The Department of the Interior announced the repeal of a rule that will cost taxpayers nearly $75 million. The repeal of the rule will reduce royalties paid for oil, gas and coal developed on federal public lands. Estimates by the Office of Natural Resources Revenue show that nearly $75 million in royalties per year will be lost, impacting both federal and state coffers. This move comes after Interior Secretary Ryan Zinke cited revenue shortfalls to justify devastating budget cuts and the proposed elimination of 4,000 jobs at his department.
“Secretary Zinke is quickly proving to be a good investment for the special interests who have propped up his career. The Secretary is proposing devastating budget cuts, privatizing public campgrounds and eliminating upwards of 4,000 jobs at Interior because of revenue shortfalls, while handing industry special interests millions in royalty reductions,” said Chris Saeger, Executive Director of the Western Values Project. “This is just another example of how under Secretary Zinke’s leadership special interests are getting millions while taxpayers are getting fleeced.”
This isn’t the first-time Secretary Zinke gave a sweetheart deal to his special interest friends at the expense of taxpayers. He already dropped the offshore royalty rate from 18.75 percent to 12.5 percent. This is a significant reduction in revenues that are, in part, used for the Land and Water Conservation Fund.
To be clear, reducing royalty rates will not increase production. As we reported in the Rigged series, market prices for oil and gas drive fossil fuel development on public lands. Reducing these already rock-bottom royalty rates will only benefit oil and gas companies and will do nothing to lower costs for consumers. According to an analysis by the Congressional Budget Office, taxpayers are also losing at least $50 million per year on Bureau of Land Management leasing rates.
This $75 million per year taxpayer giveaway and other sweetheart deals are going to some of the largest corporations in the world, like Exxon Mobil, Chevron, and ConocoPhillips, who are reaping billions in revenue and paying CEOs millions in bonuses. When justifying drastic cuts to the nation’s largest land managing agency, Secretary Zinke is going to have to come up with another story.