Interior Secretary Ryan Zinke speaking during a news conference near Gold Butte National Monument in Bunkerville, Nevada. Photo: Steve Marcus / Las Vegas Sun / AP

By Dino Grandoni
9 August 2017

(The Washington Post) – During his confirmation hearing for the job of running the Department of the Interior, Ryan Zinke told the Senate he wanted taxpayers to get “fair value” on resources extracted from public lands by private companies. But a recent move by him means taxpayers will get millions of dollars less from companies that extract oil and gas from public lands.

Five months into the job, Zinke has arrived at a final decision, to the consternation of environmental and fiscal critics, on exactly how Interior will define what is an appropriate value for oil, gas, and coal taken from lands collectively owned by U.S. citizens.

On Monday, the Interior Department officially repealed an Obama administration rule that in effect required oil, gas, and coal extractors to pay more in royalties to the federal government and states. The Trump administration stayed the rule in February, less than two months after it had taken effect.

Here's the backstory: In July 2016, as President Obama’s term wound down, the Office of Natural Resources Revenue (ONRR) issued a rule closing a loophole in Interior policy that critics said allowed fossil-fuel companies to sell oil, gas and coal to subsidiaries for an artificially low price. The maneuver allowed the companies to pay less in royalties to the federal government -- calculated as a percentage of that sales price -- before the subsidiaries in turn sold the fuel at market value to the parties that ultimately refined or consumed it.

The original Obama policy "was not a terribly controversial rule at the time," said Greg Zimmerman, deputy director of the Center for Western Priorities.

But the energy industry -- along with Republican allies in Congress -- is deriding the Obama-era rule as, in the words of Rep. David B. McKinley (R-W.Va.), “just one in a series of barriers [the Obama administration] put up to hold back energy production on federal lands.” In his statement accompanying the Interior Department's announcement, McKinley added the previous rule was poised to siphon revenue “from local community coffers and the U.S. Treasury.”

But a June report from the U.S. Government Accountability Office said otherwise. The internal government watchdog agency found that while raising the royalty rate failed to increase the amount of onshore oil, gas, and coal extracted -- one of the goals of Trump’s “energy dominance” strategy -- local governments collected more money under that policy. [more]

The Energy 202: Interior Department could cost taxpayers at least $60 million by rolling back Obama rule



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