Biden Administration Resumes Federal Oil and Gas Leases, but with Higher Royalties

The Biden administration announced on Friday that it will resume the sale of leases for oil and gas drilling on federal land, but with higher royalties and a restricted amount of land available.

The Department of the Interior announced the move in a press release on Friday, over a year after the Biden administration banned new drilling leases on federal land in January 2021.

“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of Tribal Nations, and, moreover, other uses of our shared public lands,” Interior Secretary Deb Haaland said in a statement.

According to the department’s new regulations, companies must pay 18.75 percent royalties on the value of oil or gas extracted. Companies were previously required to pay 12.5 percent in royalties, making the action the first increase in royalties on drilling since 1920.

The Department of the Interior will make 144,000 acres of land available for drilling, an “an 80 percent reduction from the acreage originally nominated” by energy companies, according to the Department’s Friday press release.

Independent Petroleum Association of America COO C. Jeffrey Eshelman criticized the release of the statement on a holiday weekend.

“This administration has begged for more oil from foreign nations, blames American energy producers for price gouging and sitting on leases,” Eshelman told the Wall Street Journal. “Now, on a late holiday announcement, under pressure, it announces a lease sale with major royalty increases that will add uncertainty to drilling plans for years.”

The Biden administration’s moratorium on new drilling leases was immediately challenged in court, with a legal battle ongoing. Republican and Democratic senators have called on the administration to increase domestic oil production in the wake of Russia’s invasion of Ukraine.

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