner instead of potentially ending up with the state.
In pushing for strong cleanup requirements, resource council Executive Director Joyce Evans said that requiring mines to do proper reclamation would create more jobs for out-of-work miners. Still, she said she doesn’t expect miners to embrace the prospect, even if the reclamation jobs pay just as well as mining, because of Wyoming’s history of “social dependency on coal and energy.”
Meanwhile, coal’s collapse is delivering a one-two punch of unemployment and unpaid taxes to Campbell County, where more than one-third of all coal in the U.S. is mined from the Powder River Basin. The Blackjewel bankruptcy put nearly 600 miners out of work, and the county may never get $37 million in taxes owed by the company, which was run by Appalachian coal executive Jeff Hoops. This is partly because of the county’s lenient approach to collecting back taxes. “We’ve been dealing with delinquent taxes and Mr. Hoops for several months in an amicable way to try and resolve (the unpaid taxes) without pushing them into what has happened now and keep our miners working,” said County Commissioner Del Shelstad in a July 3 meeting in Gillette.
Now, creditors are in line before the county to collect in bankruptcy court. For Gillette’s state Sen. Michael Von Flatern, an ex-coal miner, the delayed county tax payments and ongoing dependence on minerals “is starting not to make sense.” He described the current bankruptcies as the canary in the coal mine for the industry’s long-term decline. “We need to truly diversify our economy,” Von Flatern said. “We have a minerals, minerals, minerals economy.” But over next couple decades, it’s possible that there won’t be a market for Wyoming coal anymore, he said. “If Wyoming can’t do what we need to do to diversify our economy and change our tax structure, then we’ll be in the same place next time we go bust.”
Carl Segerstrom is an assistant editor at High Country News, covering Alaska, the Pacific Northwest and the Northern Rockies from Spokane, Washington. Email him at carls@hcn.org.
Here’s the update from the Colorado Water Conservation Board (Brent Newman):
The Colorado Water Conservation Board (CWCB) Project Management Team will release periodic updates on progress and accomplishments relating to the 2019 Work Plan for Intrastate Demand Management Feasibility Investigations. In this Update, we will discuss changes to the Workgroup process, the Orientation Webinar, and upcoming opportunities for engagement.
Workgroups to Proceed without Disclosure Agreement: After careful consideration of the comments and input received to date, CWCB and DNR leadership have decided that the Workgroup process will move forward without the proposed Ground Rules and Disclosure Agreement.
From Director Mitchell:
“The CWCB staff and Board have been moving forward in a process to investigate the feasibility of a demand management program in alignment with the Upper Basin Drought Contingency Plan. The Board and its staff have been in an ongoing conversation with stakeholders across Colorado about how to conduct this investigation transparently in the spirit of the Colorado Water Plan, while also providing space for a deliberative process where participants feel comfortable to freely consider complex, legally sensitive ideas and information.
“While the CWCB was contemplating asking participants to adhere to disclosure agreements out of an abundance of caution, after hearing feedback from our constituents across Colorado, the CWCB will adjust course and move forward without requesting that workgroup participants sign any disclosure agreements. Additionally, the workgroup meetings will be open to members of the public, with an opportunity for comment. As appropriate and dependent on the relevance of the workgroup discussion to interstate considerations, a non-disclosure setting may be necessary for elements of particular workgroup subject matter discussion.
“Each of the groups will work with CWCB staff to develop expectations around participation and communication in this effort. Through this investigation, I have high hopes that the groups will identify the relevant issues associated with the details of a potential demand management program and provide thoughtful feedback for staff and the CWCB Board to consider as we work through a public process with stakeholders to determine if and how demand management should be implemented in Colorado.
“The CWCB Board and State of Colorado will benefit from the workgroup participants’ expertise in Colorado River issues and water management. I have great appreciation for all of the individuals who have generously agreed to participate in the process.
“I recognize the need to maintain transparency and public participation throughout the activities of the CWCB. I appreciate those who reached out to the staff and Board with comments about our initial proposal. I sincerely hope this decision to adjust our direction provides clarity and simplifies the process for those involved in the workgroups. I look forward to continuing a meaningful public process and productive dialogue about the future of water management in Colorado.”
Online Resources: The CWCB hosted an Orientation Webinar for workgroup membership to provide an overview of the Drought Contingency Plan (DCP) process, and how demand management feasibility aligns with other efforts under the Upper Basin DCP. The Webinar also discussed the kickoff of the Workgroup process, and provided information to Workgroup membership about process and procedures. The Webinar was co-hosted in partnership with Colorado Water Congress (thanks, CWC!) The Webinar was open to the public, and the recording can be viewed here.
On July 18, CWCB staff presented on the 2019 Work Plan to the CWCB and the IBCC at the July Joint Meeting. A recording of the presentation can be found here.
