WASHINGTON, D.C. – Today, U.S. Senator John Barrasso (R-WY) questioned U.S. Secretary of the Interior Sally Jewell about the Obama administration’s proposal to increase royalty rates on federal coal and the Bureau of Land Management’s (BLM) proposed flaring and venting rule.

Jewell was testifying before the Senate Energy and Natural Resources Committee regarding the Department of the Interior’s budget request for Fiscal Year 2017. 

On the Administration’s Push to Increase Royalties on Federal Coal:   

“Madame Secretary, over the last year, you have repeatedly questioned whether American taxpayers are receiving a fair return on coal leased by the federal government. 

“Your agency is now in the process of considering whether to increase royalty rates on coal. 

“And I’m having a difficult time understanding why the agency is taking this step because over the last three years, the demand for federal coal has collapsed. 

“Since 2012, the amount of coal that the federal government has leased is down 95 percent. So that amount is down by 95 percent and prior to coming to the Department of Interior, you served as the Chief Executive Officer of REI, a retailer of sporting goods. 

“I know you are familiar with basic economics. Economics 101 says you shouldn’t raise prices on a product when demand for that product is collapsing. 

“So given that demand for federal coal is down by 95 percent, do you really believe it is reasonable to increase the royalty rates on coal? 

Follow Up Question: 

“But doesn’t it seem to you that if the demand goes to zero, that the revenue coming in is going to go to zero as well for the government? 

“So in fact you’re actually going to get less revenue, higher royalty rates are going to reduce demand. The revenue generated from coal is going to continue to go down. 

“I mean this is why the environmentalists have aggressively lobbied you to raise royalty rates on coal—to kill coal. They know it will kill coal production. So if you’re really willing to be honest with Congress, you’d admit that here today. 

“I’m delighted that the administration will be ending in a lot less than three years.

Click here for video of Sen. Barrasso questioning Sec. Jewell on coal royalties.

On BLM’s Proposed Venting/Flaring Rule: 

“Now, I’d like to turn to BLM’s proposed rule on natural gas flaring and venting.

“According to BLM’s rule: ‘The primary means to avoid flaring…gas from oil wells
is to capture, transport, and process that gas for sale, using the same technologies that are used for natural gas wells.’            

“The rule goes on to explain in areas where the rate of gas production ‘is outpacing [existing] infrastructure capacity,’ and in areas ‘where capture and processing infrastructure has not yet been built.’ 

“The rule notes that the cost to install natural gas gathering lines isn’t cheap.’ According to the rule, the costs of installing equipment and pipelines to capture and transport can be up to $400,000 to a $1 million per mile for the pipeline.           

“I think BLM’s proposed rule does actually a fairly good job describing the problem that oil and gas producers face.

“Then BLM’s solution completely misses the mark.

“Rather than taking steps to expedite the permitting of these natural gas gathering lines on federal land, the rule simply raises costs on producers and does so at a time when natural gas sells at bargain basement prices.

“BLM’s goal seems to be to reduce flaring by eliminating oil and gas production on federal lands. 

“So if the BLM is sincere about helping producers reduce flaring, which is the goal that the BLM states, why doesn’t the proposed rule expedite the permitting of these gas gathering lines on federal lands?”

Click here for video of Sen. Barrasso questioning Sec. Jewell on BLM’s flaring rule.