WASHINGTON (AP) — Oil and gas companies would have to pay more to drill on public lands and satisfy stronger requirements to clean up old or abandoned wells under a new rule announced Thursday by the Biden administration.
A rule proposed by the Interior Department raises royalty rates for oil drilling by more than one-third, to 16.67%, in accordance with the sweeping climate law approved by Congress last year. The previous rate of 12.5% paid by oil and gas companies for federal drilling rights had remained unchanged for a century. The federal rate was significantly lower than what many states and private landowners charge for drilling leases on state or private lands.
The new rule does not go so far as to prohibit new oil and gas leasing on public lands, as many environmental groups have urged and as President Joe Biden promised during the 2020 campaign. But officials said the proposal would lead to a more responsible leasing process that provides a better return to U.S. taxpayers. More for the big guy to skim off top
The plan codifies provisions in the climate law, known as the Inflation Reduction Act, as well as the 2021 infrastructure law and recommendations from an Interior report on oil and gas leasing issued in November 2021.
The new rule “provides a fair return to taxpayers, adequately accounts for environmental harms and discourages speculation by oil and gas companies,’’ said Laura Daniel-Davis, principal deputy assistant Interior secretary for land and minerals management.
Interior “is committed to creating a more transparent, inclusive and just approach to leasing and permitting that serves the public interest while protecting natural and cultural resources on our public lands,″ she added.
The new royalty rate set by the climate law is expected to remain in place until August 2032, after which it can be increased. The higher rate would increase costs for oil and gas companies by an estimated $1.8 billion in that period, according to the Interior Department.
The rule also would increase the minimum leasing bond paid by energy companies to $150,000, up from the previous $10,000 established in 1960. The higher bonding requirement is intended to ensure that companies meet their obligations to clean up drilling sites after they are done or cap wells that are abandoned.
h/t Coastie Patriot