Lawmaker joins push to up cost of drilling

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By Edward Felker

A powerful congressional chairman has joined a growing number of Democrats who want to sharply increase the cost of drilling leases that the government provides on federal lands, a move vigorously opposed by Big Oil and Republicans.

Rep. Nick J. Rahall II, West Virginia Democrat and chairman of the House Natural Resources Committee, has proposed a plan to boost royalty rates by 50 percent and to cut the lease periods to five years from the current 10 years or more. His recommendation would be part of a sweeping overhaul of the $22 billion, scandal-tarred oil and gas drilling program that the Interior Department oversees.

The plan also appears in line with the broader energy goals of Interior Secretary Ken Salazar, who is conducting a review of the Interior Department's handling of oil and gas leases and royalties as the House prepares to push through a bill to address climate change and the Senate works on its own energy legislation.

Mr. Salazar's office did not respond to a request for comment about the Rahall plan. Mr. Salazar has been a vocal advocate of developing renewable energy, such as wind and solar, on federal lands. He moved to cancel oil and gas leases approved by the Bush administration, including 77 natural gas leases on 100,000 acres in Utah, though he agreed to reconsider them to resolve a dispute he has been having with Sen. Robert F. Bennett, Utah Republican.

Mr. Salazar has said he favors higher royalty rates in return for the extraction of oil and natural gas on federal lands, where rates are generally lower than on private lands. But he is not planning to announce major changes in the federal program until later this year.

Mr. Rahall has yet to introduce a formal bill, and a committee spokeswoman declined to comment on Mr. Rahall's timetable for further action. Still, with House leaders hoping to bring a climate-change bill to the House floor before August, Mr. Rahall is widely expected to move quickly to ensure his plan can be added to that legislation.

"The committee has wanted to get involved in this, and they are feeling pressure from the environmental community," said Dan Naatz, vice president for federal resources and political affairs at the Independent Petroleum Association of America. The association represents smaller independent drillers. It opposes the plan because, he said, the measure would raise costs and make it more difficult for its members to attract financing for drilling projects.

The plan, written by Democratic staffers on the committee, is intended to address what is says are unethical relationships between Interior Department leasing managers and the oil and gas industry. In addition to shorter lease terms, it would raise royalty rates to a minimum of 18.75 percent, the same rate charged for offshore oil and gas extraction.

The bill "would reform the onshore oil and gas leasing program in order to provide a more coordinated, efficient and competitive use of oil and gas resources," according to an outline of the plan provided by the committee.

Mr. Rahall's plan fits neatly into the broader efforts of the Obama administration and congressional Democrats to make a "dramatic shift" in energy production toward green sources, said Sharon Buccino, director of land and wildlife programs at the Natural Resources Defense Council.