Trump Administration Revamps Federal Royalty Rules for Coal, Oil and Gas

The Interior Department on Friday announced a new proposal to ease a regulation on royalties for sales of coal, oil and gas extracted from federal and tribal land after a court struck down its initial repeal of the Obama-era rule last year.

The changes to the Office of Natural Resources Revenue’s (ONRR) regulations lift certain royalties for oil, gas and coal extracted from federal lands and restore pre-2016 policies to align with the Trump administration's focus of easing the "burden the development" of domestic energy.

The move comes as the November presidential election looms and the Trump administration aims to complete several more deregulatory actions on the spring Unifed Agenda, a list of its policy priorities.

“This proposal provides regulatory certainty and clarity to States, Tribes and stakeholders, removing unnecessary and burdensome regulations for domestic energy production,” said Interior Secretary David Bernhardt.

In the proposal, companies would not pay royalties for any natural gas that has been flared during oil production.

It also removes the 2016 provision meant to close a loophole that enabled coal companies to settle royalty payments on exports to Asia at much lower domestic prices.

Last April, a federal court ruled in favor of California and New Mexico who sued the Interior Department for repealing the 2016 Obama rule for not offering a "reasoned justification" for doing so under the federal Administrative Procedures Act.

American Petroleum Institute Vice President of Upstream Policy Lem Smith said the new proposal gives "clarity and certainty for energy production on federal lands." The proposal incorporates some recommendations made by API during the public comment period.

Conservation groups said the new proposal hurts taxpayers.

“This is yet another attempt by the Trump administration to reopen loopholes that would allow oil and gas companies to skirt royalty payments owed to taxpayers," said Aaron Weiss of the Center for Western Priorities.