American Oil and Gas Reporter - March 2017 - 18

IndustryDigest
the 2017 valuation rule until the
litigation is resolved."
Alliance President Kathleen Sgamma
thanks Gould for postponing the rule,
which she likens to the Dodd-Frank
Wall Street Reform and Consumer
Protection Act that President Obama
signed into law in July 2010. "The
valuation rule will do to small
independent oil and natural gas
producers operating on federal lands
what Dodd-Frank did to community
banks: render the federal regulatory
environment so complex that small
businesses cannot possibly comply,"
Sgamma warns. "Small companies will
be unable to take many legal
deductions, and will pay royalties at a
higher price than they actually can
obtain in the market. Postponing the
rule is a wise step, considering the
ongoing litigation."
The National Ocean Industries
Association points out the rule bans the
use of non-arm's-length sales to
determine royalty valuations, and
instead employs "market-driven"
calculations. "Under the rule, DOI may
adjust a company's oil and gas royalty
valuations if they are 10 percent below
'reasonable market prices' for similar
quality oil and gas in nearby locations,"
NOIA describes. "The rule also
removes an earlier policy that let oil and
gas companies claim royalty deductions
for business-related expenses."
Sgamma praises the American
Petroleum Institute and other parties
involved in litigating the rule, which she
maintains, "makes reporting horribly
complex without changing the royalty
valuation in many circumstances, thus
increasing the burden without a revenue
benefit to the government." ❒

U.S. Army Corps Grants
Easement For DAPL
WASHINGTON-The path to
completing the Dakota Access Pipeline
cleared considerably in February after
the U.S. Army Corps of Engineers
granted Dakota Access LLC an
easement to lay pipe under Lake Oahe in
North Dakota and a federal judge denied
a preliminary injunction to stop it.
Parent company Energy Transfer
Partners confirmed Feb. 8 that it had
received the easement the Army Corps
had denied it during the Obama
18 THE AMERICAN OIL & GAS REPORTER

administration. On Nov. 14, the corps
announced it was suspending the
easement while it conducted additional
environmental reviews "in light of the
history of the great Sioux nation's
dispossessions of lands, the importance
of Lake Oahe to the tribe, our
government-to-government relationship,
and the statute governing easements
through government property" (AOGR,
December 2016, pg. 37).
But on Jan. 24, President Trump
signed a presidential memorandum
instructing the Army Corps to "approve
in an expedited manner . . . requests for
approvals to construct and operate the
DAPL" (see story page 28).
American Petroleum Institute
President and Chief Executive Officer
Jack Gerard called the corps' action
"welcome news (that) shows the new
direction being taken by the
administration to support jobs and the
rule of law."
He added, "Certainty in the
permitting process is critical to
harnessing the benefits that come from
our nation's energy infrastructure so
that American consumers and workers,
and the environment, can continue to
benefit from our nation's energy
renaissance."
The Cheyenne River Sioux Tribe
sought a restraining order from the U.S.
District Court for the District of
Columbia to stop construction, but on
Feb. 13, Judge James E. Boasberg
denied its request. According to
published reports, the Cheyenne River
Sioux, which are a party with the
Standing Rock Sioux Tribe in other
pending court challenges to DAPL,
argued the pipeline would interfere with
their indigenous freedom to practice
religion in pure, clean water.
"The mere presence of oil in the
pipeline renders the waters religiously
impure," tribal lawyer Nicole
Ducheneaux is quoted.
Although Judge Boasberg denied the
restraining order, published reports say
he did promise to rule on the tribe's
religious challenge before oil ran
through the pipeline, and ordered ETP
to provide the court weekly updates on
when oil would begin to flow through
the river-crossing pipe.
A company spokeswoman had told
reporters previously that it would take
approximately 60 days to drill under the
lake and another 23 days to fill the line

to Patoka, Il.
Meanwhile, Standing Rock Sioux
attorney Chase Iron Eyes reportedly
vowed the tribes would "continue to
push legal remedies through the courts,
seek an injunction against the pipeline,
and push for the full environmental
impact statement to be completed." ❒

Nebraska Permitting
Resumes For Keystone
LINCOLN, NE.-TransCanada
Corporation says it has filed an
application with the Nebraska Public
Service Commission seeking approval
for the Keystone XL Pipeline route
through the state.
"This application has been shaped
by direct, on-the-ground input from
Nebraskans," relates TransCanada
President and Chief Executive Officer
Russ Girling. "The thousands of
Nebraskans we have met over the last
eight years understand the value of this
project and what it means to the state.
As we have said consistently, safety and
a respect for the environment remain
our key priorities. We are listening and
acting on what we have learned."
The company notes that the
Nebraska Department of Environmental
Quality in 2013 approved the proposed
route, which avoids the area defined as
the Nebraska Sandhills. The review also
included consultations with landowners
along the pipeline corridor, where more
than 90 percent have signed voluntary
easements to construct the pipeline,
TransCanada indicates.
Permitting requirements restrained
the Keystone project for eight years
before President Obama in November
2016 denied a permit for the 1,187-mile
pipeline, which would transport oil
from the tar sands in Alberta, Canada, to
connections near Steele City, Ne., for
eventual shipment to Gulf Coast
refineries. Obama's decision prompted
TransCanada to withdraw its original
route application to the Nebraska Public
Service Commission (AOGR, Dec.
2015, pg. 30).
TransCanada Corporation has
resubmitted its application for a federal
cross-border permit at the Trump
administration's urging. Trump also has
given the State Department a deadline
by which it must make a determination
and directed it to consider the January
American Oil and Gas Reporter - March 2017

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