Letter to U.S. Department of the Interior (DOI) Secretary David Bernhardt - Scalise, Louisiana Colleagues Urge DOI to Expedite Royalty Relief Process

Letter

Dear Secretary Bernhardt,
Under the Trump Administration, America has become energy dominant. This
achievement has made America more secure, resulted in lower energy prices for families and
small businesses, and created thousands of good-paying American jobs. Your leadership has
been integral to this progress, as well as efforts to lead the industry through the current crisis, and
we hope that you will use every tool at your disposal -- including expedited royalty relief on
federal lands and waters -- to ensure that the COVID-19 pandemic doesn't result in a further
crippling of America's oil, natural gas, and coal sectors. We must ensure that when our country
emerges from this pandemic, America will continue to be the dominant energy producer in the
world.
As you are aware, the crash in global demand from the COVID-19 pandemic, combined
with Saudi Arabia and Russia flooding the market with cheap crude, has created a worst-case
scenario for many domestic energy producers. Because of this worst-case scenario, energy
producers are having to shut off production, cut investments, and lay off many of their
employees. Furthermore, these dire circumstances are acutely felt by the thousands of small
businesses and suppliers who provide services and supplies to energy producers.
Forty-five percent of drilling rigs were idled from mid-March to late April, the worst sixweek period ever, and global oil and natural gas capital expenditures are expected to drop by
$100 billion in 2020. Further, oil prices have decreased by two-thirds since the beginning of the
year, with prices dropping below zero for the first time in history, and global oil demand has
decreased by thirty to forty percent. Coal-fired electricity generation and coal consumption have
been cut nearly in half since the start of 2020, and the Energy Information Administration
projects that coal production will fall by more than twenty percent this year.
We appreciate the work you have done to encourage energy producers, both onshore and
offshore, to apply for royalty relief on a lease-by-lease basis. However, we encourage you to take
additional action to streamline and expedite this process as soon as possible. We are concerned
that the current process is unnecessarily onerous and lacks the clarity needed to provide swift
relief. We urge you to consider options like allowing a company to "batch" a series of leases in a
singular application and setting a timeline by which applications must be acted upon by the
agencies. Further, it is our understanding that the offshore royalty relief guidance narrows what
can be used as an "allowable expense" when determining if a lease is entitled to royalty relief.
We urge you to define such expenses in a manner consistent with Generally Accepted
Accounting Principles. While the current process is a good first step, we would like to work with
you to implement these additional reforms to help keep businesses afloat.
The United States has benefitted greatly from the energy security and economic progress
made possible through a strong American energy sector -- from cheaper energy for American
families and thousands of high-paying jobs, to a resurgence in domestic manufacturing and
strengthened geo-political position, to the billions of dollars received by federal, state and local
coffers through the royalties and other fees paid by producers. We know you share our
commitment to ensuring all of these benefits are here for the long-term. Thank you for your
attention to this matter, and we look forward to continuing working with you to help stabilize
this vital industry.