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Committee hears competing views on repealing sunset for coal-washing tax credit
Summary
SB 333 would repeal the sunset on the coal-washing tax credit enacted in 2009. Industry witnesses said the credit enables washing, supports Signal Peak mine jobs (about 260 employees) and preserves higher contract prices; an environmental group warned of lost local revenue and urged trigger language tied to company profitability.
Sen. Barry Usher opened a hearing on Senate Bill 333, a proposal to repeal the sunset on the coal-washing tax credit that was first enacted (Senate Bill 509) in February 2009. Usher and multiple industry witnesses argued the credit enables a value-added washing process that removes impurities and allows Montana coal to be sold at a premium on export markets.
Charles Denow of Signal Peak Energy said the mine is the state's only underground coal mine, employs about 260 people, and that washing is essential to produce a premium product for export. He described the washing-credit calculation in the fiscal note (roughly $3.85 per ton for the credit) and argued the fiscal note did not fully account for how washing raises contract sales prices and therefore misstates long-term fiscal effects.
Industry witnesses and local business groups emphasized local economic dependence on the mine: county budgets and local payrolls benefit when the mine sells washed coal at higher prices. Opposing testimony from Derf Johnson of the Montana Environmental Information Center questioned whether the company owners are still eligible for the credit given recent export profits, and said about 40% of the revenue impacted by the credit flows to local governments — roughly $200,000 per year — that could be lost to counties.
Committee members probed the underlying economics: members asked about the $3.85-per-ton figure, the difference between washed and unwashed contract prices (witnesses gave ranges for washed product of roughly $30–$35 per ton and unwashed $15–$25 per ton in examples), the feasibility of trigger language tied to prices, and the difficulties and payroll implications of starting or stopping a washing plant. DOR natural-resources tax staff and tax-policy analysts were available for technical questions. Sponsor Usher closed by stressing community benefits and disputing the claimed $200,000 local-loss figure; the hearing closed with the matter left for committee consideration.
