Biden hikes up drilling fees on public lands

Oil and Gas Producers Face Increased Costs on Federal Lands

The Interior Department unveiled a new rule, increasing costs for oil and gas drillers operating on federally owned lands. This follows several provisions like higher rent for land usage and increased profit shares introduced by the Democrats’ Inflation Reduction Act.

The Biden administration has also made it costlier for operators to abandon oil wells post-use without proper cleanup. The administration believes that the current bonding rates fall short of ensuring companies fully clean up their operations.

First Comprehensive Update since 1988

This change marks the first significant update to the rules governing drilling on federal lands since 1988. “These reforms will decrease wasteful speculation, enhance public returns, and prevent taxpayers from bearing the burden of environmental cleanups,” said Interior Secretary Deb Haaland.

These changes were announced following the administration’s move to reduce costs for renewable energy production on public lands.

New Rules Set Higher Rates

The new rule increases the royalty rate, the government’s cut from profits made on public lands, from 12.5 percent to 16.67 percent. Rent rates are also set to rise from $1.50 per acre for the first five years of a lease and $2 per acre for the next five, to $3 per acre for the first two years and $5 per acre for the subsequent six years, eventually rising to $15 per acre.

The rule also raises the minimum bid for leasing lands for drilling to $10 per acre from $2 per acre, with an inflation adjustment factor.

Environmental Activists Laud the Move

Environmental advocates have welcomed these changes. Athan Manuel, Director of the Sierra Club’s lands protection program, stated that these regulations are the long-needed reforms to the federal oil and gas leasing program. “The era of oil and gas companies exploiting public lands for minimal costs and leaving polluted lands and air behind is over,” he said.