House OKs pursuit of lost oil royalties

The House yesterday passed an energy policy aimed at getting back more than $10 billion in federal royalty payments and eliminating tax relief and other subsidies that oil companies have enjoyed for the past decade.

The Clean Energy Act, which passed on a 264-123 vote, would create a fund called the Strategic Energy Efficiency and Renewables Reserve using the recouped oil dollars. The reserve also would be used to fund more investment in renewable ethanol, wind, hydrogen and biofuels technologies, as well as energy conservation programs.

The energy bill represented the fulfillment of Democrats’ promise to pass a package of six bills in the first 100 legislative hours of Congress.

House Speaker Nancy Pelosi, California Democrat, said her party wasn’t finished and announced that she would create a Select Committee on Energy Independence and Global Warming.

“I have also instructed my committee chairs to hold hearings so that, by July 4, we will have a package of bills that will truly get us to energy independence in 10 years.”

Democrats for years have targeted oil companies that bought and signed federal land leases in 1998 and 1999. Because of a congressional oversight, these companies did not have to pay the royalty fee for oil when its price went above $34.73 a barrel or natural gas when its price rose higher than $4.34 for every million thermal units.

The prices for both oil and natural gas have been well above the royalty thresholds for years, with the loss of more than $10 billion in fees. Democrats say their energy bill will recoup those dollars.

“The American people are owed a fair value for the resources they own. Yet when the government gives tax breaks in the form of royalty relief to Big Oil and fails to accurately monitor its oil leasing programs, it is the American people who are footing the bill,” said Rep. Nick J. Rahall II, West Virginia Democrat.

The White House was not pleased with oil and gas incentives that Congress enacted as part of the 2005 Energy Policy Act, calling them unnecessary.

It also opposed mandatory royalty relief and prohibitions on drilling-related user fees and tax incentives allowing some oil firms an almost automatic write-off of certain geological and geophysical expenditures.

The White House, however, is against the provision to renegotiate the 1998 and 1999 leases that Democrats seek.

The House bill limits the executive’s discretionary power to modify royalties by stripping that authority from the secretary of the interior.

A report by the Interior Department’s inspector general said the department had not been performing the proper oversight to track oil royalty payments to the federal Treasury and had not engaged in due diligence to ensure oil companies were paying them.

“In the compliance reviews, the Interior Department relies on the information given to them by the oil companies,” Rep. Carolyn B. Maloney, New York Democrat, said in response to the report. “This is incompetence, cronyism and it could be corrupt.”

The Justice Department has begun an investigation into the matter.

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