Biden administration delays Trump rule allowing companies to pay less money for drilling on federal lands

The Biden administration is delaying a Trump administration rule that was expected to result in the oil and gas industry paying less money for drilling on public lands and waters. 

The administration announced on Thursday that the rule, which was slated to go into effect next Tuesday, will now not become effective until April 16. 

Interior will also start a 30-day comment period to allow for “additional engagement” on the rule. 

“The Trump administration sought to allow corporations to pay less money for the oil and gas resources they extract from public lands, which deprives American taxpayers from a fair return and would result in lost tax revenue for state and local governments,” a department spokesperson said in a statement. 

“As part of the ongoing review directed by President Biden, the Department of the Interior is reviewing this rule to ensure that corporations aren’t unfairly pocketing money that is owed to the American public,” the spokesperson added. 

The rule, which was finalized in January, changed the way that royalties companies pay to the government for drilling on federal property is calculated and was expected to decrease how much the government collects by $28.9 million each year. 

This amounts to less than 0.5 percent of the total federal oil and gas royalties it collected in 2018, the rule notes. 

When he proposed the rule in August, then-Interior Secretary David Bernhardt said in a statement that it would provide “regulatory certainty and clarity to States, Tribes and stakeholders, removing unnecessary and burdensome regulations for domestic energy production.”

The rule’s promulgation followed a request from a leading industry lobbying group, the American Petroleum Institute, for changes to how royalties are calculated. 

The group called for “policies that truly do provide valuation simplicity and certainty,” referring to how oil is valued. 

Environmental groups, as well as Biden officials, opposed the change, arguing that it helped the industry at taxpayer expense. 

The decision to pause the rule comes after the White House issued a memo directing agency leadership to consider freezing pending regulations that had not gone into effect.