| WASHINGTON, March 30
WASHINGTON, March 30 The U.S. Justice
Department on Monday asked a federal appeals court to rehear a
legal decision over oil royalties between the Interior
Department and Anadarko Petroleum Corp (APC.N) which, if
allowed to stand, could cost the government billions of dollars
in lost royalties from oil companies.
Justice, on behalf of the Interior Department, is fighting
a January ruling from a panel of the Circuit Court of Appeals
for the Fifth Circuit in New Orleans that said Anadarko did not
have to pay $350 million in royalties for drilling on federal
leases in the Gulf of Mexico issued between 1996 and 2000.
If the ruling stands in Anadarko's favor, other energy
companies could forgo paying royalties and the government
"stands to lose tens of billions of dollars in revenue that
would otherwise be derived from the nation's oil and gas
reserves," the Justice Department said in its request for the
full circuit court to rehear the case.
Justice said the panel's decision was inconsistent "with
the plain language of the statute" and that "the sheer amount
of money at stake" makes the case worthy of review by the full
court to "correct the panel's error."
The dispute centers on financial incentives Congress gave
energy companies in the 1990s when oil prices fell to $10 a
barrel. To make drilling in the deeper waters of the Gulf of
Mexico more profitable, royalties were waived on initial oil
and natural gas production.
The Interior Department sought to end that royalty relief
if oil and gas prices increased significantly, which they did.
Kerr-McGee Corp, which was bought by Anadarko in 2006, sued
the department, arguing it did not have the authority to take
away the royalty relief provided by Congress. The company won
in the initial trial and on appeal.
Anadarko has said the clear intent of Congress was "to
assure that companies were afforded the royalty treatment it
granted as encouragement to make huge investments in the
deepwater Gulf of Mexico frontier."
(Editing by Christian Wiessner)