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Utah Could See Impacts As Feds Revamp Energy Royalties

Energy royalty reforms for federal and tribal lands are getting mixed reviews. It had been decades since federal agencies updated the formulas.

The U.S. Department of Interior finalized its new royalty rules June 30, prompting criticism from industry and support among environmental organizations.

The Sierra Club is one of the environmental groups that has pushed for energy-royalty reforms for years.

“The Interior Department set out to close some unintentional loopholes that were allowing coal companies to deprive the American people of a fair return when the department sells taxpayer owned coal,” says Nathaniel Shoaff, a staff attorney for the Sierra Club.

“And to a large extent, the Interior Department has done that.”

The new royalty rules apply to oil and gas extracted from federal lands and from coal mined on federal and tribal lands.

Shoaff points to federal estimates that say it could mean up to $85 million dollars more revenue going to the federal government and energy states.

But the industry and its supporters are panning the rules. U.S. Rep. Rob Bishop, R-Utah, calls them “a costly attack on energy development.”

Kathleen Sgamma, vice president of government and public affairs at the Western Energy Alliance, says Utah actually stands to lose revenue. That’s because costs added by the rules will mean companies won’t be able to sell their products profitably.

“We keep hearing from the administration that it wants to get every dollar out from oil and gas production on federal lands,” she says,  “but there aren’t going to be any dollars due if you drive production off federal lands.”

The latest data shows the value of Utah’s energy-related production was $3.1 billion last year. Lower prices and reduced production are blamed for cutting the industry’s value in half from 2014 levels.

Judy Fahys has reported in Utah for two decades, covering politics, government and business before taking on environmental issues. She loves covering Utah, where petroleum-pipeline spills, the nation’s radioactive legacy and other types of pollution provide endless fodder for stories. Previously, she worked for the Salt Lake Tribune in Utah, and reported on the nation’s capital for States News Service and the Scripps League newspaper chain. She is a longtime member of the Society of Environmental Journalists and Investigative Reporters and Editors. She also spent an academic year as a research fellow in the Knight Science Journalism program at the Massachusetts Institute of Technology. In her spare time, she enjoys being out in the environment, especially hiking, gardening and watercolor painting.
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