Interior Department repeals royalty valuation rule regarding oil and gas on public lands

The decision by the U.S. Department of the Interior's Office of Natural Resources Revenue to repeal regulations that deal with royalties from oil and natural gas produced on public lands was welcomed by API Upstream and Industry Operations Group Director Erik Milito.

“Certainty and fairness in the leasing process is a critical part of ensuring consumers and businesses can benefit from domestic energy production, which is why we are pleased that ONRR recognizes the substantial burdens and potential legal flaws associated with this rule,” Milito said. “Its lack of clarity and certainty would stifle energy production on federal lands instead of fostering oil and natural gas production, which benefits American consumers and strengthens our national security.”

API filed a lawsuit that challenged the ONRR rule in December 2016. It was reported the ONRR made its decision to repeal the rule because it did not meet policy and implementation objectives, which include simplicity, clarity and consistency in mineral valuation.

Milito said that the oil and gas industry has been working to safely develop resources while paying a “fair share in royalties.”

According to the API, royalty payments from the industry have contributed $80 billion to the U.S. government. 

“With more than 80 percent of voters supporting increased development of U.S. oil and natural gas, it’s important we continue working with the administration and Congress on forward-looking policies that support America’s energy renaissance and help our nation meet its energy needs,” Milito said.