Meeting Minutes) Is Prepared by the Legislative Service Office (LSO) and Is the Official Record of the Proceedings of a Legislative Committee Meeting

Draft Only

Approval Pending

S UMMARY of

P ROCEEDINGS

S EL E CT C OMMITTEE ON C OAL/MINE R AL B ANKRUPTCIES

COMMITT EE MEET ING INFORMATION December 9, 2019 Wyoming State Library, Conference Room 2800 Central Avenue Cheyenne, Wyoming

COMMITT EE MEMBERS P RESENT Senator Drew Perkins, Co-chairman Representative Eric Barlow, Co-chairman Senator Dan Dockstader Senator Chris Rothfuss Senator Michael Von Flatern Representative Scott Clem Representative Cathy Connolly Representative Clark Stith

LEGISLATIVE SERVICE OFFICE STAFF Josh Anderson, Senior Staff Attorney Matthew Willmarth, Senior School Finance Analyst Eilish Hanson, Associate Research Analyst

OT HERS PRESENT AT MEETING Please refer to Appendix 1-02 to review the Committee Sign-in Sheet for a list of other individuals who attended the meeting.

The Committee Meeting Summary of Proceedings (meeting minutes) is prepared by the Legislative Service Office (LSO) and is the official record of the proceedings of a legislative committee meeting. This document does not represent a transcript of the meeting; it is a digest of the meeting and provides a record of official actions taken by the Committee. All meeting materials and handouts provided to the Committee by the Legislative Service Office, public officials, lobbyists, and the public are on file at the Legislative Service Office and are part of the official record of the meeting. An index of these materials is provided at the end of this document and these materials are on file at the Legislative Service Office. For more information or to review meeting materials, please contact the Legislative Service Office at (307) 777-7881 or by e-mail at [email protected]. The Summary of Proceedings for each legislative committee meeting can be found on the Wyoming Legislature’s website at www.wyoleg.gov. PAGE 2 OF 9

EXECUTIVE SUMMARY The Select Committee on Coal/Mineral Bankruptcies (Committee) met for one day to consider information requested at the previous meeting and consider draft legislation related to protecting Wyoming tax revenues and employee payments before or during bankruptcy actions. The Committee heard testimony and considered draft legislation regarding delinquent taxpayer and lien priority provisions, protested tax payments, labor and employment, and monthly ad valorem tax payments for mineral production. The Committee voted to sponsor 20LSO-0304, Performance bonding requirements, formed a working group to specifically consider legislation on monthly ad valorem tax payments, and requested additional legislation for its next meeting.

CALL TO ORDER Co-chairman Barlow called the meeting to order at 10:00 AM. The following sections summarize the Committee proceedings by topic. Please refer to Appendix 1-01 to review the Committee Meeting Agenda.

REVIEW OF STATUTORY PROVISIONS FOR DELINQUENT TAXPAYER AND LIEN PRIORITY The following subsections summarize the Committee’s work on this topic.

Review of Montana and Texas statutory language regarding lien priority Eilish Hanson, Associate Research Analyst, LSO, presented statutory language on lien priority from Montana and Texas (Appendix 2-01).

Discussion of the Attorney General's current authority or benefit of expanding authority to provide assistance to counties to secure payments in bankruptcy cases James Kaste, Deputy Attorney General, Water and Natural Resources Division of the Attorney General’s Office, reviewed the Attorney General’s authority to provide assistance to counties for procuring payments during bankruptcy cases (Appendix 2-02).

Rusty Bell, Chairman, Campbell County Commission, discussed previous interactions between county attorneys and the Attorney General’s Office during bankruptcy proceedings. Mr. Bell specified that when Campbell County collects tax money owed during bankruptcy proceedings, 72.8% of taxes collected is owed to the State.

Bill Novotny, Chairman, Johnson County Commission, specified a need for counties and the Attorney General’s Office to coordinate on tax collections to ensure all measures are taken to secure taxes owed to the State, counties, and schools. Mr. Bell and Mr. Novotny also noted a desire for a bankruptcy expert within the Attorney General’s Office for future consultation when counties, not necessarily the State, are owed money.

Barry Crago, Civil Deputy Attorney, Johnson County, explained Johnson County has previously worked with the State to collect taxes based on percentages owed to each entity. Mr. Crago also stated support for a bankruptcy specialist within the Attorney General’s Office.

