TCS Comments on Costly Trump-Era Rule for Oil & Gas Valuation

Regulatory ActionsTCS Comments on Costly Trump-Era Rule for Oil & Gas ValuationDelaying an ONRR rule from the final week of the Trump Administration is a good first step

Energy & Natural Resources,  | Analysis
Mar 16, 2021  | 2 min read | Print Article

This week, Taxpayers for Common Sense submitted comments on an agency decision to delay a rule developed during the Trump Administration that will cost taxpayers hundreds of millions of dollars in lost revenue. The Office of Natural Resources Revenue (ONRR) within the Department of the Interior (DOI) tried for years during the Trump Administration to change the rules for how to value oil, gas, and coal developed on federal and tribal lands. These valuation rules determine the size of the pie from which taxpayers get a slice; a smaller pie means a smaller slice and bigger profits for oil and gas companies.

After initial attempts were thrown out, ONRR published a final rule in January 2021 changing how companies value federal oil and gas when calculating how much in royalties they owe to the government. These changes generally reversed a prior rule from 2016 and reduced resource valuation by increasing the amount of deductions producers can take before paying royalties. Specifically, ONRR estimated the rule would reduce royalty revenue for taxpayers by $290 million over 10 years.

Shortly after the change in administrations, ONRR delayed the effective date of the January 2021 final rule and requested public comments on whether the rule’s reasoning and conclusions were reasonable. They were not. Taxpayers for Common Sense submitted comments pointing out just a few of the rule’s weaknesses and urging ONRR to rescind the rule before further strengthening protections to make sure taxpayers get a fair return for the development of federal resources. The full comments are available for download here and below.

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