Cantwell: End Giveaways to Profit-Rich Oil Companies

"Taxpayers should not suffer at the hands of oil company profits" Americans face sky-high energy costs while companies pump oil and gas from public lands royalty-free

WASHINGTON, DC – Tuesday, U.S. Senator Maria Cantwell (D-WA), Senate Democrats’ point person on energy issues, demanded an end to policies that let companies pump billions of dollars worth of oil and gas from public lands royalty-free. According to an analysis published in Tuesday’s New York Times, the plan amounts to an estimated $7 billion dollar giveaway. Cantwell has called for hearings in the Senate Energy Committee—of which she is a member—and is developing legislation to reform the current system of “royalty relief.”

“America’s taxpayers should not suffer at the hands of the oil companies,” said Cantwell. “With back-breaking federal budget deficits, oil prices topping $60 a barrel, and record-breaking profits for these companies, this is no time for massive giveaways to the oil industry or further fattening their bottom lines. This is about tax fairness. Instead of special treatment for special interests, we need real investments in the alternative energy infrastructure and the research and development needed to move America toward energy independence.”

In a letter sent Tuesday to Senate Energy and Natural Resources Committee Chairman Pete Domenici (R-NM), Cantwell and Senator Ron Wyden (D-OR) requested Senate hearings on the current system of granting royalty relief to oil and gas companies that drill on public lands. Relief from royalty payments was granted during times of low energy prices. Now, with energy costs at record levels, Cantwell is calling for reform to make sure American taxpayers get their fair share, rather than subsidizing the profit margins of the oil and gas industry.

“American families need relief from record-high energy costs, not more giveaways to profit-rich companies,” continued Cantwell. “I’m demanding better and will keep fighting to get families the fair treatment they deserve.”

Cantwell is the chair of the Senate Democrats’ Energy Independence 2020 national campaign working break America’s overdependence on foreign oil, protect working families from skyrocketing energy costs, and stop unfair market manipulation by energy companies. Cantwell is fighting to stop price gouging, provide relief from high home heating costs, and invest in reliable sources of affordable fuel.

[The text of Cantwell’s letter to Chairman Domenici follows below]

February 14, 2006

The Honorable Pete Domenici
Committee on Energy and Natural Resources
364 Dirksen Office Building
Washington, DC 20510

Dear Chairman Domenici,

We write to respectfully request that the Senate Energy and Natural Resources Committee hold hearings on the emerging issue of the royalty relief granted to oil and gas companies that drill on our nation’s public lands. Recently published reports have suggested that American taxpayers may have foregone as much as $700 million in royalty payments last year—and that oil and gas companies may be off the hook for an additional $7 billion in payments to the federal government over the next five years. Moreover, a report published in today’s New York Times raises additional questions about the legal authorities of the Department of Interior to enforce additional payments.

Given oil and natural gas prices that are expected to hover near record levels for the foreseeable future, we question whether royalty relief for these companies is necessary or appropriate in the current fiscal environment. We are working to develop legislation to revise the current system, and believe Senate Energy Committee hearings would be useful in clarifying a few key issues. In particular, we believe it is necessary to better understand the extent of Interior’s existing legal authorities in the area of setting royalty “price thresholds;” the rules and regulations that allow oil companies to claim different profits when they report to different agencies of the federal government and Interior’s enforcement of these rules; and whether the billions in federal revenues lost under the existing system would accrue any demonstrable benefits for American consumers—or simply further pad the profit margins of large oil and gas companies. We would also like to understand the Administration’s justification for assuming in its recent budget request that these royalties will never be collected.

At a time when families across this nation continue to struggle under the weight of rising energy costs, it is clear that we must reform the complicated maze of regulations governing federal royalty payments for oil and gas development on federal lands in a manner that guarantees a fair return for American taxpayers. We look forward to working with you on this important issue and hope the Committee will soon schedule hearings on this matter.


Maria Cantwell
United States Senator

Ron Wyden
United States Senator

Cc: Senator Jeff Bingaman, Ranking Member