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Interior seeks higher fees to drill for oil and gas on federal lands

Oil pump jack flare on a prairie with mountains behind it
WildEarth Guardians
Flickr Creative Commons

A long-awaited report from the Biden administration recommends raising the costs of oil and gas drilling on federal lands. The Interior Department argues boosting royalty rates and leasing fees would bring in more revenues and decrease speculation.

“This review outlines significant deficiencies in the federal oil and gas programs, and identifies important and urgent fiscal and programmatic reforms that will benefit the American people,” Interior Secretary Deb Haaland said in a statement.

The agency also wants to limit leasing of lands that don’t hold significant oil and gas deposits. When land is under contract for potential fossil fuel development it cannot be managed for other purposes such as conservation, according to the report. It’s a reform that Russel Kuhlman, executive director of the nonprofit Nevada Wildlife Federation, supports.

"A lot of times if a piece of public land has high wildlife potential but then it’s leased, that’s pretty much it,” he says. “The [Bureau of Land Management] won’t go in there and do any type of improvement or reclamation to make it better for wildlife because it is leased for oil and gas.”

The Interior Department says an increase in royalty rates is long overdue. These are essentially taxes companies pay on the value of oil and gas extracted from federal land. The current rate of 12.5% has been in place for a century and is much lower than what states or private parties charge.

It’s unclear how much those royalty rates and leasing fees might increase – or whether it will happen at all. Congress will determine that. But the report worries oil and gas insiders, who argue that raising the cost of drilling public lands is misguided, ill-timed and hypocritical.

“During one of the busiest travel weeks of the year when rising costs of energy are even more apparent to Americans, the Biden administration is sending mixed signals,” Frank Macchiarola, senior vice president at the American Petroleum Institute, said in a statement.

Earlier this month, Macchiarola pointed out, Biden pushed producers to increase supply to help lower gas prices. Then, last week, the president ordered a record 50 million barrels of oil released from America’s strategic reserve. And now, Macchiarola said, “his Interior Department proposed to increase costs on American energy development with no clear roadmap for the future of federal leasing.”

But Interior's recommendations wouldn't impact prices at the pump, according to Taxpayers for Common Sense, a nonpartisan budget watchdog. Its recent brief on the issue cites studies by the Government Accountability Office and Congressional Budget Office, both of which suggest that boosting federal royalty rates would have negligible effects on production.

Interior's report is mostly mum on climate change, even though fossil fuels extracted from federal lands – coal included – account for nearly a quarter of U.S. carbon dioxide emissions, according to a 2018 U.S. Geological Survey study.

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

Copyright 2021 Boise State Public Radio News. To see more, visit Boise State Public Radio News.

Nate is UM School of Journalism reporter. He reads the news on Montana Public Radio three nights a week.
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