McDermott urges tax to offset cost of shipping coal through Northwest
Democratic Rep. Jim McDermott of Seattle wants to put a $10-per-ton tax on mined coal to help offset the cost of rail congestion, flying dust and other potential fallout from shipping coal through Northwest ports.
Seattle Times Washington bureau
WASHINGTON — If the Northwest is destined to become a major shipping route for coal exports to Asia, U.S. Rep. Jim McDermott says mining companies ought to pay new taxes to help offset the cost of rail congestion, flying coal dust and other potential fallout.
McDermott, a Seattle Democrat, is proposing to create a national "coal mitigation trust fund" by putting a $10 excise tax on every ton of mined coal.
The legislation, which he plans to roll out as early as Wednesday, would be one of the first federal responses to plans by mining companies to route coal from Wyoming and Montana westward through Washington and Oregon, whose ports are closest to power-hungry China and other Asian markets.
The tax — the rate is 10 times what some companies now pay in federal coal leases — would be divvied up among states to spend as they wish on mitigation measures. Community activists and environmentalists are worried about an increased risk of barge accidents, rail congestion, pollution and other hazards from trains carrying open mounds of coal.
McDermott's office estimates the tax would generate $117 billion over the next decade.
"The problem is, (mitigation cost) has to be paid for by somebody," said McDermott, a senior Democrat on the tax-writing House Ways and Means Committee.
McDermott said singling out the coal industry for the tax is justified because burning more fossil fuel anywhere in the world contributes to global warming and undercuts America's shift toward clean energy.
McDermott had four co-sponsors as of Tuesday, but the legislation's fate is doubtful given the congressional stalemate over spending and taxes. A spokeswoman for Rep. Dave Reichert of Auburn, a Republican colleague of McDermott's on the Ways and Means panel, did not respond to requests for comment on the tax proposal and the proposed Northwest coal terminals.
Vic Svec, senior vice president of corporate communications for Peabody Energy, the nation's largest coal company, said McDermott's bill would hurt the economy.
"A major new excise tax on coal exports would run directly opposite stated national goals of encouraging greater exports for the benefit of the U.S. economy and American jobs," Svec said in an email.
Six coal terminals have been proposed in Washington and Oregon. One of them, the Gateway Pacific Terminal at Cherry Point, north of Bellingham, would handle up to 48 million tons of coal a year.
The other proposed projects stretch from Coos Bay in Oregon to the Columbia River to Longview. A study commissioned by the Western Organization of Resources Councils concluded that if all the projects came to fruition at full capacity, they could handle a combined 145 million tons of coal a year — more than the total U.S. export in 2011.
And coal exporters eventually could send as many as 63 coal trains between Sandpoint, Idaho, and Spokane daily. Train traffic also would increase in Seattle and the Puget Sound area, including BNSF Railway tracks used by Sound Transit and Amtrak.
Shannon Wright, executive director of Communitywise Bellingham, a community-advocacy group, said regulators should weigh the full range of costs that would trail the coal trains, including impact on property values and new overpasses or bridges that might be needed to divert vehicles.
"They need to look at the whole balance sheet," Wright said. "What is the cost of more than doubling rail traffic?"
Roughly 80 percent of U.S. coal exports currently leave the country from the East Coast and the Gulf Coast. Though the United States is becoming less reliant on coal-fired power, it still burns nearly 90 percent of coal domestically.
But the West Coast makes a logical shipping point for American coal headed to the lucrative Asian market. Wyoming is the nation's biggest coal producer, accounting for 41 percent of the total in 2010 and about equaling the next seven states combined. It's also the nation's cheapest producer, thanks to rich coal seams and economies of scale.
Kyung Song: 202-662-7455 or firstname.lastname@example.org