The people have spoken. It’s time for the royalty rates on public lands to be modernized!

Credit: David Kingham, flickr

By Joshua Mantell

Now that the comment period for the Bureau of Land Management’s (BLM) Advanced Notice of Proposed Rulemaking on oil and gas leasing, specifically looking at royalty on production, rental payments, minimum acceptable bids, bonding requirements and civil penalty assessments has come to an end, we expect that the BLM will take the guidance and recommendation of the over 45,000 people who submitted comments—and modernize the rates on public lands.

These rates are the costs that oil and gas companies pay to the American people for the privilege to use our federal lands for development.

It is far past time these antiquated rates were updated, and not only does public opinion support this notion, but so do the facts, according to a new report by Center for Western Priorities:

  •  Western states and taxpayers are being deprived of revenue that comes from the development of our shared natural resources. Oil producing states in the West are charging, in some cases, up to double of what the federal government does. The royalties on federal lands are currently at 12.5 percent—and that has not budged since the 1920s! Texas, New Mexico, North Dakota, Wyoming, Utah Montana and Colorado on average charge 18.45 percent—with Texas charging 25 percent on state lands. Even rates in the Gulf of Mexico, which is federally owned, are higher at 18.75%. Millions of dollars are being left on the table. States in the Rocky Mountain West are being deprived of between $490 million and $730 million annually.
  • We must recognize the impacts and trade-offs energy production has with other land values. Our public lands are host to a myriad of uses other than energy production, such as, camping, skiing, fishing and many, many others. These recreation activities are a large economic driver in communities adjacent to public lands. As a result, these communities and citizens should be adequately compensated if lands near them are used for development.

The BLM must take into account what American’s do on their public lands when it comes time to making this rule. Polling continuously shows strong support for modernizing the oil and gas leasing rules for many reasons—including mitigating the effects of climate change.

Moving forward with this rule-making will ensure that the American people see fair returns on their public resources, and public lands are getting fair value from their use.