A bankruptcy court judge in Delaware has cleared the path for Cloud Peak Energy Corp. to potentially pay millions of dollars in back taxes and fees.
Whether that translates to Campbell County collecting an $8.3 million payment the company missed May 10 could be unlikely, said Rob Godby director of the Center for Energy, Economics and Public Policy at the University of Wyoming.
“Does this motion mean the taxes will get paid? Not necessarily,” he said. “But it does mean that they could get paid.”
Tuesday’s ruling was part of the court’s granting a rash of motions that accompanied Cloud Peak Energy’s Chapter 11 bankruptcy filing and clears the way for the company to continue to pay vendors, employees, and taxes and fees as they come due during the course of business.
The company estimates it has $62 million in accrued taxes and fees, with $12.7 million due within 21 days of filing for bankruptcy.
The motions are standard in a bankruptcy and protect the value of Cloud Peak’s assets, namely its mines, Godby said.
“If they don’t pay those, then you potentially could have (the state or county) start seizing equipment or putting it up for auction to get their money and that could affect the ability to do business,” he said, adding that’s an unlikely scenario.
The big question for Campbell County is whether it will see any or all of that $8.3 million or millions more from production in 2018 and the first five months of 2019, which aren’t yet due. Based on previous production reports and tax bills, that could conservatively come to at least another $25 million.
The county’s $8.3 million payment was due by the end of business May 10. Because Cloud Peak’s bankruptcy filing was made the same day hours before the end of the day, that tax is considered a financial liability of the bankruptcy and doesn’t have to be paid under the motion granted Tuesday.
Because counties collect ad valorem taxes on production on an 18-month delayed schedule, Cloud Peak’s bankruptcy could be resolved before another payment comes due, Godby said.
“The bottom line is, it’s possible that the bankruptcy could be resolved before the county has another payment due and the county is still as uncertain as to when, or if, that could happen,” he said.
The company also pays state severance taxes on the coal it produces, but those are due monthly, which means those taxes have been collected throughout the process and will likely continued to be paid under the motion, Godby said. At $55.8 million, production and severance taxes make up the bulk of Cloud Peak Energy’s accrued tab.
Whether paying any outstanding taxes or fees will be part of any sale of the company’s assets also is anybody’s guess, Godby said. Because Cloud Peak intends to sell its assets and not emerge from bankruptcy as a viable business, it’s possible a buyer could assume some, all or none of that debt.
In the case of Alpha Natural Resources, which went through Chapter 11 reorganization in 2015, the company spun off its Powder River Basin mines, Eagle Butte and Belle Ayr, into another company, Contura Energy. Contura didn’t assume the outstanding tax debt and the county had to sue Alpha to collect $19 million in back taxes. After a couple of years of legal wrangling and the county spending $1 million in legal fees, Alpha settled and paid all but $4 million it owed.
With Cloud Peak, however, if it sells its assets and doesn’t emerge as a company after bankruptcy, there may not be anyone left for the county to go after for those millions of dollars, Godby said.
“The real importance in all this is for the coal mines to continue operating after all this is done,” he said. “It’s never a pleasant process to watch a bankruptcy, especially for those folks dependent on that company.”
A June 26 deadline has been set to submit bids for Cloud Peak’s assets, which basically are its three Powder River Basin mines, Antelope and Cordero Rojo in Campbell County and Spring Creek in Montana.
The bidding process is closed, Godby said, and it’s unlikely anyone will know much about the bids until after they’re in and an auction is held a few days after the bid deadline.
A woman who was hurt in a crash that killed three people five years ago is suing the company for punitive damages for chronic injuries that she continues to live with after the crash.
Anna Mitchell is suing Powder River Transportation and Rhoda Steel, the driver of the bus, for punitive damages. Her attorneys argue that the injuries she received in the crash have changed her life for the worse.
Both sides made their opening arguments Tuesday morning in front of a jury and District Judge Thomas W. Rumpke. While they agree that Mitchell deserves some compensation for her injuries, they disagree on how many of her injuries were a result of the crash.
Mitchell is represented by Gillette attorneys Thomas Metier and John Cotton. Ryan Schwartz and Pat Murphy are representing Powder River Transportation.
“This case is about money,” Schwartz said and asked the jury to focus solely on Mitchell and not on any of the other people affected by the crash.
Steel was driving a Coach USA/Powder River Transportation bus at about 7:30 a.m. May 14, 2014, on Highway 59 when she collided with a line of cars that were stopped for construction south of Gillette.
Three men — Colin Schultz, Charles Errington and Christopher Joubert — were killed in the crash.
In August 2015, Steel pleaded guilty to three amended charges of misdemeanor vehicular homicide. Then-Circuit Judge Terrill Tharp sentenced her to 30 days in jail under a plea agreement.
Mitchell was sitting right behind Steel when the accident happened and was thrown back and forth and up and down.
Since then, she’s had chest and knee pains and has been diagnosed with post-traumatic stress disorder. She also started having migraine headaches that would “put her down for an entire day,” Metier said, adding she’d never had them before the accident.
She also has had two neck surgeries since the crash, and it’s neck pain that has given her the most trouble the last five years, Metier said.
“She can’t look down or up without getting a headache,” he said, adding the pain was so unbearable that she had to quit her job.
Metier said Powder River Transportation recently admitted it was at fault after denying responsibility “for a very long time.”
“Anna was tough, until the crash” he said.
Mitchell’s brother, Mick Snyder, said that before the accident, she was active and a good, hard worker. Now, she “hurts all the time and gets tired easily.”