20LSO-0301, Tax lien enforcement Josh Anderson, Senior Staff Attorney, LSO, presented 20LSO-0301 v0.3 Tax lien enforcement (Appendix 2-03) which clarifies tax lien language on mineral ad valorem taxes. Mr. Anderson provided the Committee a proposed amendment as requested by Co-chairman Barlow to the Committee (Appendix 2-05).

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

WYOMING LEGISLATIVE SERVICE OFFICE • 200 West 24th Street • Cheyenne, Wyoming 82002 TELEPHONE (307) 777-7881 • FAX 307-777-5466 • E-MAIL [email protected] • WEBSITE www.wyoleg.gov PAGE 3 OF 9

Public Comment Mr. Bell, Mr. Novotny, Mr. Crago, and Carol Seeger, Administrator, Campbell County Commission presented a draft version of the bill containing proposed amendments to 20LSO-0301 (Appendix 2-06).

Committee Discussion The Committee directed LSO staff to revise 20LSO-0301 to include Johnson and Campbell County’s proposed amendments for consideration at its next meeting. Co-Chairman Perkins moved to have LSO staff draft a separate bill concerning date changes and language on prior existing liens. The motion was seconded by Senator Rothfuss and adopted. The Committee also directed LSO staff to compare statutory language between ad valorem taxes and severance taxes to the language proposed in 20LSO-0301, research how much in legal fees have been withheld as a result of litigation recovering county taxes and determine the impact of 20LSO-0301 on federal leases.

20LSO-0305, Transfer of mineral interests - tax obligations Mr. Anderson presented 20LSO-0305, Transfer of mineral interests – tax obligations (Appendix 2-04) to the Committee, which prevents the transfer of mine ownership until all outstanding taxes are paid either by the seller or buyer.

Public Comment Mr. Bell, Mr. Novotny, Mr. Crago, and Ms. Seeger presented a draft bill containing proposed amendments to 20LSO-0305 (Appendix 2-07), which requires that all taxes will be paid at the time of a mine sale to reflect real estate transactions and not allow a transferee to assume outstanding tax liabilities.

Committee Discussion Representative Connolly moved, seconded by Representative Stith, to have LSO revise the proposed draft bill to include the proposed amendments from Campbell and Johnson Counties for discussion at the next Committee meeting. The Committee approved an amendment from Senator Von Flatern to include an option for producers to pay all state and local taxes within a time limit if the producer is not able to become current on all outstanding taxes. The main motion, as amended, was adopted by the Committee.

PROTESTED TAX PAYMENTS The following subsections summarize the Committee’s work on this topic.

20LSO-0303, Taxpayer appeals Mr. Anderson presented 20LSO-0303, Taxpayer appeals (Appendix 3-01) to the Committee, which applies to protested tax payments.

Public Comment Mr. Bell, Mr. Novotny, Mr. Crago, and Ms. Seeger presented a draft bill containing proposed amendments to 20LSO-0303 (Appendix 3-02), which adds county boards of equalization into the tax appeal process as well as tax distributions.

Dixie Huxtable, Converse County Assessor, explained the timeframe under which taxes are protested, indicating a timing issue with the current language of the bill draft.

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

Brenda Arnold, Administrator of the Property Tax Division, Department of Revenue, encouraged keeping taxpayers’ rights intact as well as their right to the appeal process, and suggested the Committee include language on page four of the bill draft that the prior years’ taxes shall be paid regardless of appeal.

Pete Obermueller, President, Petroleum Association of Wyoming, expressed opposition to the enforcement of taxes paid prior to protesting the assessed amount as companies are already required to pay the taxes, regardless of protest.

Committee Discussion Representative Clem moved to table 20LSO-0303, Taxpayer appeals indefinitely. The motion was seconded by Representative Connolly and passed by voice vote.

LABOR AND EMPLOYMENT The following subsections summarize the Committee’s work on this topic.

Responses to Committee requests Andrea Hixon, Manager, Program Strategy Team, Department of Workforce Services (DWS), and Christina West, Program Manager, Wyoming Innovation and Opportunity Act Title I, DWS, presented a letter to the Committee (Appendix 5-01), which outlines information requested of DWS during the Committee’s October 14 meeting.

