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Unions Turn On Coal, Demand Higher Royalties

Unions are targeting the coal industry and joining a prominent liberal think tank in calling for the federal government to force coal companies to pay more royalties for minerals extracted on federal lands.

The Center for American Progress (CAP) and AFL-CIO President Richard Trumka are pushing for the government to raise the royalty rates paid by coal companies mining in the Western U.S., saying they have an unfair advantage over eastern coal mines. In other words, they argue raising costs for western mines will level the playing field with eastern mines — where it’s more expensive to extract coal.

I’ve seen firsthand econ impact unfairly priced coal can have on workers in communities, particularly Appalachia https://t.co/B5iHNvWMh9

— Richard L. Trumka (@RichardTrumka) February 9, 2015

Under President Barack Obama, federal regulations and cheap natural gas have caused coal mines to shed more than 3,700 from 2008 to 2013. Most of these mine job losses have occurred in Appalachian states like Kentucky and West Virginia, where extraction costs have also been rising.

A new CAP study argues that raising royalties on coal mined in Wyoming’s Powder River Basin and other western lands would ease the economic pain suffered by Appalachian coal miners. CAP says that Congress to reform federal coal leasing laws to either “increase the royalty rate, minimum bid price, and rental rate for federal coal sales,” or to “assess royalties based on the true market value of federal coal.”

“The federal government’s outdated and unfair coal royalties program is severely exacerbating the problem, essentially providing a federal subsidy to coal produced in the Powder River Basin and other coal mines on taxpayer-owned lands,” said former Ohio Democratic Gov. Ted Strickland, now a counselor at CAP and author of the coal study.

Obama is not popular with the coal industry. Thousands of miners have lost their jobs during his tenure and hundreds of coal-fired generators are slated to shut down, driving down demand for coal even further.

The United Mine Workers have criticized Obama’s environmental policies, joining Republican lawmakers in calling it a “war on coal.” UMW did not support Obama’s 2012 re-election, despite having supported him in 2008.

Strickland’s proposal, however, is also intended to help heal the political wounds created by Obama’s Environmental Protection Agency. By making western coal more costly, eastern coal mines may get a leg up, and Strickland even proposes “reinvesting” revenues from higher royalties back into Appalachia.

“This proposal will level the playing field for Appalachian coal, create a fairer system for coal royalties that better reflects the current coal market, and raise millions of dollars in revenue for taxpayers that can be reinvested in Appalachian communities,” Strickland said.

This is not the first attempt to regain coal-miner support. Obama’s 2016 budget proposal includes $55 million for jobs training programs for out-of-work coal miners. The budget also includes $1 billion over five years to clean up and reuse abandoned coal mines across Appalachia.

The Obama administration has already began to re-examine how it assesses royalties for coal mining on Indian lands. In January, the Department of the Interior proposed a rule that would raise royalties on coal, natural gas and oil extracted on tribal lands. Interior says the reform would increase royalties paid to the federal government and the tribes by $80 million per year.

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