House Democrats are poised to deliver on President Joe Biden’s calls to reform drilling for oil and gas on public lands and waters by raising costs on producers and imposing stricter regulatory requirements.
Democrats on the Natural Resources Committee, which oversees energy production on federal lands, voted 24-13 late Thursday to pass their portion of the party’s $3.5 trillion reconciliation infrastructure and social spending package.
NATURAL GAS BLOCKED FROM DEMOCRATS’ CLEAN ELECTRICITY PLAN
All Democrats on the panel supported the $25.6 billion bill over the unanimous opposition of Republicans, who proposed dozens of amendments to muzzle the measures targeting fossil fuels, which Democrats derided as “poison pills.”
The committee worked through the bill all day Thursday following a marathon meeting last week.
“Democrats fully understand the historic role we’re playing with this reconciliation. We’re going to do what it takes. It’s not going to be won by attrition, it’s not going to be won by sabotage,” said Chairman Raul Grijalva of Arizona.
The sprawling bill contains a suite of provisions sought by Biden as part of his aggressive ambitions to address climate change. At the start of his presidency, Biden signed an executive order imposing an indefinite pause on issuing new oil and gas leases on federal lands and waters, a step toward fulfilling a major campaign promise to ban new leases altogether.
But he has since moved to restart leasing because of a court order that found the pause to be illegal.
Democrats’ bill would raise the royalty rates onshore drillers pay to extract oil and gas from federal land from 12.5% to 20%. Offshore leases would also be raised to 20%.
The measure increases the minimum bid for oil and gas leases from $2 an acre to $10 an acre and cuts the length of fossil fuel lease terms in half.
It strengthens bonding requirements on operators — meaning that when a company goes bankrupt, there is more assurance they could foot the bill to reclaim their wells — and assesses a new royalty on all extracted methane from oil and gas operations on public lands and waters.
The bill would also end the practice of “uncompetitive leasing” that allows companies to secure leases unsold at auction without paying a bonus bid. And it would stop drilling in Alaska’s Arctic National Wildlife Refuge by including a provision overturning lease sales approved as part of Republicans’ 2017 tax cut bill.
Committee Democrats say the package of reforms would provide a fairer return to taxpayers and reorient the use of public lands away from fossil fuel production to other practices, such as clean energy development.
The royalty rates companies pay to the government to drill on public onshore lands haven’t been raised since the 1920s.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
But Republicans and some centrist Democrats worry the measures would cause companies to stop drilling for oil and gas on federal lands and waters, depriving fossil fuel-dependent states of revenue.
Democrats’ “true motive is to make producing energy on federal lands so unattainable that the federal leasing program virtually will no longer exist,” said Rep. Yvette Herrell, Republican of New Mexico.
