Economy

The Trump Regime Will Let Fossil Fuel Companies Cheat States Out of Millions

JM Ashby
Written by JM Ashby

There is a loophole that allows fossil fuel companies mining on federal land to hide royalty payments from the federal and state governments. Companies sell their raw materials to themselves at substantially lower prices through the use of subsidiaries, then sell the materials again at full market price. But only the first sale, the substantially reduced sale, is subject to duties.

This loop hole was first exposed (and we discussed it here) years ago. Those reports prompted the Obama administration to close the loop hole, but the Trump regime has decided to open it back up.

Interior Secretary Ryan Zinke, the man who recently threatened the economic well-being of Alaskans if their senators don't vote for Trumpcare, has reversed the Obama-era rule because the industry asked him to.

The coal industry was bent on killing the rule, sending executives to plead its case to the White House and filing a federal lawsuit to block it. “They are liars, and they know it,” Mr. Reavey, the Cloud Peak lobbyist, said of those who suggested the industry was not paying its fair share in royalties. [...]

“We made clear that we thought this rule was bad and they had an opportunity to stop this process from going forward,” [Zinke] said of the change in royalty payments.

Cloud Peak and other mining industry giants also put their objections in writing, asking the department to delay the rule until the industry’s lawsuit was resolved. Within days, they got their wish. The agency, reversing its position during the Obama presidency, froze the rule and told Cloud Peak and other industry lawyers that they had “raised legitimate questions.”

Now, according to a federal notice, the Trump regime is not denying that this will cost taxpayers tens of millions of dollars.

The Trump administration’s decision not to close a loophole that allowed energy companies to sell coal, oil, and natural gas at significantly depressed prices will cost taxpayers $75 million per year, a fact the administration itself acknowledged in a Federal Register notice published Monday. [...]

The DOI’s Office of Natural Resources Revenue (ONRR), in the Federal Register notice, severely underestimates how much money will continue to be lost if the valuation rule is not allowed to go back into effect, [Montana Director of Revenue Dan Bucks] told ThinkProgress. “As bad as the $75 million loss is, it’s not a credible number,” he emphasized.

To be clear, this will not only cost federal taxpayers money. Royalties collected by the federal government are distributed to states in a revenue sharing program.

Ironically, people who live in western states that voted for Trump will most likely be screwed the hardest by the Trump regime in the coming years as they move to open up more mining operations while depriving local communities of revenue from those operations.

It remains to be seen if this will ultimately help or hurt the western conservative movement to return control of federal land to the states. It could bolster the movement by demonstrating that the federal government cannot be trusted (at least not under Trump), but there's reason to believe most Republican state governments would also allow private companies to cheat state residents out of millions.

No one benefits from the privatization of federal land except private companies.

  • Ceoltoir

    It’s no longer about anything other than preserving the business model of the fossil fuel industry. Look at how the republican party is trying to tax renewables out of existence at the State level.

  • Aynwrong

    Conservatives have never believed in “limited government.” They believe in limited taxation for those who can afford to donate to their campaigns.

  • Scopedog

    That loophole would’ve stayed closed under a President Hillary Clinton…but you know, emails, she’s a Neo-liberal shill, she stole the election from Bernie, she’s a warmonger, etc., etc…..

    • Ellen Kuhlmann

      and Trump will hasten the “revolution” so better Trump than Clinton. I knew it was crazy talk then, and even more so now.

  • muselet

    What is the fascination this administration has with coal?

    It is impossible to mine coal cleanly. And the only way coal can be mined cheaply is if the operation is highly automated (so much for all those coal-mining jobs coming back) and the environmental costs of the (seemingly) inevitable spills and dumps of toxic materials are foisted on government.

    At not-inconsiderable expense, it is possible to burn coal relatively cleanly, but that expense makes coal a lousy choice of fuel. Even without the expense, renewables are already as cheap as coal and they’re only going to get cheaper as time goes on, making them a better strategic investment.

    The public-health consequences of coal are unlovely at best, both for coal workers and people—expecially young children—who are exposed to fine particulates when coal is burned without state-of-the-art precautions.

    So again I ask: why the fascination with coal?

    –alopecia

    • ninjaf

      Because Trump told these “scared” people that they would magically become financially stable again, no re-training or extra effort required. And Hillary told them she would see that they were retrained and ready to learn jobs for the future. They chose the candidate that promised them the most for the least effort.

      And they like to call liberals lazy.

    • Dread_Pirate_Mathius

      It’s a cultural thing.

      It’s like the conservative obsession with a mythological America that never existed. The Main Street, small town, good old halcyon days of yore. It’s about days when life was simple and America was ascendant and there was peace and prosperity. There was no civil strife, no racial tensions, and Andy Griffith was the sheriff.

      In these days, America didn’t have – and didn’t need – any of that fancy globalist ‘clean’ energy. She was clean and pure and healthy and, by god, she burned coal. Legions of men made an honest living working by the sweat of their brow to march into the mines to return home to their wives with dinner on the table – made with butter, not margarine. It was a time when men were men and women were women and there were no gender issues and everyone knew where they stood. Everyone knew who was good and who was bad. Taxes were low and the community simply stood together to make public works a reality. It was in church that citizens gave to help the needy (of whom there were very few). And government concerned itself only with keeping America’s enemies at bay. The world was your oyster, overflowing with opportunity for those bold enough to go and seek it. Gold and oil and opportunity for wealth were boundless. Children respected their elders. There were no drugs. No crime. No poverty. It was a simpler time.

      Never you mind that this world never existed. Never mind that it was hell for broad swaths of the population. Never mind that most kids lived to the ripe old age of “dies in childbirth.”

      What matters is how it makes you feel.

      And conservatives feel this very deeply. Any effort to move away from this is prima facie bad. It is the destruction of The American Way. Liberals want to turn us into a European hellscape and terrorist warzone. If we would actively seek to move America away from those good times, it can only be because we don’t truly believe in the Real America – the America of their fantasy. It is for this reason that many are so certain that we “hate America.”

      And it is for this reason that they so love coal. Coal was a big part of this world that never existed. They think it can be again, if we just let it be. They think if government regulations just got out of the way, the jobs would come streaming back, and with them, the good old days. Coal is simple, it’s honest. Fire plus coal makes hot, equals energy. But solar panels and nuclear and other green energies with globally sourced parts? It doesn’t fit with their world view. And if it doesn’t fit, and if liberals like it, it must be bad.

      • Aynwrong

        Don’t forget the chicken in every pot. Well said.

        “…and Andy Griffith was the sheriff.

        More like Lonesome Rhoades in the White House.

  • Dread_Pirate_Mathius
    • ninjaf

      This is perfect.

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    • Aynwrong

      Yup.

  • Dread_Pirate_Mathius