A U.S. Department of the Interior committee voted Feb. 28 to recommend to Secretary Ryan Zinke that the agency lower royalty rates for federal offshore oil and gas drilling, to spur production.
The agency’s royalty policy committee voted unanimously to lower the rates to 12.5% through 2024. The existing rate of 18.75% was set during the administration of former President George W. Bush.
The panel, which is made up of department and state officials, tribal representatives, and energy companies, also voted to increase the amount of acreage available for offshore oil and natural gas leasing in the outer continental shelf.
The Houston meeting was aimed at updating around a dozen federal royalty rules, which guide energy and mineral production in the United States.
The committee was formed last year to advise Zinke on whether the government was getting a fair price from resources companies for their use of public land. He will take its recommendations into account.
The panel also voted to approve a proposal letting coal companies that mine on federal land set their own rates for coal used to calculate royalties.
Zinke last year halted an Obama-era rule that had required coal companies to pay royalties on sales to their first unaffiliated customer. The rule, which had been intended to close a loophole that had let companies sell coal to its own subsidiaries at deflated prices, was criticized by Zinke as confusing.
Randall Luthi, president of offshore energy lobby group the National Ocean Industries Association, said at the meeting that existing production offshore was “declining and at a very quick rate” and that lowering royalty rates should spur new activity.
Pam Eaton, an advisor to conservation group Wilderness Society, attended the meeting as an observer.
She said in comments after formal presentations that she wanted to remind the committee that its mission was “to ensure the public receives the full value of the natural resources produced from federal lands.”
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