The measure, passed Thursday 252-165, is calculated to extract $7 billion more from energy companies for oil and natural gas they produce from land beneath publicly owned waters, The New York Times reported Friday.
Democrats argued that so-called royalty incentives are inappropriate in a time of high energy prices.
"Oil companies want to play Uncle Sam for Uncle Sucker," said Rep. Edward J. Markey, D-Mass., who co-sponsored the amendment with Rep. Maurice D. Hinchey, D-N.Y. "Today, we must put an end to these senseless giveaways."
The bill to rescind royalty incentives drew the support of 85 Republicans.
Energy companies had other setbacks Thursday including a House rejection of a bill to lift a 25-year ban on oil drilling in coastal areas outside the western Gulf of Mexico and another to keep blocking natural gas drilling.
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