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NEWS
Economic impact of coal lease cloudy for Wayne
EAST LYNN -- While the profits will most likely exceed $1 billion for two coal companies if they are allowed to lease the mineral rights around East Lynn Lake, Wayne County's potential share is a little more uncertain.
Rockspring Development and Argus Energy would extract approximately 26.2 million tons of coal from the 13,089 acres of public land that they want to lease, according to the draft report on the proposal.
States that have federal coal leases are entitled to receive a portion of the revenues from the sale of coal. The customary royalty fee rate for federal coal using underground mining methods is 8 percent, according to the Minerals Management Service. One-fourth of that 8 percent goes to the federal government, while the remaining three-fourths goes to the state.
The draft report on the proposal indicates that Wayne County would get three-fourths of the 8 percent, but the report is wrong, said Marcia Sieckman, supervisor of natural resources for the Bureau of Land Management's Milwaukee, Wis., field office. The field office is reviewing the coal lease application.
"It would be up to the state to do what they want with their share of the royalty fee," she said. "We probably need to clarify that in the draft document."
Rep. Nick Rahall, D-W.Va., said last week that he would like to see all of West Virginia's share of the royalties go to Wayne County if the coal lease is approved.
The coal companies could apply for a royalty fee reduction if they are awarded the coal lease, according to the draft report. Reductions are sometimes granted if the applicant can show proof of economic hardship or if the customary 8 percent royalty rate is above the going rate in the private sector, according to the draft report.
No one knows how much money would be made from the coal lease because the price of coal would fluctuate over the 10 to 15 years that Argus and Rockspring would mine the property.
Argus currently has contracts in the $50-per-ton range, said Randall Maggard, environmental compliance manager for the company's Kiah Creek operation. The length of the contract, the type of coal and where it's going also are factors in the price, he said. Rockspring Development representatives did not return calls seeking comment.
Using the example of $50 per ton, the companies' gross profits would be approximately $1.3 billion. West Virginia would receive $78.8 million, while the federal government would get $26.2 million.
Since the federal government owns the East Lynn Lake property, it also would get the proceeds from the leasing of the mineral rights, Sieckman said. If the lease application is approved, Argus and Rockspring would still have to bid on the lease, she said. If no one else submits a bid, Argus and Rockspring could secure the lease for the fair market value of the mineral rights, she said.
Wayne County Commissioner Jim Booton said the uncertainty surrounding the economic projections is just one of several reasons why the commission has requested that the Bureau of Land Management extend the public comment period on the coal lease proposal.
"The report is very confusing on the economic impact and it needs to be cleared up," Booton said. "Since then, they've told us the local royalty share would go to the state and the state would send it back to us. That's not good enough."
Booton said the commission, which has no say in whether the lease is approved, has contemplated using whatever revenue it receives to set up a trust fund that would be used to pay for potential environmental messes caused by mining on the East Lynn Lake property.
"The lake is so important for our local people because of tourism, recreation and flood control," he said.
Wayne County commissioners Rick Wellman and Charles Sammons did not return calls seeking comment.
