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Higher Royalty Rates Draw Coal’s Friends And Foes To Denver Hearing

Stephanie Paige Ogburn
Activists rally in support of higher royalty rates for coal mined from public lands.

In recent years the government agency that handles the sale of coal on public lands has come under criticism for how it manages that program. Independent reviews have found the Bureau of Land Management may not be charging companies enough for the coal they mine.

That means taxpayers, who own the coal on public lands, could be getting short changed. In response, the Bureau of Land Management has been holding listening sessions around the country.

As with any forum related to coal, the session, held Aug. 18 in Golden, provided an opportunity for those in favor and opposed to the carbon-rich energy source to air their grievances.

Mine workers wearing “Friends of Coal” stickers and 350.org activists skirted each other in the hallway outside the conference room, after signing up for a three minute opportunity to state their opinion to federal officials.

While the listening session was ostensibly on whether the government is managing the leasing of federal coal properly, comments ranged from digs at Obama’s “war on coal” to statements from ski town representatives on how climate change is diminishing recreation opportunities.

Credit Stephanie Paige Ogburn / KUNC
Rick Curtsinger works in media relations for Cloud Peak Energy. He and many others sported "Friends of Coal" t-shirts at the hearing. Employees from Cloud Peak's Wyoming operations traveled to Golden to testify at the listening session.

Autumn Hanna, an analyst with Taxpayers for Common Sense, was focused on the money.

“So these are a taxpayer-owned resource and that’s why we are concerned. We are concerned the taxpayers aren’t getting what they are owed.”

Hanna’s Washington D.C.-based group says the current federal royalty rate is often less than what companies pay for private or state-owned coal. Right now that rate is set at 12.5 percent for above ground coal, and for underground mines, it’s 8 percent.

Often, though, the government lowers those payments, for various reasons. The Government Accountability Office has reported that around 30 percent of royalty payments do get reduced, in Colorado in 2013, the royalty rate was 5.8 percent, according to the GAO.

Even with those reductions, many at the hearing argued that charging coal companies any more would cost jobs and raise electricity rates. Coal miners even traveled down from Wyoming’s Powder River Basin to testify against raising rates.

Colorado coal also made an appearance. Jerry Nettleton, who works for Peabody Energy in Steamboat Springs, pointed out that 350 coal miners, and their families, live in Northwest Colorado.

“The coal mines and coal fueled power plants in Northwest Colorado are the largest employers and the major taxpayers in our area,” said Nettleton.

Coal fuels these rural economies and its economic benefits are worth far more than simply the royalties it pays, Nettleton testified.

The view from Colorado’s mountain towns, however, reflects the diversity and some of the conflict between the state’s extraction economies and those based on tourism and mountain recreation. Keith Baker, a trustee from Buena Vista, spoke about decreased snowpack, a higher timberline, “a shorter snow season, a shorter irrigation season, a shorter skiing season and all the recreation opportunities that come with that.”

Credit David Herrera / Flickr, Creative Commons
Flickr, Creative Commons
Towns like Buena Vista, nestled beneath Colorado's tall mountains, say they are seeing negative impacts from climate change, exacerbated by burning coal.

Baker said while he appreciates the contribution of coal, it is not paying for the full cost -- the climate cost -- of its impacts.

Colorado received around $26 million from federal coal royalties in 2013, and from 2010 to 2014, averaged around $20 million per year. Most of that money goes to fund schools and to energy impacted communities.

That amount does not include property and other state and local taxes paid by the coal industry. According to Stuart Sanderson, of the Colorado Mining Association, the industry contributed more than $2.8 billion [.pdf] to the state’s Gross Domestic Product.

Mark Squillace, a law professor at the University of Colorado Boulder, said the federal coal program has been criticized for years. One of the main problems, he said, was that instead of the federal government directing how coal is mined on public lands, the Bureau of Land Management cedes control to companies, letting them direct where and when coal will be mined.

Regardless of whether the government ultimately decides to charge companies more for coal, or change how it runs its coal program, Squillace said the industry’s decline is imminent, as the world becomes more concerned with climate change and countries like China invest in alternative fuels.

“That’s not going to change and it’s really the responsibility of the federal government to make sure they manage that decline in a responsible way,” he said.

The BLM’s final hearing on royalty rates is Aug. 20 in New Mexico, and it is accepting public comments through Sept. 17, 2015. It will likely be years, though, before the agency will make a final decision on changing how it charged companies for coal mined from public lands.

Stephanie Paige Ogburn has been reporting from Colorado for more than five years, primarily from the Western Slope.
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