Secretary of Interior Ryan Zinke’s proposal to repeal the coal royalties rule, or Valuation Rule, for public minerals will be costly to states and tribes and the American public, according to five United States senators in a letter sent early this week. WORC labored five years to close the royalty loophole exploited by coal companies involved in export markets. The new rule was finalized in June 2016 under the Obama Administration, after a long review process that gleaned over 200,000 public comments, largely supportive of the reform.
“Repealing the rule would allow private companies to exploit loopholes in how coal in particular is valued, thereby reducing the amount of royalties tribes, the state, and ultimately, the American public receive in exchange for the use of publicly-owned resources.”
Senators Maria Cantwell (D-WA), Tom Udall (D-NM), Jeff Merkley (D-OR), Ron Wyden (D-OR), and Patty Murray (D-WA) noted that reverting to the status quo could cost taxpayers an average of $124 million per year in undervalued royalties, according to some analysts. The Valuation Rule offered greater simplicity, transparency, and consistency in product valuation for federal coal, oil and gas, and Indian coal.
“We are concerned that the Department’s decision to delay implementation of the rule and, ultimately, to rescind the rule, contradicts Congress’s clear direction to Interior that ‘the United States receive fair market value of the use of the public lands and their resources.’”
The Senators note the importance of fair value to tribes derived from resources extracted on their lands. With over two million acres of tribal lands subject to mineral leases administered by Interior, and $560.4 million in royalties and other mineral revenues distributed to tribes, “rescinding the rule merely locks in place an outdated regime” the letter claims.
The DOI Office of Natural Resource Revenues (ONRR) spent five years engaging public, industry, and academic comments to update and improve its valuation program, which had not been updated in more than 25 years. The agency estimated that the Valuation Rule would increase royalty collections by between $71.9 million and $84.9 million annually.
“Every month the Department delays implementation means millions in dollars of lost revenue owed to tribes, the taxpayers or the states,” the letter points out.
Noting the criticism of BLM’s oversight and management since 2013 by the General Accountability Office, Interior’s Inspector General, and the President’s Council of Economic Advisers, the letter states that the “evidence in favor of reform is simply overwhelming.” By properly valuing publicly owned resources we ensure that the American people and sovereign tribes get their fair share from oil, gas and coal development, the Senators go on to state.
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