Royalties for Drilling on Public Lands to Increase
The Biden administration on Friday made it more expensive for fossil fuel companies to pull oil, gas and coal from public lands, raising royalty rates for the first time in 100 years in a bid to end bargain basement fees enjoyed by one of the country’s most profitable industries.
The government also increased more than tenfold the cost of the bonds that companies must pay before they start drilling.
The new rules are among a series of environmental regulations that are being pushed out as President Biden, in the last year of his term in the White House, seeks to cement policies designed to protect public lands, lower fossil fuel emissions and expand renewable energy.
While the oil and gas industry is strongly opposed to higher rates, the increase is not expected to significantly discourage drilling. The federal rate had been much lower than what many states and private landowners charge for drilling leases on state or private property.
“These are the most significant reforms to the federal oil and gas leasing program in decades, and they will cut wasteful speculation, increase returns for the public, and protect taxpayers from being saddled with the costs of environmental cleanups,” Interior Secretary Deb Haaland said.
The government estimates that the new rules, which would also raise various other rates and fees for drilling on public lands, would increase costs for fossil fuel companies by about $1.5 billion between now and 2031. After that, rates could increase again.