Department of Workforce Services recommendations Jason Wolfe, Administrator, Workforce Standards, DWS and Kelly Roseberry, Deputy Administrator, Labor Standards, DWS also addressed the letter to the Committee from DWS (Appendix 5-01). Ms. Roseberry referenced Blackjewel’s change from Chapter 11 bankruptcy filing to Chapter 7, which enabled workers to receive back wages. Mr. Wolfe and Ms. Roseberry explained the barriers to processing wage claims and the limited scope the DWS has to investigate after bankruptcies, as well as the outstanding wages and benefits owed to former Blackjewel employees. Ms. Roseberry reviewed a letter addressed to the Committee (Appendix 5-04), which included the following priorities: anti-retaliation provision, intervention/assignment authority, and affected class investigations.

20LSO-0304, Performance bonding requirements Mr. Anderson presented 20LSO-0304, Performance bonding requirements (Appendix 5-02) to the Committee, which amends current law to only allow surety bonds for nonresident employers until they have conducted business in Wyoming for at least two years. Mr. Anderson also presented Kentucky’s statutory language on performance bonding requirements (Appendix 5-03), which omits out-of-state companies from performance bonding requirements after having done business within Kentucky for at least five years.

Public Comment No public comment on this topic was received.

Committee Discussion The Committee directed LSO staff to coordinate a study with DWS staff to understand the differences between wage violations of different types of employers, including in-state and out-of-state employers.

Senator Rothfuss moved, seconded by Senator Von Flatern, to sponsor 20LSO-0304. The Committee adopted the following amendments:

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

Delete page 2, lines 11-22 and delete new language on page 3, lines 7-8; and

Page 3, line 14, strike “security” and insert “bonding”.

The Committee voted to sponsor 20LSO-0304, as amended, with five aye votes and three no votes (Appendix 5-05).

Representative Connolly moved to draft legislation on the anti-retaliation provision listed by DWS as the department’s first priority. The motion was seconded by Representative Clem and adopted.

Representative Connolly moved to draft legislation on the intervention/assignment authority listed by DWS as the department’s second priority. The motion was seconded by Senator Rothfuss and adopted.

Representative Connolly moved to draft legislation on the affected class investigations, listed by DWS as the department’s third priority, but limit it to only bankruptcy proceedings. The motion was seconded by Senator Rothfuss and adopted.

MONTHLY AD VALOREM TAXES The following subsections summarize the Committee’s work on this topic.

Review of revenue collection scenario of transitioning to a monthly ad valorem tax payment schedule Matthew Willmarth, Senior School Finance Analyst, LSO, presented a memorandum on scenarios for ad valorem payment schedules (Appendix 7-01).

Review of historical delinquencies for severance taxes and ad valorem taxes in Wyoming, including settlement amounts received. Information will also be provided on the top property taxpayers across all industries, as well as the percent of property taxes paid by the percent of all taxpayers Mr. Willmarth presented a memorandum on historical severance tax and ad valorem delinquencies (Appendix 7-03).

Discussion of impact on the Department of Revenue transitioning to a monthly ad valorem tax payment schedule Craig Grenvik, Administrator, Mineral Tax Division, Department of Revenue, presented a letter addressed to the Committee from Dan Noble, Director of the Department of Revenue, on the impacts monthly payments would have on the agency (Appendix 7-04). Mr. Grenvik explained that although the severance tax collection rate has historically been nearly 100 percent, recent shifts in the mining industry have caused the much lower number reflected in Mr. Willmarth’s memorandum.

Ms. Arnold explained the budgeting period based around mill levies and requested the Committee consider legislation that prevents distribution of ad valorem taxes until a mill levy is established on the previous year’s production.

The Committee directed LSO staff to coordinate a report with Department of Revenue staff to understand how a monthly ad valorem payment system could be implemented by the State, and to compare an estimated mill levy system to what the actual mill levy calculations were.

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

Mr. Bell supported the Department of Revenue’s statements and noted encouragement for distribution of collected taxes by the counties. Mr. Bell also advocated for the creation of an escrow account for the purpose of holding taxes during the proposed three-year transition period.

Mr. Novotny encouraged the Committee to create an equitable framework in order to prevent the number of delinquent taxpayers from increasing, referencing local fire districts and hospitals operating without budgeted funds.

Mr. Crago clarified that under current statute, counties are required to distribute tax money once it’s collected to the entitled parties.

Public Comment Larry Wolfe, previous member of the Mineral Tax Task Force, expressed support for the Committee to move forward with the draft legislation.

Joel Schell, Converse County Treasurer, cautioned the Committee of possible effects the transition period could impose on local governments.

Ms. Huxtable explained the importance of assessing the correct production value with the correct mill levy and advocating for staying as close as possible to the current county budgeting process.

