Senators, Representatives Praise Halt of Harmful Federal Coal, Oil and Gas Valuation Rule

U.S. SENATE —U.S. Senators Steve Daines (R-MT), Mike Enzi (R-WY), John Barrasso (R-WY) and John Kennedy (R-LA) and U.S. Representatives Steve Scalise (R-LA), Scott Tipton (R-CO) and Rob Bishop (R-UT) today applauded the U.S. Department of the Interior for working to rescind the Consolidated Federal Oil and Gas, Federal and Indian Rule. 

“We need forward looking policies that encourage energy innovation to create American energy dominance,” Daines stated. “This rule would have harmed hardworking Montana families.”

“The Trump Administration should be applauded for moving to overturn this harmful rule that was aimed at discouraging energy production,” Enzi said. “This rule was bad for Wyoming families and for those across the country who rely on affordable American energy. I encourage everyone who understands the value of our energy resources to Wyoming’s communities to submit comments in the next 30 days to the Department of the Interior about the importance of doing away with this rule.” 

“It’s time to eliminate this burdensome and confusing rule. This rule would increase energy costs and hurt coal, oil and gas production in Wyoming,” said Barrasso. “I look forward to working with the Trump administration, the state of Wyoming, local governments and on-the-ground experts to make thoughtful reforms to the way we value energy resources.” 

“In order to bolster job creation and domestic energy dependence, the federal government needs to encourage growth rather than regulating American industries to death,” said Kennedy. “The recension of this rule will help America realize our goal of energy independence.”

“Let’s be clear—the ONRR mineral valuation rule was nothing but a shadow tax on American energy,” Scalise stated. “In my home state of Louisiana, it meant reduced state revenue sharing dollars, hindering our ability to make major investments to restore our coast and protect Louisiana families and businesses from devastating storms. I applaud Secretary Zinke’s action to begin withdrawing this damaging rule, and look forward to working with the Department of Interior to promote safe and responsible energy production throughout the U.S.”  

“The Trump administration should be commended for beginning the process of reversing the impossible regulatory requirements imposed on energy development by this rule,” Bishop (R-UT) said. “Endless layers of regulation don’t yield greater returns for taxpayers, they paralyze economic activity. In this case, the rule hit marginal producers – the small businesses that support local economies – the hardest.” 

 “The ONRR’s mineral valuation rule added more red-tape, complexity, and confusion to an already overly-complicated mineral valuation process, creating a disincentive for responsible development of our natural resources on federal land and ultimately hurting hardworking Americans and their families the most,” Tipton stated. “I am glad to see that Interior Secretary Zinke joins us in recognizing the harmful impact this rule would have on energy producers and consumers alike and has started the process for withdrawing the regulation through the rulemaking process.” 

This rule was finalized in July 2016, the default provision creates substantial uncertainty about the feasibility of fully complying with the rule, especially considering that operators faced their first payment deadline on February 28, 2017. This provision makes operators liable for royalty payments that could be interpreted differently several years down the line by auditors. For other operators, the final rule eliminates longstanding exemptions for subsea energy infrastructure used to develop and transport product to processing facilities, which could substantially increase the cost of offshore energy production that has already been underway for decades. Other provisions of the rule give no clarity to how mine mouth operators should value their coal when the first arms-length transaction occurs between the electricity generator and its power customers. These changes could cause many energy operators across the country to shut-in what is already very capital-intensive production. 

On February 23, 2017, the Office of Natural Resources Revenue stayed the rule to reform royalty valuation for federal and Indian coal, and federal oil and gas. 

On March 6, 2017, Daines, Barrasso, Kennedy, Enzi, Tipton and Scalise introduced S.J.Res. 29 and H.J.Res. 71, respectively, providing for congressional disapproval under chapter 8 of title 5, United States Code, of the final rule of the Office of Natural Resources Revenue of the Department of the Interior relating to consolidated Federal oil and gas and Federal and Indian coal valuation reform. 

On February 11, 2015, Senators called on the U.S. Department of Interior to allow the states, tribes, union members and business owners more time to provide input on the Office of Natural Resource Revenue’s proposed rule to reform royalty valuation for coal, oil and gas.