An Interior Department advisory committee voted unanimously Wednesday to cut the royalty rate that oil and gas companies pay for offshore drilling in federal waters.
The Interior Department’s Royalty Policy Committee held a meeting in Houston to evaluate a proposal to lower the royalty rate companies pay on offshore drilling from 18.75 percent to 12.5 percent to promote more offshore production.
The proposed amount is the lowest rate the government can charge for offshore leases.
Interior Secretary Ryan Zinke will have the final say on whether to approve the lower rate. An Interior Department spokeswoman said a decision is not imminent.
“The department will not be making a decision on this today,” Heather Swift, the spokeswoman, told the Washington Examiner. “We look forward to reviewing the committees recommendations after they have been formally received.”
Top congressional Democrats have warned Zinke not to lower the royalty rate, arguing the proposal would prevent the government from claiming billions of dollars in revenue.
“This proposal would amount to a giveaway to some of the most profitable companies in the world and rob taxpayers of potentially billions of dollars of revenues over the life of the leases,” said Sen. Maria Cantwell of Washington, the top Democrat on the Senate Energy and Natural Resources Committee, and Rep. Raul Grijalva of Arizona, the top Democrat on the House Natural Resources Committee.
In a letter to Zinke, Cantwell and Grijalva say the royalty committee is “woefully stacked with resource extraction interests, misrepresenting the public and the scope of issues at stake for a full and fair evaluation of potential royalty reforms.”
Zinke appointed members to the advisory committee, selecting members from the Interior Department, states, tribes and oil, gas and coal companies. He revived the committee after former President Barack Obama let it lapse during his second term.
The royalty committee’s charter says that it “will provide advice” on “the fair market value” of energy and mineral development on public land.
The offshore royalty rate was last raised twice during the George W. Bush administration, to the current rate of 18.75 percent.
The Trump administration has made offshore oil and gas drilling a major priority, proposing a plan to make 90 percent of total acres in federal waters available for leasing in the years from 2019 to 2024.
