ELR Citation: 51 ELR 20172
No(s). 19-CV-120-SWS, 19-CV-121-SWS, and 19-CV-126-SWS (D. Wyo. Sep 8, 2021) (Skavdahl, J.)

A district court upheld in part and vacated in part a 2016 rule of the Office of Natural Resources Revenue (ONNR), which effectively changed how royalties owed to the federal government are calculated on oil, gas, and coal produced from federal land and offshore leases as well as coal produced from Indian land. Petitioners argued the rule was arbitrary and capricious and exceeded ONNR's authority, and sought to have it vacated. The court found that ONNR did not exceed its authority by enacting the rule with respect to the oil- and gas-valuation provisions, nor did it act arbitrarily and capriciously by rescinding the deep water policy, implementing caps on transportation and processing allowances, implementing a new index pricing option for non-arm's-length gas transfers, and requiring written, signed contracts. It did, however, find that the coal-valuation provisions of the rule were arbitrary and capricious because they valued coal based on the "altogether different, and highly regulated, commodity of electricity." It therefore upheld the federal oil-valuation and gas-valuation provisions and vacated the federal and Indian coal-valuation provisions.