Rosen, Grassley Introduce Bipartisan Fair Returns for Public Lands Act to Ensure Taxpayers Get Fair Share for Oil and Gas Leasing on Public Lands
Legislation Would Reform Antiquated Law That Governs Royalties And The Leasing Of Public Land To Ensure Oil And Gas Companies Pay Fair Market Value For The Public Resources They Extract And Sell
WASHINGTON, D.C. – Today, U.S. Senators Jacky Rosen (D-NV) and Chuck Grassley (R-IA) announced the introduction of their bipartisan Fair Returns for Public Lands Act, legislation to update the nation’s outdated public lands royalty system and ensure that taxpayers and our rural communities get fair returns on leases of public lands for oil and gas production. Representatives Katie Porter (D-CA), Raúl Grijalva (D-AZ), and Alan Lowenthal (D-CA) have introduced companion legislation in the U.S. House of Representatives.
“The current federal oil and gas program is broken, and fails to protect our public lands and the American people,” said Senator Rosen. “I’m introducing this bipartisan, common-sense legislation that will require oil and gas companies to pay increased royalties for drilling, ensuring that our state and local governments in Nevada and across the nation receive fair compensation to fund critical education, infrastructure, and public health projects.”
“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. This is not right. 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,” said Senator Grassley.
“Congress has the responsibility to make sure America’s public lands are managed in the public’s interest,” said Jocelyn Torres, Nevada-based Senior Field Director for the Conservation Lands Foundation. “Much of our nation’s public land deserves to be conserved for the public’s use and for its natural values. We support the Administration’s current pause on new leases and Senator Rosen’s introduction of the Fair Return for Public Lands Act to ensure taxpayers receive fair market value on the use of their public lands where oil and gas leasing is allowed.”
“We thank Senator Rosen for joining Senator Grassley in this important bipartisan effort to make sure the federal oil and gas leasing system works for local communities, does not undercut taxpayers, and does not harm wildlife habitat,” said Russell Kuhlman, Executive Director, Nevada Wildlife Federation. “It is completely illogical to continue using century-old policies to manage our public lands–policies that have cost Nevada’s communities tens of millions of dollars in revenue over the years. This common-sense fix goes hand in hand with the Biden administration’s commitment to ensuring federal land management works for wildlife and local economies, not just oil and gas companies.”
“For a hundred years, taxpayers have been ripped off by a system rigged for oil and gas CEOs,” said Jennifer Rokala, Executive Director of Center for Western Priorities. “Modernizing our public lands leasing system is long overdue and we applaud Senators Rosen and Grassley for the introduction of their bipartisan Fair Returns for Public Lands Act. Bringing royalty rates in line with market rates will make it harder for oil executives to lock up public land for years at a time and give the Interior department the flexibility to ensure the American people get a fair return when companies profit on the resources that belong to all of us.”
“For too long oil and gas companies have exploited our public lands and polluted our communities to profit at taxpayer expense,” said Athan Manuel, Director of Public Lands, Sierra Club. “We thank Senators Rosen and Grassley for their bipartisan leadership to help right these wrongs. This bill is an important step forward and compliments the Biden administration’s review of our outdated leasing system to ensure that our nation’s public lands work for the people, not just oil and gas CEOs.”
“As long as there is leasing of our public lands for oil and gas extraction, the public’s interest must be served,” said Sharon Buccino, director of Lands for the Natural Resources Defense Council. “The current system gives away too much to polluters. We applaud Senators Rosen and Grassley for their introduction of this bill that takes industry’s thumb off the scale and provides, at last, some equity to taxpayers when it comes to oil and gas extraction on public lands.”
“For decades, western communities have lost out on billions of dollars, while watching our cherished landscapes deteriorate thanks to federal leasing policies that have not been updated in over a century,” Gwen Lachelt, Founder and Director, Western Leaders Network. “With the introduction of this bill today, Senators Rosen and Grassley are standing up to ensure that communities like ours are getting a fair return from oil and gas drilling on public lands. A fix like this is long overdue, and we encourage Congress to support this bill and work with the Biden administration as they take on the task of reviewing and updating our woefully outdated leasing system.”
“As the Biden administration reviews the federal leasing system, Senator Rosen and Senator Grassley’s bipartisan bill provides a sensible roadmap for curbing irresponsible oil and gas development on millions of acres across the west, many on the doorsteps of famous national parks such as Grand Teton and Arches National Park,” Matt Kirby, Director of Energy and Landscape Conservation, National Parks Conservation Association. “Updating these policies as we transition our economy to clean energy will protect communities and parks from the damage that nearby oil and gas operations cause to air quality, public health and the climate.”
