Top Dems: Raise drilling royalty rates

Two House Democrats asked the Bureau of Land Management on Friday to increase the royalty rates for gas and oil drilling on federal land. 

Reps. Raúl Grijalva (D-Ariz.), the ranking Democrat on the House Natural Resources Committee, and Alan Lowenthal (D-Calif.), said the BLM should consider raising its minimum royalty rate for oil and gas drilling from 12.5 percent to 18.75 percent.

{mosads}They said the agency should consider “other royalty-rate structures” like a sliding scale based on oil prices, and they suggested regulators should be able to raise royalty rates on individual lease sales without having to go through a formal regulatory process.

“Ensuring a fair return to the American taxpayer for the extraction of their resources from public lands is one of the most critical stewardship tasks of the Bureau of Land Management,” the lawmakers wrote in a letter to BLM Director Neil Kornze.

The BLM announced in April that it was considering raising the royalty rate for oil and gas drilling on federal lands. The current level is 12.5 percent of drilling operations’ production value, lower than the royalty rate in several states and the federal rate for offshore drilling.

Friday is the last day the BLM is accepting comments on the proposal. The oil industry pushed back on the plan when the bureau announced it, and Grijalva’s Republican counterpart on the Natural Resources Committee, Chairman Rob Bishop (R-Utah), opposes it as well, calling it “another regulatory assault from the Obama administration” in April. 

Grijalva and Lowenthal, the ranking member on the Natural Resources energy and mineral resources subcommittee, said the BLM should also increase bonding levels and civil penalties for companies that violate lease terms. 

“In general, we are concerned that the current leasing process is excessively generous to oil and gas companies,” the lawmakers wrote.