The Trump administration filed in court Thursday to preserve a loophole that allows coal companies to evade royalty payments owed to U.S. taxpayers.
By repealing the Office of Natural Resource’s Revenue popular valuation rule, Western states and all federal taxpayers will lose out on hundreds of millions of dollars annually that could go to schools, roads, and other local projects.
“This latest effort to gut government royalty collections is an attack on one of our bedrock minerals and environmental laws, the Mineral Leasing Act, which requires the government to get fair market value when federal fossil fuels like coal are developed,” said Nada Culver, Senior Counsel and Director of the BLM Action Center at The Wilderness Society.
The action compounds questions about the legality of the administration’s announcement last month — without notice and comment — that it would stay the rule, which enforces coal, oil and gas royalty payments on public lands.
“In abandoning the rule, the Trump Administration [was] trying to cloak itself in legal terms like ‘stay,’ — but the action is still not legal,” Culver said.
Others — including members of Congress — agreed. Earlier this month, Sen. Maria Cantwell (D-WA) told new Sec. of the Interior Ryan Zinke that “postponing the effective date of the new rule in this manner was plainly contrary to law. You testified at your confirmation hearing that you ‘will follow the law.’ This may be a good place to start. You should lift the stay and let the royalty valuation rule go back into effect.”
Thursday’s court filing, requesting a stay of the rule and stating that the notice to repeal the rule would be published in the Federal Register within 90 days, was an apparent response to those legal concerns.
However, the Federal Register notice won’t change the fact that the original stay was put in place after the rule was already in effect. The administration does not have the authority to stay a rule that has already been implemented without direction from a court, and the illegal stay is still in place.
The ONRR rule was promulgated after a Reuters investigation found that coal companies operating on public lands were taking advantage of a loophole that allowed them to sell coal to their own subsidiaries at intentionally depressed prices, thereby avoiding royalty payments and cheating taxpayers out of hundreds of millions of dollars annually. In response, the Obama administration began a rulemaking process to close the loophole. The rule was finalized on July 1, 2016.
Zinke, who has received significant campaign contributions from the coal, oil and gas industries, has been a vocal supporter of rolling back the coal loophole rule.