II 

114TH CONGRESS 

1ST SESSION S. 1891 

To amend the Mineral Leasing Act to improve coal royalties, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 29, 2015 

Mr. WYDEN (for himself and Mr. UDALL) introduced the following bill; which 

was read twice and referred to the Committee on Energy and Natural 

Resources 

A BILL 

To amend the Mineral Leasing Act to improve coal royalties, 

and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Coal Royalty Fairness 

5 Act of 2015’’. 

6 SEC. 2. VALUATION OF COAL ROYALTIES. 

7 Section 7 of the Mineral Leasing Act (30 U.S.C. 207) 

8 is amended— 

9 (1) in subsection (a), by striking the fourth sen10 tence; and 


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1 (2) by adding at the end the following: 

2 ‘‘(d) ROYALTIES.— 

3 ‘‘(1) DEFINITIONS.—In this subsection: 

4 ‘‘(A) ASSESSMENT VALUE.— 

5 ‘‘(i) IN GENERAL.—The term ‘assess6 ment value’, with respect to Federal coal, 

7 means— 

8 ‘‘(I) the price of Federal coal 

9 paid by the purchaser at final sale; or 

10 ‘‘(II) a price imputed by the Sec11 retary based on the coal price index. 

12 ‘‘(ii) EXCLUSIONS.—The term ‘assess13 ment value’ does not include, as deter14 mined and to the extent determined to be 

15 appropriate by the Secretary— 

16 ‘‘(I) transportation costs, as de17 termined in accordance with the 

18 transportation cost index; or 

19 ‘‘(II) the cost of coal washing. 

20 ‘‘(B) BROKER.—The term ‘broker’ means 

21 a person that resells Federal coal. 

22 ‘‘(C) COAL PRICE INDEX.—The term ‘coal 

23 price index’ means the schedule of average mar24 ket prices of Federal coal (in United States dol25 lars) paid by the purchaser at final sale, based 


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1 on the quality and type of the Federal coal, as 

2 determined by the Secretary, in consultation 

3 with the Administrator of the Energy Informa4 tion Administration. 

5 ‘‘(D) PURCHASER.— 

6 ‘‘(i) IN GENERAL.—The term ‘pur7 chaser’ means a person that— 

8 ‘‘(I) purchases or contracts to 

9 purchase Federal coal— 

10 ‘‘(aa) directly from a coal 

11 mine operator; or 

12 ‘‘(bb) indirectly from a 

13 broker; and 

14 ‘‘(II) uses that Federal coal in 

15 any industrial or energy conversion 

16 process. 

17 ‘‘(ii) EXCLUSION.—The term ‘pur18 chaser’ does not include— 

19 ‘‘(I) a coal broker; or 

20 ‘‘(II) any other third-party inter21 mediary. 

22 ‘‘(E) QUALITY.—The term ‘quality’, with 

23 respect to Federal coal, means the quality of 

24 Federal coal measured in British thermal units, 


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1 sulfur, moisture, and other criteria determined 

2 to be appropriate by the Secretary. 

3 ‘‘(F) SECRETARY.—The term ‘Secretary’ 

4 means the Secretary of the Interior. 

5 ‘‘(G) TRANSPORTATION COST INDEX.—The 

6 term ‘transportation cost index’ means the 

7 transportation cost index established under 

8 paragraph (7). 

9 ‘‘(H) TYPE.—The term ‘type’, with respect 

10 to Federal coal, means a general category of 

11 coal, such as metallurgical coal or steam coal, 

12 as determined by the Secretary. 

13 ‘‘(2) PAYMENT RATE.— 

14 ‘‘(A) IN GENERAL.—Except as provided in 

15 subparagraph (B), a lease shall require pay16 ment of a royalty in such amount as the Sec17 retary shall determine of not less than 12.5 per18 cent of the assessment value of Federal coal, as 

19 determined under paragraph (3). 

20 ‘‘(B) EXCEPTION.—In lieu of the royalty 

21 payment rate described in subparagraph (A), 

22 the Secretary may establish such lower royalty 

23 payment rate as the Secretary determines to be 

24 appropriate in the case of Federal coal recov25 ered by an underground mining operation. 


