Today, the Department of the Interior’s Bureau of Land Management released a final rule to codify fiscal reforms to the onshore oil and gas leasing system passed by Congress in 2022 and update bonding policies that were last reviewed in 1960.

In response to this announcement, TCS Vice President Autumn Hanna issued the following statement:

“Today’s final rule by the Bureau of Land Management marks a significant milestone in our longstanding efforts to reform the federal oil and gas leasing system. For too long, this outdated system has failed to secure fair returns for American taxpayers, costing us billions of dollars in lost revenue and imposing substantial reclamation liabilities. The final rule, which enacts fiscal reforms to the onshore oil and gas leasing system including updates to fees, rents, royalties, and bonding requirements, is a crucial step towards ensuring a fair return and protecting American taxpayers.”

Background

For decades, the federal oil and gas leasing system has failed to ensure that taxpayers receive a fair return from the development of federally owned resources. This has been due to outdated leasing processes, below-market fees, and insufficient bonding requirements, which have not only deprived taxpayers of potential revenue but also left them with growing financial liabilities.

In 2022, Congress passed a suite of fiscal reforms to the federal onshore oil and gas leasing system in the Inflation Reduction Act (IRA) — including raising below-market royalty rates and minimum bids, ending noncompetitive leasing, and creating a new expression of interest fee.

The final rule codifies the important fiscal reforms made by Congress, increases bonding requirements for the first time in over 60 years, and directs leasing towards areas with a higher potential of oil and gas development and away from important and sensitive wildlife habitat or cultural sites.

The final rule will help ensure taxpayers receive a fair return from the development of federally owned resources and are not left with costly liabilities from orphaned wells.

For more information, see how federal oil and gas leasing reform will benefit taxpayers.