U.S. Interior Department disbands royalty panel amid scrutiny

April 30 (Reuters) - The U.S. Interior Department said on Tuesday it has dissolved an advisory panel that made recommendations on royalty rates from oil, gas and coal leases on federal land, after a legal challenge over its industry ties.

Interior Department spokeswoman Molly Block confirmed that the Royalty Policy Committee’s charter, which was created in March 2017, expired on April 21. She declined to give a reason or say whether the panel would be replaced.

Nonprofit environmental group the Western Organization of Resource Councils and government watchdog group Democracy Forward had sued Interior Secretary Ryan Zinke in August, alleging the department violated federal laws in forming the RPC by not including enough taxpayer or conservation group members and not operating in a transparent manner.

The groups said they believed the committee was disbanded as a result of their lawsuit.

“Our [legal action] reminded the Interior Department that the charter would be scrutinized,” said Travis Annatoyn, senior counsel at Democracy Forward who had previously worked for the Justice Department.

The RPC, which included members drawn from the energy and mining industries, had made several recommendations last year to lower royalty rates on drillers and miners.

In February 2018, the panel recommended lowering royalty rates for federal offshore oil and gas drilling from 18.75% to 12.5% to spur production. Facing pressure, Zinke did not take that recommendation.

The panel also voted to approve a proposal letting coal companies that mine on federal land set their own rates for coal, used to calculate royalties, effectively reversing an Obama administration policy that closed that loophole.

WORC and Democracy Forward said the federal Advisory Committee Act requires agency advisory groups like the RPC to be “fairly balanced in terms of points of view represented” and include “representatives of the public interest.”

Initial RPC members included the heads of the National Ocean Industries Association, which lobbies for offshore drillers; ConocoPhillips; Anadarko Petroleum Corp and western coal company Cloud Peak Energy Inc.

Other members included academics from the Colorado School of Mines, and New Mexico Institute of Mining and Technology, and a representative from consulting firm Wood Mackenzie. (Reporting by Valerie Volcovici; Editing by Richard Chang)