“Today, Senators Jacky Rosen and Chuck Grassley introduced the Fair Returns for Public Lands Act of 2021, a bipartisan bill which will help fix the broken onshore oil and gas leasing system by putting an end to the industry’s sweetheart deals for public lands drilling,” said Kate Hoit, Western States Director, Vet Voice Foundation. “This bill can serve as a model for how Congress can work with the Biden administration as it undertakes an historic and long-overdue review of the federal leasing program. Our public lands play a pivotal role in veterans’ lives as they transition back to civilian life—and this bipartisan bill will put an end to billions of dollars in taxpayer losses and return those revenues to the states to invest back into our communities and public spaces that so many veterans and their loved ones rely on.”
“America’s public lands have been leased to oil and gas companies for pennies on the dollar, at the expense of our treasured outdoor spaces, for far too long. And some of these leases have been on the doorstep of our iconic national parks and monuments,” said Phil Francis, Chair, Coalition to Protect America’s National Parks. “The Biden administration took a step towards solving this crisis by pausing new leasing to review the program, and Senator Rosen and Grassley’s bipartisan fix would reform fiscal aspects of the federal leasing program, some of which haven’t been updated in over 100 years. This would help hold oil and gas companies accountable, ensure they’re paying their fair share, and ultimately help to protect our national parks.”
“Our public lands should be managed with all of the opportunities they provide in mind, including ranching, farming, conservation, and outdoor recreation,” said Bill Midcap, Senior Policy Advisor, Rocky Mountain Farmers Union. “As a nation, it is our responsibility to find a careful balance between protecting and conserving our public lands and wildlife, and managing them for their fullest economic potential. Unfortunately, the century-old federal oil and gas leasing system has prioritized leasing and drilling far above all else and allowed industry to lease our public lands for far below fair-market value. We applaud U.S Senators Jacky Rosen and Chuck Grassley for introducing a no-nonsense, bipartisan bill that will modernize our leasing system to ensure taxpayers and local communities get their fair share.”
“A broken leasing system has enabled the oil and gas industry to plunder our public lands and waters that support a healthy climate,” said Maria Handley, Director of Campaigns at The Wilderness Society. “We need Congress to pass common sense reforms that prioritize the well-being of frontline and fossil-fuel reliant communities. We applaud Senators Rosen and Grassley for their leadership championing our nation’s public lands and the communities they support.”
“Kudos to Senators Rosen and Grassley for trying to finally inject some fiscal sanity into the federal oil and gas leasing program,” said Dave Jenkins, President, Conservatives for Responsible Stewardship. “For decades, and especially during the fevered leasing binge of the past four years, taxpayers have been fleeced out the wazoo by a system geared to exclusively benefit oil and gas speculators. We have been practically giving away the nation’s mineral wealth and allowing the oil industry to hoard huge swaths of the American West. Saying this bipartisan reform bill is overdue would be an understatement; this bill, coupled with the Biden administration’s comprehensive review of the federal leasing system, is a critical step toward making sure that taxpayers are getting the return they deserve.”
“New Mexicans hold our public lands close to our hearts, but the federal government has been practically giving them away to Big Oil for more than a century, without regard for the health, climate, and pollution costs to all of us,” said Camilla Feibelman, Director, Sierra Club Rio Grande Chapter.“President Biden made it clear that this change is long overdue with his recent executive order to pause new leasing and review the leasing program, and Senator Rosen and Senator Grassley’s bipartisan bill tackles one of the many egregious issues that are need of fixing.”
“For decades, the public lands and treasured places that are the bedrock of New Mexico’s outdoor heritage have been leased to oil and gas companies for next to nothing,” said Mark Allison, Executive Director, New Mexico Wild. “In January President Biden took a stand and paused new leasing on public lands until the Interior Department has a chance to review the leasing system. We thank Senator Rosen and Senator Grassley for advancing concrete changes that can and should be made to the program. This bipartisan bill would help bring this outdated system into the 21st century and help generate critical revenue for schools and infrastructure projects instead of favoring special interests.”
