Utah coal-cleaning plant leaves behind trail of waste and unpaid debts

(Brian Maffly | The Salt Lake Tribune) The operators of this coal-cleaning plant in Wellington have walked away from the 30-acre facility, state regulators say, after numerous violations and failing to pay contractors and tax obligations.

In 2013, a prominent coal-industry investor named Steven Rickmeier co-founded a company to acquire several coal-cleaning plants, including one at Wellington in the heart of Utah coal country.

In an arrangement with Utah’s largest coal producer, the new firm, Bowie Refined Coal (BRC), was to receive substandard coal from nearby mines, blast it with air to separate out sulfur, dirt and other impurities and sell it as fuel.

But BRC’s Wellington Dry Coal Cleaning Plant proved a failure, and now its operators have abandoned the 30-acre facility, still contaminated with coal waste, according to documents from the Utah Division of Oil, Gas and Mining (DOGM). State and local authorities are left to clean up the mess and recoup taxes and fines from a nonresponsive company.

To make matters worse, the division alleges the Wellington plant illegally sold at least 2,000 tons of the waste to a trucking company, which used it as a road base for a parking lot in 2017.

At a 2017 meeting with regulators to explain that violation, Bowie’s then-operations manager, Kyle Edwards, argued that the material wasn’t coal waste but actual product, which it sold for 25 cents a ton. Regulators rejected that assertion, deeming the material regulated coal waste, and ordered Edwards to gather it up and return it to the coal-processing plant for proper disposal.

Bowie Refined Coal never complied or offered a plan for recovering the waste, state regulators say. The $2,310 fine, one of many levied against the firm in the past two years, has gone unpaid. Now the plant is locked up and usable coal has been removed.

Last month, the division filed papers to seize Bowie’s $732,000 reclamation bond and “pursue the collection of fines and civil penalties for willful and knowing violations of [Utah’s] Coal Act.” The action targets not just the company, but individual officers, including Edwards and Rickmeier, identified as the facility’s owner, for potential fines of up to $5,000 a day over the year since the violations have gone unaddressed.

In its unreclaimed state, the facility could harm the environment and threaten public health and safety, according to the division’s notice filed April 10 with the Utah Board of Oil, Gas and Mining, which will hear the matter at its next meeting in June.

The company has filed no papers in response to the state’s request for fines. The plant’s phone line is disconnected.

Reached Friday, Rickmeier said he resigned from Bowie Refined Coal five years ago and does not know about the division’s action. The document indicates Utah regulators mailed the action to his address in Lake Forest, Ill.

Efforts to reach Edwards, the former operations manager, were not successful.

Two then-executives with the similarly named Bowie Resource Partners, which operates Utah’s Dugout, Skyline and Sufco mines, helped launch the coal refining company in 2013, according to publicly available documents.

But officials with Bowie Resource Partners, which recently renamed itself Wolverine Fuels and relocated to Sandy after a leadership shakeup, say there is no ongoing connection.

“There is no affiliation now, and there hasn’t been for some time,” said Brian Settles, Wolverine’s chief administrative officer. The company’s name change, he added, was motivated partly to avoid confusion arising from the two firm’s similar names.

News releases and corporate filings from 2013 to 2015 suggest the two companies had a close relationship at that time. In 2015, Bowie Resource Partners filed documents with the Securities and Exchange Commission proposing a public stock offering. Those filings indicated it held a “right of first refusal” to buy any products Bowie Refined Coal intended to sell. And James Wolff, then Bowie Resource Partners’ chief financial officer, signed the Wellington plant’s operating permit in 2014. The division filings indicate coal from a Bowie mine was stored at the Wellington plant as recently as last year.

Rickmeier later was nominated to a seat on Bowie Resource Partners’ board of directors and became one of that company’s principal equity owners. The companies’ news releases described Bowie Refined Coal as an “affiliated company."

The now-shuttered Wellington plant is one of 10 Bowie Refined Coal acquired in 2013 from Headwaters Inc., a Utah construction materials firm that developed the plants around the country at a cost of at least $120 million, according to a 2013 Bowie Resource Partners news release. Using a special dry compressed-air technology, the plants cleaned low-grade coal stockpiled in mounds totaling more than 2 billion tons in the hopes of turning it into marketable commodities.

“The annual productive capacity of 6 million tons makes Bowie Refined Coal one of the largest independent processors of waste coal in the U.S.,” the release states. “The Bowie Refined Coal product is an extremely low cost component when either blended with run-of-mine coal or sold directly to coal consumers.”

Headwaters itself announced the deal with Bowie Refined Coal in 2013, saying it sold the plants for $13.8 million in cash and up to $43.7 million in future royalties from coal refined and sold at the facilities.

But Bowie had trouble meeting financial obligations associated with its Utah operations. Property taxes to Carbon County have gone unpaid since 2014. Some contractors have taken the company to court to collect unpaid invoices for services rendered. The company never responded to the lawsuits and default judgments were entered totaling about $250,000.

The county intended to seize the two parcels and sell them this month to recover $16,000 in unpaid taxes plus interest and penalties. At the request of the division, however, the county treasurer agreed to remove the parcels from the sale list.

The county’s delinquent tax notice names the property owner as Bowie Refined Coal LLC, a limited liability company. While this owner’s address is the same Louisville office that housed Bowie Resource Partners headquarters before it moved to Utah last year, the question of who is responsible for the refiner’s remaining mess promises may be a tougher question to answer. Owners of LLCs are generally shielded from the company’s liabilities and debts.