The Biden administration on Thursday proposed to raise fees associated with drilling for oil on public lands — making it more costly to drill on lands owned by the federal government, but giving the government more cash when that drilling takes place.
Many of the changes to the Bureau of Land Management’s new proposed rule were spelled out as part of the Inflation Reduction Act.
However, the rule also contains additional actions from the Biden administration.
One such new action would alter the bond policy to combat what the administration described as a current system that “increases 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.”
The new rule seeks to “prevent that burden from falling on the taxpayer in future years” including through raising required bond amounts, according to a press release.
The release also said the proposed rule would also implement several cost hikes that were part of the climate, tax and health care law. It raises royalties on oil that’s extracted from 12.5 percent to 16.67 percent.
When oil is not being produced, producers have to pay rent on the land. The rule implements the law’s requirement to raise fees to rent land from the government — previously either $1.50 to $2.00 per acre — to $3 per acre during the first two years of the lease, $5 per acre for the next six years and $15 per acre after that.
It also implements the law’s required minimum bids for a lease from $2 per acre to $10 per acre.
Bureau of Land Management Director Tracy Stone-Manning described the changes as a win on climate change and a way to get fair returns for taxpayers because the lands are government-owned.
“This proposal to update BLM’s oil and gas program aims to ensure fairness to the taxpayer and balanced, responsible development as we continue to transition to a clean energy economy,” she said in a written statement.
The rule also proposes to prioritize oil and gas development on public lands where there’s existing infrastructure or significant potential for oil and gas production and that is not near “important wildlife habitat or cultural sites,” according to the press release.
The oil and gas industry pushed back on the draft rule, saying that it would make future oil and gas production more difficult.
“This action from the Department of the Interior is yet another attempt to add even more barriers to future energy production, increases uncertainty for producers and may further discourage oil and natural gas investment. This is a concerning approach from an administration that has repeatedly acted to restrict essential energy development.” said a written statement from Holly Hopkins, vice president of Upstream Policy at the American Petroleum Institute, an oil and gas lobby group.
Meanwhile, the environmental movement gave the proposal mixed reviews, with some saying it advanced key common-sense reforms while others said it did not go far enough to fight climate change.
“It is going to stop allowing oil and gas companies to get bargain-basement deals on drilling on public land,” said Kate Groetzinger, a spokesperson for the Center for Western Priorities.
“The bonding requirements are really important and they really do intersect with the climate change issue because when wells are not properly remediated they can leak methane into the environment…the faster that we get these wells plugged when they’re no longer producing, the better for our climate,” Groetzinger added.
However, others said the administration should be trying to move toward ending fossil fuel production on public lands altogether.
“This is a cowardly proposal that fails the basic climate imperative of ending fossil fuel expansion and phasing out production,” said a written statement from Taylor McKinnon, Southwest director at the Center for Biological Diversity. “
“Any rule that fails to phase out oil and gas production on public lands will sacrifice human lives, ecosystems and entire species at the altar of fossil fuel corporations and their insatiable quest for profit,” McKinnon added.