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1 ‘‘(3) VALUATION FOR ROYALTIES.—Not later 

2 than 1 year after the date of enactment of this sub3 section, the Secretary shall establish, as the valu4 ation for Federal coal royalties, the assessment value 

5 of Federal coal. 

6 ‘‘(4) ADMINISTRATION.— 

7 ‘‘(A) REPORTING.—The purchaser of Fed8 eral coal shall annually submit to the Secretary 

9 a report containing such information as the 

10 Secretary determines to be necessary to carry 

11 out this subsection. 

12 ‘‘(B) AUDITS.—To carry out this sub13 section, the Secretary may examine the records 

14 of any person engaged in the purchase, sale, 

15 transportation, or marketing of Federal coal. 

16 ‘‘(5) COAL PRICE INDEX.— 

17 ‘‘(A) IN GENERAL.—The Secretary shall 

18 compile the assessment values of coal by type 

19 and quality of coal in a coal price index. 

20 ‘‘(B) PUBLICATION.—Not less frequently 

21 than quarterly, the Secretary shall publish the 

22 coal price index, along with a methodological 

23 description, including— 

24 ‘‘(i) the method of calculation; 


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1 ‘‘(ii) the data used to calculate the 

2 coal price index in an aggregate manner 

3 that does not reveal proprietary informa4 tion; and 

5 ‘‘(iii) any other information the Sec6 retary considers appropriate to ensure 

7 transparency. 

8 ‘‘(C) OTHER INFORMATION.—If a person 

9 believes that the coal price index significantly 

10 deviates from the assessment value of the coal 

11 produced by the person, the person may peti12 tion the Secretary to use information supplied 

13 by the person in lieu of the coal price index, in14 cluding all information the Secretary requires 

15 to accurately determine the assessment value 

16 and audit the records of the person. 

17 ‘‘(6) EXPORTS.— 

18 ‘‘(A) IN GENERAL.—In assessing royalties 

19 for the export of Federal coal under this sub20 section, the Secretary may obtain from the ex21 porter of the Federal coal such information as 

22 the Secretary determines to be necessary to 

23 carry out this subsection. 

24 ‘‘(B) ASSESSMENT VALUE OF EXPORTED

25 COAL.—Subject to subparagraph (C), in deterVerDate Sep 11 2014 02:43 Jul 31, 2015 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1891.IS S1891

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1 mining the assessment value of Federal coal 

2 that is exported, the Secretary shall— 

3 ‘‘(i) use the price of coal free on board 

4 the marine vessel used to transport the 

5 coal overseas at the port of origin; and 

6 ‘‘(ii) limit any deductions that apply 

7 to the assessment value of the Federal coal 

8 to costs incurred prior to being free on9 board the vessel. 

10 ‘‘(C) UNCERTAIN EXPORT PRICE.—If the 

11 Secretary cannot determine the value of ex12 ported coal in accordance with subparagraph 

13 (B), the Secretary shall— 

14 ‘‘(i) assess royalties under this sub15 section based on the coal price index for 

16 coal of a similar quantity and type; and 

17 ‘‘(ii) limit any deductions that apply 

18 to the assessment value of the Federal coal 

19 to costs incurred within the contiguous 

20 United States. 

21 ‘‘(7) TRANSPORTATION COST INDEX.— 

22 ‘‘(A) IN GENERAL.—Subject to the other 

23 provisions of this paragraph, the Secretary, in 

24 consultation with the Secretary of Energy and 

25 the Secretary of Transportation (in consultation 


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1 with the Surface Transportation Board and 

2 others), shall— 

3 ‘‘(i) compile in a transportation cost 

4 index the average costs of transporting 

5 coal; and 

6 ‘‘(ii) determine the amount of any 

7 transportation cost deduction under this 

8 subsection, on the basis of the transpor9 tation cost index. 

