Lawmaker joins push to up cost of drilling

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Mr. Rahall’s bill would make numerous other changes to federal oil and gas leasing. Among other actions, it would :

• End the “payment-in-kind” option that allows companies to pay royalties in oil and gas rather than cash. Mr. Salazar has said he would consider ending the program.

• Tighten royalty payment rules through new penalties, elimination of interest on overpayments, and other adjustments.

• Consolidate Interior Department leasing activities into a new Office of Federal Energy and Mineral Leasing, and end leasing by the Minerals Management Service and the Bureau of Land Management.

• Require the adoption of five-year plans for oil and gas leasing on federal lands similar to those developed for offshore leasing.

• Create an Oceans and Coastal Trust Fund funded by revenues from Outer Continental Shelf leases and royalties.

• Impose new environmental restrictions to curtail pollution from offshore oil drilling.

• Impose royalties for the first time on uranium mining.

The Interior Department’s management of oil and gas leasing has been the subject of a series of critical reports by the Government Accountability Office, which has called for a “comprehensive reassessment” of federal rules that investigators say fail to encourage drilling on leased lands and impose longer terms and lower rates than states and other countries.

In September, the department’s inspector general reported that “a culture of ethical failure” had taken hold at the Minerals Management Service office in Lakewood, Colo., where 13 employees managing the $4.3 billion royalty-in-kind program were purported to have ignored federal ethics rules,engaged in sex and drug abuse among themselves and with industry representatives, and accepted gifts from those same representatives. The department terminated and demoted employees in the office last fall but did not provide specifics.

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