Interior recommends imposing higher costs for public lands drilling

A long-awaited report from the Interior Department recommends taking steps to increase fees for drilling on public lands, arguing that taxpayers are currently being shortchanged.

The department says that the Bureau of Land Management (BLM) should carry out several policies that increase these rates.

Drilling on public lands represents 7 percent of domestically produced oil and 8 percent of domestically produced natural gas.

But, it does not make similar concrete recommendations for offshore drilling, which accounts for 16 percent of all oil production and 3 percent of natural gas production in the U.S.

Instead, it notes that the Bureau of Ocean Energy Management is currently working on changes following a different report recommending that it ensure it is “capturing the full value” of the leases it offers. 

For both onshore and offshore drilling, the report says Interior will continue to study the best way to incorporate the cost of the planet-warming gases carbon dioxide, methane and nitrous oxide — but it didn’t lay out specific steps that would be taken.

The burning of fossil fuels, including oil and gas, is the main driver of climate change. 

The report, which was originally slated for an “early summer” release that didn’t materialize, is expected to inform the administration’s future oil and gas leasing policies.

Specifically, the report calls on BLM, which governs public lands drilling, to raise minimum royalties paid for onshore oil and gas leases, increase minimum bids that companies can make on tracts of land and rental rates that companies pay before they begin producing oil and gas on the leased lands.

It also calls for BLM to increase the surety bonds that companies pay the federal government as an assurance to make sure they are complying with their lease terms. 

In describing the changes, the report said that the tweaks to royalties specifically are only expected to have limited impacts on how much oil is drilled overall. 

“In June 2017, [the Government Accountability Office] reported that studies showed that raising Federal royalty rates for onshore oil and gas could ‘decrease production on federal lands by a small amount or not at all but could increase overall federal revenue,’” it said. 

The recommendations do not go as far as President Biden said on the campaign trail that he would in limiting oil and gas drilling. At the time, then-candidate Biden promised to effectively stop new drilling on federal lands and in federal waters by “banning new oil and gas permitting.”

Nevertheless, Interior Secretary Deb Haaland described the recommended reforms as “urgent,” in a statement. 

“This review outlines significant deficiencies in the federal oil and gas programs, and identifies important and urgent fiscal and programmatic reforms that will benefit the American people,” she said.

In its report, Haaland’s department argued that the changes are necessary because its review found a “Federal oil and gas program that fails to provide a fair return to taxpayers, even before factoring in the resulting climate-related costs.”

It said that components of the onshore oil and gas program are “particularly outdated,” noting that royalty rates haven’t been raised in a century. 

“These antiquated approaches hurt not only the Federal taxpayer but also State budgets because States receive a significant share of Federal oil and gas revenues,” it said. 

While the review that produced Friday’s report was being carried out, the administration sought to pause new leasing on public lands, but ran into legal headaches. 

Republican-led states challenged the pause, which was halted in court, as a judge argued that states, which also benefit from drilling royalties, were likely to face losses as a result of the moratorium.

Friday’s report received swift pushback from Republicans, who lamented that recommended changes would make it more expensive to drill. 

Rep. Bruce Westerman (Ark.), the top Republican on the House Natural Resources Committee, said in a statement that the findings were “simply justifications to make it even harder and more expensive to produce energy on federal lands.”

Westerman also criticized the report’s timing, insinuating that the holiday release was meant to bury the findings. 

“DOI is quietly releasing this report the Friday of a holiday weekend, months after they promised it, in the hopes that no one notices their continued attacks on domestic energy,” he said. 

Meanwhile, environmentalists were split, with some touting the reforms as commonsense. 

“Enacting these overdue reforms will ensure taxpayers, communities, and wildlife are no longer harmed by below-market rates, insufficient protections, and poor planning,” said Collin O’Mara, President and CEO of the National Wildlife Federation, in a statement. 

Others, however, were less enthusiastic, saying the department should go further to prevent drilling. 

“These trivial changes are nearly meaningless in the midst of this climate emergency, and they break Biden’s campaign promise to stop new oil and gas leasing on public  lands,” said Randi Spivak, public lands director at the Center for Biological Diversity, in a statement. “Greenlighting more fossil fuel extraction, then pretending it’s OK by nudging up royalty rates, is like rearranging deck chairs on the Titanic.”

—Updated at 1:58 p.m.