Sens. Chuck Grassley (R-Iowa) and Jacky Rosen (D-Nev.) introduced the bipartisan Fair Returns for Public Lands Act, legislation to update the nation’s outdated public lands royalty system and ensure that taxpayers and rural communities get fair returns on leases of public lands for oil and gas production.
“Big Oil continues to take advantage of low royalty rates on federal lands. Congress has not addressed this issue for over 100 years and since then, these oil companies have deprived the treasury and the American people of billions of dollars. This is not right. It’s time for my colleagues in Congress to end this oil company loophole, end the corporate welfare and bring oil leasing into the 21st century,” Grassley said.
“The current federal oil and gas program is broken, and fails to protect our public lands and the American people,” Rosen said. “I’m introducing this bipartisan, common-sense legislation that will require oil and gas companies to pay increased royalties for drilling, ensuring that our state and local governments in Nevada and across the nation receive fair compensation to fund critical education, infrastructure, and public health projects.”
Over one hundred years ago, Congress passed the Mineral Leasing Act of 1920, setting up a system in which companies could lease public lands to wrest valuable oil and gas from the ground. In the century since, the royalties and rent that those corporations pay to the American people for access have remained essentially unchanged even as the scale of development and profits has grown.
The Fair Returns for Public Lands Act would set a uniform federal royalty at 18.75 percent, applied to new oil and gas leases. The Congressional Budget Office estimated that this royalty would raise $200 million in federal revenue over the next 10 years, with an equivalent amount returned to the states where the oil or gas is being extracted. Reductions in production would be small or even negligible over that period. This bill will also increase the rates for reinstated oil and gas leases, which will discourage oil and gas developers from holding onto leases on public lands they do not intend to actually explore or develop.
Specifically, the Fair Returns for Public Lands Act would:
· Increase the royalty rate for oil and gas leases, from 12.5 percent to 18.75 percent.
· Increase the rental rate for oil and gas leases, from $1.50 per acre for the first five years and $2.00 per acre for the remainder of the lease, to $3.00 per acre for the first five years and $5.00 per acre for the remainder.
· Increase the national minimum bid for oil and gas leases, from $2.00 per acre to $10.00 per acre, with discretion for the Secretary of the Interior to set a higher minimum bid for individual lease sales or lease parcels as needed.
· Increase the rental and royalty rates for reinstated for oil and gas leases, by establishing a rental rate of $20 per acre and a royalty rate of 25 percent that applies uniformly to all reinstated leases.
· Establish a fee for expressions of interest, by requiring parties who wish to nominate public lands for oil and gas leasing to pay a fee sufficient to reimburse administrative costs of at least $15 per acre.
· Require regular adjustments, by directing the Secretary of the Interior to adjust these rates for inflation at least every four years, or earlier if necessary to enhance financial returns or promote more efficient management of oil and gas resources.
· Require a study, which must be completed in 3 to 5 years and will evaluate the efficacy of the Interior Department’s implementation of the bill.
Original source can be found here.
