January 18, 2007 

Contact: Allyson Ivins Groff, 202-225-9019

"Big Oil has been hitting the taxpayer not once, not twice, but three times. They are hitting them at the pump. They are hitting them at the Treasury through the tax code. And they are hitting them with royalty holidays," said Rahall. "Meanwhile, people back home - in my case, folks in Beckley, Logan, and Welch - stand in their work boots pumping precious, costly gas into their tanks, while energy lobbyists scuttle about wanting more."

H.R. 6 includes two components that will roll back the unnecessary tax benefits and costly federal oil and gas leasing provisions included in the Energy Policy Act of 2005. The legislation will also correct the botched leases issued by the Interior Department between 1998 and 1999, and send a clear message that these abuses will no longer be tolerated. The Government Accountability Office (GAO) estimates this blunder, which erroneously allowed lessees off the hook for making royalty payments, could cost the Federal Treasury up to $10 billion in revenues.

"As we warned back in 1995, this was nothing but an unwarranted give-away of public resources, paying the companies to do what they would do anyway - drill for oil," Rahall said.

The core of the issue lies in the Deep Water Royalty Relief Act of 1995, which sought to encourage oil companies to drill offshore in the Gulf of Mexico by allowing them to avoid paying royalties to the American taxpayers for the extraction of publicly-owned resources. However, the Interior Department erred in the administration of the law by failing to outline a threshold in leases issued between 1998 and1999 to cut off royalty relief when market prices were high.

"This is no small matter. These are public resources. The names of every American are on the deeds to these lands and waters where this drilling for oil and natural gas takes place," Rahall said. "Royalties from this production contribute a significant amount to the Treasury, nearly $8 billion in the last fiscal year - and it would be more if it were not for all of the mismanagement at Interior."

The CLEAN Act will impose a fee on the holders of the royalty-free 1998 and 1999 leases unless the companies agree to renegotiate them to include royalties. According to Congressional Budget Office (CBO) projections, these provisions would raise $6.3 billion over 10 years - funds which can be used to finance renewable and alternative energy initiatives. The bill will also repeal the extension of the original 1995 royalty relief provision contained in the Energy Policy Act of 2005.

"Indeed, over the last few years, we have suffered an unprecedented assault on America's resources and on American taxpayers under the guise of contributing to our energy security," Rahall said.

"The passage of this legislation is a critical step in standing up for the integrity of America's resources. In ending corporate welfare. In ushering in a new dawn, a new era, in the management of our public energy resources."