Sens. Udall, Grassley introduce bill targeting Big Oil subsidies
February 26, 2020
BY Erin Voegele
Sens. Tom Udall, D-New Mexico, and Chuck Grassley, R-Iowa, introduced legislation Feb. 25 that aims to update the nation’s antiquated public lands royalty system and ensure that taxpayers get fair returns on leases of public lands for oil and gas production.
The bill, titled “The Fair Returns for Public Lands Act of 2020,” modernizes the public lands leasing system, which currently uses royalty rates that were set in 1920. The legislation increases both the share of royalties that taxpayers receive from public lands leasing as well as rental rates. The federal royalty rate would increase to 18.75 percent, up from 12.5 percent currently. According to Udall and Grassley, the new rate reflects the current fair market value. They also noted the bill establishes minimum bidding standards to lease public lands.
The Renewable Fuels Association has spoken out in support of the bill, noting it takes a step toward ending subsidies for oil and gas companies.
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“We applaud Sens. Grassley and Udall for introducing bipartisan legislation today that closes a century-old tax loophole exploited by oil companies and takes a step toward leveling the playing field for all transportation fuel producers,” said Geoff Cooper, RFA president and CEO. “Study after study show that the oil and gas industry benefits each year from billions of dollars in hidden subsidies, write-offs, incentives and other giveaways. If oil producers and refiners truly want a ‘free market’ in the energy sector, they should start by giving up the subsidies and tax preferences that have robbed state and federal coffers for 100 years or more. We hope this bill sets lawmakers on a path toward comprehensive energy tax policy reform, and that the end result is a fair and open market that offers true competition and consumer choice.”
Monte Shaw, executive director of the Iowa Renewable Fuels Association, said, “Oil companies have been fleecing the taxpayers for 100 years by paying pennies on the dollar for resources extracted from public lands. We should all remember this the next time we hear Big Oil talk about just wanting a level playing field. The playing field can never be level when petroleum companies have secret advantages. This is just one of many hidden Big Oil tax subsidies and we thank Sen. Grassley for shining a light on it.”
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