Obama proposes royalty reform, boost in coal fees

Posted: Apr 15, 2013

Written by

Manuel Quinones, E&E

President Obama's fiscal 2014 budget blueprint proposes for the first time a royalty on noncoal mining and a new industry fee to pay for cleanup efforts.

Obama for years has called for hardrock mining reform as a way to reduce the deficit and make sure taxpayers are not on the hook for expensive cleanups.

"For non-federal lands, each state and tribe would select its own priority projects according to national criteria, similar to how coal [Abandoned Mine Land] funds are allocated," the budget said.

Sources indicate that Obama will soon be joined by lawmakers including Sen. Tom Udall (D-N.M.) and Rep. Ed Markey (D-Mass.) in backing mining reform on Capitol Hill. It's a herculean effort that has failed in previous years because of disagreements over royalty rates and the need for new fees.

Coal mining companies already pay royalties and a fee for cleaning up their abandoned mines. But Obama today is proposing to boost the AML fee to pre-2006 levels, something that will likely please environmental advocates but concern coal companies.

The president is repeating his previous calls for cutting AML funding to states and tribes that have already finished cleaning up their abandoned mine sites, an idea unpopular among powerful lawmakers in states like Montana.

Overall, the president would fund the Office of Surface Mining at $117 million, compared with $124 million under the 2013 continuing resolution. That includes new fees OSM would collect from processing permits within certain states and tribes.

As in previous years, Obama is proposing to cut "tax preferences" for the coal industry, including the ability to expense exploration and development costs.

But the budget is relatively pro-coal in the sense that it would provide $266 million in research and development for carbon capture technology. The spending blueprint puts more emphasis on capture than sequestration amid ongoing efforts to commercialize trapped carbon dioxide.

As expected, the budget also proposes a $25 million price for the first combined cycle natural gas power plant able to integrate carbon capture, a nod to the growing importance of natural gas in the U.S. energy landscape.

When it comes to mine safety, Obama is proposing to boost spending for the Mine Safety and Health Administration from $376 million to $381 million.

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