New Biden Rule Would Make Energy Companies Pay More To Drill On Public Lands
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The Biden administration on Thursday took a first step toward reforming and “modernizing” the federal oil and gas leasing program.
The Interior Department’s proposed rule, which is now open to public comment, would significantly increase how much energy companies must pay to lease and drill on federal lands. It would also give the Bureau of Land Management greater authority to keep fossil fuel development away from sensitive ecosystems and cultural sites.
The new rule “provides a fair return to taxpayers, adequately accounts for environmental harms and discourages speculation by oil and gas companies,” Laura Daniel-Davis, principal deputy assistant Interior secretary for land and minerals management, said in a statement.
“The Department is committed to creating a more transparent, inclusive and just approach to leasing and permitting that serves the public interest while protecting natural and cultural resources on our public lands,” Daniel-Davis said.
The proposal would codify several provisions in the Inflation Reduction Act, President Joe Biden’s signature climate law that Democrats passed last year. That law hiked the royalties that companies pay to the U.S. government for oil and gas extracted from public lands, raising it from a stagnant 12.5% to 16.67%. It also upped the minimum bid for leasing federal parcels from $2 to $10 per acre.
The new proposal would also increase minimum lease bonds to $150,000 — a 15-fold increase over the current $10,000 minimum, which has been in place since 1960. The Interior Department said in a release that current bonding requirements no longer provide “an adequate incentive for companies to meet their reclamation obligations,” and that they increase the risk that “taxpayers will end up covering the cost of reclaiming wells in the event the operator refuses to do so or declares bankruptcy.”
Oil and gas wells dot federal lands near De Beque, Colorado.
The measure has received mixed reactions from environmentalists.
“For far too long, federal public land policies have prioritized fossil fuel companies’ profits at the expense of communities’ wellbeing and public lands themselves,” Jamie Williams, president of the Wilderness Society, said in a statement. “The proposed Oil and Gas Rule is an important step towards the BLM taking a more holistic conservation, climate and community-centric approach to managing public lands.”
But some have grown increasingly frustrated with the Biden administration’s energy agenda, accusing the president of breaking campaign-trail promises to “take on the fossil fuel industry” and rapidly transition the nation away from planet-warming fossil fuels.
The advocacy group Friends of the Earth slammed Thursday’s proposal as “the latest in a long string of failures by the Administration to make good on President Biden’s promise to address the climate impacts of oil and gas drilling on public lands.”
“Even as record heatwaves bake the country and floods ravage eastern states, the Biden Administration continues to cozy up to Big Oil,” Nicole Ghio, the group’s senior fossil fuels program manager, said in a statement. “President Biden can’t be a climate leader unless he addresses the root cause of the climate crisis: fossil fuels. Turning a blind eye to his broken leasing program proves once again that Biden is content to fiddle away while the world burns.”
Earlier this year, BLM introduced a separate proposal to place conservation “on equal footing” with traditional uses like energy development, mining and cattle ranching. A key provision of that rule would grant the agency ― which oversees 10% of all land in the United States ― the authority to issue “conservation leases” to promote land protection and ecosystem restoration.
