Grijalva Presses Zinke to Explain Potentially Illegal Delay of Oil, Gas and Coal Valuation Rule That Has Already Sparked Lawsuits

Washington, D.C. – Ranking Member Raúl M. Grijalva (D-Ariz.) today sent a second letter, available at http://bit.ly/2pdiyhH, to Interior Secretary Ryan Zinke pressing for information on the potentially illegal delay of an Office of Natural Resources Revenue (ONRR) rule on how to value oil, natural gas, and coal for royalty purposes. While the rule became effective on Jan. 1, the Trump administration put it on hold in February, letting oil, gas, and coal companies avoid compliance.

As E&E News reported April 27, the states of California and New Mexico have already sued the administration over its failure to enforce the rule, formally titled Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Reform. Among other points, the states argue that the federal government illegally postponed the start date of the rule after the changes had already gone into effect.

Grijalva first wrote to Zinke’s predecessor, Acting Interior Secretary Jack Haugrud, on Feb. 28 seeking clarification on the delay. The letter never received a response.

On April 4, ONRR published a proposal to repeal the rule entirely. Today marks the end of a short 30-day public comment period for that proposal. Grijalva writes in today’s letter that the brief comment period is particularly upsetting because the rule “was developed through a multi-year process that included an Advance Notice of Proposed Rulemaking in 2011 with a 60-day public and stakeholder comment period,[1] six public workshops, and a 120-day comment period on the proposed rule in 2015.”

Today’s letter objects to ONRR’s proposal to permanently withdraw the rule, which Grijalva wrote would be “an unwarranted surrender, a multi-million-dollar giveaway to the oil, gas, and coal industries, and a waste of the taxpayer resources that went into developing the rule in the first place.”

The rule was estimated to raise up to $85 million in public revenue each year. In their lawsuit, California and New Mexico argue that putting the rule on hold “has kept $18 million a year out of state coffers in oil, gas and coal royalties,” E&E News reported. As of the end of April, the lost revenue so far this year equals roughly $26 million.

Among other changes, the rule sought to end the loophole allowing coal mining companies to sell the coal to a subsidiary at below-market rates, reducing the amount of royalties owed to the federal government, states, and tribes. It also cracked down on the practice of taking inflated deductions for expenses and other industry abuses.

[1] 76 F.R. 30878 (May 27, 2011)

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