On March 14, the Powder River Basin Resource Council, WORC, and The Wilderness Society filed motions in Wyoming federal district court to intervene in litigation brought by Cloud Peak Energy against the Department of the Interior’s federal coal royalty valuation rule.
The rule, written by Interior’s Office of Natural Resources Revenue (ONRR), was finalized July 1, 2016. It clarifies that royalties due on taxpayer-owned coal must be calculated at the first “arm’s-length” sale of federal coal after it is mined, thereby preventing coal companies from underpaying royalties by selling low to affiliates and subsidiaries. The agency’s analysis estimated that the new standard would increase revenue from federal mineral royalties by as much as $85 million annually.
“If companies want to mine and profit from federal coal, they need to pay a fair price for the public coal,” said Bob LeResche, Chair of Powder River Basin Resource Council who ranches near Sheridan. “Ninety thousand Americans commented in favor of closing this loophole. The government should keep it closed.”
Secretary of the Interior Ryan Zinke was a vocal opponent of the coal royalty valuation rule in Congress, where he served just over one term as Montana’s sole Representative. He introduced an appropriations rider to block the rule. It is unclear whether Secretary Zinke’s Interior Department will aggressively defend the standard against the legal challenge from Cloud Peak.
Cloud Peak Energy sued the Interior Department to block the rule on December 29, 2016, and in February wrote a letter to ONRR Director Gregory Gould petitioning the agency to “postpone implementation” of the rule. In what critics say appears to be a violation of the Administrative Procedures Act, Director Gould complied with this request, informing Cloud Peak and its fellow petitioners that he would “postpone the effective date of the Rule,” even though he acknowledged the rule was already in effect as of January 1, 2017.
“ONRR carried out an extensive and informed public process to close this loophole and make sure Americans are getting a fair return from federal coal,” said LeResche. “It’s no less than crony capitalism for the government to roll over as soon as Cloud Peak sends a letter.”
The Western Environmental Law Center is representing the organizations.
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