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US Report Suggest Changes in Oil and Gas Leases

Administration report calls for raising rates but not banning drilling on public land
By Newser Editors and Wire Services
Posted Nov 26, 2021 4:25 PM CST
US Report Suggest Changes in Oil and Gas Leases
Interior Secretary Deb Haaland, shown Monday in New Mexico, said the lease recommendations will help combat the effects of climate change.   (AP Photo/Susan Montoya Bryan)

(Newser) – The Biden administration on Friday recommended an overhaul of the nation's oil and gas leasing program to limit areas available for energy development and raise costs for oil and gas companies to drill on public land and water. The long-awaited report by the Interior Department stops short of recommending an end to oil and gas leasing on public lands, as many environmental groups have urged. But officials said the report would lead to a more responsible leasing process that provides a better return to US taxpayers, the AP reports.

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"Our nation faces a profound climate crisis that is impacting every American," Interior Secretary Deb Haaland said in a statement, adding that the new recommendations will mitigate worsening climate change impacts "while staying steadfast in the pursuit of environmental justice." The report completes a review ordered in January by President Biden, who directed a pause in federal oil and gas lease sales in his first days in office, citing worries about climate change. The moratorium drew sharp criticism from congressional Republicans and the oil industry, even as many environmentalists and Democrats said Biden should make the leasing pause permanent.

The new report seeks a middle ground that would continue the multibillion-dollar leasing program while reforming it to end what many officials consider overly favorable terms for the industry. The report recommends hiking federal royalty rates for oil and gas drilling, which have not been raised for 100 years. The federal rate of 12.5% that developers must pay to drill on public lands is significantly lower than many states and private landowners charge for drilling leases on state or private lands. The report also said the government should consider raising bond payments that energy companies must set aside for future cleanup before they drill new wells. Bond rates have not been increased in decades, the report said.

(Read more oil and gas leases stories.)

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