The Biden administration called for oil and gas companies to pay more to drill for oil and gas on public lands, arguing that taxpayers are being short-changed by low rates that have stayed stagnant for more than a century.
The Interior Department said in a long-awaited report that the federal leasing program must be revamped to deliver better returns for the public and to prevent damage to the environment and wildlife. The administration stopped short of calling for a permanent end to leasing government land to drill for fossil fuels despite pleas from climate change advocates.
Interior Secretary Deb Haaland said in a statement that our nation is facing a profound climate crisis that is impacting every American. The Interior Department has an obligation to be responsible for our public lands and waters, to give a fair return to the taxpayer and to mitigate the worsening climate impacts while staying steadfast in the pursuit of environmental justice. Nearly 27 million acres of land are currently under lease by oil and gas companies who have drilled more than 96,000 wells and continue to bid on more.
Since the leasing program was put into place in 1920, the royalty rate of 12.5 percent has never been raised. The rates are out of step with modern times, according to the report. The Biden administration isn't saying what the new rate should be, other than to say it should be higher, arguing that taxpayers have not received a fair rate of return due to outdated fiscal terms. The royalty rates for onshore drilling on federal lands are lower than they tend to be for state-owned lands or offshore leases, according to the report.
The report was released the day after the Thanksgiving holiday by the Biden administration, as President Joe Biden and his family were vacationing in Nantucket.
The report also calls for taking into account climate change in selling off new leases to drill but does not go as far as to spell out how oil and gas extracted from public lands are contributing to global warming.
Some environmental groups want the federal government to stop leasing public lands for drilling altogether, with the Center for Biological Diversity calling them trivial changes that are nearly meaningless in the midst of this climate emergency. The Biden administration has been unable to stop leasing public lands due to court action from Republican state attorneys general, and was forced to hold a sale last week.
The agency is trying to address a problem that has been widely acknowledged: we have a broken and outdated leasing system, said Alexandra Adams, senior director of federal affairs for the Natural Resources Defense Council.
The American Petroleum Institute, which lobbyists for oil and gas companies, criticized Biden's move, as he has been working to lower gas prices, including through the release from the Strategic Petroleum Reserve.
During one of the busiest travel weeks of the year, when rising costs of energy are more apparent to Americans, the Biden Administration is sending mixed signals, according to API Senior Vice President Frank Macchiarola.