Full Title: Reconsidering Coal’s Fair Market Value: The Social Costs of Coal Production and the Need for Fiscal Reform
Author(s): Jayni Foley Hein and Peter Howard
Publisher(s): Institute for Policy Integrity
Publication Date: 10/2015
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Coal mining on federal lands accounts for more than 40 percent of all coal produced in the United States.1 Nearly 90 percent of federally-produced coal comes from strip mines in the Powder River Basin in Wyoming and Montana.2 As a result of outdated policies, longstanding loopholes, and prevalent environmental externalities, American taxpayers are not receiving their fair share of value from coal mined on public lands. The Department of the Interior (“Interior”) has the obligation and statutory authority to make changes to the leasing program in order to earn a fair return for the American public and protect the environment.
The federal coal leasing program is not structured to ensure that taxpayers receive “fair market value,” as the law requires, for coal extracted from public lands. Recent investigations have shown that coal companies exploit loopholes to avoid paying their fair share of royalties, costing taxpayers up to $1 billion each year in lost revenue.3 Outdated fiscal policies fail to remedy uncompetitive bidding practices or properly account for coal’s export value. And central to the recommendations in this report, Interior’s fiscal terms do not account for the prevalent environmental externalities and option values associated with coal production that impose uncompensated costs on the public.