BEULAH — Dan Neurohr has been a coal miner and a proud member of the United Mine Workers of America most of his working life.
Now, after decades, the mine where he’s working and the local union — once representing nearly every coal miner in North Dakota — are coming to an end.
Dakota Westmoreland Corp. has less than four more years to deliver coal to the Coyote Station power plant from its mine at the plant’s back door. It is the only coal mine still represented by UMWA in North Dakota. The union’s other mines, such as Indian Head at Zap and Glen Harold at Stanton, have all since shut down, their coal delivery contracts absorbed by North American Coal Corp’s Coteau Freedom Mine.
The Coyote Station is south of Beulah and Dakota Westmoreland is a “mine mouth” operation, meaning coal is fed from the mine pits and crusher right onto the plant’s conveyor belts.
The Coyote Station owners announced last month they’ll switch to a new coal provider starting May 2016.
North American, owner of the two largest coal mines in the state and both non-union, will open a new mine they’re calling Coyote Creek Mining Co. just west of Dakota Westmoreland’s open coal pits.
Coyote Creek Mining Co. exists in coal lease documents for now. The Public Service Commission must issue a mining permit and North American won’t make application for the 13-square-mile reserve area until next year or possibly 2014, says its spokesman David Straley.
The contract would expire in 2040.
Neurohr, 61, says he doesn’t really understand how or why Dakota Westmoreland lost its contract. He knows it came down to the price of coal, which is what Coyote Station owners said in a press release when they announced their decision.
“We were mining at a cheap enough price. Our wages were the same or even a little less, but our benefits are better,” he said.
The Coyote Station has four owners. Otter Tail Power Co. based in Fergus Falls, Minn., is the operating partner.
Its spokeswoman, Cris Oehler, said the companies put out a request for proposals in view of its expiring contract and North American’s was a better deal than either Dakota Westmoreland’s or harder, less sulfurous coal from the Powder River coal fields in Wyoming.
Mike Dalpiaz is the UMWA’s international vice president covering western states including North Dakota.
He doesn’t pull any punches.
Dalpiaz said the new contract is a “farce” and a “joke” and that the four power plant owners acted “maliciously” in making the agreement.
He said North American has only taken preliminary coal samples and doesn’t know much about the quality of the coal it says it will deliver to the Coyote Station.
“It’s just quite amazing. We’ve looked at the maps and we have to question how are they going to get the coal to the plant. Will they be using the highway (49); are they going to helicopter it in? No one wants to talk about it, they just say that’s North American’s problem,” Dalpiaz said.
He said if North American can’t deliver the coal quality it’s promised, it’ll have to make it up from other premium coal sources at ratepayers’ expense.
He said the plant owners all refer questions to Jan Rudolph, Otter Tail Co.’s vice president for supply, but Rudolph won’t return the union's phone calls.
Rudolph did not return a phone call for this story and Oehler said contacts and questions should go through her.
Straley said North American has not made any decisions about how and which way it will deliver coal to the Coyote Station, four miles from where the new mine will start. Highway 49 is an option, but all options are on the table, he said.
The decision to change coal providers is a game-changer for Dakota Westmoreland.
Without the Coyote Station contract for 2.5 million tons, it’s left with a relatively small contract for the half-million tons it ships annually by rail to the Heskett power plant near Mandan. That contract also expires in 2016.
Bill Weaver, mine manager, said his company is evaluating options after 2016 and thinks the Heskett contract is enough to keep the mine open.
“There are a lot of rumors that this place is for sale, but it wouldn’t make any sense to sell it. We have contracts to supply coal. We will do our best to supply them with the best quality coal that we have,” Weaver said.
He said most of the mine’s 145 employees were devastated by the news. “We have very little turnover here. It’s not a place where people leave,” he said.
Dakota Westmoreland bought the former Knife River Coal Mine holdings from Montana-Dakota Utilities for $28 million in 2000. MDU also is an owner of the Coyote Station power plant.
Dalpiaz said the union will be watching language for a “retention bonus” that's in the agreement between Dakota Westmoreland and the Coyote Station.
He said the bonus is intended to retain miners to ensure a continuous supply of coal.
“We have full intentions of fulfilling our part to supply coal, but we can’t do it without bodies,” he said.
He said there’s no dollar amount named with the bonus and if it’s not lucrative enough, miners will look for other work.
“People are looking now and I don’t blame them. They want a secure livelihood, but if they’ve gotta leave, they’ve gotta leave,” he said.
Weaver said his company is talking about an incentive plan to keep its miners on board through 2016. What will help is having a core group of experienced miners, like Neurohr, who could get them through until 2016 and then would be eligible to retire, Weaver said.
Oehler said Otter Tail respects Dakota Westmoreland miners, but can’t require North American to hire them.
“We recognize their work ethic and their commitment to the region. We can’t tell (coal companies) who to hire; those decisions are up to those companies,” she said.
She said the Coyote partners’ commitment to the region is evident in their decision to stick with lignite and a North Dakota coal supplier.
“There will be a mine in that area and the mine will need employees,” she said.
Straley, North American’s spokesman, said he couldn’t comment on whether his company would take on Dakota Westmoreland miners.
He did say his company will put on “emphasis on experience” and hiring local, qualified employees.
“We’re excited about opening a new coal mine and we’re ready to go,” Straley said.
North American is gathering baseline information for a new mine permit, evaluating the archaeological, soils, water and other data that will be necessary.
Jim Deutsch, who oversees the permit program at PSC, said it’s possible to get a new mine through the complicated permit process in the short time North American envisions. He said how fast it goes will depend on how fast the company responds to any deficiences or questions that emerge in the PSC's review.
Dalpiaz believes the decision to change providers was anti-union, at least to a degree.
He said the union had a sound labor relationship at Dakota Westmoreland with good coal production and a matching safety record. “The union is seen as the boogeyman in these things, but it’s not true,” he said.
Neurohr, a union local president and recording secretary in years past, said he agrees. “I think it has something to do with the union, but that’s my personal opinion. I really enjoy working at Dakota Westmoreland; I really do,” he said.
Oehler said the issue of union versus non-union was not discussed when bids were evaluated.
“It didn’t enter into the decision. Coyote Station uses union labor. All four owners use union labor at their companies. We have long-standing good working relationships with unions,” she said.
Bill Johnson, of Hazen, is a former miner and longtime UMWA organizer and district representative, when the union had hundreds of members at active coal mines that have since closed down.
He was there when UMWA miners conducted strikes at both Indian Head and Glen Harold mines for better health care for workers and he was there when union miners went through a prolonged legal wrangle over the right to mine coal reserves that resulted in a $6.5 million settlement from Basin Electric Power Cooperative.
Johnson said he can’t figure out how North American can spend many millions to open a new mine, recover those costs on only 2.5 million tons of coal a year and still deliver cheaper coal than Dakota Westmoreland.
“It just doesn’t make sense,” he said.
Straley said North American was creative in formulating its coal bid, basically a “cheaper, better way to do things.”
Johnson said it’ll be a sad day when the last UMWA union mine closes, leaving only the International Brotherhood of Electrical Workers Union at BNI Coal near Center.
“It’ll be sad for the workforce around here. We have fought for wages and benefits forever,” Johnson said.