The Fish and Boat Commission published notice in the August 1 PA Bulletin  of a proposed rulemaking updating the royalty rates for sand and gravel dredged from rivers in Pennsylvania.

The Commission, with the concurrence of the Department of Environmental Protection, is authorized to adjust the amount of royalty payments per ton or cubic yard of usable or merchantable, or both, sand or gravel, or both, extracted from Commonwealth waters.

There are four companies currently maintaining permits which allow the dredging of material from navigable waters of this Commonwealth.

Historically, royalty rates were set in 1970 and involved establishing a flat rate of $0.10 per adjusted dry ton that was about 6 percent of the selling price.

The rate was adjusted $0.05 each year from 1998 to 2001 culminating in $0.30 per dry ton.

Between January 1, 2002, and December 31, 2010, a variable calculation using the change in the producer price index (PPI) for sand and gravel from the base year (2002) was used.

This was an administratively burdensome process that required the carry forward calculations from 2002 with annual adjustments to make the Commission whole due to the timing of PPI rate releases.

In 2010, dredger representatives, the Department and the Commission simplified the process into its current configuration using a straightforward calculation with a fair rate that multiplied the immediately preceding year's published price, average value, dollars per metric ton (converted to U.S. ton) for the commodity sand and gravel in the United States Geological Survey, Mineral Commodity Summary per dry ton, provided that the rate per dry ton is not less than $0.48.

This straightforward approach removed any ambiguity in the rate setting process and has been successful for the past decade.

As such, the current royalty rate schedule, which was adopted in 2011 and is set forth in the Commission's regulations at § 51.92, expires on December 31, 2020.

The Commission and four representatives from the sand and gravel dredging industry have unanimously agreed to extend the previous process for setting royalty rates for the 10-year period of January 1, 2021, through December 31, 2030.

Public comments are due August 31.

Read the entire PA Bulletin notice for more information.

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[Posted: July 31, 2020]

8/3/2020