- Associated Press - Tuesday, February 11, 2014

CHEYENNE, Wyo. (AP) - The Wyoming House voted Tuesday not to introduce a bill to cut a tax on coal production that would have cost the state more than $40 million a year.

Sponsors Rep. Eric Barlow of Gillette and Sen. Ogden Driskill of Devils Tower said Tuesday that coal is increasingly coming under fire from federal government regulations.

Wyoming is the nation’s top coal-producing state and draws nearly $1 billion a year from its share of the proceeds from coal production on federal lands.

“This state has taken a very proactive role in being supportive of this industry that has provided so much for us,” Barlow said in an interview before the House vote. “And my question is how do we support them in return in ways that actually put dollars in their pocket so they can continue to be strong contributors to our economy?”

The House voted 38-21 against hearing the bill. It would have cut the severance tax for surface coal from 7 percent to 6 percent and cut the tax on underground coal from 3.75 percent to 3 percent.

The bill also called for imposing a 1.5 percent severance tax on natural gas that’s flared or consumed at the production site. That would have raised about $4 million a year.

Severance tax is a tax the state imposes on the act of removing minerals from the ground.

Barlow said he believes the state’s current tax structure is not equitable in how it taxes production of coal and natural gas. “And does that mean that Wyoming values one more or less than the other?” he said.

Barlow said the state has determined that gas used for flaring or consumed at a production site is not taxed. He said the Legislature should consider how that squares with the state constitutional requirement to impose severance taxes on energy production.

The Environmental Protection Agency last fall announced the first national limits on carbon pollution from future power plants. The agency also is developing tougher standards on existing plants as part of the Obama administration’s push to address global warming.

Recent major coal lease auctions in the state have failed to go through, either because of lack of bids or because the federal government rejected bids as too low. Legislative leaders have warned that the situation points to a future decline in coal lease bonus money that funds educational programs.

“No coal bid bonuses means we’re going to have to look other places to fund education,” Barlow said.

Driskill said Tuesday he believes Wyoming is in danger of losing a few coal mines in the Powder River Basin in the northeastern corner of the state.

“We’re in an industry that’s under fire from umpteen directions,” Driskill said. “A few million dollars in cost to the state might mean $100 million in economic impact.”

Driskill said he didn’t expect the bill to pass its introductory vote in the House, but said it was important to express support for the industry.

Rep. Steve Harshman, R-Casper, chairman of the House Appropriations Committee, said Tuesday he would not support decreasing the severance tax rate on coal.

“I’m not sure that lowering the tax from 7 to 6 is really that big a deal for large, multinational coal companies that are established in Wyoming. I probably wouldn’t support that,” Harshman said before the House vote.

“But I think it’s good to talk about these things - why are we taxing one energy source higher than another,” Harshman said. “There’s reasons probably for it, but it’s probably good for this Legislature, which has never really debated that to talk about it.”

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