First Regional Workshop Scheduled: The first regional workshop has been scheduled for Thursday, August 22nd. This workshop will be held in conjunction with the summer conference of Colorado Water Congress, at the Steamboat Grand Hotel in Steamboat Springs, Colorado. More information about CWC’s Summer Conference can be found here.
Upcoming Events: Colorado River Drought Contingency Planning and demand management feasibility investigation will be on the agenda at the following events:
Colorado Water Congress’ Summer Conference, August 20-22, 2019 in Steamboat Springs.
As always, keep an eye on basin roundtable agendas. Drought Contingency Planning and demand management feasibility are frequent topics. Roundtable schedules and agendas are available here.
For questions, comments, or more information, visit the CWCB website or email demandmanagement@state.co.us.
The Yampa River Core Trail runs right through downtown Steamboat. Photo credit City of Steamboat Springs.
A meeting on Thursday, July 18, 2019 in Leadville between the members of the Colorado Water Conservation Board and the Interbasin Compact Committee, in a meeting room on the Colorado Mountain College campus. The CWCB members discussed the unfolding demand-management workgroup process in an unscheduled executive session, and then were challenged to explain their process. Photo credit: Brent Gardner-Smith/Aspen Journalism
State agency drops requirement for volunteer workgroup participants to sign non-disclosure agreements
After a week filled with pushback from water managers and users, especially on the Western Slope, the director of the Colorado Water Conservation Board has decided to hold upcoming workgroup meetings about a potential water-demand management effort in public and will no longer ask the workgroup volunteers to sign non-disclosure agreements or always meet behind closed doors.
“The CWCB will adjust course and move forward without requesting that workgroup participants sign any disclosure agreements,” director Becky Mitchell said in an update on the workgroup process released Sunday. “Additionally, the workgroup meetings will be open to members of the public, with an opportunity for comment.”
But Mitchell also reserved the option to shield from public view sensitive information and discussions that came up during the process.
“As appropriate and dependent on the relevance of the workgroup discussion to interstate considerations, a non-disclosure setting may be necessary for elements of particular workgroup subject matter discussion,” Mitchell wrote.
Mitchell said it was most likely that sensitive information would come up in the law and policy workgroup, which includes eight current or former water attorneys.
CWCB staff members, working closely with lawyers in the attorney general’s “defense of the Colorado River” subunit, have been crafting a process for months to investigative the feasibility of a voluntary, temporary and compensated demand-management, or water-use reduction, program in order to stay in compliance with the 1922 Colorado River Compact.
The CWCB intends to set up eight workgroups, each exploring a different aspect of a potential demand-management program in Colorado: law and policy; monitoring and verification; water-rights administration and accounting; environmental considerations; economic considerations and local government; funding; education and outreach; and agricultural impacts.
Each of the work groups is slated to meet four times over the next year, meaning there could be 32 work group meetings.
“The workgroups are kind of an extension of staff at this point. That’s how we’re seeing them,” Brent Newman, the head of CWCB’s section on Colorado River issues, told the CWCB directors in May. “They’re here to help inform staff about these solutions from a more technically diverse perspective. And then we’re going to bring those solutions to you guys.”
Asked if CWCB directors should attend the closed-door workgroup meetings, Newman advised against it.
“When you have a decision-making body like this board, having you all directly participate in some of the conversations of these working groups, it contravenes some open-meeting requirements, and we don’t want to do that,” Newman said.
The open-meetings law says that if two or more officials of a state public body, such as the CWCB, attend a meeting, then it’s a public meeting.
Steve Zansberg, an attorney at Ballard Spahr in Denver, is an expert on the state’s open-meetings law and the president of the Colorado Freedom of Information Coalition.
He said advisory committees, such as the CWCB’s proposed workgroups, are considered public bodies subject to the open-meetings law if they are appointed directly by the members of a public body, such as the CWCB directors.
But if staff members form such committees, and the committees report directly to staff members and not to a board, then they may meet behind closed doors.
“They are probably being very crafty and careful, and with the advice of the attorney general’s office, trying every which way to set these workgroups up as not being public bodies, and they are probably succeeding,” Zansberg said Friday, before Mitchell at the CWCB had changed course and opened up the meetings, or at least most of them.
Zansberg also said the Colorado Supreme Court stated in a 2008 case, Town of Marble v. Darien, that “the open-meetings law prohibits bad-faith circumvention of its requirements.”
“I’m not going to ascribe bad faith here, but it is an effort to evade or circumvent the requirements of the open-meetings law,” he said of the CWCB’s staff-meeting approach.
During the River District’s quarterly meeting in Glenwood Springs last week, the district’s general manager, Andy Mueller, brought up the CWCB’s proposed workgroup process with his board of directors, who represent 15 Western Slope counties.
Some of the directors voiced strong opposition to the CWCB’s requirement of a non-disclosure agreement and closed-door meetings, and unanimously passed a motion asking the CWCB to explain its process.
