Report: BLM says oil and gas operators should set their own royalty rates for public lands drilling

Report: BLM says oil and gas operators should set their own royalty rates for public lands drilling
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State offices for the Bureau of Land Management (BLM) were instructed to allow oil and gas operators to set their own rates for royalties they pay to the government as part of their leases for public lands drilling, High Country News reported on Thursday. 

High Country News reported that state BLM directors were emailed a document in which the national office said they should let oil and gas firms make those determinations. The document reportedly suggests a rate of 0.5 percent as opposed to the 12.5 percent fees typically paid by companies on oil and gas extracted from public lands. 

The BLM did not immediately respond to a request for comment from The Hill about this document. 

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The report comes as some in the industry has been requesting that the Trump administration lower the fees, known as royalties, that companies have to pay the government in order to extract oil and gas on public lands. 

Asked last month whether they would be implementing widespread royalty cuts, an Interior spokesperson told The Hill that companies that want such measures should apply for it through “established processes.”

“Entities who believe such relief may be appropriate to promote continued energy production and development can submit an application for relief to the appropriate bureau program,” the official said.

Based on the data that’s available so far, it looks as if every request sent to the government for royalty relief was granted. These 75 rate cuts were all in Utah. 

Critics have argued that this demonstrated a lack of rigor in the vetting process and will harm taxpayers since the royalty money goes to the government. 

A BLM official previously defended the rate cuts, telling The Hill that they were only being done "when it is in the best interest of conservation to do so or when it would encourage the greatest ultimate recovery of our natural resources."

Agency and industry sources told High Country News that hundreds of applications for royalty cuts and suspensions of federal lands leases have been sent in. Some of the requests for relief were at as low as 0.5 or zero percent, the news outlet reported.