Interior Faces Fresh Pressure to Hike Royalty Rates

MOORPARK, CA - SEPTEMBER 23: Smoke blows past oil wells at sunset on the eastern flank of the 16,000-plus-acre Guiberson fire, burning out of control for a second day as Red Flag warnings continue in southern California on September 23, 2009 near Moorpark, California. A Red Flag warning means critical wildfire weather, based on a combination of high temperatures, low humidity and Santa Ana winds, is occurring. Several large wildfires broke out in triple-digit temperatures on the first of Red Flag warnings.
National Journal
Ben Geman
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Ben Geman
Dec. 19, 2013, 11:29 a.m.

Cap­it­ol Hill Demo­crats are press­ing the In­teri­or De­part­ment to force en­ergy com­pan­ies to send more money to the gov­ern­ment when they pro­duce coal, oil, and nat­ur­al gas on fed­er­al lands.

The Bicam­er­al Task Force on Cli­mate Change, a group of lib­er­al law­makers, said in a re­port that In­teri­or’s cur­rent policies “ef­fect­ively sub­sid­ize fossil-fuel de­vel­op­ment on pub­lic land” with roy­alty rates that are too low and coal lease terms that are too gen­er­ous.

“These policies are coun­ter­pro­duct­ive to the goals of the Pres­id­ent’s Cli­mate Ac­tion Plan be­cause they sub­sid­ize a high-car­bon en­ergy source at the very time the U.S. needs to re­duce its car­bon pol­lu­tion and be­cause they fail to provide tax­pay­ers with a prop­er re­turn on these pub­licly owned min­er­al re­sources,” states the re­port is­sued Thursday.

The call for high­er roy­al­ties is part of the group’s wider set of re­com­mend­a­tions to In­teri­or for ad­dress­ing cli­mate change, such as fo­cus­ing more of the U.S. Geo­lo­gic­al Sur­vey’s re­search on cli­mate sci­ence.

Rep. Henry Wax­man, D-Cal­if., and Sen. Shel­don White­house, D-R.I., lead the bicam­er­al group.

The re­port marks the second time this week that In­teri­or has come un­der fire for roy­alty policies that crit­ics call too friendly to­ward oil and gas pro­du­cers.

A Gov­ern­ment Ac­count­ab­il­ity Of­fice re­port re­leased Tues­day said reg­u­lat­ors have been slug­gish in up­dat­ing policies that have al­lowed on­shore oil and gas roy­alty rates to re­main stat­ic. Tax­pay­ers may not be get­ting a fair re­turn on the sale of en­ergy pro­duced on fed­er­al lands, GAO warned.

In­teri­or told GAO in a let­ter that it’s craft­ing a reg­u­la­tion that will give the de­part­ment “broad flex­ib­il­ity” to set the rates.

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