“She’s not the same sister, in that respect,” he said.
Schwartz said “a grievous error was made, and a terrible crash occurred.”
“We accept that (Mitchell) was injured and is entitled to some compensation,” Schwartz said, but the defense does not believe the crash was responsible for causing her neck injuries.
He told the jury that it would hear testimony that Mitchell’s neck had been causing her problems for years before the crash, and that she “should have pursued surgery” for those issues.
Perry Study, who was a passenger on the bus, said that shortly before the crash, he looked at Steel and saw that while both of her hands were on the steering wheel, “she wasn’t looking out the windshield.”
Steel had previously testified that she was looking down right before the crash, but that she did not remember what she was looking at.
Schwartz said the “only reasonable explanation” was that Steel had fallen asleep at the wheel.
After the crash, Study climbed out of a window and went to the front of the bus, when he said he heard Steel say, “I’m going to lose my job.”
Study said he’d had complaints about Steel’s driving in the past, but never brought the complaints to Powder River Transportation.
During opening arguments, Metier showed the jury photographs of the crash. Before showing them, he said there would be no pictures that contained the victims who died. But as he was going through the pictures, one that showed a victim flashed on the screen.
Metier said he had prepared a presentation with pictures of the deceased removed, but he was having problems downloading it Tuesday morning so he used the original presentation. He forgot to remove those pictures, he said, and it was “completely unintentional.”
Schwartz called for a mistrial, saying that showing a picture of a dead body “tainted that jury beyond repair,” and that “we cannot un-ring that bell.”
The picture was “absolutely irrelevant to the case,” Schwartz said, because Mitchell left the bus without seeing any of the victims. “There is no way to cure this.”
Even though Rumpke said he was very concerned about Metier’s error, he refused to declare a mistrial. The picture was not gruesome and it was only on the screen for a few seconds, he said. But most importantly, the jury was already aware that people were killed in the crash. He instructed the jury to “totally disregard the picture.”
Another federal law change is leading to some questions in Wyoming about youth and putting the future of group homes and crisis shelters at risk.
At least that’s the assessment of two Gillette officials who asked the Joint Judiciary Interim Committee last week to delay work on a bill to establish creation of a Family First Prevention Services Act.
YES House Executive Director Sheri England and Rep. Scott Clem, a Gillette Republican and former coordinator of the boys home at the YES House, spoke against producing a draft bill to meet those federal standards, which would take effect Oct. 1, 2021.
While they support the focus behind Family First and the proposed act — keeping children in their homes first and foremost when possible — they also fear the legislation may force group homes and crisis shelters in the state to close.
The Gillette-based Wyoming Youth Services Association also released a position paper on the issue. While implementation of the act will strengthen some prevention services for youth and their families, it also may limit care for others because funding would be shifted from group homes and residential treatment centers to prevention services.
Rene Kemper, mayor of Douglas and executive director of Youth Development Services there, said the paper outlines positive results from the changing federal focus on family issues and work to keep children in their own homes. At the same time, the act brings a lot of questions and worries.
England and Kemper both asked the Judiciary Committee to delay work on the act so its implications could be considered more fully.
The work not only will increase costs because of its use of independent evaluators and a requirement for an additional hearing — one with the independent evaluator after 30 days and another with a judge after 60 days.
Kemper said it’s important to evaluate the role of the independent evaluators, judges and teams.
“One of my biggest concerns is the unintended consequences of the act,” Kemper said. “In group homes, it could reduce the number of crisis shelter beds in the state.”
The federal requirements also would reimburse a program for a youth’s stay in group homes to no more than 14 days. The cost for any more days would fall on the state or local level.
“That’s not very reasonable when you’re talking about rural Wyoming,” Kemper said. “As a mayor, I’m concerned about reducing services at the state or local level.”
Keeping families together in their homes also is a focus of YES House programs, England said.
“But what if it takes longer” than 14 days, she asked. “The unintended consequences may be that we cut our crisis shelters or group homes to go to. What if there’s no place for them?”
The average stay for children in group homes in Wyoming is three months.
“Kids may be placed into detention more often,” England said. “I think we owe it to our children to take our time.”
“If they’re only willing to pay for 14 days, we can’t provide the services. That’s not enough time to provide the services,” Kemper said. “I’ve done the job for 29 years. We are making permanent changes in these kids’ lives, but not when we’re limited to a 14-day timeline.”
Clem said since he resigned from his job at the YES House earlier this year to become a full-time minister in Gillette, “I don’t really have a dog in this fight.”
But the proposed act “does greatly concern me because it would disrupt the continuum of care.”
He added that a first-time juvenile delinquent sent to the group home may take more than 14 days just to start speaking to staff, depending on how upset or stubborn he or she is.
He worries how the new prevention act would affect the continuum of care, although that isn’t known yet.
A lot of times with abuse or neglect, they’re placed in a facility while awaiting adjudication, Clem said.
“These are kids who’ve not been successful in foster care and they’re sent back to a crisis shelter, unfortunately, because they’re not safe in the community,” he said.
He asked what will happen to children involved in a diversion program or neglect cases if a court takes more time to determine the best course of action for that child.
“More and more will be in jail,” he said. “There is always going to be a need for a group home. I believe this will put our children at risk. ... This is going to have a significant impact.”
Even the Judiciary Committee was divided on the issue, voting 7-7 on a proposal to move a draft bill on the issue forward. As a result, the draft bill will move forward and the discussion likely will continue.