Interior acts to rescind rule about energy valuation

The Interior Department on Friday moved to repeal a rule revising how coal, oil and gas are valued for federal royalty purposes, winning praise from U.S. Rep. Scott Tipton, who has pushed for legislative repeal of the rule.

The House Committee on Natural Resources announced the Interior Department’s action in a news release. Molly Block, a spokeswoman for the committee, said the department revealed its plans in a court filing. The rule has been legally challenged by groups including the American Petroleum Institute.

It was released last year by Interior’s Office of Natural Resources Revenue and took effect Jan. 1. The agency had cited the need to update regulations for valuing production to align them with current market conditions.

Among the rule’s goals is to keep a company from selling coal at below market value to an affiliated company to pay lower royalties to the government, only to have that company resell the coal for a much higher rate. The new rule also got rid of some cost allowances for oil and gas companies when it comes to valuing their production for royalty purposes.

In February, Tipton, R-Colo., and House Majority Whip Steve Scalise, R-La., introduced a resolution to repeal the measure using the Congressional Review Act.

Later that month, the Office of Natural Resources Revenue delayed implementation of the rule pending resolution of the litigation challenging it.

In the Natural Resources Committee news release, committee Chairman Rob Bishop, R-Utah, praised the Trump administration “for beginning the process of reversing the impossible regulatory requirements imposed on energy development by this rule. 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.”

Tipton said in the release that the 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.”

He said he’s glad to see that Interior Secretary Ryan Zinke “joins us in recognizing the harmful impact this rule would have on energy producers and consumers alike.”

On March 7, Sen. Maria Cant-well, D-Wash., the senior Democrat on the Senate Energy and Natural Resources Committee, asked Zinke in a letter to lift the stay on the rule, saying the stay was illegal and the rule would ensure taxpayers would get fair value from resources extracted from public lands.

She wrote to Zinke, “You testified at your confirmation hearing that you ‘will follow the law.’ This may be a good place to start. You should lift the stay and let the royalty valuation rule go back into effect.”

Zinke opposed the rule while serving as a U.S. House member from Montana and introduced legislation to block it. He feared impacts to the coal industry, and local economies, communities and tribes.

It wasn’t immediately clear Friday whether Tipton and Scalise will continue to pursue their resolution on the rule.

Under the Congressional Review Act, they could seek not just to have it repealed, but to prevent any substantially similar rule from being enacted in the future unless Congress later revisits the issue, Block said.


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