Cash, Charge--Or Oil?
Cash, Charge--Or Oil?
More than a dozen big oil and gas companies are priming the pump for a campaign to change how they pay royalties to the federal government for petroleum tapped from federal lands.
The American Petroleum Institute and such corporate giants as Amoco Corp., Chevron U.S.A. Production Co., Exxon Co. U.S.A. and Texaco Inc. say they want to pay in oil--which the government can then use or resell--rather than forking over a cash amount determined by what the companies consider to be an unwieldy formula.
Industry officials argue that the feds already accept in-kind payments in relatively small amounts, and that "it would be easier to administer for Uncle Sam and for industry, it would reduce administrative costs and reduce conflict resolution, all without having a negative impact on revenues," David T. Deal, the managing attorney at the American Petroleum Institute, said.
But critics say the industry proposal is intended to counter the Interior Department's efforts over the past few months to get what it considers a fairer market value for oil and gas. "There's no evidence the government would get as much money as it does now, and that's not enough as it is," said Danielle Brian, executive director of the Project on Government Oversight. "It's clearly a diversionary tactic to avoid a very real problem--that the industry is underpaying."
Indeed, the lobbying push comes just as the issue is heating up: Last week, Interior's Minerals Management Service proposed changing the benchmarks for calculating the value of oil and gas. Advocates say this could increase the Treasury's take by $100 million annually. An Interior Department official--who charged that the industry plan would force the government to pay much of the cost that the industry currently bears--described the debate as "the issue in the oil and gas right now."
The Dallas-based law firm Gardere & Wynne L.L.P., which has no Washington office, recently signed on to lobby for 16 companies on the issue. It plans to focus on crafting model legislation. The House Natural Resources Subcommittee on Energy and Mineral Resources is planning a hearing for this spring.
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