• NMA Urges Interior Department to Increase Revenues to Taxpayers by Lowering Federal Coal Lease Costs

NMA Urges Interior Department to Increase Revenues to Taxpayers by Lowering Federal Coal Lease Costs

Coal Industry Tells “Listening Session” How to Improve Returns to Taxpayers

Washington, D.C. – If the Department of the Interior is truly listening for the best way to maximize revenue to taxpayers from the federal coal lease program, it will lower the cost of mining federal coal. That’s the message the National Mining Association delivered this afternoon at the Washington, D.C. “listening session” on the coal lease program, the first of several announced by Secretary Sally Jewell.

Royalty rates on federal coal are already above market, said NMA. The current royalty is 40 percent higher than prevailing rates for private coal leases. Adding the non-recoupable bonus bids paid for federal coal—but rarely if ever on private coal leases—the effective rate for federal coal tops 20 percent. Raising royalties will further discourage federal coal production and in turn reduce federal revenues that are shared with the states.

“Critics of the current program are doubly wrong,” said NMA CEO and President Hal Quinn. “They’re obviously wrong in claiming the current royalty is too low, and they don’t understand how their push for higher rates is out of step with current market conditions and a bad deal for all Americans.”

Quinn suggested the following improvements for increasing federal revenue while preserving low cost reliable electricity for Americans: (1) lower royalty rates so federal coal is more competitive in the market place; (2) reduce delays in scheduling coal lease sales that rob the states and public of the time value of bonus bids and royalties over the five to seven years it is now taking to complete lease sales.

“The costs of higher royalty rates and fees are all eventually passed on to consumers,” said Quinn, who said any renewed concern for taxpayers would be a welcome change. “As the administration will again demonstrate with its Clean Power Plan, the cost to taxpayers has not been a guiding principle of its energy policies.”

For the full text of Quinn’s statement, click here.