The federal government issued a new rule Thursday increasing the cost energy producers must pay to extract coal, oil, and gas leased on public land, in a move bound to roil energy markets and raise fears the Obama administration has struck another blow against the coal industry.
The Department of the Interior changed the rules governing royalty rates that oil and coal companies must pay to the federal government to extract gas and coal from public lands. The regulation essentially uses the gross proceeds from a sell, not a percentage, to determine the royalty rates energy producers must pay to use public lands to extract oil and coal. There will be modest reductions taken into account, based on transportation and processing costs.
Up until now, royalty rates did not take into account the supposedly high costs associated with climate change, environmentalist group Friends of the Earth wrote in a press statement announcing the rule change.
The new rule essentially seeks to wring money out of energy providers who use public lands to extract oil and coal, as well as natural gas. Energy analysts also fear a royalty tax would stunt oil and coal production.
The government justified the rule change by suggesting that it would help taxpayers receive every dollar due for the production of domestic production.
“As the steward of America’s oil, natural gas and coal production on public lands, Interior has an obligation – and is fully committed – to ensuring that the American taxpayer receives every dollar due for the production of these domestic energy resources,” U.S. Interior Secretary Sally Jewell said in a press statement explaining the rule change.