On the one hand, a court Wednesday ruled against the Trump administration’s effort to rescind a rule that was intended to close a loophole allowing coal companies to pay hundreds of millions of dollars less in royalties to U.S. taxpayers.
On the other hand, the loophole will remain open, since the Department of the Interior has already completed a separate effort through the normal rule-making process. The Interior’s revocation of the Obama-era coal valuation rule will be effective September 7, allowing coal companies to again engage in self-dealing (selling coal to subsidiaries at deflated prices to avoid paying full royalties before reselling it at normal prices).
“It is so blatantly anti-taxpayer that it is unbelievable that they did this,” Sierra Club attorney Nathaniel Shoaff told ThinkProgress.
The loophole — which Shoaff points out was never meant to exist — costs taxpayers $75 million a year, the administration acknowledged in its revocation notice. Others suggest the number might be even higher: Dan Bucks, the former Montana Director of Revenue and an expert on federal coal policy, told ThinkProgress earlier this month that “as bad as the $75 million loss is, it’s not a credible number.” After the Trump adminstration announced it would not enforce the rule, state attorneys general from California and New Mexico sued in a California federal court for an alleged violation of the Administrative Act, which dictates how the federal rule-making process is implemented.
After that suit was filed, the Interior Department began the formal process of rescinding the rule, which includes publication of the revocation and a public comment period.
Shoaff said the push to reopen the loophole was reflective of the administration’s overall priorities. “They have given an intentional, deliberate handout to coal companies at the expense of the U.S. taxpayer,” Shoaff said. “Our billionaire president just gave a handout to billionaires.”
Earlier this week, President Trump called for lowering the corporate tax rate — although a new study says the plan will not create the promised job boom and, further, will benefit shareholders, not workers.
Trump has consistently supported coal executives, even reportedly going so far as to tell Robert Murray, CEO of Murray Energy, the nation’s largest coal company, that the Energy Department would issue an emergency order to keep coal plants operational. That promise did not come to fruition, though. Energy experts suggested that issuing an emergency order on behalf of an industry — not energy security — would be illegal. In that case, the administration decided not to act, but in many others, officials have plunged ahead with potentially illegal moves. The young administration has been plagued with court decisions against it, including over Trump’s Muslim ban,
Wednesday’s coal valuation ruling, therefore, might not have an impact on the valuation of coal, but it’s an important message to the administration about what is — and is not — allowed. Two other attempted environmental regulation repeals are pending a decision: the Bureau of Land Management’s methane rule and an EPA rule about how much pollution power plants can release into local waterways.
Shoaff expects the administration to lose those cases as well. The government can’t make these decisions “behind closed doors,” he said.
“It is a good ruling, but we’re not particularly surprised by it,” Shoaff said. “At this point, the one thing the administration should be used to is losing in court.”