Attorneys General of California, New Mexico Blast Proposed Rollback of Interior Department Royalty Reforms

Washington, D.C. — California Attorney General Xavier Becerra and New Mexico Attorney General Hector Balderas filed comments today opposing the Trump administration’s proposal to roll back the Interior Department’s Valuation Rule, a set of reforms finalized in 2016 to ensure that states and the federal government receive fair royalties for energy resources extracted from public lands. The proposed rollback follows the administration’s efforts “to delay and then repeal the Valuation Rule based on illegal tactics and false justifications,” which AG Becerra and AG Balderas defeated in court.

“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 AG 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.”

“The Courts have agreed twice that the attempts to repeal this rule have been unlawful; and we will continue to fight to ensure that the rule of law is followed and that the federal government fulfills its trust obligations to tribes and New Mexican schoolchildren, who should receive the proper royalties they are owed,” said AG Balderas.

Reversing Royalty Reforms — In their comments, AG Becerra and AG Balderas emphasize that the Trump administration “entirely failed to consider the many important reasons” that motivated the Obama-era reforms, including “ensuring the accurate calculation of royalties from the development of public resources, fulfilling [the Interior Department’s] trust responsibilities on tribal lands, and ensuring industry compliance with legal obligations.” Instead, the Trump administration intends, in its own words, to “return to the definitions and practices that had been in place since the 1980s,” which the attorneys general note gave rise to “pervasive problems ... that undermined [the Interior Department’s] ability to ensure that it was receiving full compensation for the development of fossil fuel resources on public lands.”

As AG Becerra and AG Balderas warn in their comments, “[r]everting back to the old, flawed system would deprive taxpayers in California and New Mexico of revenue that is largely spent to support the states’ schools, with no indication that other steps would be taken to make up for this lost revenue.” The Trump administration acknowledges that its proposed rollback would result in “an estimated $42.1 million annual decrease in royalty collections,” which the attorneys general note includes “millions of dollars in additional annual royalties that states are due from the development of public resources within their borders.”

Administrative Costs Mumbo Jumbo — The Trump administration has frequently cited administrative burdens on industry as part of its justification for targeting the 2016 Valuation Rule, yet it has entirely failed to refute the Obama administration’s findings that the rule would yield an estimated $3.61 million annual reduction in administrative costs. Moreover, as AG Becerra and AG Balderas note in their comments, the Trump administration itself has acknowledged that its proposed rollback of the Valuation Rule would actually increase annual administrative costs by an estimated $2.58 million.

More information on the Valuation Rule and related litigation is available on our website.

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About the State Energy & Environmental Impact Center:
The State Energy & Environmental Impact Center at NYU School of Law is a nonpartisan academic center at NYU School of Law. The Center is dedicated to working towards a healthy and safe environment, guided by inclusive and equitable principles. The Center studies and supports the work of state attorneys general (AGs) in defending, enforcing, and promoting strong laws and policies in the areas of climate, environmental justice, environmental protection, and clean energy.