Full Title: Illuminating the Hidden Cost of Coal
Author(s): Jayni Foley Hein and Peter Howard
Publisher(s): Institute for Policy Integrity
Publication Date: December 1, 2015
Full Text: Download Resource
Description (excerpt):
The Department of the Interior (“Interior”) can make strides in modernizing the federal coal program through straightforward royalty rate increases and fiscal reform. 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. As our October 2015 report described in detail, the federal coal leasing program suffers from lack of robust competition; stagnant minimum bids and royalty rates that have not been raised since 1982; frequent royalty rate deductions; and inconsistent internal “fair market value” calculations, which often fail to account for coal’s export value.2
The fiscal terms of federal coal leases also fail to account for the many environmental and social externalities (or shared costs) imposed on the public by coal production. This policy brief and its accompanying regulatory report aim to illuminate some of the hidden costs of coal production, which Interior should account for in order to modernize the federal coal program and earn “fair market value,” as required by federal law. If Interior had used a higher royalty rate that accounts for even a fraction of the public costs of mining, it could have earned an additional $2 billion from 2009 to 2013, from coal production in four western states—Wyoming, Colorado, Montana, and Utah.