The Biden administration unveiled a final rule Friday that increases the costs of drilling for oil and gas on federally-controlled lands.
The Bureau of Land Management (BLM) announced its final Fluid Mineral Leases and Leasing Process rule, increasing the amount the government charges drillers to use its land, increasing the government’s cut of profits from extracted oil and making it considerably more expensive for companies to abandon wells. While the administration and activist groups heralded the final rule as a much-needed update to federal guidelines for drilling on public lands, industry groups have generally characterized the regulation as unnecessarily broad and onerous.
“The BLM rule will drive small producers off public lands. The bonding amounts are excessive when there are just 37 orphan wells out of more than 90,000 wells on federal lands,” Kathleen Sgamma, the president of the Western Energy Alliance, said in a statement addressing the final rule. “Increasing bonding amounts 20-fold in order to take care of a problem on just .004% of wells is way out of proportion. This is another rule by the Biden Administration meant to deliver on the president’s promise of no federal oil and natural gas.”
Sgamma added that her organization “has no other choice” but to take the Biden administration to court over the regulation.
The rule reflects several key provisions of the Inflation Reduction Act, President Joe Biden’s signature climate bill, according to BLM. Among these provisions are a five-fold increase in minimum bids for oil and gas leases, an eventual five-fold increase in the minimum rental rate the government charges and an increase in the government’s take from oil and gas production of more than 4%.
Federally-controlled lands provided about 11% of all oil and 9% of all natural gas produced in the U.S. in fiscal year 2022, according to the BLM. The agency announced a new rule on Thursday that effectively makes it less costly to develop green energy on public lands.
Overall, the regulatory changes could saddle the fossil fuel industry with an additional $1.5 billion in costs, and the government could subsequently jack up rates after 2031, according to The New York Times. While Friday’s rule figures to have a restrictive effect on onshore drilling, the Biden administration has also pushed the skimpiest offshore oil and gas leasing schedule in contemporary American history.
Meanwhile, some activist organizations have commended the BLM’s final rule.
“The Biden administration deserves our thanks for holding accountable the companies who have gotten a sweetheart deal to drill public property for far too long,” Chris Marshall, a spokesperson for Accountable.US, a group that seeks to “hold special interests accountable and drive progressive change,” said in a statement. “Anyone who wants to profit from resources that belong to all American taxpayers should pay their fair share. This is an important step toward fixing a wildly irresponsible system that has given so much to massive corporations at the expense of everyone who enjoys the great outdoors.”
The BLM did not respond immediately to a request for comment.
