Trump Administration Repeals Obama-Era Coal Royalty Reform

Aug 8, 2017

Connie Wilbert of the Sierra Club says, since the 1980s, energy companies have exploited a loophole that allows them to pay unfairly low royalties on the coal they get from public lands.
Credit Kym Farnik / Flickr

The Trump administration is repealing an Obama-era rule that forced energy companies to pay more royalties on fossil fuels. Coal producers call it a return to fairness, but environmental groups say the repeal allows companies to continue exploiting a decades-old loophole.

Connie Wilbert, director of the Sierra Club’s Wyoming Chapter, says the repeal of Obama’s valuation reform is about  “giving coal companies this great gift of a bunch of extra revenue and shorting the communities here in Wyoming."

She says, since the 1980s, energy companies have exploited a loophole that allows them to pay unfairly low royalties -- which are like a sales tax -- on the coal they get from public lands.

And Wilbert says this harms coal-producing states like Wyoming, which rely on those royalties to fund public education and infrastructure. 

The reform made companies pay more in royalties. It went into effect on the first of this year, But it only lasted a month before the Trump administration pressed pause.

And now the Interior Department has published a final rule scrapping the reform.

“This is just another positive move by the Trump Administration to ensure that the resource economies in states like Montana are strong and that we’re creating jobs here,” Chuck Denowh, a spokesperson for Count on Coal Montana, says.

The system in place before the Obama administration’s change works, he says, and Montanans and Americans get a fair deal on the coal they own. He says Obama’s valuation reform was a thinly-veiled attempt to shut down coal mining in the West.

“They just wanted to keep it in the ground," he says. "You saw that every group that supported this had that keep it in the ground mantra, so that’s what it was really all about.”  

But Wilbert says it’s a boon for big coal.

“We go back to the same system we’ve had since the 1980s, allowing these huge coal corporations to basically cheat taxpayers out of hundreds of millions of dollars every year,” she says.

The repeal goes into effect on September 6th, and a spokesperson for the Sierra Club says they’re exploring legal options. In a press release, Interior Secretary Ryan Zinke says the repeal “restores our economic freedom by ensuring our energy independence.”