10 ‘‘(B) UNIT OF MEASUREMENT.—The 

11 transportation cost index shall be based on the 

12 average transportation costs per ton of coal or 

13 another unit of measurement determined by the 

14 Secretary. 

15 ‘‘(C) DIFFERENCES IN TRANSPORTATION

16 COSTS.—The transportation cost index shall 

17 take into consideration differences in the costs 

18 of transportation, as determined by the Sec19 retary, based on— 

20 ‘‘(i) the mode of transportation; 

21 ‘‘(ii) the geographic region, and 

22 ‘‘(iii) other characteristics of the 

23 transportation industry that the Secretary 

24 considers to be necessary to calculate a 


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1 fair, transparent, and accurate transpor2 tation cost index. 

3 ‘‘(D) EXCLUSIONS.—The transportation 

4 cost index shall not include costs associated 

5 with, as determined by the Secretary— 

6 ‘‘(i) take-or-pay contract penalties; 

7 ‘‘(ii) liquidated damages; 

8 ‘‘(iii) the speculative aspects of trans9 portation transactions; or 

10 ‘‘(iv) any other costs that are not di11 rectly associated with moving Federal coal 

12 from 1 location to another location. 

13 ‘‘(E) PUBLICATION.—Not less than twice 

14 annually, the Secretary shall publish the trans15 portation cost index, along with a methodo16 logical description, including— 

17 ‘‘(i) the method of calculation; 

18 ‘‘(ii) the data used to calculate the 

19 transportation cost index, in an aggregate 

20 manner that does not reveal proprietary in21 formation; and 

22 ‘‘(iii) any other information the Sec23 retary considers to be appropriate to en24 sure transparency. 


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1 ‘‘(F) OTHER INFORMATION.—If a person 

2 believes that the transportation cost index sig3 nificantly deviates from the transportation costs 

4 of the person, the person may petition the Sec5 retary to use information supplied by the per6 son (other than costs descried in subparagraph 

7 (D)) in lieu of the transportation cost index, in8 cluding all information the Secretary requires 

9 to accurately determine cost and audit the 

10 records of the person. 

11 ‘‘(8) REVIEWS.— 

12 ‘‘(A) IN GENERAL.—To ensure a trans13 parent, fair, and efficient administration of the 

14 Federal coal program, and to ensure that citi15 zens of the United States receive a fair return 

16 on Federal coal, not later than 3 years after the 

17 date of enactment of this subsection and every 

18 3 years thereafter during the 15-year period be19 ginning on that date of enactment, the Comp20 troller General of the United States shall sub21 mit to Congress a report that describes a review 

22 of the Federal coal program, including the ad23 ministration of this subsection. 


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1 ‘‘(B) CONSULTATION.—In conducting a re2 view under this paragraph, the Comptroller 

3 General shall consult with— 

4 ‘‘(i) the Secretary; 

5 ‘‘(ii) the Director of the Bureau of 

6 Land Management; 

7 ‘‘(iii) the Secretary of Transportation; 

8 and 

9 ‘‘(iv) the Secretary of Energy. 

10 ‘‘(C) INCLUSIONS.—A review under this 

11 paragraph shall include a review of— 

12 ‘‘(i) the total volume of coal produc13 tion from Federal land; 

14 ‘‘(ii) the total volume of remaining 

15 coal reserves on Federal land; 

16 ‘‘(iii) the total revenues generated 

17 from the Federal coal program, itemized 

18 by type of revenue, including lease bonus 

19 payments and royalties; 

20 ‘‘(iv) market prices for coal; 

21 ‘‘(v) market prices for transportation 

22 costs and any other deductible costs; and 

23 ‘‘(vi) the appropriateness of royalty 

24 rates. 


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1 ‘‘(D) FORMAT.—The Comptroller General 

2 shall report information in a review under this 

3 paragraph— 

4 ‘‘(i) in the aggregate for the United 

5 States; and 

6 ‘‘(ii) categorized by State for at least 

7 the top 10 Federal coal-producing States, 

8 as determined by the Comptroller General. 

9 ‘‘(9) APPLICATION.—This subsection— 

10 ‘‘(A) applies to coal mined from Federal 

11 land; and 

12 ‘‘(B) does not apply to coal mined from 

13 tribal land.’’. 

Æ 


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