07.19.17

As Today’s House Budget Markup Kicks Off, Grijalva Highlights “Flagrantly Outdated” GOP Oil Estimates, Touts Alternatives

Washington, D.C. – As today’s 10:00 a.m. House Budget Committee markup of the House Republican fiscal year 2018 budget proposal gets underway, Ranking Member Raúl M. Grijalva (D-Ariz.) questioned Republican estimates of revenue generated by opening the Arctic National Wildlife Refuge to oil drilling and touted clean alternative energy development as a more popular and more economic option.

The budget proposal includes instructions to the Natural Resources Committee to generate $5 billion in revenue. While the rationale for that exact figure is unclear, it appears to be based on an August 2012 Congressional Budget Office finding that opening the Arctic Refuge to drilling would, at the time, have generated total receipts of $5 billion over a year.

The problem with this estimate is that under current law, the State of Alaska would receive 90 percent of those royalties, leaving the federal treasury with $500 million. Changing the law to establish a 50/50 split, which is typical for public lands, would net the federal treasury only $2.5 billion.

Just as seriously, that estimate was based on what Grijalva points out is now a “flagrantly outdated” price of oil. Even the Trump administration, in its FY18 budget estimate, estimates that opening the Arctic Refuge would generate just $1.8 billion over a 10-year period.

“The majority is telling this Committee to generate billions of dollars based on outdated estimates of policies we’re not going to enact anyway,” Grijalva said today. “It’s like writing a budget on the back of a bounced check. Building out sustainable energy sources and conserving our natural open spaces is a more profitable, more popular path forward than drilling for oil in a wildlife refuge. At the end of the day our nation’s budget needs to reflect the people’s actual priorities, not just oil lobbyist demands.”

Democratic Budget Proposals

Reinstate the Royalty Valuation Rule – Recently blocked by the Trump Administration, this rule would raise an estimated $784 million over 10 years. (81 FR 43360)

Institute a royalty on hardrock mining – An 8 percent royalty on new claims and a 4 percent royalty on existing claims would generate $300 million in revenue over a 10-year period. (CBO score of H.R. 2262, Hardrock Mining and Reclamation Act of 2007)

Hardrock Mining Displaced Materials Fee – A 7-cent-per-ton fee on material displaced by hardrock mining operations would generate an estimated $1.8 billion over 10 years. (DOI FY17 Budget In Brief)

Increase coal Abandoned Mine Land fees – Restoring AML fees paid by coal operators to their original 1977 levels (35 cents per ton for surface-mined coal and 15 cents per ton for underground-mined coal) would raise $258 million over 10 years. (DOI FY17 Budget In Brief)

Ending AML Payments to certified states – Ending AML payments to states that have completed all their high-priority coal AML site cleanups would save $520 million over 10 years. (DOI FY17 Budget In Brief)

Onshore Oil and Gas Inspection Fees – Implementing oil and gas inspection fees for onshore operations, as are currently in place for offshore operations, would raise approximately $480 million over 10 years. (DOI FY17 Budget In Brief)

Onshore Oil and Gas Reforms – CBO estimates that the Administration estimates that simple oil and gas reforms, such as requiring onshore leases to be auctioned via sealed bid and increasing the minimum bid price, would raise $350 million over 10 years. (CBO – Options for Increasing Federal Income From Crude Oil and Natural Gas on Federal Lands)

Nonproducing Lease Fee – A fee of $6 per acre for nonproducing leases would raise approximately $700 million over 10 years. (CBO – Options for Increasing Federal Income From Crude Oil and Natural Gas on Federal Lands)

Total: Approx. $5.2 billion over 10 years

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