New rule increases royalties for oil and gas companies that drill on public lands; bond will be at least 15 times more

The Interior Department worked to bring oil and gas management
into the 21st century. Drillers are angry. (Photo by J. Evans, Unsplash)

 

For decades, companies that  drilled on public lands for oil paid the federal government small royalties and spent little on cleanup funding, but that era is about to change. "A suite of regulatory changes from the Bureau of Land Management will increase royalties on oil and stiffen cleanup requirements," reports Heather Richards of E & E News. "The rule caps a multiyear effort by the Interior Department to 'modernize' how the U.S. manages vast resources of oil and natural gas under public lands in states like Wyoming and New Mexico."

Initially, President Joe Biden planned to end drilling on public lands "to shrink the future footprint of the nation’s oil program. . . but he retreated due to legal setbacks early in office," Richards writes. "The rule requires a minimum bond for drilling a federal lease that's 15 times higher than the previous minimum of $10,000. Environmental groups and government watchdogs like the Government Accountability Office have asked BLM for years for stronger bonding requirements to cover decommissioning costs of wells and pipelines when they are abandoned."

The new rule angered drillers who "are already panning the rule as an attack on their industry and threatening to sue," Richards reports. "The final rule suggests the Bureau of Land Management will have a higher responsibility to limit oil and gas in areas that are considered valuable for wildlife or recreation by prioritizing leasing in areas with greater oil potential. Oil companies nominate lands for lease, but BLM decides what acres are ultimately offered for sale."

Environmental advocates praised the action as a good stewardship plan. Emily Olsen, vice president of the Rocky Mountain Region for Trout Unlimited, told Richards, "Energy development and conservation need not be mutually exclusive. The BLM is prioritizing energy development where it will have the fewest resource impacts."