US Senators Chuck Grassley (Iowa) and Tom Udall (New Mexico) have introduced a new bill that is being touted as the first step towards ending subsidies for oil and gas companies.
The bipartisan Fair Returns for Public Lands Act of 2020 updates the antiquated public lands royalty system in the US to ensure that taxpayers get fair returns on leases of public lands for oil and gas production.
The legislation will modernise the public lands leasing system since royalty rates were set 100 years ago, in 1920. It will also increase both the share of royalties that taxpayers receive from public lands leasing as well as rental rates.
“Public lands and their natural resources belong to the American people, and it’s only fair to ask those who profit from them to return a fair share to taxpayers,” commented Udall. “Oil and gas companies are paying significantly higher royalty rates offshore and on many state and private lands, and there is no need to give federal onshore producers a sweetheart deal at a time of record US production along with rising climate change and habitat impacts.
“After one hundred years of the Mineral Leasing Act, it is high time for real reform that gives state and federal taxpayers their fair share of royalties that fund important education, infrastructure, public health and environmental needs in communities across the country and particularly in the West. I am proud to introduce this common-sense, bipartisan bill with Senator Grassley to ensure that New Mexicans and the American people get a fair deal when they let for-profit companies operate on their public land.”
Grassley added: “Low royalty rates on oil produced on federal lands has deprived the federal treasury of billions of dollars. Today marks 100 years since Congress passed the Mineral Leasing Act of 1920. Since then, the royalty rate has not been addressed. This is just one example of Big Oil saying it wants a free market, but lobbying for taxpayer-funded corporate welfare. It’s time for my colleagues in Congress to end this oil company loophole, end the corporate welfare and bring oil leasing into the 21st century.”
Research carried out by the Congressional Budget Office and Government Accountability Office has found that modernising public lands royalty rates for oil and gas could increase federal revenues by up to $200 million (€183.6 million) over the next 10 years, with little to no impact on overall production.
The bill has been welcomed by the US biofuels industry, with Renewable Fuels Association president and CEO Geoff Cooper thanking the Senators for targeting Big Oil’s subsidies.
“We applaud Senators Chuck Grassley and Tom Udall for introducing bipartisan legislation today that closes a century-old tax loophole exploited by oil companies and takes a step toward levelling the playing field for all transportation fuel producers,” Cooper said. “Study after study show that the oil and gas industry benefits each year from billions of dollars in hidden subsidies, write-offs, incentives, and other giveaways. If oil producers and refiners truly want a ‘free market’ in the energy sector, they should start by giving up the subsidies and tax preferences that have robbed state and federal coffers for 100 years or more. We hope this bill sets lawmakers on a path toward comprehensive energy tax policy reform, and that the end result is a fair and open market that offers true competition and consumer choice.”
A copy of the bill can be found here.
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