The Government Giveth
Or, do they take and then give? It appears to be a vicious cycle with no beginning or end.
For the last four years, President Obama and his EPA have waged a war on coal. Though they deny it, their regulations have cost thousands of miners their jobs, and hundreds of coal-fueled power plants are scheduled to be closed within the next few years. On January 7, Georgia Power announced that it will “shut down 15 coal and oil-fired units, cutting nearly one-sixth of its power grid capacity to comply with federal rules aimed at reducing air pollution.” This, the latest in a string of plant-closure announcements, will take away nearly 500 jobs. Over the next five years, the North American Electric Reliability Corporation forecasts closures of plants that currently produce 20 percent of the nation’s coal-fueled generation.
The Atlanta-Journal Constitution report cites the closures come “after the utility and parent Southern Co. spent years unsuccessfully fighting the regulations.” The regulatory hit to the coal industry is tough to deny: “Currently, the amount of coal that Georgia Power uses to produce electricity stands at 47 percent, down from 70 percent five years ago.”
The government has taken away.
Despite the assault on coal that has decimated the economy of entire regions, lawmakers voted to subsidize coal through Section 406 of the American Taxpayer Relief Act—known as the “Fiscal Cliff Deal.” The 400 Section of the 157-page bill is for “Energy Tax Extenders” and includes “provisions of the Bill that are relevant to ongoing and future projects in the renewable energy space.” Within the package, various tax credits are extended—including the Production Tax Credit for wind energy that I’ve fought to end. Other extensions include those for “closed and open-loop biomass facilities, geothermal facilities, landfill gas facilities, trash facilities, qualified hydropower facilities, and qualified marine and hydrokinetic renewable energy facilities.” And then, there are a few lines in Section 406, buried in a group of renewable energy provisions, which extend a tax credit for coal produced on American Indian land.
American coal is bad, but apparently coal from Indian lands is good?
Section 406 “extends,” by one year, an accommodation in the Energy Policy Act of 2005 that allows a credit for “Indian coal”—which the bill defines as coal produced from reserves which were owned by an Indian tribe on June 14 2005.
Compared to the amount for renewables, the actual dollar amount going to Indian coal is miniscule in the grand scheme of the Fiscal Cliff Deal—estimated to be about $1 million, The Missoula Independent states that Section 406 currently applies to only three mines in the country, but it is the hypocrisy; the incongruity of it that is so troubling.
One mine that benefits from the tax credit is the Absaloka mine, a 10,427-acre, single-pit surface mine on the Crow Indian reservation in southeastern Montana, operated by Westmoreland Coal Company. The mine employs about 100 tribal members and provides royalties for the Crow Indians. According to the Independent, “The section 406 tax credit pays Westmoreland an estimated $2.26 per ton of coal extracted at Absaloka. In 2007, the mine produced 7,704,556 tons of coal. In 2010, it produced 5,467,670 tons.” So, in 2010, the US taxpayers gave Westmoreland nearly $12.5 million to mine coal on the Crow Indian Reservation.
The government gives.
Native Americans have long been given some special accommodations—though it does seem that their coal contributes to CO2 as well. While the tax code gives, the EPA has taken away.
The Navajo Nation occupies land in what is known as the Four Corners region—where New Mexico, Arizona, Utah, and Colorado meet. Coal is important to the everyday life of the Navajo. A report on coal’s uncertain future, says the following about coal’s place in the life of the Navajo: “It warms their homes, and provides them with jobs. Recent events threaten both winter warmth and job security for the future.”
Navajo lands include coal mines and coal-fueled power plants that are facing decommissioning and closure due to the EPA’s expensive emission controls. The coal mines support the power plants—if the power plants shut down, quick closure of the mines is expected. All three coal-fueled power plants in the area are facing closure of some or all of their units.
The Navajo Mine has one customer: the Four Corners Power Plant—which has five coal-fueled units—and provides electricity to 300,000 households in Arizona, New Mexico and Texas. The three older units are scheduled to be shut down by the end of the year, and the plant’s partial shutdown will reduce demand for the mine’s coal by about 30 percent. On January 8, jobs cuts at the mine were announced: “BHP Billiton plans to cut about 100 jobs at Navajo Mine.”
The government has taken away.
Sources tell me, BHP Billiton, the Australian company that operates the mine, has been trying to sell it for several years. Tightening environmental regulations decrease the mine’s potential profitability. With the mine’s sole customer’s partial shutdown, it hasn’t attracted any buyers.
Enter Section 406.
Back in December, BHP Billiton reached an agreement with the Navajo Nation that provided for a 100 percent stock sale of the mine’s assets to a tribally chartered corporation by mid-2013. The regional newspaper reported: “A tribal corporation would have certain tax advantages.” The sale of the Navajo Mine to the Navajo Nation could preserve 800 high-paying jobs at the plant and mine. BHP will continue to run the mine through 2016.
The government gives.
Encouraging resource development and the economic prosperity that comes with it is good for the Navajo Nation, the Crow Tribe, and all Native Americans—but that can happen through an inviting, rather than hostile, regulatory environment. And, if coal is OK for them, it should be OK for the American Nation. Coal warms our homes and provides good paying jobs for all Americans —whether in the coal mines, coal-fueled power plants, manufacturing that depends on cost-effective energy, energy-intensive high-tech industries, or other fields. Instead of taking away our resources, we should all benefit from the bounty—which includes “winter warmth and job security for the future.”
The government shouldn’t be in the business of giving and taking. That role should be reserved for “the Lord” alone.
[First published by Townhall.]