House committee proposes changes to boost US oil, coal on federal lands

(Reuters) -A House of Representatives panel this week will consider sweeping changes to the nation’s oil and gas drilling programs, including requiring dozens of lease sales in the Gulf of Mexico and Alaska, that could be passed in an impending budget bill.

WHY IT MATTERS

The proposal is designed to bolster President Donald Trump’s goal to increase U.S. fossil fuel production by making it easier and cheaper to drill for oil and gas and mine for coal on federally-owned lands and waters.

WHAT’S NEXT

The House Natural Resources Committee will hold a markup hearing on energy provisions in the budget reconciliation bill on Tuesday. The hearing is a key step before legislation can advance to the Republican-controlled House floor for a vote.

The reconciliation process will allow Republicans to bypass Democratic opposition and pass tax cut legislation along party lines later this year.

KEY QUOTE

“The House Committee on Natural Resources is answering President Trump’s call to unleash American energy dominance through commonsense, science-based, and economically sound provisions in budget reconciliation,” the committee’s Republican staff said in a memo dated May 4.

BY THE NUMBERS

The proposal, unveiled last week, would mandate 30 oil and gas lease sales in the Gulf of Mexico, which President Donald Trump has renamed the Gulf of America, over 15 years. That provision would effectively replace the schedule the Interior Department has developed every five years for decades.

It would also require six offshore auctions in Alaska’s Cook Inlet and four onshore auctions in the state’s Arctic National Wildlife Refuge in the next decade, as well as lease sales every other year in Alaska’s National Petroleum Reserve.

It also proposes that after 2035, 90% of the revenues from leasing in Alaska go to the state, with the state sharing revenue with the federal government prior to that date.

The United States has held just a handful of lease sales in Alaska in recent years, largely due to a dearth of industry interest.

The staff memo estimated that the proposals would generate $15 billion in savings and new revenue for the federal government, mainly from changes to onshore oil and gas leasing. The legislation would also lower royalty rates for drillers to 12.5% both offshore and onshore.

REACTION

An oil industry executive told Reuters that the House oil measures will largely remain intact in the final bill because of the sector’s strong support in Congress, though some provisions could face legal challenges.

Jenny Rowland-Shea, director of public lands at the liberal think tank Center for American Progress, said the bill “would upend the use of our public lands as we know it, putting President Trump’s oil and mining industry donors in the driver’s seat.”

(Reporting by Nichola Groom in San Marino, California and Jarrett Renshaw in Washington; editing by Edward Tobin)