U.S. House Panel Studies Proposal to Alter Federal Leasing

Source:

"The bill's draft also would change the federal royalty program in several ways. . ."

A legislative draft that would substantially change federal oil and gas leasing has been circulating around the U.S. House Natural Gas Resources Committee.

The proposal by the committee's majority would consolidate the U.S. Bureau of Land Management and U.S. Minerals Management Service, according to a copy that OGJ obtained on May 29. It would shorten lease periods from 10 to 5 years, increase onshore royalty rates to 18.75%, require diligent development of leases, and impose best management practices on new leases.

Offshore, the proposed legislation would institute a "no discharge" requirement for new leases. It also would establish what the draft calls "a production incentive fee" on existing onshore and offshore leases that are not producing in their later years to encourage production and discourage speculative holding of federal resources.

The bill's draft also would change the federal royalty program in several ways including elimination of royalties-in-kind, ending federal reimbursement of interest accrued on overpayments lessees erroneously make, revision of several ambiguous legal provisions which the bill's proponents say hinder accurate accounting, and increased penalties for inaccurate royalty reporting and payments.

The draft also would establish regional ocean councils and onshore statewide teams modeled on existing voluntary collaborative management efforts such as the Northeast Regional Ocean Council and the Western Governors Association's Renewable Energy Zones project.

OCS regional planning councils would be established for the Atlantic, Pacific, and Gulf of Mexico regions. These councils would prepare marine spatial strategic plans to guide OCS energy development amid other activities. The plans would then incorporate into the 5-year OCS leasing plans that are already being developed under the OCS Lands Act.

Onshore, the draft proposes creating federal-state-stakeholder teams to develop comprehensive energy plans for each public lands state. The plans would be used to guide federal land management and leasing decisions. The bill also would create federal leasing programs for wind, solar, and uranium on public acreage to create a basic framework for the various kinds of energy development.

The draft proposal also would create an oceans trust fund, which would dedicate a portion of OCS revenues to grants for coastal states and regional collaborations to protect, maintain, and restore ocean, coastal, and Great Lakes ecosystems.

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