Rayhall bill will not improve energy outlook

The sex scandals within the federal office of Minerals Management Services last year — in which federal employees were reported cavorting with oil company executives whose royalties they were collecting for the government — deservedly caused outrage.

Secretary of Interior Ken Salazar announced last week that he plans to phase out the royalty-in-kind program that was at the heart of the scandal, a program that allowed oil and gas companies to pay their royalty fees in the products they produced rather than cash.

Some argue that Salazar went too far, that his department could clean up the misbehavior among employees within the system without dumping a program that brings in billions of dollars to the federal government in the form of oil and gas. But Salazar argues the program will run cleaner and more efficiently if royalties are paid in cash instead of product. And that argument is not without merit.

Far more worrisome than Salazar’s proposed phase-out is legislation introduced this month by Congressman Nick Rahall, D-W.Va., which was heard in the Natural Resources Committee last week, but was not voted upon. Rahall is the chairman of that committee.

HR 3534, Rahall’s bill, would eliminate the royalty-in-kind program as Salazar intends to do. But it would do far more than that. It would create a new federal agency within the Department of Interior to oversee oil and gas leasing, and it would create regional planning councils to look at oil and gas development both on federal lands and offshore.

That would add a new layer of bureaucracy to leasing. We were glad to see Salazar’s carefully worded statement about Rahall’s bill did not endorse that part of it.

The legislation will make oil and gas leasing more costly to obtain and more difficult. That certainly won’t push this country toward energy independence, nor will it make the oversight and development of oil and gas more efficient.

The bill is unlikely to die in Rahall’s committee, but we hope it will meet that fate when it reaches the House floor.


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