America’s public lands benefit communities across the country. While some of our public lands, including many near national parks, provide recreational opportunities like hiking, fishing, or canoeing, others are leased to oil and gas companies – and this can help taxpayers. But unfortunately, the leasing system that we have in place has some serious problems that can actually hurt taxpayers and communities.
Oil and gas companies pay rental and royalty rates for oil and gas drilling on federal (or public) lands. But these rates are outdated and can also allow speculators to hoard leases. Here is the problem:
- The royalty rate – or the percentage of revenue paid to the government from the sale of oil, gas, and coal – has not changed in over a century. For the past 100 years, that rate has been set at 12.5%.
2. Rental rates – or the rent that oil and gas companies pay annually to the federal government – have stayed flat since the mid-1980s, even though drilling activity has more than doubled since then. This has resulted in billions of dollars in lost revenues.
3. And because rental rates increase from just $1.50/acre to $2.00/acre after 5 years, speculators can stockpile hundreds of idle leases without ever putting them into production.
As a result, taxpayers are not receiving a fair price for the development of publicly owned oil and gas resources on public lands.
The Federal Land Policy and Management Act tells us that Americans are entitled to “fair market value [for] the use of the public lands and their resources….” And the Mineral Leasing Act also directs the Bureau of Land Management (BLM) to use policies that “enhance financial returns to the United States…”
So in order to fix this broken system and ensure that companies are paying a fair price, we need to update oil and gas regulations to increase the royalty and rental rates.
The Fair Return for Public Lands Act, introduced by Senators Rosen and Grassley, would:
1. Increase the onshore oil and gas royalty rate from 12.5% to at least 18.75%
2. Increase rental rates to at least $3/acre for the first five years and $5/acre for the next five years.
This act will help make sure that energy development companies are paying their fair share for the use of public lands, and generate more money for states to help fund things like schools and infra-structure projects.’
Help protect our national parks and public lands and ensure that companies are paying a fair amount for leasing and developing our precious natural resources. Tell your representatives to support the Fair Return for Public Lands Act.