March 9, 2021
On behalf of our millions of members and supporters across the country, we the undersigned urge you to support the Fair Return for Public Lands Act, introduced by Senators Rosen and Grassley. Federal revenue-generating policies for onshore oil and gas production have not kept pace and have fallen well behind the policies of most Western states. Congress has an opportunity to better protect taxpayers by updating the federal onshore fiscal rates and with the administration’s current pause on new leases in order to evaluate the onshore fossil fuel program, now is the right time for this reform. Doing so would ensure that companies are paying their fair share to taxpayers for the use of public lands to generate a private profit and would generate more revenue for states to help fund priority activities, like schools and infrastructure projects.
Oil and gas companies are getting sweetheart deals to develop America’s public lands at the expense of taxpayers and communities. The United States’ rental and royalty rates for oil and gas drilling on federal lands are woefully outdated; royalty rates have languished since 1920, and the minimum bid and rental rates have stayed flat since the mid-1980s, while drilling activity has more than doubled since 1985. As a result, taxpayers are not receiving fair market value for the commercial development of publicly owned oil and gas resources. Under the Federal Land Policy and Management Act, Americans are entitled to “fair market value [for] the use of the public lands and their resources….” Similarly, the Mineral Leasing Act also directs the Bureau of Land Management (BLM) to employ fiscal policies that “enhance financial returns to the United States…”
If passed, the legislation would increase the onshore oil and gas royalty rate to at least 18.75%, minimum bids to at least $10/acre, and increase rental rates to at least $3/acre for the first five years and $5/acre for the next five years. GAO has repeatedly raised the alarm on the inadequacies of BLM’s current fiscal policies, concluding that improved royalty rates could increase revenues by $20 to $38 million per year. According to the analysis conducted by Taxpayers for Common Sense, if an 18.75% royalty instead of a 12.5% royalty had been assessed on all oil, gas, and natural gas liquids produced on federal lands from FY09-FY18, ONRR could have collected as much as $15.7 billion in additional revenue.
Western states like New Mexico, Utah, Nevada, Colorado could benefit most from this adjustment. According to recent analyses, these outdated policies have cost New Mexicans $5 billion in revenue; Utahans $1.4 billion in revenue; Nevadans $50 million in revenue; and Coloradoans $1.3 billion in revenue. Annually, that adds up to billions lost to each state that could have helped fund after school programs, repave crumbling roads, or other state priorities.
Many western states have already strengthened their fiscal policies in order to provide a fairer return to taxpayers. In fact, all of the major oil and gas producing states in the West provide for higher royalty rates than the federal government’s onshore rate. According to GAO, “officials from Colorado and Texas said that they have raised their state royalty rates without a significant effect on production on state lands.”
It is incumbent on Congress to fix the broken onshore oil and gas leasing system and start putting American taxpayers, public lands, and communities first. Congress can do this by updating rental and royalty rates and minimum bids. We urge you to support the Fair Return for Public Lands Act to ensure the American people are getting a fair return from leasing and drilling on our public lands.
Coalition to Protect America’s National Parks
Conservation Lands Foundation
Friends of the Earth
Grand Canyon Trust
Hispanics Enjoying Camping, Hunting, and the Outdoors (HECHO)
League of Conservation Voters
Montana Wilderness Association
National Parks Conservation Association
National Wildlife Federation
Natural Resources Defense Council
Nevada Conservation League
Nevada Wildlife Federation
New Mexico Voices for Children
New Mexico Wild
New Mexico Wildlife Federation
Rocky Mountain Farmers Union
The Wilderness Society
Western Organization of Resource Councils