Gov. Norm Bangerter has asked the federal government to lower the amount of money it earns from coal production on federal lands, saying Utah consumers are suffering and miners may soon lose their jobs.
Bangerter also joined other Western governors in calling for the federal government to be consistent in the way it determines the value of coal.In a statement released Thursday, Bangerter said high royalty rates may be responsible for a lack of competitiveness in Utah's coal industry.
Coal producers must pay the federal government 8 percent of the money earned on coal mined from federal land. Bangerter wants that lowered to 5 percent.
"While coal production has increased in Utah, those increases are the result of contracts negotiated in the early 1980s," the statement said. "The new long-term contracts which are essential for future growth are not coming to Utah."
Bangerter said jobs will be lost and mines will close unless the state's companies can attract more business. All of Utah's coal is produced from underground mines.
Utah Power & Light Co. customers also suffer from the high royalty rates because they pay more for electricity produced from coal, he said.
Utah's coal industry is facing stiff competition from states that produce coal above ground. Companies in those states pay higher royalty rates, 12.5 percent, but actually pay the federal government less because other costs are lower, Bangerter said.
The U.S. Department of Interior supports lowering the rate, but Congress must make the ultimate decision.
Bangerter joined governors from Montana, Colorado, Wyoming and New Mexico in writing Interior Secretary Donald Hodel asking him to reject proposals to change the way the value of coal is determined.
"It is important that the valuation process be fair and consistent," Bangerter said. "If the royalty needs to be adjusted, you should change the royalty rate, not the valuation process."