Sunday, August 23, 2015
By Sen. Ray Scott
Interior Secretary Sally Jewell announced that the Bureau of Land Management would conduct a series of “listening sessions” throughout the country, including one in Denver this past Tuesday.
Jewell says that she wants an “open and honest conversation about modernizing the federal government’s coal (leasing) program…and about whether the taxpayers are getting a fair return from public resources.” I don’t believe a word she says. I think these listening sessions have less to do with “honesty” and much more to do with separating coal miners in Colorado and throughout the West from their jobs.
At the outset, the notice provides no real information about why these sessions came about, other than buzz words and unspecified concerns “about how the federal government leases coal and the amount of royalty charged.”
It mentions nothing about the Obama administration’s regulations on emissions from power plants, which have caused hundreds of coal plants to shut down, or the effect that these and other administration rules are having or will have on future production from federal leases.
It also says nothing about the impact of litigation by anti-coal extremists that is threatening to shut down at least two of the state’s mines. Rest assured that the continued operation of these mines is essential to maintaining an adequate royalty revenue stream to government coffers.
Colorado once ranked second among all states in federal royalty payments from federal coal leases. It now ranks fourth and royalty payments have fallen by more than 33 percent in the last several years alone. Coal production has declined by nearly half from levels set more than 10 years ago. State laws mandating the shutdown of Front Range power plants or their conversion to natural gas have or will cost Colorado coal producers up to 4 million tons annually; much of that would have been produced from federal coal leases. But the listening session notice mentions nothing about those factors or how the federal government could help stimulate production and yes, increase royalty payments from coal.
Coal producers already pay royalties on surface-mined coal of 12.5 percent and 8 percent on gross proceeds from coal sales. This is in addition to sales taxes, severance taxes, and excise taxes. The total tax burden exceeds $100 million annually in Colorado alone. And that is on just eight operating mines. When bonus bids are added into the mix, the royalty rate rises even higher.
The “sessions” appear designed to give anti-coal groups, which call for leaving coal in the ground, a forum to air their extremist policies before the BLM, all at taxpayer expense. If that is the case, then the BLM is very close to violating its trust responsibilities to administer the land to ensure the maximum economic recovery of the coal, as federal laws require. Freezing the coal in place deprives America of its most abundant energy fuel.
Secretary Jewell, mining is important, especially to rural Colorado. The coal industry pays average wages and benefits in excess of $120,000 annually. Rural communities like Paonia, Craig, Meeker, Rangely, and even larger cities like Steamboat Springs depend on coal and the revenues it provides. And Colorado benefits overall from affordable and reliable energy from coal. Increasing the tax burden will only serve to drive coal further to the edge, deprive public schools of an important source of revenue from federal leases, and increase electricity rates for those who can least afford it.
One thing is certain: Lower production means lower royalties. Zero production means zero royalties. Any honest conversation about the level of royalty payments hinges on the government disclosing its intentions and analyzing the devastating impacts that its policies and rules are having on an industry that has been a part of Colorado’s economy for more than 150 years.
Republican Ray Scott represents Mesa County in the Colorado Senate. He is chairman of the State, Veterans and Military Affairs Committee and vice-chairman of the Senate Transportation Committee.