“We applaud Senators Rosen and Grassley’s sponsorship of this bipartisan bill,”said James Jimenez, executive director, New Mexico Voices for Children. “The royalty rates for drilling on our public lands are woefully outdated – they haven’t been increased in more than a century. New Mexico, which is supposed to get a fair share of this revenue, lost out on at least $2.5 billion over a recent ten-year span. That’s money that should have been invested in our classrooms. New Mexico can only set the rates on oil and gas that’s extracted from state lands, so we’re dependent on Washington to ensure that we’re getting fair market value for the natural resources on federal lands that belong to all of us. We encourage our congressional delegation to join Senators Rosen and Grassley, and work with the Biden administration in this important fight to ensure our public lands best serve the public interest.”
“Oil and gas companies should not be allowed to lease New Mexico’s breathtaking public lands, which provide critical habitat for big game and many other wildlife species, for pennies on the dollar,” said Jesse Deubel, Executive Director, New Mexico Wildlife Federation. “Senator Rosen and Senator Grassley’s new bipartisan bill will put an end to this practice by updating the federal leasing system, helping to ensure that our state’s long heritage of fishing, hunting, and outdoor recreation will remain for generations to come. We are grateful for this common-sense fix and applaud the senators for putting taxpayers ahead of oil and gas CEOs.”
BACKGROUND: One hundred years ago, Congress passed the Mineral Leasing Act of 1920, setting up a system in which companies could lease public lands to wrest valuable oil and gas from the ground. In the century since, the royalties and rent that those corporations pay to the American people for access have remained essentially unchanged even as the scale of development and profits has grown hugely.
The federal royalty rate for drilling in federal waters, at 18.75 percent, is 50 percent higher than it is on land. According to a 2015 study by the Center for Western Priorities, if the onshore federal royalty rate were the same as the 18.75 percent offshore rate, the U.S. government and the affected states would have collected up to $730 million annually in additional revenue.
In the 2019 fiscal year, the United States received $2.931 billion in royalties from onshore oil and gas production on federal lands. The overall value of those resources computes to $23.4 billion at a 12.5 percent royalty rate.
According to Taxpayers for Common Sense, due to outdated annual rental rate and minimum bid prices, taxpayers have lost more than $50 million in revenue in the state of Nevada over the last decade.
The Fair Returns for Public Lands Act would set a uniform federal royalty at 18.75 percent, applied to new oil and gas leases. The Congressional Budget Office estimated that this royalty would raise $200 million in federal revenue over the next 10 years, with an equivalent amount returned to the states where the oil or gas is being extracted. This bill will also increase the rates for reinstated oil and gas leases, which will discourage oil and gas developers from holding onto leases on public lands they do not intend to actually explore or develop.
Specifically, the Fair Returns for Public Lands Act would:
- Increase the royalty rate for oil and gas leases, from 12.5 percent to 18.75 percent.
- Increase the rental rate for oil and gas leases, from $1.50 per acre for the first five years and $2.00 per acre for the remainder of the lease, to $3.00 per acre for the first five years and $5.00 per acre for the remainder.
- Increase the national minimum bid for oil and gas leases, from $2.00 per acre to $10.00 per acre, with discretion for the Secretary of the Interior to set a higher minimum bid for individual lease sales or lease parcels as needed.
- Increase the rental and royalty rates for reinstated for oil and gas leases, by establishing a rental rate of $20 per acre and a royalty rate of 25 percent that applies uniformly to all reinstated leases.
- Establish a fee for expressions of interest, by requiring parties who wish to nominate public lands for oil and gas leasing to pay a fee sufficient to reimburse administrative costs of at least $15 per acre.
- Require regular adjustments, by directing the Secretary of the Interior to adjust these rates for inflation at least every four years, or earlier if necessary to enhance financial returns or promote more efficient management of oil and gas resources.
- Require a study, which must be completed in 3 to 5 years and will evaluate the efficacy of the Interior Department’s implementation of the bill.
The Fair Returns for Public Lands Act is endorsed by Center for Western Priorities, Coalition to Protect America’s National Parks, Conservation Colorado, Conservation Lands Foundation, Conservatives for Responsible Stewardship, Earthjustice, Earthworks, Friends of the Earth, Grand Canyon Trust, GreenLatinos, 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, Publish What You Pay-US, Rocky Mountain Farmers Union, Sierra Club, Sierra Club Rio Grande Chapter, Taxpayers for Common Sense, The Wilderness Society, Vet Voice Foundation, Western Leaders Network, and the Western Organization of Resource Councils.