Energy Scorecard

This week, Congress will consider amendments to H.R. 2282, FY 2016 Interior, Environment, and Related Agencies Appropriations Bill. An amendment offered by Rep. Pearce would prohibit the Department of the Interior from using funds to increase the royalty rate for oil and natural gas produced on federal lands.

Recently, Democrats have pushed the Bureau of Land Management to consider raising the royalty rate for oil and natural gas production on federal lands. House Democrats, along with the Center for American Progress, argue that American taxpayers aren’t getting a fair shake for resources produced on federal lands. They advocate raising the royalty rate from 12.5 percent to 18.75 percent of drilling operations’ production value.

BLM recently closed a public comment period for their Annual Notice of Proposed Rulemaking, which allowed for public comments on various rules and regulations, including “… comment on potential changes that would provide the BLM with the procedural flexibility to change the royalty rate in response to market conditions consistent with the procedure for offshore oil and gas leases.”

The answer to increasing taxpayer returns isn’t in raising the royalty rate. What is needed is streamlining the permitting process and slashing red tape that discourages production and investment. BLM should look at what is happening on non-federal and private lands: since FY 2010, oil production on private and state lands has increased 89 percent, and natural gas has increased 37 percent. Conversely, oil and natural production on federal lands has decreased 10 percent and 31 percent, respectively, in the same period. Had production on federal lands tracked with the increases on state and private lands, taxpayers would have gained an additional $24.47 billion in federal royalty revenues, which is more than four times the revenue that would come from BLM raising the royalty rate.

Instead of raising taxes by increasing the royalty rate, BLM should address the real problem: stifling regulation and an ineffective permitting process. The American Energy Alliance urges members to vote YES on the Pearce amendment. It will be included in our American Energy Scorecard. YES is the pro-market, pro-taxpayer, pro-energy vote.