Hesid Bradow, Organizer, Powder River Basin Resource Council, expressed support for monthly payment of ad valorem taxes.

Bobby Rolston, Occidental Petroleum Corporation, explained the complexities of the true-up period from the mining operators’ standpoint and proposed use of the prior year’s mill levy during the first six months of transition.

Mr. Obermueller expressed a need for accommodation from the State with cashflow during the proposed transition period and proposed the State offer incentives for mining companies to begin on-time monthly ad valorem payments.

Ashley Harpstreith, Executive Director, Wyoming Taxpayers Association, expressed opposition to implementing a monthly ad valorem payment system on a single industry.

20LSO-0302, Monthly payment of ad valorem tax on mineral production Mr. Anderson provided a copy of 20LSO-0302 (Appendix 7-02) to the Committee, which defines the process for monthly ad valorem payments on mineral production.

Committee Discussion The Committee directed LSO staff to draft legislation to allow counties to hold collected tax money in an escrow account and to include language on lien priority. The Committee also directed LSO staff to compare the difference between a State-held escrow account and county-held escrow accounts.

The Committee agreed to form a working group for 20LSO-0302 on the topic of monthly collection of the ad valorem tax on mineral production.

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

COMMITTEE DIRECTIVES Representative Connolly moved to draft legislation allowing counties to receive counsel from the Attorney General’s Office during bankruptcy proceedings concerning severance and ad valorem tax collections. The motion was seconded by Senator Rothfuss and adopted.

MEETING ADJOURNMENT There being no further business, Co-chairman Barlow adjourned the meeting 6:40 PM.

Respectfully submitted,

Co-chairman Barlow

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

Committee Meeting

Materials Index

Index Agenda Item Document Description Document Provider Number

1-01 Agenda LSO

1-02 Sign-In Sheet LSO

Review of Statutory Montana and Texas Statutory Language on Lien 2-01 Provisions for Delinquent LSO Priority Taxpayer and Lien Priority

Review of Statutory Letter to the Select Committee on Coal/Mineral Office of the Attorney 2-02 Provisions for Delinquent Bankruptcies General Taxpayer and Lien Priority

Review of Statutory 2-03 Provisions for Delinquent 20LSO-0301 v0.3 Tax lien enforcement. LSO Taxpayer and Lien Priority

Review of Statutory 20LSO-0305 v0.3 Transfer of mineral interests- 2-04 Provisions for Delinquent LSO tax obligations. Taxpayer and Lien Priority

Review of Statutory 2-05 Provisions for Delinquent 20LSO-301 proposed amendment LSO Taxpayer and Lien Priority

Review of Statutory Johnson/Campbell Proposed Amendment to Johnson and Campbell 2-06 Provisions for Delinquent 20LSO-0301 Counties Taxpayer and Lien Priority

Review of Statutory Johnson/Campbell Proposed Amendment to Johnson and Campbell 2-07 Provisions for Delinquent 20LSO-0305 Counties Taxpayer and Lien Priority

3-01 Protested Tax Payments 20LSO-0303 v0.3 Taxpayer appeals. LSO

Johnson/Campbell Proposed Amendment to Johnson and Campbell 3-02 Protested Tax Payments 20LSO-0303 Counties

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

Department of Workforce 5-01 Labor and Employment Responses to Committee Requests Services

20LSO-0304 v0.3 Performance bonding 5-02 Labor and Employment LSO requirements.

Kentucky Statutory Language on Performance 5-03 Labor and Employment LSO Bonds

Department of Workforce 5-04 Labor and Employment Labor Law Statutory Changes Services

5-05 Labor and Employment Vote Form - 0304 LSO

7-01 Monthly Ad Valorem Taxes Scenarios for Ad Valorem Payment Schedules LSO

20LSO-0302 v0.3 Monthly payment of ad 7-02 Monthly Ad Valorem Taxes LSO valorem tax on mineral production.

7-03 Monthly Ad Valorem Taxes Summary of responses on deliquencies LSO

7-04 Monthly Ad Valorem Taxes Impacts on Monthly Payment of Property Taxes Department of Revenue

SELECT COMMITTEE ON COAL/MINERAL BANKRUPTCIES Summary of Proceedings

WYOMING LEGISLATIVE SERVICE OFFICE • 200 West 24th Street • Cheyenne, Wyoming 82002 TELEPHONE (307) 777-7881 • FAX 307-777-5466 • E-MAIL [email protected] • WEBSITE www.wyoleg.gov