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Despite weak odds, Markey to reintroduce federal coal leasing reform bill

U.S. Sen. Edward Markey, D-Mass., plans to reintroduce legislation aimed at increasing taxpayer returns on coal production from federal lands in the wake of the U.S. Department of Interior's recent decision to scrap an Obama-era rule with a similar goal.

Markey on Aug. 8 said he will refile the Coal Oversight and Leasing Reform Act, or COAL Act, as soon as the U.S. Senate returns from its summer recess in early September. The bill, which Markey has introduced in prior sessions of Congress, would temporarily bar the DOI from holding new coal lease sales until the agency makes certain changes to its coal leasing program. Those changes include eliminating what Markey described as a "loophole" that allows companies to avoid paying upfront bonus bids for the right to mine federal coal tracts. The legislation also seeks to revise how Interior determines the fair market value of coal, an estimated per-ton price that coal producers must meet or exceed in their bonus bids, and would require the department to provide its appraisal reports and other information on lease sales and bids to the public in order to increase transparency.

Some of Markey's desired reforms were included in a federal coal, oil and gas valuation rule that the Obama administration finalized in June 2016. The rule revised how Interior calculated royalty payments on coal from federal lands by valuing production using gross proceeds from the first arms'-length coal sale, with applicable allowances. That change was in response to concerns that taxpayers were not receiving the full value of coal sold into higher-priced export markets because producers could pay royalties based on an initial, lower-priced sale to their internal coal marketing subsidiaries.

The National Mining Association, or NMA, and other industry members panned the rule, saying the regulation was politically motivated and that coal producers already pay royalties at above-market rates. The Trump administration, which has worked to reduce regulatory barriers for the coal sector, announced in early August that it was repealing the rule.

With Republicans in control of the Senate and President Donald Trump in the White House, Markey's bill stands little chance of becoming law. But the Massachusetts senator has long fought to overhaul the federal coal leasing program.

"Coal resources on public lands belong to all Americans and they should not be sold at rock bottom prices to worsen climate change," Markey said. "Given the Interior Department's rollback of the reforms the Obama administration had initiated, we need comprehensive legislation to put an end to taxpayers subsidizing the extraction, export and burning of this federal natural resource."

The NMA said the U.S. Office of Management and Budget concluded the valuation rule would not have provided additional revenue to taxpayers and that staff with Interior's Office of Natural Resources Revenue admitted the rule's provisions would be difficult to implement in some cases. Most coal from federal lands comes from the Powder River Basin region that spans parts of Wyoming and Montana and provides around half of all coal mined in the U.S.

"Sen. Markey knows as much about PRB coal lease sales as Wyoming coal miners know about lobster fishing," NMA spokesman Luke Popovich told S&P Global Market Intelligence in response to Markey's plans to reintroduce the COAL Act.