Montana senators float bill to extend Indian coal tax credit

Senators Steve Daines, R-Mont., and Jon Tester, D-Mont., on May 18 introduced legislation to permanently extend the Indian Coal Production Tax Credit (ICPTC), which they said provides a crucial tax incentive to level the playing field for future development of the tribal coal resources that are currently subject to more regulatory requirements than comparable development on private, state or federal lands.

The credit protects the economic viability of existing tribal coal mining projects, which support much-needed tribal jobs and provide a major source of non-Federal revenue for coal-producing tribes, they added.

“The Indian Coal Production Tax Credit is an essential tool in Montana tribes’ work to achieve self-sufficiency, increase economic opportunity and create good-paying jobs for tribal members,” Daines stated. “A permanent extension provides tribes much-needed certainty to invest in large-scale energy production projects and provides a path forward for the long-term prosperity of our tribal nations.”

“Reauthorizing the Indian Coal Production Tax Credit will increase self-determination and help the economy in Indian Country,” Tester said. “This is an opportunity to create jobs in Indian Country so that we can help take pressure off social safety net programs that are financially strapped. I look forward to working with folks in Congress and tribal leaders to get this tax credit secured once again.”

“The Indian Coal Production Tax Credit is critical to the future and prosperity of the Crow Nation, and I appreciate the Montana delegation’s work to permanently reauthorize it,” Crow Tribe Chairman Darrin Old Coyote stated.

Westmoreland Coal‘s Absaloka surface mine in the Montana end of the Powder River Basin is on Crow tribal reserves. The mine supplies several power plants, including Xcel Energy‘s Sherburne County facility in Minnesota. The Crow Tribe has also been trying for years to develop a coal gasification project on tribal reserves.

The Senate legislation introduced May 18 is also co-sponsored by Senators John Barrasso, R-Wyo., Heidi Heitkamp, D-N.D., and Jerry Moran, R-Kan. The ICPTC was first offered in the Energy Policy Act of 2005 and was more recently granted a one-year extension, which expired at the end of last year. The tax credit was designed to incentivize investment on Indian lands and the hiring of Indian people. Last Congress, Daines and Tester both supported legislation to make the Indian Coal Production Tax Credit permanent. Montana Representative Ryan Zinke has introduced a companion bill in the House.

Said Westmoreland Coal in its March 6 annual Form 10-K report: “We are a party to two leases with the Crow Tribe covering 18,406 acres of land at our Absaloka Mine, which are held by our wholly owned subsidiary, Westmoreland Resources, Inc. (‘WRI’). In 2008, and in order to take advantage of certain Indian Coal Tax Credits (‘ICTC’) for the production of coal on the leased Crow Tribe land, WRI entered into a series of transactions, including the formation of Absaloka Coal, LLC with an unaffiliated partner. As part of such transaction, WRI subleased its leases with the Crow Tribe to Absaloka Coal, LLC, granting it the right to mine specified quantities of coal with WRI as contract miner. From 2009 through 2013, we experienced a yearly average of $3.1 million of income and $6.1 million of cash receipts from the ICTC. The ICTC expired, but we are currently pursuing future monetization of the ICTC in the event that the U.S. Congress extends the ICTC.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.