UPDATE – Dec. 17, 2021: 

The Senate Energy and Natural Resources committee released its own proposal as part of the Senate’s version of the reconciliation bill. Analysis of the oil and gas reforms included in the Senate version can be found here.

UPDATE – Nov. 4, 2021: 

The House Rules Committee released an updated version of Build Back Better bill on November 3, 2021. All oil and gas provisions outlined below remained in the draft bill. TCS is glad to see important oil and gas leasing reforms move along the reconciliation process. These fiscal reforms will bring in revenues and protect taxpayers from potential liabilities from oil and gas drilling.

ORIGINAL POST – Nov. 1, 2021:

The newly released House Rules Committee print of the Build Back Better bill for the FY 2022 budget reconciliation process includes provisions that would finally update the decades-old federal oil and gas leasing system to get taxpayers a fair return. At the beginning of the reconciliation process, Taxpayers for Common Sense highlighted several important oil and gas leasing reforms that should be included in any Reconciliation package, many of which are included in the current House draft.

Provisions in the bill that will raise revenues and give taxpayers a fair return:

• Raise the onshore fossil fuel royalty rates. [Learn more about how taxpayers have been shortchanged by the below-market-rate royalty for onshore oil and gas here.]
  • Coal: 12.5% to 18.75% for surface mining; underground mining royalty stays at 8%
  • Oil and Gas: increased from 12.5% to 18.75%
• Rate on back royalties & reinstated leases bumped up from 16 2/3% to 25%
• Charge royalties on all extracted methane from federal lands and the Outer Continental Shelf whether used on lease or flared/vented except in an emergency for no more than 48 hours [Learn more about lost gasses through venting and flaring here.]
• Eliminate Royalty Relief for [Learn more about problematic oil and gas royalty relief here.]
  • Outer Continental Shelf
  • Onshore oil & gas and coal
• Increase oil and gas minimum bid: increased from $2/acre to $10/acre, with inflation adjustment every 4 years
• Raise fossil fuel rental rates [Learn more about how raising oil and gas rental rates will increase revenues here.]
  • Oil and Gas: $3/acre for the first 2 years, $5/acre for year 3-5; back rentals and reinstated leases increased to $20/acre from $10/acre
• Establish an expression of interest fee
  • $15-50/acre, to be adjusted every 4 years to reflect inflation
• Eliminate noncompetitive oil and gas leasing [Learn more here about how noncompetitive leasing often leads to speculation but not production, locking lands away from other beneficial uses.]

Provisions in the bill that will protect taxpayers from liabilities associated with oil and gas drilling:

• Repeal of the Arctic National Wildlife Refuge (ANWR) oil and gas program and protect certain areas of the Easter Gulf Atlantic and Pacific Coasts from drilling. [Learn more about fiscal concerns with leasing in ANWR here.]
• Update onshore bonding requirement [Learn more about how taxpayers are at risk for oil and gas industry liabilities due to insufficient bonding here.]
  • A bond, surety or other financial arrangement required by rule or regulation is inadequate if it is for less than the cost of complete and timely reclamation of the least tract