Trump Moves to Increase Subsidy for Coal Mining on Federal Lands

Coal country. Photo: Saul Loeb/AFP/Getty Images

Donald Trump appears to set regulatory policy on a kind of reverse-utilitarian calculus, working diligently to do the greatest good for the smallest number. With the help of the congressional GOP, the president has made it easier for coal companies to dump mining waste in streams; given financial advisers the right to scam their clients; and made companies that routinely abuse their workers eligible for federal contracts again.

But with its latest deregulatory endeavor, the Trump administration has taken this governing philosophy to new heights: The White House appears to have found a way to put the profit margins of select coal companies ahead of not merely environmental conservation, climate sustainability, and federal taxpayers, but also coal miners in Appalachia.

Early in his tenure, Trump reversed the Obama administration’s moratorium on leasing federal lands to coal companies, and canceled its proposed study on the environmental impacts of the coal industry. But Trump’s Interior Department doesn’t merely want the public to blindly absorb the environmental costs of fossil-fuel extraction on public lands — it also wants us to subsidize the financial costs of such activity. Late last week, the administration filed a repeal of an Obama-era measure designed to increase mineral royalties on federal lands. Or, more precisely, Trump moved to reopen loopholes that allow coal companies to avoid paying their full dues to Uncle Sam. As the New York Times explains:

Under federal rules adopted in 1920, coal companies are required to pay “not less than” 12.5 percent on sales of surface coal mined on federal lands. But for years, studies indicate, the companies paid far less — as little as 2.5 percent of the ultimate sale price — because they often negotiated large royalty discounts with sympathetic federal officials. Companies also often sell coal first to a corporate affiliate at a sharply reduced price, before reselling it to the intended customer, costing the government a chunk of its royalties, according to the Government Accountability Office study. The technique was particularly popular among mines with foreign buyers.

To eliminate the loophole, the Interior Department adopted a rule last year requiring that the payment be calculated on the first arm’s length transaction, meaning sales to corporate affiliates would not count. Such a change would be a blow to the bottom lines of companies mining in the Powder River Basin, which accounts for about 85 percent of all coal extracted from federal lands, with a growing share headed to Asia.

Interior Secretary Ryan Zinke fought this rule (on behalf of his coal-industry donors) while in Congress, and is now using his federal perch to finish it off.

Given the reality of manmade climate change, it’s more than a little insane that our government would lease any publicly held land to companies looking to extract the dirtiest of fossil fuels. The idea that we would provide it to them at a discounted rate is awe-inspiring in its madness; it is that rare breed of energy policy that manages to simultaenously undermine humanity’s long-term survival and Appalachia’s near-term economic prospects: In 2015, the Center for American Progress found that the coal industry’s ability to lease federal lands at below-market rate was “giving coal companies that mine in Western states an unfair advantage over companies that mine in Appalachia,” where most mineable territory is in private hands.

New Mexico, California, cattle ranchers, and the Cheyenne tribe are all fighting the Trump administration’s regulatory rollback in the courts. But opposition to the president’s prioritization of energy extraction over environmental preservation brings together a far broader coalition.

There is nothing “populist” about the Trump administration’s energy policies. We are not subsidizing the despoilment of our federal lands and planetary climate because of the American public’s myopia, but because of their government’s craven corruption.

Trump to Increase Subsidy for Coal Mining on Federal Lands