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Interior Department pulls back rule designed to maximize Indian coal revenues

Tuesday, April 4, 2017

Interior Secretary Ryan Zinke. Photo: U.S. Department of the Interior

The Trump administration is seeking to repeal new royalty rates that were designed to increase coal revenues on Indian lands.

The Department of the Interior had already put a stay on the rule after energy companies that extract coal from Indian lands complained. Now the rates are up for elimination altogether.

"The repeal would provide certainty and clarity to the regulated community by continuing to require compliance with lawful, longstanding, and well-known procedures," the department said in an announcement on Monday.

The new rates were supposed to kick in on January 1. They were written to ensure tribes and individual Indians receive the "maximum revenues from coal resources on their land," the department said last June when it finalized the rule.

Only a handful of tribes, including the Crow Nation, engage in coal development on their lands. But Secretary Ryan Zinke, Interior's new leader, has vowed to do whatever he can to ensure they remain open for business.

"You can take it from the Crow Nation in Montana," Zinke said during a briefing at the White House on Tuesday, "the chairman once said, a war on coal is a war on Crow Nation, and coal jobs are the only jobs."

Comments on the proposed repeal of the coal rates are being accepted until May 4, according to a notice that was published in the Federal Register on Tuesday. Comments are also being accepted until May 4 on potential changes -- ostensibly ones that are more friendly to the energy industry -- to existing rules, according to a second notice.

The lawsuit that preceded the change in policy was filed by Cloud Peak Energy, a firm that wants to develop coal owned by the Crow Tribe in Montana and ship it to markets in Asia. The Obama administration dealt a significant blow to the project last May when it rejected a proposed export terminal in Washington due to the negative impacts on the treaty rights of tribes in the Pacific Northwest.

Another plaintiff is the National Mining Association. According to the petition, a "significant number" of the organization's members "operate leases on federal and Indian lands with royalty obligations in Wyoming and other states."

"Royalty rates are already above market," the NMA said in a statement last year when the new rule was finalized. "Current royalties, bonus bids, taxes and fees delivers almost 40 cents of every dollar in federal coal sales to the government, undermining the specious claim that somehow taxpayers are being cheated."

Besides the Crows, the Hopi Tribe and the Navajo Nation have engaged in coal production on their lands. Falling prices, along with new regulatory requirements, have led to declines in revenues and have impacted their economies.

Federal Register Notices:
Repeal of Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform (April 4, 2017)
Federal Oil and Gas and Federal and Indian Coal Valuation (April 4, 2017)
Postponement of Effectiveness of the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform 2017 Valuation Rule (February 27, 2017)