Hinchey, House Democrats Hail Appropriations Committee's Passage of Measure to End Royalty Giveaways to Oil & Gas Companies Profiting on Public Land

Hinchey, House Democrats Hail Appropriations Committee's Passage of Measure To End Royalty Giveaways To Oil & Gas Companies Profiting on Public Lands; Prepare For House Floor Fight With Republicans Who Weakened Measure in Committee

A group of House Democrats today hailed the House Appropriations Committee's passage of an amendment to the Interior Appropriations bill for Fiscal Year 2007 that prohibits energy companies from entering into new contracts with the federal government to produce oil and gas on publicly-owned land and coastal waters unless those companies pay royalties, or user fees, to the government. The measure, which was offered during Committee proceedings yesterday by Congressman Maurice Hinchey (D-NY) and is based on Congressman Ed Markey's (D-MA) Royalty Relief for American Consumers Act of 2006, also directs the Interior Department to attempt to renegotiate existing agreements that provide energy companies with billions of dollars in royalty-free oil and gas.

The Democrats acknowledged they would need to watch Republicans closely since a procedural move could be used to strip the royalty relief ban from the Interior Appropriations bill before it even comes to the House floor next week. They also plan to restore a provision that Committee Republicans eliminated yesterday, which would have enabled the Interior Department to ban big oil and gas companies from future federal government leases if those companies refused to renegotiate their existing royalty-free leases.

"For years, oil and gas companies have taken advantage of the American people by not paying royalties, or user fees, in exchange for selling natural resources derived from public land and waters," Hinchey said. "Energy company profits are at record levels and CEO's are walking away with obscene retirement packages thanks to the surplus in money these giant, ruthless companies have, which is partly due to the billions of dollars saved from royalty relief. The greed exhibited is sickening and it's time for the American people to get their fair share in return from these companies. We will aggressively be fighting to keep my amendment intact, and are prepared to aggressively fight on the House floor if need be to end this unfair subsidy for oil and gas companies."

"America's consumers are being tipped upside down and having money shaken out of their pockets by Big Oil companies," said Rep. Markey, a senior Democrat on the House Energy and Commerce Committee and Resources Committee. "It is about time we put an end to these tax breaks for these companies that are making money off of consumers hand over fist."

At a Capitol Hill press conference today, the Democrats highlighted the need to stop energy companies from taking oil and gas from public lands and coastal waters without paying royalties, or user fees, to the federal government. The Government Accountability Office (GAO) estimates that current royalty relief provided to oil and gas companies will end up costing the federal government at least $20 billion over 25 years in lost revenue. That figure could grow to $80 billion if oil companies win a pending lawsuit that would expand the scope of royalty relief.

The Deepwater Royalty Relief Act of 1995 provided the Interior Department discretion to provide royalty forgiveness to industry in order to spur deepwater exploration when prices of oil and gas were low. That measure allowed the Interior Department to decide whether or not to put price thresholds into the leases that would trigger royalty payments once gas and oil prices reached a certain level. However, due to a clerical error, the Interior Department left out price thresholds on contracts signed in 1998 and 1999, allowing oil and gas companies to extract resources from public property without paying royalties, regardless of the price of oil or gas. Many of those royalty-free leases are starting to produce oil and gas now, at a time when Americans are paying record prices. These leases are expected to produce about $60 billion worth of energy for the oil and gas companies, but the American taxpayers will receive no royalties under current law. To make matters worse, Republicans extended the Deepwater Royalty Relief Act as part of the energy reform bill passed last summer.

"Though the amendment was unfortunately weakened, this is an important step in bringing sanity back to the royalty process," said Congresswoman Carolyn Maloney (D-NY). "With oil reaching $75 a barrel, it is imperative that Congress preserves this amendment through as the bill progresses. Currently, the government is putting dollars in the pockets of the oil and gas companies while those companies are shortchanging taxpayers by the billion. If oil companies can afford to give retiring executives $400 million packages, surely they can afford to pay taxpayers fair royalty rates."

"Even as this Republican Congress has pushed to expand oil exploration in public waters off California and off of Florida, the public still can't seem to get a fair deal," Rep. George Miller (D-CA) said. "The taxpayers are literally being robbed of billions of dollars, and Republicans in Congress have been sitting idle. Democrats will continue to fight for American taxpayers who have been paying the price for this bad policy, both on tax day and at the pump."

"I applaud Rep. Hinchey's efforts to address the outrageous giveaways to the energy industry," said Rep. Raul Grijalva (D-AZ). "His amendment is a fair, fiscally responsible, and common sense approach to addressing this situation. My constituents are rightly angry at the excessive profits and executive salaries of oil companies and I will work to ensure Rep. Hinchey's amendment remains in the final Interior bill."

Before the Interior Appropriations bill goes to the House floor next week, it must be reviewed by the House Rules Committee. The House Democrats said they were prepared for Republicans on the Rules Committee to remove the Hinchey amendment prior to sending the Interior Appropriations bill to the full House. If that happens, the Democrats said they would offer another amendment on the House floor to help fight royalty relief.

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