The American Coal Council (ACC) recently criticized a report from the Council of Economic Advisors (CEA) for its conclusion that the Obama administration’s plan for the federal coal-leasing program will increase government revenues.“This government modeling exercise addresses the question of whether an increase in royalty rates by the Department of the Interior will increase or decrease government revenues,” the ACC said in a statement. “The CEA’s answer is that it will increase them. However, the conclusions reached by CEA in answering ‘yes’ to that question show a complete disconnect between its theoretical modeling results and the way the real-world coal marketplace functions. The CEA, therefore, misrepresents the outcome of such a policy change, and its report must not be relied on.”
The ACC said the program as currently proposed would reduce investment in coal and therefore reduce the amount of coal produced on federal lands. This, in turn, would lead to less revenue created from coal for both federal and state governments.
“It would be a grave mistake for American taxpayers to believe that increasing royalty rates under this program will be beneficial for them,” the ACC statement said. “The economics are clear...While not improving the lives of everyday Americans, such a policy change would be devastating to an industry already burdened by weak markets and oppressive governmental regulation.”