The Biden administration is increasing the royalty rates for drilling on public lands for the first time in over 100 years, the New York Times reported. The higher fees aim to better compensate taxpayers for exploiting public resources that all Americans own.
The rates companies will pay for new oil and gas leases on public and federal lands are going up from 12.5% to 16.67%. According to the government, this could bring in over $1 billion between now and 2032.
The 2022 Inflation Reduction Act mandated the royalty increase, but the Department of the Interior announced the rules on April 12, 2023. The Times noted that the rules could go into effect in as little as 60 days from the announcement.
With the new rules, the Biden administration aims to "disincentivize speculators and irresponsible actors." It also aims to have drilling companies cover more clean-up costs for abandoned wells, which taxpayers currently pay for.
This is where the increased bonds companies must pay for leases come in. The rate will go from $10,000 to $150,000 per lease, according to the Times. These bonds will cover the clean-up costs. Abandoned wells release methane gas into the atmosphere. Per the UN, exposure to methane leads to one million premature deaths yearly. Sealing the wells can help prevent these deaths.
Not only could the new rules relieve the financial burden on taxpayers and save lives, but closing the wells will also significantly impact communities by mitigating air and water pollution.
"Taxpayers have been losing billions of dollars on a broken leasing system with these ridiculously low royalty rates, rents, and minimum bids for far too long," said Autumn Hanna, vice president of Taxpayers for Common Sense, a fiscal watchdog group.
Methane gas is also more powerful than some other harmful carbon pollutants because it is more efficient at trapping heat in the atmosphere. Reducing methane gases would help reach climate goals.
This isn't the government's only project in the works to reach climate goals. The Department of Energy is investing in nuclear energy, and local projects like the largest-of-its-kind solar farm in Ohio are also happening.
The low rates also led to the overexploitation of land, which has destroyed wildlife habitats. These new rates intend to discourage companies from drilling as much as they do now, resulting in animals getting less land taken away.
Interior Secretary Deb Haaland said in a statement quoted by the Associated Press that "these reforms will help safeguard the health of our public lands and nearby communities for generations to come."
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