NMA Applauds Ruling Providing a Sharp Rebuke of the Deeply Flawed Obama-era Coal Valuation Rule
October 9, 2019 - The National Mining Association (NMA) welcomes a ruling from the U.S. District Court for the District of Wyoming providing a preliminary injunction halting compliance with the deeply flawed Obama-era coal valuation rule.
“The prior administration’s rule was fundamentally unworkable. This ruling confirms that valuing coal based on the cost of coal-generated electricity, as opposed to basing the royalty on the value of the coal at or near a mine, is both unlawful and defies logic,” said Rich Nolan, NMA President and CEO. “Returning to the pre-2016 rule valuation restores clarity and business certainty.”
In issuing his ruling, Judge Scott Skavdahl wrote, "The primary problem with the new valuation methodology for coal is requiring it to be valued based on the sales price of a different commodity (electricity) where an arm's-length sale of the coal does not otherwise exist."
NMA argued just this point in its petition, stating “The rule’s required use of a netback from electricity sales to value coal if the coal is sold to an affiliated power plant is both contrary to law and impossible to perform…. Applying the statutory lease royalty rate to an entirely different energy commodity generated from the coal, and that is subject to a highly regulated pricing structure, is inconsistent with the statute.”
NMA requested a preliminary injunction from the federal district court in Wyoming barring the implementation of the Obama coal valuation rule. This move was necessitated by the reinstatement of the Obama rule by a federal district court in California vacating the 2017 repeal of the Obama rule.