Bill To Amend Mineral Lease Act, Raise Royalties And Cut Lease Sales Draws Opposition
A bill to amend fees, royalty rates, and the frequency of federal oil and gas lease sales under the federal Mineral Leasing Act received pushback Thursday in a hearing held by the House Subcommittee on Energy and Mineral Resources.
Rep. Mike Levin’s (D-Cali.) bill, “Restoring Community Input and Public Protections in Oil and Gas Leasing Act,” seeks to amend the Mineral Leasing Act, including reductions in Bureau of Land Management lease sales from scheduled quarterly sales to no more than 3 per year, and no more than once per year per field office. The bill would also set a royalty rate of 18.5 percent minimum, up from 12.5 percent.
The bill has just two cosponsors, House Natural Resources Committee Chairman Rep. Raul Grijalva (D-Ariz.), and House Subcommittee on Energy and Mineral Resources Chairman Rep. Alan Lowenthal (D-Cali.).
“Since the passage of the National Environmental Policy Act almost 50 years ago, this country has been committed to the idea that people should have a say in governmental decisions that impact their lives,” said Lowenthal in his opening statement. “This idea is particularly important when it comes to our public lands,” he added.
Subcommittee Ranking Member Rep. Paul Gosar (R-Ariz.) criticized the goal of the bill’s amendments to the Mineral Leasing Act, “all of which are designed to make oil and gas leasing on federally-owned land more difficult and to reduce domestic energy development,” he said.
“Rather than ensuring that the taxpayers receive their fair share from the extraction of federally-owned hydrocarbons, revenues will fall as companies will likely opt out of doing business with the federal government altogether,” Gosar added.
Michael D. Nedd, Deputy Director for Operations at the Bureau of Land Management, told the committee H.R. 3225 “adds new and unnecessary administrative and other burdens on oil and gas development on public lands, thereby reducing the competitive nature of the leasing process, and potentially reducing the value of bids the BLM receives for leased public lands.”
The legislation would move counter to the Department of the Interior’s policies that seek to minimize burdensome and time-consuming regulations, he said.
“The Department has issued a number of Secretarial Orders (S.O.) designed to promote timely and responsible oil and gas development on public lands, produce domestic energy security, and reduce unnecessary and burdensome regulations, while maintaining environmental protections,” Nedd said.
Increasing red tape and reducing BLM bid values would hurt many states that receive revenue—approximately 50 percent—from oil and gas development on public lands, according to Nedd. That includes $650 million for New Mexico, $90 million for Colorado, and $35 million for California in 2018 alone.
“The Department cannot support the bill as currently written,” Nedd concluded.
BLM manages 245 million surface acres in 12 western states, along with 700 million subsurface acres. Of the subsurface acreage, 57 million acres are split estate, according to the agency, where BLM manages subsurface mineral rights while the surface estate is owned privately. Currently, there are 25.5 million surface acres currently under lease for oil and gas development, with 94,000 active wells and 24,000 producing leases, according to BLM data.
Kathleen Sgamma, President of Western Energy Alliance, told the committee that the bill’s intent is duplicative and cumbersome.
“Contrary to its name, H.R. 3225 is not about restoring community input and public participation, which already exists at multiple points in the federal onshore oil and gas program,” said Sgamma. “Rather, this bill is about tying up the process in so much red tape that it will become nearly impossible for BLM to administer it and undesirable for companies to operate on federal lands. Since companies develop the energy that all Americans own on their behalf, the effect of this bill would be less leasing and royalty revenue back to them,” she said.
“With all the extra red tape and regulatory overreach, the bill should instead be named the Keep It in the Ground Act,” Sgamma added. Raising onshore royalty rates, she argued, would make federal lands “even less competitive than nonfederal lands, leading to less overall revenue to the American people.”
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Sgamma pointed to the multiple avenues for public comment on leasing and development, beginning with the Resource Management Planning (RMP) process, followed by at least one or more rounds under National Environmental Policy Act (NEPA) review.
Groups like Earthworks supported the bill’s efforts to reduce annual lease sale frequency and cap the number of lease sales per field offices at one per year.