The Interior Department's Bureau of Land Management's action would require oil companies to pay between $10,000 and $150,000 per lease on federal land. This is the first time since 1960 that the so-called bond requirements have been updated despite significant inflation.
Also, for the first time in a century, fossil fuel companies will have to pay more in royalties for the oil and gas they extract from federal lands, based on the total revenue they receive. Under the new rules, the minimum royalty rate paid by the government will rise from 12.5% of revenue to 16.67%. This rate is roughly in line with higher fees charged by most private landowners and major oil and gas producing states.
The rules come as the Biden administration prepares a sweeping plan to restrict future oil drilling across the roughly 13 million acres of Alaska's National Petroleum Reserve, the nation's largest public land. The Interior Department is expected to finalize the plan, another major part of the president's conservation plan, in the coming days, Bloomberg News first reported.
Advocates say the changes announced Friday will better compensate taxpayers for fossil fuel extraction on federal lands and eliminate taxpayers from paying for the cleanup of abandoned oil and gas wells. claims. Fossil fuel companies have retired from thousands of wells after completing drilling operations or going out of business, leaving the sites leaking greenhouse gases and toxic substances such as arsenic and benzene.
The bipartisan Infrastructure Act of 2021 provided a record $4.7 billion for states' efforts to plug these “orphan” wells. But federal funding may have only a marginal impact on the problem, with some experts estimating there could be millions of undiscovered orphan wells across the country. are doing.
“Doing business costs money, and the industry should bear the cost of cleaning up its operations,” said Autumn Hanna, vice president of the nonpartisan watchdog group Taxpayers for Common Sense. . “They are extracting oil and gas from public lands for their own profit, and those resources belong to taxpayers, and the cleanup costs should not be borne by taxpayers themselves.”
Kate Gretzinger, communications manager at the conservation group Center for Western Priorities, said the changes come after the nation's largest oil and gas companies reported their biggest annual profits in a decade last year. He said it was “very fair.” ExxonMobil reported a profit of $36 billion, and Chevron made a profit of $21.4 billion.
“They're making huge profits, but they're leaving the taxpayers with the baggage,” Gretzinger said of these companies.
Fossil fuel industry trade groups expressed strong concerns about BLM's proposed rules released last summer. A coalition of 14 industry groups wrote in a public comment that the proposal could hinder domestic fossil fuel production and make the United States dependent on other countries for its energy needs.
Groups such as the American Petroleum Institute and the Independent Petroleum Association of America are “concerned that BLM's approach to this rule exceeds its statutory authority and could adversely impact America's energy security and economy.” writing.
Dan Naerts, executive vice president of the Independent Petroleum Association of America, previously told the Post that the proposed rules would make it harder for small oil and gas companies to drill on public lands.
“I don't know of any companies that just want to speculate or just want to keep their contracts,” Naats said. “The goal is to produce.”
Friday's rule codifies provisions of the Inflation Control Act, Biden's signature climate law. It also directs oil companies to prioritize leasing in areas with existing energy infrastructure and high production potential, rather than areas with sensitive wildlife habitat or cultural resources.
In addition to overhauling fossil fuel production on federal lands, the government has sought to promote renewable energy development on these lands. On Thursday, the Interior Department announced it had approved approximately 29 gigawatts of clean energy permits. This is enough to power more than 12 million homes. This figure includes dozens of solar farms, wind turbines, and geothermal projects.
Interior also finalized Thursday a rule that would reduce the rents and fees renewable energy developers pay for using public land. This rule reduces these payments by approximately 80% compared to the previous requirements that have been in place since 2022.
Interior Secretary Deb Haaland said in a call with reporters that the Biden administration has approved more than twice as many renewable energy projects as the Trump administration. She suggested that former President Donald Trump, who has criticized wind power as too expensive and falsely claimed that wind turbines cause cancer, delayed but did not stop the country's transition away from fossil fuels. did.
“While the previous administration did everything in its power to sabotage our department's clean energy program, we are making the most of the time lost by focusing on this urgent and overdue transition to a better future. “We're making up for it,” Haaland said.