by Elisabeth Lorio Baer

Interior Secretary Ken Salazar informed Congress on September 17, 2009 that he would kill a controversial program, currently in effect, that allows energy companies to pay the government royalties for drilling on public lands in actual oil and gas in lieu of cash. The announcement was made during testimony to the House Natural Resources Committee which is holding a hearing on a proposal by Chairman Nick Rahall, D-W.V. to revamp the manner in which the nation leases and collects royalties for drilling on public land.

Salazar stated that he would begin a “phased-in termination” of the royalty-in-kind program. The program, previously promoted by the Mineral Management Service, has reportedly been so badly managed that the government has failed to collect an estimated $21 million in oil and gas royalties from about 29,000 productive leases. Salazar said that the royalty-in-kind program was outdated and difficult to administer. Jack Gerard, president of the American Petroleum Institute, defended the program, and urged Salazar to reconsider ending it.

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