Secretary of the Interior Ryan Zinke, right, greets Chairman Alvin Not Afraid, Jr. of the Crow Tribe prior to a Senate Committee on Indian Affairs hearing in Washington, D.C., on March 8, 2017. Photo by Indianz.Com (CC BY-NC-SA 4.0)

Environment | National | Politics

Trump administration repeals rule designed to maximize Indian coal revenues

Friday, August 4, 2017

The Trump administration is handing the energy industry another victory by repealing a rule that was designed to maximize coal revenues in Indian Country.

A notice sent to the Federal Register on Friday morning cites numerous "defects" with the rule. Even though the Department of the Interior, during the Obama administration, said it would result in higher payments for tribes with coal resources, the Trump team is claiming the exact opposite.

"These defects alone would have resulted in significant costs that would have served as a financial disincentive to producing coal from federal or Indian lands," the notice, which is being published in the Federal Register on Monday, states.

The repeal is hardly unexpected. The department put a stay on the so-called "2017 Valuation Rule" in February after President Donald Trump, eager to portray himself as business-friendly, directed his administration to look for ways to help the coal industry.

"We have ended the war on beautiful, clean coal," Trump declared a rally in West Virginia on Thursday evening.

Coal, though, is not big business in Indian Country, with just the Crow Tribe, the Hopi Tribe and the Navajo Nation engaged in coal development. But the tribes have relied on revenues to support essential programs and services and their citizens have benefited from jobs in the industry.

Still, it was the industry itself that the primary driver of the repeal effort. Of the 34 comments received after the department asked for additional input in April, only one came from Indian Country.

"The potential future growth in international demand for coal provides an additional opportunity for Crow Nation to obtain full value for our resource and could offset some loss of revenue caused by the decline in domestic coal markets," Chairman Alvin "AJ" Not Afraid, Jr. wrote in a May 4 letter in which he recommended repeal but also expressed support for less restrictive actions.

Today the @VP delivered the message the Crow Tribe has been waiting years to hear: THE WAR ON COAL IS OVER pic.twitter.com/I7IyeltBws
— Secretary Ryan Zinke (@SecretaryZinke) May 12, 2017

The industry, on the other hand, supported a full repeal. Cloud Peak Energy, a firm that wants to export the Crow Tribe's coal in Montana to international markets, stood firmly in that category, as did other corporate interests, some of which were challenging the rule in federal court.

Yet, in spite of Trump's declaration, his administration's efforts so far have not had a major impact on the market. Coal prices remain at historic lows, with prices for the region that includes the Crow Tribe representing the lowest sector in the nation, according to the U.S. Energy Information Administration.

The industry also has turned to more lucrative forms of energy development and tribes have benefited from a boom in natural gas. In contrast, peak production of coal occurred in 2008, the year before Barack Obama became president.

"Falling production in 2016 continues an eight-year decline from peak production in 2008," the agency said in January.

Secretary Ryan Zinke, Interior's new leader, has been eager to blame the demise on the Obama administration's regulatory efforts, like the coal valuation rule. He's also repeatedly complained to tribal leaders about declines in energy development overall on federal lands.

"If you go back to 2008, Interior made about $18 billion a year, just in off-shore," Zinke told the National Congress of American Indians in June, echoing comments he made at a tribal energy summit in May. "Last year, we made $2.6 billion. So we lost $15.5 billion -- that's equal to our entire budget."

According to Zinke, the loss in revenues translates to fewer resources for the Bureau of Indian Affairs. The Trump administration slashed the agency's budget by more than $300 million in its fiscal year 2018 request, a proposal that key members of Congress have not accepted.

"When we lose $15.5 billion a year in revenue, that results in not being able to fund schools and infrastructure," Zinke said at NCAI's mid-year session. "So we're looking at turning that around."

"We're looking at our revenue picture so we can afford to do our responsibilities and meet our treaty obligation -- not only meet our treaty obligation, but exceed our treaty obligation," Zinke added.

The repeal of the coal valuation rule becomes effective 30 days after its publication on Monday. It's being replaced with standards that were finalized back in January 1989, just a week before the late Ronald Reagan left office.

Forthcoming Federal Register Notice:
Repeal of Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform (To Be Published August 7, 2017)

Prior 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)