STATEMENT: Trump administration lowers royalty rates, taxpayers get worse deal on drilling

Jul 14, 2017

July, 14, 2017

DENVER—In the first offshore oil lease sale of the Trump administration, Interior Secretary Ryan Zinke decided to cut royalty rates from 18.75 percent to 12.5 percent. This is the rate paid by oil companies to taxpayers in return for drilling and selling publicly owned resources.

The decision comes on the heels of the Government Accountability Office raising red flags about already-low royalty rates for drilling on U.S. public lands. The Interior Department’s management of oil and gas resources remains on the GAO’s high-risk list for fraud, waste, and abuse because it is not collecting a fair return from oil and gas development.

The Center for Western Priorities released the following statement from Deputy Director Greg Zimmerman:

“Lowering already-low royalty rates is deeply irresponsible. This is another signal that Secretary Zinke will happily hand out sweetheart deals to his friends in the oil business while ripping off American taxpayers.”

President George W. Bush and his Interior Secretary Dirk Kempthorne raised offshore royalty rates to 18.75 percent. The proposal to lower rates to match the onshore rate of 12.5 percent directly contradicts the Government Accountability Office, which has not only encouraged the Interior Department to increase royalty rates, but found that increases would generate new revenue and have a negligible impact on production.

Revenues generated from oil and gas production on U.S. public lands and waters is one of the federal government’s largest sources of non-tax revenue.