The bill before us supports clean energy and emerging technologies, so this is the perfect opportunity to update an outdated aspect related to a legacy energy source.
Senator Udall and I have an amendment that will close a loophole in federal energy policy.
I’ve long supported renewable and alternative sources of energy and so I agree with the aims of the Murkowski-Manchin Energy Bill. The amendment that Senator Udall and I have introduced is the same as the bipartisan bill we introduced last week. The Fair Returns for Public Lands Act was introduced 100 years to the date of the Mineral Leasing Act of 1920.
This amendment would increase the royalty rate on federal lands from 12.5 percent to 18.75 percent.
A royalty is what the oil company will pay to a mineral owner – in this case the American taxpayer – for the right to extract oil and natural gas from their land.
The legislation modernizes the public lands leasing system for the first time since royalty rates were first set in 1920.
The legislation increases both the share of royalties that taxpayers receive from public lands leasing as well as rental rates.
The new rental rate we are offering reflects the current fair market value, while the bill also establishes minimum bidding standards to lease public lands that will stay in line with inflation.
This bill is a simple fix by making federal leasing rates the same – whether you are on land or off-shore. The royalty rate the bill offers is very comparable to what current leases are for oil-producing states on their state-owned land.
The state of Texas charges a 25 percent royalty on its state lands, while states in the Rocky Mountain West charge royalties between 16.67 percent and 18.75 percent.
The royalty rate on federal public lands is more than one-third lower, at 12.5 percent. The current regulatory system allows companies to get a sweetheart deal on federal public lands, and Senator Udall and I are asking our colleagues to fix this for the American people.
According to studies done by the Congressional Budget Office (CBO) and Government Accountability Office (GAO), modernizing public lands royalty rates for oil and gas could increase federal revenues by as much as $200 million over the next decade with little to no impact on production.
It is time for my colleagues in Congress to end this oil company loophole and bring oil leasing into the 21st century.