White House proposes royalty, permitting changes on energy development

Interior Secretary Ken Salazar called the so-called “Energy Security Trust” a “critical proposal by the president.”

The trust would create a dedicated basic research fund designed to spur innovations to wean the transportation sector off oil.

The administration wants $2 billion from offshore oil-and-gas revenues through the next decade for the trust, which Salazar said would be offset by other revenues. Those funds would come from the proposed permitting and royalty changes, already scheduled offshore leases and anticipated oil-and-gas price increases.

Despite Salazar’s promise of offsets, Republicans are unlikely to agree to let those funds go to the trust rather than the general Treasury, which is their current destination.

The GOP would probably require the administration to expand federal oil-and-gas drilling as a condition for approving the trust. But the White House has said it won’t do that, even as a compromise to secure approval for the trust.

The budget reiterated that by touting the president’s five-year offshore leasing plan, which the administration says makes 75 percent of recoverable resources available for drilling.

Overall, Interior’s budget would hit $11.7 billion, a 4 percent increase compared with the 2012 enacted level. Much of the increase comes from the proposed royalty and permitting changes for energy production.

Some other changes include a per-acre fee on nonperforming leases and shorter primary leasing periods, which the White House says will incentivize production. The budget also would eliminate royalty relief for energy firms and simplify royalty valuation.

But those items — not to mention Obama’s budget as a whole — are unlikely to gain traction with Republicans, who have sought to reduce regulations and fees for oil-and-gas development.

“President Obama has already successfully blocked energy production on federal lands and the policies in this budget would only make it worse,” House Natural Resources Committee Chairman Doc Hastings (R-Wash.) said in a Wednesday statement.

The oil-and-gas industry also blasted the proposed royalty and permitting changes on Wednesday.

“The administration claims to support oil and natural gas development on federal lands, but the proposed list of increased fees, royalties and regulations will only make it more burdensome for small producers to operate on federal lands and waters,” Independent Petroleum Association of America Chairwoman Virginia Lazenby said in a statement.

— This story was updated at 2:09 p.m.

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