Guest essay by Eric Worrall
A Californian judge ruled that President Trump’s administration acted illegally in suspending Obama era royalty hikes against resource projects on government land. But given the rules will shortly be abolished, the rules will not be re-instated.
Court says feds broke the law when delaying new royalty rule
By Laura Paskus
A federal judge said Wednesday that the United States government broke the law when it delayed a rule updating how royalties are calculated when companies drill and mine offshore and on federal and tribal lands. Those royalties are paid out to states, tribes and the United States government.
After five years of analysis, meetings with stakeholders and public comment, in 2016 the Office of Natural Resource Revenue (ONRR) issued a rule updating valuation rules, which had been set in the 1980s. ONRR estimated the changes would increase royalty collections by $71.9 to $84.9 million annually.
The rule took effect on January 1, 2017 and initial reports were due in February.
But in late 2016, industry groups filed three lawsuits, saying the rule was “arbitrary and capricious.” In February, ONRR postponed its implementation.
On Wednesday, the court issued a summary judgement saying the federal government had broken the law by postponing the rule, but it did not reinstate the rule. Doing so, according to the judgement, would be “unduly disruptive” because it would require industry to comply for only a short time before the repeal takes effect.
According to Balderas’ office, the rule is important for New Mexico because it affects how royalties on oil and gas leases on federal lands are calculated. In New Mexico, those royalty payments fund public schools.
“Attorney General Becerra and I sued President Trump because his administration broke the law trying to deny New Mexico’s public school students the royalties they are owed,” Balderas said in a statement following the decision. “I’m pleased that a federal court agreed with us that Donald Trump broke the law as this is a big win for New Mexico’s students, families and teachers.”
What a nonsensical waste of public money. President Trump suspended the rule as a step towards abolishing it. The abolition of the bill will happen anyway in a few days. Yet the Attorney Generals of California and New Mexico spend who knows how much public money to obtain a ruling that Trump should have abolished the bill in the first instance.