The Bureau of Land Management has finalized new regulations that could provide mining royalty relief to aid producers of sodium bicarbonate in northwest Colorado.
The agency’s initiative is being met with criticism from the Democratic chairman of the House Natural Resources Committee, Raúl Grijalva, who considers it an unwarranted industry giveaway. It’s being welcomed by Natural Soda, which mines sodium bicarbonate in Rio Blanco County and sells baking soda around the world.
The BLM on Aug. 31 released a final rule it says streamlines the process for companies to seek, and the BLM to grant, reductions of rental fees, royalty rates and production requirements for non-energy, solid leasable minerals, such as sodium, gilsonite, phosphate, potassium and sulfur. It also codifies in regulation what the agency says is its authority to make such reductions on an area- or industry-wide reduction on its own initiative.
“This final rule gives the BLM more flexibility to respond to changing market dynamics and to promote development of the Federal mineral estate when deemed necessary,” the new rule states.
It takes effect 30 days after its publication in the Federal Register.
The agency says the new regulations are less burdensome and more flexible, and are needed to keep the United States competitive in global markets for certain commodities and to promote development of mineral resources as required by law, particularly in periods of market fluctuation.
The United States led the world in production of sodium carbonate — or natural soda ash, used in industries such as carmaking and construction — before falling behind in 2003 to China, which has seen growth in synthetic soda ash production. Congress previously has provided for temporary reductions from fair-market royalty rates affecting the sodium products industry but those have expired. A 2015 bill supported by U.S. Sens. Michael Bennet, D-Colo., and Cory Gardner, R-Colo., and U.S. Rep. Scott Tipton, R-Cortez, would have reduced royalty rates to 2%, down from what the BLM said was a 2006 fair market value average of 5.6%.
Solvay, a company that produces sodium bicarbonate products near Parachute from soda ash mined in Wyoming, has supported the regulatory change, saying it will help it maintain its competitiveness against subsidized foreign suppliers.
Natural Soda uses hot water injected deep underground to mine sodium bicarbonate on federal leases southwest of Meeker and produce baking soda and other products.
“Natural Soda fully supports the Bureau of Land Management’s effort to simplify its rules so that royalty rates can be adjusted to address competition in the export market,” the company’s president, Kirk Daehling, said in a statement. “Natural Soda worked with Senators Michael Bennet and Cory Gardner and Rep. Scott Tipton to ensure that our delegation in Washington understood the challenges we face and the opportunities available to export our baking soda around the world.
“Right now, we are facing serious competitive challenges from Chinese producers that do not have the same regulatory and quality controls, labor costs and energy costs as we do. However, there are many foreign customers that want our natural, pure and organic baking soda, and we hope that a change in the royalty rate will allow Natural Soda to rebuild and then continue to grow its position in the global market.”
In a letter to Casey Hammond, principal deputy assistant secretary of the Interior Department, Grijalva argued that the rule change will result in a $177 million windfall for industry.
“Previous legislative efforts to provide royalty cuts to soda ash producers were extremely profitable for the producers themselves but did nothing to create jobs or improve the country’s international competitiveness,” he wrote.
He also disagreed with BLM’s contention that the Mineral Leasing Act gives it blanket authority to reduce royalty rates across the board, and that the previous regulations were unnecessarily restrictive and burdensome. He said it’s not enough to argue that a royalty rate reduction would benefit industry, and the question is whether it is needed and would benefit the nation.
“The royalty reduction rule makes it clear that BLM is not interested in answering that,” he wrote.