Interior Department Repeals Another Obama Energy Regulation

Aug 18, 2017 by AFP

Building off the recent repeal of the harmful Fracking Regulation, Interior Secretary Ryan Zinke announced the repeal of another costly Obama-era energy regulation. Interior will be repealing the  Consolidated Federal Oil and Gas and Federal and Indian Coal Valuation Reform Rule as it “created confusion and uncertainty regarding how companies report and pay royalties on energy.”

“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” said Secretary Zinke.

The Obama administration’s Valuation Rule was supposed to offer greater simplicity and certainty for companies calculating royalty payments when they develop natural resources on federal and Indian lands. But the rule had the exact opposite effect by ending long-standing methods of asset valuation that the industry and regulators both understood.

One example of how the rule made valuations more complicated was with coal sales. The Obama administration wanted to change how coal is valued by requiring companies developing coal to estimate the value of the coal as its used in electricity generation. It’s difficult to determine coal’s value as a part of electricity sales because electricity sales are influenced by a variety of factors beyond the input of coal. Making matters even more complicated, coal is increasingly being sold on the international market.

The Crow Tribe of Montana was one of the groups that would have been harmed by the valuation rule had it remained in effect. The tribe depends heavily on coal sales as part of its non-federal budget. In recent years, the Obama administration’s regulatory assault on coal has significantly lowered coal sales and harmed tribes that depend on coal like the Crow of Montana. Repeal of the Valuation Rule will make it easier for the Crow Tribe and others to develop and sell their natural resources.

An important part of regulatory reform is ensuring that those most impacted by government regulation have a say in the process. As part of the repeal, Secretary Zinke committed building a better valuation policy and listening to the interests of those most impacted by the rule. As a part of that commitment, he reestablished the Royalty Policy Committee. The committee will be a diverse group of members from academia, public interest groups, mineral owners and leases, Indian tribes, and industry experts that will provide feedback for how to conduct valuations.

The Department of Interior’s repeal of the Valuation Rule is another great example of this administration’s commitment to regulatory reform and promotion of energy dominance. By repealing costly energy regulations, the Department of Interior helps ensure we have affordable and reliable energy.