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Gianforte Welcomes Interior Decision to Rescind Obama’s Onerous Oil, Gas, and Coal Valuation Rule

August 9, 2017
Press Release

WASHINGTON, D.C. - Montana Congressman Greg Gianforte praised a Department of Interior decision to repeal a last-minute Obama administration rule that could hurt Montana’s rural economy. The mandate would impose burdensome new regulations on production companies with oil, gas, and coal leases on federal land as well as coal leases on tribal lands. 

“Reducing misguided, unnecessary, and costly government regulations is a step in the right direction for Montana’s families,” said Congressman Gianforte, a member of the House Natural Resources Committee. “The decision by Interior Secretary Ryan Zinke will help create more certainty for energy companies investing in Montana and the state’s tribal partners. The increased certainty and investment can lead to good-paying jobs and more opportunity for Montanans. It’s a solid three- to five-yard play for Montana’s economy.”

 The Interior Department’s Office of Natural Resources Revenue (ONRR) announced a final rule in the Federal Register that repeals a ruling placed in effect January 1 by the previous administration. The rule complicated the valuation process for federal oil and gas leases, and federal and reservation coal leases with the stated goal of increasing revenue. Opponents complained it would make it more difficult to accurately capture value and would lead to a reduction in production and revenue. After a mandated review of the new ruling, the ONRR stated their analysis showed defects in the new 2017 Valuation Rule that “would impose a costly and unnecessary burden on Federal and Indian Lessees,” and burden the development of those resources “beyond the degree necessary to protect the public interest or otherwise comply with the law.” 

“The Obama era valuation rule was designed to do an end-run around Congress and illegally impose a new tax on coal mined on federal lands,” said Richard Reavey, Vice President Government & Public Affairs at Cloud Peak Energy, which operates a mine in southeastern Montana. “In 2017, Cloud Peak Energy announced plans for 4.3 million tons of coal exports to South Korea. Those sales could yield $15 to $20 million in taxes, fees, and royalties that certainly would have been jeopardized by the proposed valuation rule.”

The new ruling, effective September 6, 2017, rescinds the flawed 2017 valuation rule and reinstates the valuation process in place prior to January 1, 2017.