Phil Bredesen

Coal Tax Bill

NASHVILLE — The Bredesen administration is backing efforts to increase the state’s tax on coal for the first time since 1984, prompting one mining company official to say Tuesday that the administration wants to choke off industry operations in East Tennessee.

“The administration would like to shut down coal mining, in my opinion,” said Charles W. Kite, senior vice president and senior counsel of National Coal Corp.

Gov. Phil Bredesen later called surface mining “kind of a necessary evil. Obviously we need coal.”

“I don’t particularly want to see it (coal mining) expanded beyond what the basic needs are in Tennessee,” he said.

He said if legislative sponsors are correct in saying increases would keep Tennessee’s taxes comparable to those in Kentucky and other states, “I see no harm in that. I don’t think we should be a cheap place to mine coal.”

Earlier in the day, Paul Sloan, deputy commissioner of the Tennessee Department of Environment and Conservation, told a Senate panel that administration officials “support the idea” of the tax bill sponsored by Sen. Doug Jackson, D-Dickson.

The bill would change the state’s coal-severance tax from the current 20 cent-per-ton charge to a 4.5 percent tax on coal production. It would generate about $7 million more annually, according to a fiscal note estimating the financial impact of the bill.

“Kentucky’s severance is 4.5 percent of the production,” Mr. Sloan said. “We think it’s fitting that ours would be the same.”

The new revenue largely would be split between local communities and land reclamation efforts, proponents said.

Sen. Jackson said his bill is aimed at discouraging mountaintop removal mining in East Tennessee. In that process, hilltops are blasted away to reveal coal seams, and leftover rock and dirt are dumped into adjacent valleys. Environmentalists call the process destructive.

The legality of another bill, which would address the issue by banning all mining above 2,000 feet, has been questioned by state Attorney General Robert Cooper.

Sen. Jackson noted there are some 75,000 acres in the state’s Sundquist Wildlife Management Area and more acreage in the Royal Blue Wildlife Management Area that are undergoing new mining.

“The mountain’s never the same,” Sen. Jackson said.

National Coal Corp. President Daniel Roling told the subcommittee the company does not shove debris into valleys and instead restores the land as closely as possible to its original condition. He said the Knoxville-based firm intends to step up production “significantly.”

Sen. Douglas Henry, D-Nashville, chairman of the Senate Tax Subcommittee of the Finance Committee, unsuccessfully sought to lower the proposed tax to 2.25 percent. He then directed the bill go to a subcommittee for further review.

Mr. Roling said the company works previously mined areas abandoned before 1977 laws requiring companies to address environmental damage. He said National Coal restores the land after its work is done.

Gov. Bredesen acknowledged sending letters to the U.S. Department of the Interior’s Office of Surface Mining in 2006 in an effort to get officials to conduct an environmental impact study, the first since 1985. Letters supplied by the administration show the agency refused.

WHAT THE BILL WOULD DO

Present law provides for a 20 cent-per-ton tax on all coal products “severed” from the ground in Tennessee. The bill would change that to 4.5 percent of the gross value of the coal products removed and is estimated to generate about $7 million in new revenue annually.