Today, the Department of the Interior (DOI) conducted the first onshore oil and gas lease sales of 2023. The sale offered 45 parcels containing 10,124 acres of federal land in Kansas and New Mexico for oil and gas development. In total, DOI leased 37 parcels covering 8,596 acres. The lease sales generated $78.8 million in total revenue, which is shared between federal and state taxpayers in New Mexico and Kansas.
In response to the lease sale, Taxpayers for Common Sense released the following statement from vice president Autumn Hanna:
“For decades, taxpayers have been shortchanged by the onshore federal oil and gas leasing system. The Department of the Interior has acknowledged that the system fails to adequately protect taxpayers and fails to give taxpayers a fair market value for the sale of publicly owned resources. Yet the Department continues to auction new leases under this broken system.
Today, the Department of the Interior offered more than 10,000 acres in Kansas and New Mexico and sold leases covering 8,596 acres. These leases carry with them a below-market royalty rate that will fail to adequately compensate taxpayers for the development of valuable oil and gas resources and insufficient bonding requirements that will further burden taxpayers with the long-term fiscal and environmental liabilities associated with orphaned wells.
Without solidifying important reforms to the onshore oil and gas leasing system, taxpayers will continue to lose. The Biden Administration must follow-up on the actions recently taken by Congress with new rules that will bring the federal oil and gas program into the 21st Century.”
Background
On October 7, 2022, the Department of the Interior (DOI) announced plans to offer 10,124 acres of federal land – 6,844 acres in Kansas and 3,279 acres in New Mexico – in the first onshore oil and gas lease sale of the year. Since then, nearly a dozen more oil and gas lease sales have been scheduled for this year, potentially offering more than half a million acres of federal land across the country.
Today is the first oil and gas lease sale that incorporates the fiscal reforms made by the Inflation Reduction Act (IRA). Although Congress has taken steps to raise the minimum bid, rent, and royalty rate, the new royalty rate of 16.67% is still lower than what some states and federal water charge, and insufficient bonding requirements leave taxpayers vulnerable to cleanup liabilities. Although DOI’s own review of the federal oil and gas leasing program acknowledged these leasing terms fail to provide a fair return for taxpayers, DOI has not completed the rulemaking to solidify the reforms suggested by its review. Today’s lease sale is further evidence that DOI must reform the oil and gas leasing system to better protect taxpayers and ensure a fair return for our valuable resources before more public lands get snatched up under these broken leasing terms.
Read our analysis of the lease sale results here
For more than two decades, TCS has advocated for modernizing the federal oil and gas leasing system to give taxpayers a fair return on the resources we all own. DOI must take prompt actions to increase the royalty rate to 18.75% and modernize oil and gas bonding requirements to address future cleanup liabilities. The DOI should also prioritize leasing in areas with known resource potential and avoid leasing that conflicts with other important uses like recreation, wildlife habitat, and conservation. Read more information on the leasing process and needed reforms here:
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