Energy & Environment

Bipartisan bill seeks to raise fees for public lands drilling

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A new bipartisan bill is seeking to reform the royalties that oil and gas companies pay to the government to drill on public lands. 

Sens. Chuck Grassley (R-Iowa) and Jacky Rosen (D-Nev.) are introducing legislation in the Senate that would increase the rate oil and gas producers pay to drill on federal lands from 12.5 percent to 18.75 percent. 

“Big Oil continues to take advantage of low royalty rates on federal lands. Congress has not addressed this issue for over 100 years and since then, these oil companies have deprived the treasury and the American people of billions of dollars,” Grassley said in a statement. 

“It’s time for my colleagues in Congress to end this oil company loophole, end the corporate welfare and bring oil leasing into the 21st century,” he added. 

It’s not clear whether other Senate Republicans will get on board, but a companion House bill has been introduced by Reps. Katie Porter (D-Calif.), Raúl Grijalva (D-Ariz.) and Alan Lowenthal (D-Calif.), indicating further Democratic support for the measure. 

The Biden administration has also indicated it would make changes to the oil and gas leasing program, having temporarily paused new leases on public lands pending “completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practice.”

That order also directed the Interior Secretary to consider whether to adjust royalties for coal, oil or gas from public lands and waters “to account for corresponding climate costs.”

The Rosen-Grassley legislation would also bring other changes to the leasing program. It would hike the rate to rent land from $1.50 per acre for the first five years and $2.00 after that to $3.00 per acre for the first five years and $5.00 thereafter. 

It would also increase the minimum bids on federal lands from $2.00 per acre to at least $10.00 per acre. 

The bill would further adjust the rates for inflation at least every four years. 

The Congressional Budget Office estimated in 2016 that raising the royalty rate to 18.75 percent would add $200 million in federal revenue over the next 10 years. 

“The current federal oil and gas program is broken, and fails to protect our public lands and the American people,” Rosen said in a statement, adding that increased royalties could provide more funds for “critical education, infrastructure, and public health projects.”

The legislation would need the support of more Republicans besides Grassley to evade the threat of a Senate filibuster. 

Last year, Grassley and then-Sen. Tom Udall (D-N.M.) introduced a similar measure. 

Tags Alan Lowenthal Chuck Grassley Jacky Rosen oil and gas public lands Tom Udall

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