This week, the Department of the Interior (DOI) conducted 3 onshore oil and gas lease sales, offering 132,815 acres of federal land in North Dakota, Wyoming, Louisiana, and Michigan. In total, DOI leased 85 parcels covering 74,950 acres. The lease sales generated $30 million in total revenue, which will be shared among federal and state taxpayers.

In response to the lease sales, Taxpayers for Common Sense vice president Autumn Hanna released the following statement:

For decades, taxpayers have been shortchanged by the archaic onshore federal oil and gas leasing system. The Department of Interior has acknowledged that the system needs improvement yet fails to give taxpayers a fair return on publicly owned resources.

This week, the Department of Interior offered more than 132,815 acres of federal land for oil and gas development and sold 74,950 acres across all four states. Once again, the leases sold this week 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.

Background:

In late 2022 and early 2023, the Department of the Interior (DOI) announced plans for oil and gas lease sales in North Dakota, Wyoming, Louisiana, and Michigan. The sales offered a combined 137,986 acres of federal land for oil and gas development. In June, DOI offered 10,124 acres of federal land in Kansas and New Mexico for oil and gas development and sold leases containing 8,596 acres.

All lease sales conducted this year include recent reforms implemented by the Inflation Reduction Act (IRA), including a 16.67% federal onshore royalty rate (raised from 12.5%); rental rates of $3/acre for the first 2 years, $5/acre for years 3-8, and no less than $15/acre for years 9-10 (raised from $1.50/acre for years 1-5 and $2/acre for years 5-9); a minimum bid of $10/acre (raised from $2/acre), and an end to noncompetitive leasing.

For over two decades, TCS has advocated reforming the federal oil and gas leasing system in order to give taxpayers a fair return on the resources we all own. Although DOI has released proposed rules to update oil and gas bonding requirements, the final rule will not be released in time as DOI moved forward with scheduled 2023 lease sales. The leases will still come with insufficient bonding rates, saddling taxpayers with more cleanup liabilities in the future.

The proposed rule also codifies the 16.67% rate updated by the IRA, but TCS urges DOI raise the onshore royalty rate to match the offshore rate of 18.75%.

Read more on the federal onshore leasing process and common sense reforms here:

• The Federal Oil and Gas Leasing Process
• Abandoned Wells and Oil and Gas Bonding FAQ
• Oil and Gas Bonding on Federal Land
• Oil and Gas Bonding and Orphaned Wells Reform—General Principles & Options
• Oil and Gas Speculation on Federal Lands
• Scoring on Oil and Gas in Reconciliation