New White House report sheds light on need for fair share from energy

Expansive coal mine in the Powder River Basin, Wyoming.

WildEarth Guardians, flickr.

A new report looks at fair share and royalties from coal on public lands.

By Joshua Mantell

The report from the Council on Economic Advisers (CEA), the team of economists that advises the White House, makes the case that American taxpayers are not getting a fair share from coal extracted on public lands. Raising royalty rates and closing loopholes, something that The Wilderness Society has been advocating for years, is key to ensuring the American people are getting true value from leasing public lands for coal development.

The 1920 Mineral Leasing Act established that the American people needed to be compensated fairly for the use of their own land. The royalty rate was set for coal developed on public lands, and that rate has not been materially changed since then - nearly a century ago! Technologies and science have advanced immensely and energy sources have changed, but the share that the public gets for leasing lands to private companies has not.

In addition to the changes in our economy, Americans are increasingly using lands for recreation and enjoyment. As the Department of the Interior’s report on public lands on June 17th noted, recreational visits to public lands supported $45 billion in economic output and 396,000 jobs nationwide. With these kinds of numbers, it’s clear that the rate of return for leasing land for fossil fuel development is outdated and in need of reform.

The new report from the CEA makes this extremely clear. As the report notes, there are a number of ways to increase the royalty rates, whether it is tying it to the price of other types of coal, adding in costs for externalities like carbon, or tying it to other types of fuel, like natural gas. It is up to the government’s discretion on how to do it. But the bottom line is that there is a real need for more return for taxpayers and raising the rate will be impactful for federal and state revenue.

Fortunately, the Department of the Interior (DOI) has a real opportunity to fix these inequities and ensure that the American people are not being shortchanged by the fossil fuel industry. DOI is in the middle of a comprehensive review of the federal coal program that will no doubt include a look at royalty rates. Right now, coal royalty rates for surface mines (most of federal coal is mined at surface mines) are at 12.5%, but through loopholes and deductions, the rate that is being paid is actually close to 5%. The American taxpayers are not seeing the money they are owed. And the existing royalty rates don’t begin to address the impacts of coal mining on the climate, land and local communities. Coal’s costs to the environment should be covered in royalties paid to the American people, not being thrust on the public.

It is great to see the Obama administration continue to advocate for a fair return from our public lands. While in 1920 our lands may have been seen as a place for extraction to power our country, they are now economic engines through recreation, conservation, and even renewable energy. We should no longer be subsidizing the oil, gas, and coal industry through artificially low royalty rates. The Department of the Interior should take this opportunity to ensure that we are all seeing the true value of our public lands and resources, and raise royalty rates on oil, gas and coal extracted from the American people’s lands.