Efforts To Boost Coal Exports Progress

Feb 24, 2020

The proposed site for the Millennium Bulk Terminals in Washington State. Wyoming has pushed to open a port in the U.S. with distance from a port in Canada
Credit Millennium Bulk Terminals - Longview

The House Revenue Committee went back and forth over a bill that looks to incentivize coal exports, voting 5 to 3 to move the bill forward.

House Bill 231, Coal Severance Tax Exemption - Canadian and Mexican Ports, is one of three bills with the goal of boosting exports this session along with the Wyoming Coal Marketing Program and Exportation of mineral resources. Both look to appropriate funds to expand Wyoming's coal markets. The former has already passed out of the House.

HB 231 would give a 3 percent tax exemption to coal producers who use a port in Mexico or Canada to ship out Wyoming coal.

In addition to benefiting producers, a lower tax would lower the price of a coal for a foreign utility. The current severance tax is set at 7 percent.

Bill sponsor and Cheyenne Rep. Bob Nicholas said the legislation wouldn't automatically make shipping coal economically viable. In fact, he said it wouldn't impact Wyoming's severance tax income at all unless producers started shipping coal.

"This is more of introduction to our Pacific Rim neighbor saying, 'We're interested in selling our coal to you, we'll give you tax breaks because we'd like to do anything we can to get more coal out of Wyoming and into the market,'" he said.

House Minority Floor Leader Cathy Connolly pushed back.

"To me this is a bill that has us as a state interfering in the free market," she said. "What this bill does is lower severance taxes. This lowers the amount of money that would be coming in."

The bill's fiscal note calculated that Wyoming could lose approximately $1.3 million in severance tax income if producers shipped out 5 million tons of coal with this bill in effect.

The Powder River Basin Resource Council said that loss of funds might be worth it if the bill could stimulate the economy or jobs but argued this tax exemption wouldn't do that.

"In fact, Montana with a much higher severance tax rate exports much more coal than we do. Why? Geography and geology, not taxes. Montana coal is closer to the port and has a higher energy content," said Shannon Anderson, staff attorney for the landowners' group, adding the bill comes down to a talking point with a potential buyer in Japan or Taiwan.

Without calling out Anderson specifically, Nicholas dismissed the points saying some individuals are just against coal.

"Quite honestly, any person opposed to this merely doesn't want to mine coal. They don't want to keep the jobs in Campbell County because they don't like coal. They're here for political reasons to shut down coal," said Nicholas.

Connolly said it's an unfair characterization that anyone on the committee who votes no to the bill just doesn't like coal.

Nicholas added his trips to South Korea, Taiwan and Japan revealed interest in Powder River Basin Coal. He said Japan, in particular, would be interested if producers could get the price to ship came down $10 or 15 per ton.

Connolly, though, did not agree with Nicholas's assertion that other countries are interested in Wyoming coal.

"Interestingly, the Taiwanese government officials that we were meeting with were, in fact, talking about not wanting coal. Now, you piped up and came up with green coal. So, I didn't get that the Taiwanese government was enthralled about coal, but they did like the idea of Wyoming coal over what some of the alternatives would be," she said.

The committee went on to discuss that the bill would have little impact without an increase in coal exports.

Other than calculating the loss of taxes from hypothetical coal export figure, the Legislative Service Office found the financial impact was indeterminable.

Have a question about this story? Contact the reporter, Cooper McKim, at cmckim5@uwyo.edu.