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.