WY Delegation Requests Royalty Rate Cuts From Interior Department

Apr 1, 2020

Coal seam at Peabody's North Antelope Rochelle Mine
Credit Peabody Energy

On March 30, Wyoming Sen. John Barrasso and Sen. Mike Enzi led 10 other U.S. Senate signatories in a request for the U.S. Department of the Interior to administer help to the coal, oil and gas industries amidst the COVID-19 pandemic. Representative Liz Cheney signed a similar letter coming from the House of Representatives today alongside 29 other Congressmen.

"America's energy producers face unprecedented challenges, putting hundreds of thousands of jobs, reliable and affordable energy sources, and our national energy security at risk," the Senate letter read.

The letters argued Secretary David Bernhardt had the authority to support energy production on federal lands through several means including a reduction, delay or suspension of federal royalty payments for oil, gas, and coal to the U.S. Treasury. The House letter included soda ash and other minerals in its list.

The Senate letter also asks Bernhardt to consider lease term extensions and suspension of production requirements to help preserve existing energy leases.

"While economic conditions will improve over time, providing this necessary relief now will ensure America continues production, essential industry jobs are preserved, and taxpayers receive a fair return from federal lands in the future," it reads.

Both House and Senate letters make it clear they're not asking for a bailout and clarified a royalty rate reduction should not affect states' revenues if possible.

"We must utilize every existing authority to enable them to withstand the economic impacts of this pandemic, which is no fault of their own," the House letter read.

A royalty rate reduction is in line with a similar request from the National Mining Association made on March 18 to congressional leaders and the president.

"Royalty rates for federal coal are 30 percent to 65 percent higher than the prevailing rates for private coal in the East… between taxes, fees and royalties, the federal, state and local governments receive almost 40 cents on every dollar of coal sold from the Powder River Basin," wrote Rich Nolan, President and CEO of the National Mining Association.

The roughly $2 trillion federal stimulus package did not include any line items for coal, but some in the industry have their eyes on the next round of funding

The Interior Department hasn't made a public statement or response to the Senator's March 30 request. The federal agency did not respond to a request for comment.

Have a question about this story? Contact the reporter, Cooper McKim, at cmckim5@uwyo.edu.