Representative Issa Seeks Interior Documents on Royalty Relief

A GOP lawmaker yesterday continued his probe into subsidies that allow offshore oil and gas producers to forgo billions of dollars in royalty payments with a request for a suite of Interior Department documents on the issue.

Rep. Darrell Issa (R-Calif.) sent a letter to Interior Secretary Gale Norton yesterday asking for records to help determine why leases in the late 1990s were not subject to "price thresholds" above which offshore producers could not forgo royalties on deepwater Gulf of Mexico projects. Issa chairs the House Government Reform Energy and Resources Subcommittee.

Legislation in 1995 provided "royalty relief" for producers to encourage high-risk, high-cost deepwater projects at a time when energy prices were much lower. Interior has waived the relief when prices reach certain levels, but leases in 1998 and 1999 did not contain the price limits.

Interior's Minerals Management Service acknowledged recently that the omission could cost the government billions of dollars in coming years if prices remain high because production will remain royalty-free from those leases. A top MMS official called the omission an inadvertent mistake at a March 1 hearing before Issa's subcommittee. Lease agreements with royalty relief in 1996, 1997, 2000 and since have contained the price caps, according to MMS.

Issa said at the hearing this month that the omission in 1998 and 1999 is suspicious and promised a more aggressive inquiry into Interior actions (E&E News PM, March 1).

His letter yesterday seeks information including: personnel involved in leasing between 1996 and 2000; a "cradle to grave" narrative describing how leases were created, negotiated, reviewed and approved during those years; records related to directives, guidelines and other communications about how leases were handled during those years; and other information.

Several lawmakers on both sides of the Capitol are probing multiple issues surrounding the royalty collection program.

Copyright 2006 E&E Daily. All Rights Reserved. Visit E&E Publishing for a free trial.

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