Government Cannot Halt Oil Incentives, Judge Rules [View All]

[jpak]

http://www.nytimes.com/2007/11/02/business/02royalties.html?_r=1&oref=slogin

WASHINGTON, Nov. 1 — A federal judge in Louisiana handed the oil industry a major legal victory this week, saying the government had no authority to suspend billions of dollars’ worth of drilling incentives when energy prices were high.

If upheld, the ruling could free companies from paying the government up to $60 billion in royalties for oil and gas produced in publicly owned waters of the Gulf of Mexico.

The ruling, in a lawsuit brought by Kerr-McGee Oil and Gas Corporation, is not a final verdict. But the judge flatly rejected all of the government’s arguments, not only refusing to throw out the case but also agreeing with the oil company that the government had overstepped its authority.

Oil companies won a similar suit in 2003 involving the same law, a decision that has already allowed oil companies to escape several billion dollars in royalties.

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