Will Federal Coal Valuation Reforms Hurt the Coal Industry? Yes And No

The Office of Natural Resources Revenue recently proposed a new rule that would change the way federal coal is valued for royalty purposes. Will it hurt the industry? Yes and No.

The Office of Natural Resources Revenue (ONRR) recently published a proposed rulemaking that would change the way federal coal is valued for royalty purposes.

Cloud Peak Energy, Inc, a large producer of federal coal in Wyoming, is concerned that the proposed changes will have a big effect on its profitability.

Graphic: Coal Royalty Valuation Reform Options

That’s prompted Peabody Energy, also a large producer of federal coal, to respond that the likely outcome of proposed reforms on the industry will be small, if any.

After looking in detail at the proposed rule and analyzing data, my take is that they are both right.