API Notes Supreme Court Decision Not to Hear Kerr McGee Royalty Case

American Petroleum Institute President Jack Gerard has issued the following statement following the Supreme Court's decision not to hear the Anadarko Petroleum (then Kerr McGee) case regarding royalty collection under the Deepwater Royalty Relief Act:

"The Supreme Court's decision not to hear the case definitively reaffirms the Fifth Circuit's unanimous decision that Congress, when it passed the Deepwater Royalty Relief Act, provided royalty relief, based only on a volume limitation, not on price.

"That Act was passed at a time of historically low crude oil prices as a means to increase production and sustain jobs in a struggling industry. It was enormously successful, helping to boost deepwater Gulf of Mexico production by 50 percent in less than a decade. This production, which Congress considered would likely remain in the ground for years without the royalty relief program, helps boost our domestic supplies and keep jobs at home.

"The Deepwater Royalty Relief Act is an example of constructive Congressional policy that encouraged the development of our domestic resources and achieved the desired results by creating jobs, generating government revenues and enhancing America's energy security. Going forward, we trust Congress will continue to pursue constructive energy policies that benefit the American people, while resisting the urge to take steps that attempt to change the rules of the game midstream and that discourage investment. The oil and natural gas industry remains highly cyclical, as demonstrated by the huge swings in prices over the past 12-15 years. Congress and the administration need to take a comprehensive, long-term approach to meeting America's critical need for reliable, domestic energy supplies."


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