Utah Operator Fined for Mining Unleased Federal Coal
By Brian Maffly
June 10, 2020 - An upstart Utah coal operator has run afoul of the Bureau of Land Management for extracting federal coal in Emery County without authorization, according to a report posted by the government’s watchdog agency.
Bronco Utah Operations, which resurrected the old Emery Deep mine in 2016, was recently given permission to tunnel through federal coal so it could access state-owned coal without having to develop a new mine portal.
But as Bronco’s crew bore the tunnel, it removed coal outside the 340-foot-wide right of way the BLM granted the company, according to a summary report posted last week by the Interior Department’s Office of Inspector General. The case was resolved with Bronco paying $92,000 in penalties.
Critics of coal mining contend the company should experience a much stronger sanction for pilfering coal that was worth at least 10 times the amount it paid as punishment.
“By only requiring this scofflaw corporation to pay the estimated value of the coal and backed royalties with no other penalty sets a very dangerous precedent going forward,” said Jayson O’Neill, director of Western Values Project. “[President Donald] Trump’s Interior Department just essentially sent a message to other extractive resource corporations that violating the law and trespassing will give you exclusive access to the public’s shared resources.”
Reached last week, Bronco environmental manager Kit Pappas declined comment. The inspector general’s full report has yet to be released.
The company, owned by a New York hedge fund called Sandton Capital Partners, has experienced numerous management shake-ups since buying the century-old idled Emery Deep mine from Consol Mining Co. in 2015 and renaming it Bronco Utah. Bronco is on its third CEO in two years after the dismissal of Dan Baker, a veteran Utah coal entrepreneur.
According to court records, Baker had helped Sandton acquire the mine and ran it until he was let go in 2018 amid allegations of mismanagement and self-dealing. Baker, who was 68 at the time of his firing, sued for age discrimination, and the suit was settled this year with a confidential agreement.
The BLM estimated that Bronco extracted 30,910 tons of federal coal outside of the right of way without authorization, according to spokeswoman Kimberly Finch. The agency discovered the problem during a routine quarterly inspection, she said, and handed over the matter to Interior’s inspector general.
Had the coal been properly leased and taxed, Bronco would have would have owed $12,673.10 for the mining rights and $79,426.34 in royalties. These amounts reflect the price — 41 cents per ton — for which Utah coal has been leased in recent sales and a standard 8% royalty.
The two sums combined translate into a penalty of $2.98 per ton of purloined coal, which could have been sold for about $35 per ton on the market, depending on its quality, earning more $1 million.
Early last year, the BLM approved Bronco's request to cut a 3,700-foot tunnel through an unleased federal coal seam to reach the coal it leased from the Utah School and Institutional Trust Lands Administration and private owners. It was supposed to extract no more than 200,000 tons from this tunnel, according to BLM documents.
Bronco has substantially boosted production at its mine from virtually nothing in 2015, when it was acquired by Sandton, to nearly 700,000 tons last year while employing 96 workers.