The US Government Freezing the Planned Changes to the Country’s Coal Mining Royalties

coal mining
Image Source: Beyond Coal & Gas Image Library, CC BY 2.0

The United States Department of the Interior (DOI) has frozen all changes that are to be made to the royalties imposed on coal mining, especially on public lands in the western part of the country. The action was taken after mining firms challenged the agency in a federal court.

According to an agency notification for the Federal Register, this move will keep the current regulations governing the mining industry in place, while the court still has to make its decision. Originally, the changes were designed by the previous administration to make sure firms will not shortchange taxpayers on coal sales to international markets, such as Asia. However, lawmakers and watchdogs are still complaining that taxpayers were losing millions of dollars each year due to improper calculations of coal mining royalties, especially those made on public lands.

Regulations, which are imposed since the 1980s, have allowed firms to sell fuel to affiliates and pay the government royalties on the sale prices they are using. Then, affiliates would often sell the coal overseas at higher prices. With the suspension of the changes, the rate of royalties would be determined at the time of leasing. Also, the revenue will be based on the price paid by an outside entity, instead of an interim sale to an affiliate.

Now, conservationists criticized the suspension, saying that it will only benefit the industry and will take away the power of the states to make revenue that they need. Steve Charter, an owner of a ranch next to the Bull Mountain coal mine, said:

“This announcement is a gift to coal companies trying to avoid paying their fair share.”

On the other hand, some lawmakers welcome the suspension. Utah Representative Rob Bishop said the proposed changes could have caused electricity rates to increase due to increases in cost utilities pay for coal. He stated:

“The Trump administration made the right decision to suspend this illogical and legally dubious rule.”

The DOI rule also included changes to oil and gas valuations, though this aspect has not received much attention compared to coal mining royalties.