Attorneys General Becerra and Balderas Oppose Latest Effort to Undermine Valuation Rule

SACRAMENTO – California Attorney General Xavier Becerra and New Mexico Attorney General Hector Balderas today submitted comments opposing the Department of the Interior’s (DOI) proposal to undermine key requirements of the Valuation Rule. Finalized in July 2016, the Valuation Rule replaced antiquated regulations that determined how much producers must pay in royalties for the oil, gas, and coal they extract from public and tribal lands. In the comment letter, Attorneys General Becerra and Balderas argue that the proposed rule violates the Administrative Procedure Act, undervalues our nation’s natural resources, and enriches the fossil fuel industry at the expense of the American people and the environment. 

“The Trump Administration is using the same tired playbook to benefit industry polluters at the expense of the American taxpayer. We’ve already beaten DOI twice in court to stop its unlawful attempts to delay and repeal the Valuation Rule,” said Attorney General Becerra. “On its way out the door, the Trump Administration has become embarrassingly transparent as it throws feeble, unlawful proposals against the wall to see what sticks. We anticipated that and are confident that we’ll get the final outs of the inning.”

On October 1, 2020, DOI published a proposed rule that would eliminate several key requirements of the Valuation Rule “in order to return to the definitions and practices that had been in place since the 1980s.” The proposal would have the effect of reducing the amount of royalties collected on fossil fuels extracted from federal land and thus, the revenue California and New Mexico receive from such royalties. 

In the comment letter, Attorneys General Becerra and Balderas argue that the proposed rule is arbitrary and capricious in violation of the Administrative Procedure Act because:

• DOI’s primary rationale for the proposed rule is directly contradicted by the factual record, which shows that this rulemaking will actually increase administrative burdens and have no impact on energy production;
• DOI’s reliance on the alleged “deficiencies” in the Valuation Rule identified by the District of Wyoming is misguided because the District Court has only ruled on the motion for a preliminary injunction. California, New Mexico, and DOI are currently defending the merits of the the rule in Court; and
• DOI has entirely failed to consider the many important reasons for its enactment of the Valuation Rule, such as ensuring the accurate calculation of royalties from the development of public resources, fulfilling it trust responsibilities on tribal lands, and ensuring industry compliance with legal obligations.

Attorneys General Becerra and Balderas have repeatedly defended the Valuation Rule from the Trump Administration’s attempts to both postpone and repeal the rule’s requirements. Shortly after the change in administrations in early 2017, DOI issued a notice attempting to postpone the Valuation Rule’s requirements. Attorneys General Becerra and Balderas filed a lawsuit challenging DOI’s failure to implement the rule, and in August 2017, a federal district court agreed that DOI acted unlawfully in its attempt to postpone implementation of the rule. Simultaneously, DOI began a process to repeal the Valuation Rule in its entirety. In public comments, Attorneys General Becerra and Balderas urged DOI to not move forward with a repeal that would reopen loopholes exploited by coal companies and deprive taxpayers of a fair return on public resources. Nonetheless, DOI went ahead with the repeal without offering any reasoned basis for doing so. Attorney General Becerra filed a lawsuit challenging the repeal, and the federal district court subsequently ruled this action unlawful as well. In July 2019, Attorneys General Becerra and Balderas filed a motion to intervene in Cloud Peak Energy v. U.S. Department of the Interior to defend the Valuation Rule against corporate interests.

A copy of the comment letter can be found here.