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A Guide: Starting Down the “Road to Rollbacks”
Department of Interior Rolls Back Environmental Safety Net and Protects Bad Fossil Fuel Loopholes
In March, the Trump Administration and the Department of the Interior released a back-to-back Executive Order and Secretarial Order focused on four Interior Department rules for review and possible repeal. These four rules are:
- The Bureau of Land Management’s “Oil and Gas; Hydraulic Fracturing on Federal and Indian Lands” rule;
- The Bureau of Land Management’s “Waste Prevention, Production Subject to Royalties, and Resource Conservation” rule;
- The National Park Service’s “General Provisions and Non-Federal Oil and Gas Rights” rule; and
- The Fish and Wildlife Service’s “Management of Non-Federal Oil and Gas Rights” rule.
Oversight of energy development on our public lands is a core tenet of the National Wildlife Federation and our Affiliates, upheld by generations. Wildlife like mule deer, elk, moose, and pronghorn depend on open migration corridors, and fish like the cutthroat trout need cool clean rivers and streams to survive in a rapidly changing climate. Likewise, we need to ensure our public resources are used in a responsible way that support healthy wildlife populations and benefit the public.
The Tip of the Iceberg
The rollback of these four regulations is a drastic step in the wrong direction, as it undermines important wildlife protections. Moreover, the Administration’s Executive Order went far beyond these four specific rules. It states the federal agencies will review all actions that could potentially burden domestic energy development. The Order specified “burden” to mean:
“Unnecessarily obstruct, delay, curtail, or otherwise impose significant costs on the siting, permitting, production, utilization, transmission, or delivery of energy resources.”
This language potentially covers all environmental regulation on our public lands. Now the Department of the Interior and Secretary Zinke are starting the process of implementing this far reaching directive. For one of their first stops down the “road to rollbacks,” Secretary Zinke has chosen a rule that fixes a loophole fossil fuel companies use to avoid royalties from oil, gas and coal extracted on public lands.
The Loophole: The Center for American Progress estimates that some coal companies pay an effective royalty of 4.9 percent, instead of the official 12.5 percent rate. Here is how they do it: Coal companies can avoid paying royalties by selling the coal to their own subsidiary at a very low price, which results in a low royalty payment. This subsidiary company can then resell the coal at a much higher price, making a profit at the expense of taxpayers.
A 2012 Reuters investigation estimated that the loophole allowed companies to pocket at least an additional $40 million on coal exports from Wyoming and Montana alone in 2011.
A One Billion Dollar Mistake
The previous valuation rule was put in place in the 1980’s and has not kept pace with market changes or rapid advancements in technology. This is a disservice to our public lands and wildlife priorities. Further, if the loophole remains in place, the American public, who are the true owners of public lands, won’t receive the royalties we are owed.
The Institute for Energy economics and Financial Analysis estimates that $1 Billion is lost in US coal royalties annually. That is money that should have gone to the states and federal treasury to benefit the American people, not to the fossil fuel companies.