Wyoming Powder River Basin Coal: Economic, Tax and Royalty Implications

The Powder River Basin (PRB) refers to the coal deposits located in southeastern Montana and the northeastern Wyoming counties of Campbell, Converse, Hot Springs and Sheridian (Wyoming PRB). In 1993, there were 20 active surface mines with 3109 employees in the Wyoming PRB (Annual Report, The State Inspector Of Mines Of Wyoming, 1993). Early PRB production growth was primarily in response to the passage of the Clean Air Act of 1970. The disproportionate growth in Wyoming as compared to Montana can be attributed to the differing coal taxation policies of the two states. The state severance and production taxes were significantly lower in Wyoming. However, Montana passed legislation in 1987 reducing the severance tax rate, substantially narrowing the severance tax gap. Campbell and Converse counties in Wyoming have benefited the most from the production growth in the region. Cyprus Amax's Belle Ayr Mine, south of Gillette, in Campbell County, was the first modern commercial coal mine to be developed.