February 24, 2017

The Department of the Interior’s Office of Natural Resource Revenue (ONRR) announced that it has stayed the implementation of a new rule regarding how royalties on federal coal, oil and gas are calculated until pending litigation is resolved.

Steve Charter of Shepherd, Montana, a board member and past Chair of the Northern Plains Resource Council who ranches above an underground coal mine, criticized the action, which puts on hold ONRR’s efforts to close a loophole that has cost taxpayers million.

“This announcement is a gift to coal companies trying to avoid paying their fair share for publicly-owned minerals. These are funds our states depend on for roads and schools.

“This rule is a common-sense measure to stop energy corporations from using subsidiaries and shell companies to hide profits and dodge royalty payments. It’s terrible that the new administration has again decided to offer sweetheart deals for industry at the expense of Western families.”

A 2012 Reuters investigation revealed that companies were selling coal to their own subsidiaries at artificially low prices in order to reduce royalty payments. This practice allowed companies to pocket at least $40 million more in 2011on coal exports from Wyoming and Montana alone.

WORC Board Member and Powder River Basin Resource Council Chair Bob LeResche of Clearmont, Wyoming, said:

“This loophole cost state and federal taxpayers roughly $850 million between 2008 and 2012. Coal companies are increasingly selling coal to themselves at reduced prices to effectively avoid paying royalties to the government. This cheats taxpayers.

“Interior’s rule brings additional transparency and accountability and prevents this self-dealing. It’s a shame that the Trump administration is backing away from the rule.”

An analysis of data from the U.S. Energy Information Administration by the Center for American Progress revealed that coal companies are increasing use of the loophole the ONRR rule addresses. Forty-two percent of all coal produced in Wyoming in 2012 was sold through a captive transaction—or a transaction between a parent and an affiliate company—up from just four percent in 2004. In 2013, all coal mined for export in Montana was sold through a captive transaction.

The Powder River Basin Resource Council works to ensure responsible development of Wyoming’s mineral resources.  

Based in Billings, Montana, the Northern Plains Resource Council is a statewide grassroots conservation and family agriculture group that organizes Montanans to protect our water quality, family farms and ranches, and unique quality of life.

The Western Organization of Resource Councils is a seven-state network of grassroots community organizations working to shape policy on energy and agriculture and strengthen communities.