Western Officials Applaud Repeal Of Obama-Era ONRR ‘Energy-Stifling Valuation Rule’
In an effort to bring clarity to the U.S. energy industry, the Department of Interior (DOI) officially rescinded the “defective federal mineral valuation rule” promulgated under the Obama administration.
“The decision by the Department of the Interior’s Office of Natural Resources Revenue (ONRR) to repeal the Obama Administration’s Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform Final Rule comes as welcome news to Wyoming and communities throughout the West,” Congresswoman Liz Cheney (R-WY) said in a statement through the Congressional Western Caucus.
The Obama administration ONRR created the Valuation Rule with the intent of updating the mineral valuation method “to ensure a fair return to the taxpayer for the resources extracted on both federal and tribal lands, as well as offshore sites,” according to the Western Caucus. However, it only caused confusion and regulatory strangulation.
“This rule would have discouraged mineral extraction on federal and tribal lands across Wyoming by implementing an ambiguous and complicated process for establishing royalty rates and requiring unnecessary, burdensome reporting requirements. Repealing this misguided and costly rule will help to reduced burdensome federal overreach and bring jobs and added economic certainty back to Wyoming,” Cheney said.
Caren Cowan, Executive Director of the New Mexico Cattle Growers’ Association (NMCGA), told Western Wire, “Part of the reason we supported the repeal is that we got a lot of regulations in 2016 that are not good for business.”
Cowan estimated that there are approximately 7,000 ranches in New Mexico, her group represents more than 1,500 members all across the state. New Mexico is 28th in cattle production, according to Cowan, and it’s important cattle growers show solidarity across industries as they share the land with oil and gas, timber, and mining.
“It’s important to us that we have a vibrant energy industry for us and the nation,” Cowan said. “This is something we did in support of our brothers in the oil and gas industry.”
“We make sure we’re doing the best to take care of the land and also stay in business,” Cowan said, describing the balancing act ranchers, miners, and oil and gas operators undertake. But too many regulations make it difficult for New Mexico’s businesses to stay afloat.
“If we’re not profitable, we’re not here,” Cowan said. NMCGA joined more than a dozen organizations across the West in support of a bill to block the Obama administration’s revision of the valuation rule.
“The Office of Natural Resource Revenue (ONRR) valuation rule was a direct attack on states like New Mexico that rely on the production of energy resources,” said Congressman Steve Pearce (R-N.M.) who had recently pushed back on the implementation of the ONRR Valuation Rule in a letter to the House Committee on Appropriations.
“Without repealing this rule, taxpayers in New Mexico and across the nation would be cheated out of revenues they rightfully deserve,” said Pearce. “This is much-needed money to improve our schools, repair roads, and assist other essential services our local communities and economies rely on.”
“I’m pleased to see the Department of the Interior follow through on their commitment to unleash domestic energy production from crippling regulations so that New Mexico can continue producing affordable and reliable energy. Not only will this lower energy costs for New Mexicans, but it will keep good-paying jobs here in our state where they belong,” said Pearce.
“Repealing the Valuation Rule provides a clean slate to create workable valuation regulations,” said Secretary of the Interior Ryan Zinke in a statement announcing the decision. “The Department and the Office of Natural Resources Revenue remain committed to collecting every dollar due. These are taxpayer and American Indian assets, and the public and American Indians deserve an accurate accounting and valuation.”
In the West, where the majority of federal land ownership is concentrated, officials applauded the rescission of the ONRR Valuation Rule.
“This rescindment is another important step by the Trump administration to position Interior as a facilitator of responsible energy development,” said Congressman Rob Bishop in a statement. “I look forward to working with Secretary Zinke on ONRR policies, and many other areas, to spur more investment in Federal and Indian lands, foster greater regulatory certainty and eliminate or address pre-existing policies that work against these goals.”
The ONRR Valuation Rule caused unnecessary red tape for responsible energy development on federal and Indian lands resulting in undeveloped minerals and missed opportunities for taxpayers to collect royalty revenues.
The repeal of the ONRR Valuation Rule will take effect on September 6, 2017. The rescission of the Obama-era ONRR rule reinstates prior rules governing royalties payments for minerals produced on federal and tribal lands.
In an effort to keep economic momentum rolling, Secretary Zinke said, “The United States is a safer and more sustainable nation when we rely on our own natural resource development.”
“Repealing the Valuation Rule restores our economic freedom by ensuring our energy independence. The increased costs associated with the Valuation Rule had the potential to decrease exploration and production on Federal lands, both onshore and offshore, making us rely more and more on foreign imports of oil and gas.”