TORONTO (miningweekly.com) – US coal producer Arch Coal has argued against potential reforms of the federal government’s coal rights leasing scheme, saying it is working well.

The company was testifying on Tuesday at a Department of Interior (DOI) listening session on potential reforms to the federal coal programme in Golden, Colorado.

The US federal coal leasing programme had come under increased scrutiny in recent years, as communities impacted by coal mining and export proposals, taxpayer advocates and environmental groups had questioned the ability of the Bureau of Land Management to ensure a fair return to US taxpayers and adjust to newer challenges such as climate change and coal export proposals.

Arch’s senior VP of strategy and public policy, Deck Slone, however, warned the DOI to act with caution when considering reform.

"In the past decade alone, the programme has generated roughly $12-billion in revenue for the American people – revenue that has been put to work to build schools and fix roads and provide a range of critical services,” he stressed.

In the Powder River basin, where Arch produced 95% of its federal coal, the company paid royalties, taxes and fees accounting for nearly 40% of the selling price of its product.

"It is self-evident that a programme that returns nearly 40% of all revenues to the public is creating remarkable value for taxpayers. But that's beside the point for those who are arguing for ‘reform’,” he advised.

ENVIRONMENTAL OFFENSIVE
Arch testified that what critics of the programme really meant when they argued that current payments were not enough, was that current payments were not enough to put the industry out of business.

“That's the real goal – to make sure the coal stays in the ground. They don't want a higher return for taxpayers, they want no return.”

Slone further alleged that critics wanted to derail the coal industry by masking this objective with a thinly veiled 'fair share' allegation, saying it was reckless and misleading.

The federal royalty component – consisting of the upfront as well as per-ton payments – currently exceeded 20% of the selling price, was more than twice the highest rate that Arch paid for producing coal from private lands and was, on average, three to four times higher. “Clearly, the government is not only getting a fair return, it's getting an exceptional return," he said.

Arch, a fervent opponent of President Barack Obama and the US Environmental Protection Agency’s Clean Power Plan Rule, aimed at cutting carbon pollution from existing power plants and dealing the domestic fossil-fuel industry a blow, said not only would higher royalty rates put a needed governmental revenue source at risk it would also put further economic strain on American families.

In the US, families earning less than $50 000/y spent about 17% of their take-home pay on energy. Those families would not be well served by a so-called reform effort that was really just a highly regressive energy tax in disguise, Arch maintained.

"An increase in the royalty rate will likely ensure a decline in high-paying mine jobs, increased electricity rates and a decrease in government revenue. Simply put, these are outcomes that many communities and taxpayers can't afford. Should the DOI decide to take action, we strongly encourage the department to take steps to improve the return to the American public by making coal on public lands more competitive, not less,” Slone asserted.