Gas and oil companies drilling on public lands in the U.S. will have to pay $150,000 per lease on federally owned lands, an exponential increase of the $10,000 bond amount that’s been in place for decades, according to a rule finalized Friday from the Bureau of Land Management.
Key Facts
The “Fluid Mineral Leases and Leasing Process rule,” issued by the Interior Department’s Bureau of Land Management, finalized the price hikes up from $10,000—a figure that was last updated in 1960—and the price will be adjusted every ten years for inflation, according to a news release.
Companies will also be required to pay more in royalties for extracted oil and gas—the new rate will be 16.67%, up from 12.5%, until Aug. 16, 3032, and then will become the new minimum royalty rate, according to the release.
The rule also aims to protect wildlife and cultural sites by establishing a bureau preference for companies “to offer lands for lease that are close to existing infrastructure or have high potential for oil and gas production,” the release said.
Environmental advocates and conservation groups, like Earthjustice and Sierra Club, praised Friday’s new rule—with Sierra Club Lands Protection Program Director Athan Manuel saying in a statement the updates are the “kind of common-sense reforms the federal oil and gas leasing program has needed for decades.”
Industry groups have been vocal critics throughout the rule-making process, including a letter from a coalition of more than a dozen groups that called for the bureau to “abandon several aspects” of the proposal, citing concerns that the proposal would cause “greater dependence on foreign sources.”
Independent Petroleum Association of America slammed the finalized rule in a statement, with executive Dan Naatz saying: “The true losers with this misguided policy are states and localities that rely on revenues from federal land extractive industries to meet their budget obligations year after year.”
What To Watch For
The Biden administration is reportedly planning to issue a plan limiting oil drilling across 13 million acres of the National Petroleum Reserve-Alaska, according to Bloomberg, which is one of the most widespread efforts from the administration to limit drilling on public lands. The plan would reportedly not impact the controversial ConocoPhillips oil drilling project in the reserve, which Biden approved last year, but would make it difficult to get another large-scale project operational in the region.
Key Background
About 10% of the nation’s oil and gas supplies comes from products drilled on federal land, according to Reuters. As part of Biden’s 2020 election campaign, he vowed to ban new drilling on federal lands, but has experienced difficulties in attempts to fulfill the promise, upsetting both oil companies and environmental advocates. Biden signed an executive order on Jan. 27, 2021, during his first week in office, which paused sales on federal land, an order that was swiftly blocked by a federal judge. Biden came under fire in March 2023 for approving a controversial ConocoPhillips oil drilling project in the National Petroleum Reserve-Alaska, a move that was upheld by a federal judge in November. The Bureau of Land Management first proposed the rule in 2023 and received more than 130,000 comments on the matter as part of the federal rule-making process, according to the release.
Tangent
In another historic move, the Environmental Protection Agency finalized the first-ever limits on PFAS, or “forever chemicals,” in the nation’s drinking water on Wednesday.
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