Western Energy Alliance Applauds Postponement of Royalty Valuation Rule

February 24, 2017

DENVER – Western Energy Alliance applauds the action by Gregory Gould, Director of the Department of the Interior’s Office of Natural Resources Revenue (ONRR) to postpone implementation of the Consolidated Federal Oil & Gas and Federal & Indian Coal Valuation Rule, pending litigation. The rule was finalized on July 1, 2016 and took effect January 1, 2017, with the first royalty reports otherwise due February 28, 2017.

“Western Energy Alliance thanks Director Gould for postponing the rule,” said Kathleen Sgamma, president of the Alliance. “The valuation rule will do to small independent oil and natural gas producers operating on federal lands what Dodd-Frank did to community banks: render the federal regulatory environment so complex that small businesses cannot possibly comply. Small companies will be unable to take many legal deductions, and will pay royalties at a higher price than they can actually obtain in the market. Postponing the rule is a wise step considering the ongoing litigation. Western Energy Alliance thanks the American Petroleum Institute and other groups for taking legal action against this rule, which makes reporting horribly complex without changing the royalty valuation in many circumstances, thus increasing the burden without a revenue benefit to the government.”