Energy & Environment

Manchin-led committee proposing hike to federal drilling fees

Julia Nikhinson

A key committee led by Sen. Joe Manchin (D-W.Va.) is proposing an increase in the fees paid for oil and gas drilling on federally owned lands and waters. 

The fee increase is one of several environmental provisions passed by House Democrats as part of the massive social spending and climate legislation now being considered by the Senate that appears likely to be retained by Manchin and the Senate Energy and Natural Resources Committee, which is considering its portion of the bill.

There are some differences between what the House proposed and what the Senate is considering.

The Senate panel is proposing an increase in the rate of royalties paid for onshore oil and gas production to 16 and two-thirds percent, from the current rate of 12.5 percent. This number is below the House version’s rate of 18.75 percent.

It also seeks to increase offshore drilling royalty rates from 12.5 percent to 14 percent.

The Hill obtained text of the proposal. The text was first reported by Politico and described as a draft. 

The Senate proposal also retains a House proposal to repeal drilling in the Arctic National Wildlife Refuge, home to animals like grizzly bears and polar bears and land that is sacred to the Gwich’in people. 

Drilling in the area was approved by a 2017 Republican reconciliation bill, and has met much ire from Democrats. 

And it retains a House proposal that would allow offshore wind development in areas off the Georgia, South Carolina, North Carolina and Florida coasts, rolling back Trump administration actions to bar development in those regions.

The committee text also includes royalties on all methane extracted in mining on public lands and waters.

However, language present in the House version that would have banned new offshore drilling along the East and West coasts and in the Eastern Gulf of Mexico did not appear in the committee text viewed by The Hill.

Manchin spokesperson Sam Runyon declined to confirm the authenticity of the proposal, noting via email that it “was not released by our office.”

The text comes the same afternoon that talks between Manchin and Senate Majority Leader Charles Schumer (D-N.Y.) showed signs of breaking down amid a disagreement related to the child tax credit. 

The text would be part of Democrats’ major climate and social spending package, and would likely not move without a deal to advance the bill. The party cannot afford to lose a single vote because of the Senate’s 50-50 split between the two parties. 

It follows the release of text from the Senate Finance Committee, which includes a tax credit for union-made electric vehicles that Manchin has opposed.

The text received a positive reception from left-wing groups. 

Nicole Gentile, director of public lands at the liberal Center for American Progress, said in a statement that the text is a “step in the right direction” from Manchin, a Democrat frequently at odds with the progressive wing of the party.

“Senator Manchin and his colleagues have demonstrated that they are looking out for taxpayers — not oil and gas lobbyists — and are committed to planning for the energy transition without leaving communities behind,” Gentile said in a statement Wednesday. “It is absolutely essential that the Senate get these popular and common-sense policies across the finish line.”

Tags ANWR drilling Arctic Refuge drilling controversy Build Back Better Act Charles Schumer Chuck Schumer federal lands Joe Manchin oil and gas drilling

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