Top House and Senate Democrats warned Interior Department Secretary Ryan Zinke on Tuesday night to not cut the royalty rate oil and gas companies pay for offshore drilling in federal waters.
The Interior Department’s Royalty Policy Committee on Wednesday is holding 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 U.S. energy production in federal waters.
The proposed amount is the lowest possible rate the government can charge for offshore leases.
“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 ranking member of 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 had 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.
Zinke would have to approve any royalty rate changes. He 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.
The royalty panel also on Wednesday will consider a proposal that would let coal companies set their own rate for coal in royalty calculations.
Zinke last year suspended an Obama administration’s rule that the royalty rate be based on market prices for coal.
