A Wyoming state legislator has floated a measure with national ramifications on the federal fee that pays to clean up old coal mines.
State Rep. Daniel Zwonitzer, a Cheyenne Republican, introduced HB-80 this week to increase the state severance tax on coal if Congress does not reauthorize the Abandoned Mine Land Reclamation Program.
AML’s per-ton fee funds reclamation at mines abandoned before the Surface Mining Control and Reclamation Act of 1977 created a system to hold coal companies responsible for cleanup.
The fee is set to expire on Sept. 30, 2021, but debate has already started in Congress, with the coal industry declaring its opposition to reauthorization for the first time (E&E Daily, Oct. 20, 2017).
Nowhere could that have a bigger impact than in Wyoming.
The Cowboy State produces more than 40 percent of the nation’s coal, nearly all of it at surface mines, which have a higher fee rate than underground and lignite mines. Therefore, Wyoming generates more than half of the nation’s fees — $84.6 million out of $151.8 million total in 2016.
Decades of the disparity has driven a wedge between lawmakers from Wyoming — a “certified” state because it was considered to have finished its AML work in 1984 — and traditional coal states. Pennsylvania alone has at least $1 billion in reclamation to do.
That conflict forged the elaborate, convoluted formula by which AML money is distributed to the states (Greenwire, Sept. 29, 2016).
Under a 2006 compromise, Wyoming receives the equivalent of 50 percent of its fees directly from the Treasury Department.
In 2017, after a federal sequestration reduction, Wyoming got $39.4 million.
Historically, that money has paid for roads and infrastructure in Wyoming and has sometimes sparked controversy, like a proposed $10 million investment in a university basketball arena.
But it has become vital now as Wyoming stares down a $400 million budget deficit, largely due to the decline of the coal industry.
For decades, mineral revenue helped fund schools while allowing Wyoming to not have an income tax.
Leaders in the Wyoming Legislature are actively searching for ways to generate new revenue without new taxes or dipping into the state’s $1.6 billion rainy day fund.
That got Zwonitzer thinking.
“I don’t have some kind of overarching political agenda against coal or for coal,” he said. “I just thought if this tax goes away, the easiest thing Wyoming can do is just keep it going.”
Wyoming already has a 7 percent severance tax on surface coal and a 3.75 percent severance tax on underground coal.
Zwonitzer’s bill would impose additional 2.2 percent and 1 percent taxes on surface and underground coal, respectively. The charges would go into effect the year after Congress either repeals or doesn’t renew AML and would go straight into the state’s general fund.
Zwonitzer said the percentages were designed to produce roughly the same amount of money that currently comes from AML — an estimated $58.8 million per year.
Keeping the fee alive won’t be popular among energy companies, but Zwonitzer said citizens have for decades chosen to tax minerals.
“Nobody wants an individual income tax or a sales tax or a property tax,” he said.
The question, he said, will be how this affects the national debate over keeping AML.
“It may force Congress to re-up it, saying, ‘Hey, if we don’t get the money, Wyoming’s going to get it,'” Zwonitzer said, “But it may help our federal delegation say, ‘Hey, maybe we shouldn’t keep the federal tax because Wyoming will get the proceeds.'”
The future is uncertain.
“I don’t have any illusions it’s going to pass, but I do think it’s good to kind of start thinking about it and say, ‘Hey, what if this does go away, if we don’t reauthorize it?'”
Reprinted from Greenwire with permission from E&E News. Copyright 2018. E&E provides essential news for energy and environment professionals at www.eenews.net.
ED NOTE: This story has been corrected to reflect that Rep. Zwonitzer represents Cheyenne.