“In all my years of participating in policymaking at the state level, at the local level, I’ve never seen anything like this,” said Steve Aquafresca, who represents Mesa County on the River District board and is a former Mesa County commissioner and a former state legislator.
Marc Caitlin, a state legislator and the Montrose County representative on the River District board, said, “This idea of putting this behind closed doors, putting a gag in your mouth and having us be surprised, so wonderfully surprised, when this comes out is not going to make sense to me. I can’t believe that the CWCB believes that they can actually pull this off.”
He added: “I can’t believe the attorney general would even go along with this.”
Colorado Attorney General Phil Weiser explained his support for the CWCB’s process in a July 8 memo to the CWCB board.
He said the proposed nondisclosure agreement was meant to “strike a balance between the need for the CWCB to lead the investigative process in a manner that considers and protects the state’s ongoing strategies in interstate forums” while also “honoring the roles and perspectives of the subject matter experts” asked to participant in the workgroups.
The first version of the CWCB’s non-disclosure agreement — a six-page “confidentiality agreement” — ran into opposition from many invited workgroup members when it was released in June.
In July, a second proposed agreement — this time labeled as a “disclosure agreement” — was circulated. It was shorter but still contained two key provisions from the first proposal.
First, participants needed to agree to not attribute anything said in the closed-door workgroups. Second, the participants couldn’t share in a public setting what was said at the workgroups, unless they got permission from the CWCB.
The 74 invited participants are still being asked to volunteer as individuals and “subject-matter experts, and not as representatives of their organizations or clients, which also troubled some River District board members.
On Thursday, during a CWCB meeting in Leadville, Mueller told the CWCB directors that the River District board was seeking an explanation about the process, and that he and his staff could not participate until his board had learned more.
Mueller made his comments shortly after the CWCB directors held a long and unscheduled executive session to discuss the non-disclosure agreements.
CWCB chair Heather Dutton, who represents the Rio Grande River basin, responded by saying the board’s position on the workgroup process was still evolving.
Also during the meeting, the CWCB had invited the members of the state’s Interbasin Compact Committee to join them at the table to discuss aspects of demand management.
And Bill Trampe, a rancher from the upper Gunnison River basin who serves on the IBCC, the Gunnison Basin Roundtable, and the River District board, told the CWCB board members that their approach to the workgroup process was raising a lot of questions about demand management among his constituents on the Western Slope.
“Everybody is starting to think about how they might participate, because they like the voluntary, compensated, temporary part,” Trampe said. “And they recognize the fact that we probably better show up and participate in some fashion, so that our brethren on the east side of the mountain will also be willing to participate.
“But we know it’s going to hurt us like heck if we participate very deeply, and we’re trying to figure out how we can do it. And we feel like we’ve been shut out of this initial process. If you’re going to go behind closed doors and develop these ideas, we feel that that’s the wrong way to do it, that it should be open from the very beginning, and we can’t figure out why these different workgroups have things that they think they need to do behind closed doors,” Trampe said.
On Friday, Mitchell issued a workgroup update that said the non-disclosure agreements had been eliminated and that the meetings would be public.
That update took a softer approach to the remaining potential need for closed-door meetings and agreements to not discuss sensitive information, saying “each of the groups will work with CWCB staff to develop expectations around participation and communication in this effort.”
On Sunday, she issued a revised update that did not include that statement, but did include the new provision that some meetings could still occur, if necessary, in a “non-disclosure setting.”
In response the overall course change by the CWCB, the River District said, “We look forward to working with CWCB as they move forward with this important public-policy process. And we appreciate the deliberation that went into considering how the workgroups will do their work.”
Aspen Journalism covers rivers and water in collaboration with The Aspen Times and other Swift Communications newspaper. The Times published a version of this story on Monday, July 22, 2019.
Mike Castellucci officially announced his candidacy for the Pueblo Board of Water Works on July 10.
Castellucci is a lifelong resident of Pueblo and a graduate of South High School and the University of Southern Colorado, now Colorado State University-Pueblo. This would be his first time running for an elected position.
Castellucci has worked in the finance and banking industry for over 23 years. He has owned his own business and worked for several local banks. He says his “diverse experience and knowledge will be very useful for the community as a board member on the Board of Water Works.”
Chris Woodka, a veteran reporter and editor who retired to begin a new career as a water professional, also has announced his candidacy for the Pueblo Board of Water Works.
Woodka, 64, is seeking the six-year seat being vacated by Kevin McCarthy.
“As a water professional for the past two years, and as a journalist who spent more than 30 years covering water issues, I would bring a unique skill set to Pueblo Water. I have a deep understanding of water issues in Colorado and the American West, a fundamental knowledge of the structure of Pueblo water and practical knowledge about completing complicated water projects,” Woodka said.
