Climate

11 Western Towns Say Coal Companies Are Cheating Taxpayers Out Of Billions

CREDIT: AP Photo/Ed Andrieski

The old mining town of Telluride, Colo., is pictured nestled in a valley from the top of Mount St. Sophia, in this July 17, 2001, file photo.

For Western mountain towns, where climate change has shortened the ski season, diminished the snowpack, and increased fire risks, the fair value of coal is a serious question.

Coal, when burned, is a major carbon emitter, and is increasingly being mined out of publicly-owned lands in the Rockies. But a group of 11 ski towns is now fighting back against cheap Western coal, the cost of which they say is being kept low due to a federal loophole.

Organized under the Mountain Pact, the group of towns, which includes Park City, Utah and Telluride and Aspen, Colorado, sent a letter Tuesday to Secretary of the Interior Sally Jewell, urging her to close the loophole, which they say costs taxpayers a billion dollars every year in lost revenue.

“Whether money ends up coming to us is not our concern,” Telluride Mayor Stu Fraser told ThinkProgress. “We have to try to make sure that we are doing the right thing for the environment.”

The letter’s signatories come from towns uniquely positioned in the fight against climate change. Western states are some of the biggest coal producers in the United States, but these communities are also some of the most affected by climate change.

Fraser said Telluride is experiencing more and more “erratic” weather patterns. He also said the snowpack in the surrounding mountains is melting faster than usual due to dust storms kicked up in dry areas from as far away as Mongolia. Telluride’s lakes are also worryingly low, he said.

The effects of climate change are myriad in the mountains. Hot, dry summers can lead to devastating wildfires. Low snowpack can threaten water supply. And, of course, these climate impacts can cause winter resort towns’ revenues to take a hit. A study by Mountain Pact found that by 2030 the decrease in snowpack is estimated to result in $120 million lost annually in just one Utah county.

“We’ve got climate change… and coal is definitely part of it,” Fraser said. Not only will correctly valuing coal increase taxpayer revenue — some of which can be used to for climate change mitigation — but it also is important for making the price fairer, he said.

Coal producers “are getting this lower-priced product that is being used substantially more than it should be,” Fraser said.

In fact, coal mined on public lands in the west is significantly cheaper than it is in other areas. Last summer, a report from the Center for American Progress found the spot price for coal in the Powder River Basin was less than 20 percent of the price for Northern Appalachian coal. According to recent estimates, 40 percent of coal sold in Wyoming is sold to subsidiary companies at below-market rates, which are used to calculate taxpayer royalties.

“We should be collecting fair returns on taxpayer-owned land,” Mountain Pact founder Diana Madson told ThinkProgress.

According to her group’s letter, this undervaluation of coal “may have cost taxpayers upward of $30 billion in lost revenue” over the last 30 years.

“The costs of adapting to a changing climate are rising, but at the same time coal companies are taking advantage of gaping loopholes that allow them to pay less, thus depriving many western states (and taxpayers across the country) their fair share of the revenues from coal leased on federal land,” the letter reads.

The issue appears to be widespread in the west. According to the Center for American Progress, in 2012, 42 percent of coal produced in Wyoming was sold to a subsidiary. The Department of Interior independently found that the undervaluation of coal is costing at least taxpayers $80 million per year.

The government also subsidizes coal production on federal land, including for transportation and — ironically — royalty relief.

In January, the Dept. of Interior proposed a new method of valuing coal, which would not accept the price set during transactions with subsidiaries. The public comment period ends on Friday.