New legislation would reform broken federal oil and gas leasing system

Today , House Democrats of the 117th Congress  took the first legislative action to ensure our public lands and waters are managed in the public interest, introducing a package of bills that give much needed reform to an archaic and broken federal oil and gas leasing system. 

In response to the bill introductions, The Wilderness Society released the following statement from Maria Handley, Director of Campaigns:

“Our nation’s system of fossil fuel leasing is broken. It gives handouts to oil and gas companies and has entangled community welfare and state budgets for schools and social services with the fossil fuel industry’s profits. 

“This broken system lets industry CEOs essentially call dibs on millions of acres of land and then do nothing with them, tying the hands of agencies who then won’t actively manage these lands for conservation, recreation, climate resilience or other valuable community benefits. We applaud Reps. DeGette, Porter, Lowenthal and Levin on their leadership to tackle the climate crisis and putting the public first.”

Summary of the bills introduced today:

Methane Waste Prevention Act (Rep. Diana DeGette)
This legislation led by Rep. DeGette, would codify long-overdue, widely agreed upon, common-sense standards to reign in excessive waste of vented and flared gas on public lands. By curbing unnecessary venting, flaring, and leaks at oil and gas facilities, this bill will help protect public health, reduce potent greenhouse gas emissions, and recoup on millions of dollars owed to the American taxpayers. As methane emissions have only proliferated in recent years, the Bureau of Land Management and Environmental Protection Agency have failed to meet their obligations to prevent the waste of federally owned resources under the Federal Land Policy and Management Act (FLPMA) and the Mineral Leasing Act (MLA), largely due to the outdated framework governing oil and gas production on federal lands. The growing problem of wasting publicly owned resources is amplified by the gas’s value and the resulting loss of royalty revenue for taxpayers. At the average price of gas sold from federal lands in the 2009-2015 period – $3.65 per thousand cubic feet (Mcf) – the 462 Bcf was worth an estimated $1.7 billion. Instead of collecting royalties on the full value of the gas, the Office of Natural Resources Revenue reports collecting just $17 million from operators for lost gas between 2009 and 2015. This bill takes an important first step to begin remedying this broken system. 

The Restoring Community Input and Public Protections in Oil and Gas Leasing Act (Rep. Mike Levin)
Oil and gas leasing on public lands has an impact on farmers, ranchers, businesses, recreationists and residents. It’s only fair that each of these groups are able to participate in the management and decision-making processes surrounding oil and gas development. This legislation includes provisions that allot a reasonable time for public and stakeholder input, require shorter lease terms to ensure the leasing agent is working with the most current information, and ensure that other uses are considered for the land in question. The bill led by Rep. Mike Levin, would end non-competitive leasing, where speculators can buy leases for $1.50 per acre and hold them for 10 years. GAO found that 99% of these leases are never developed - making it a waste of taxpayer resources and undercutting the BLM’s multiple use mandate. From stockpiled leases to drilling permits that sit in limbo for decades, the existing system for managing oil and gas development on public lands favors the oil and gas industry over all other uses. The federal government must start putting the public’s interests ahead of the oil and gas industry.

Ending Taxpayer Welfare for Oil and Gas Companies Act of 2021 (Rep. Katie Porter)
Our nation’s system of fossil fuel leasing is broken. Under our current system, oil and gas companies nominate public lands they want to drill, purchase oil and gas lease at obscenely low rates, easily obtain drilling permits, and pay taxpayers low and outdated royalty rates. This bill led by Rep. Porter, will ensure a fair return to taxpayers for use of their federal lands and that future actions adequately incorporate the costs of climate change and damages to human and environmental health that come from fossil fuels. The legislation would raise onshore royalty rates for the first time in a century, modernize rental and minimum bid rates, and require that these rates are periodically examined and adjusted for inflation. By modernizing the royalty rate, annual revenues could increase by as much as $38 million, according to the Government Accountability Office and the Congressional Budget Office. States in the Westlease their land with higher royalty rates: Montana, Utah and Wyoming charge 16.67 percent; in Texas, the rate is 25 percent. The 12.5 percent federal rate amounts to an unnecessary subsidy to the oil and gas industries. Worse, the Interior Department agreed to lower even that paltry rate temporarily during the pandemic to an average of less than 1 percent for companies that sought a reduction. The leasing system is supposed to provide taxpayers with a fair return for the lands that oil and gas CEOs lease from us, the public, but instead companies are paying pennies on the dollar – if royalty rates along were raised to 18.75% a decade ago, the federal government would have received an additional $12.8 billion dollars in revenue. In addition, companies can currently acquire leases for less than $1.50 per acre non-competitively, yet a 2020 GAO report found that 99 percent of recent noncompetitive leases never went into production or generated royalties for taxpayers. We must end this taxpayer giveaway and modernize our leasing and royalty system. This legislation will help frontline communities with their transition to a clean energy economy by ensuring they are receiving millions more in revenues owed to them by the oil and gas industry. 

Bonding Reform and Taxpayer Protection Act (Rep. Alan Lowenthal)
This bill led by Rep. Lowenthal, will help ensure complete and timely cleanup of oil and gas well sites by increasing – for the first time in 60 years – the minimum bond amount the Bureau of Land Management requires for reclamation. Moreover, BLM would be required to periodically and publicly review the bond amounts and make adjustments for inflation. This would help fix the problem now and into the future by addressing the root cause of the issue and strengthening oil and gas bonding requirements. This will, in turn, create critically-needed jobs, as thousands of oil and gas workers are now out-of-work because of the financial downturn caused by COVID-19. According to the Interstate Oil & Gas Compact Commission, there are nearly 57,000 documented orphaned wells in the United States and as many as 746,000 undocumented orphaned wells. Similarly, in 2019, the Government Accountability Office identified nearly 2,300 “at risk” wells on federal lands and warned that taxpayers could be on the hook for a large chunk of the clean-up costs for those wells, which could reach $333 million. Over 93% of people in the West agree that companies should clean up the lands they impact during development. Yet, the current bonding rate has not kept up with inflation, let alone technological advances which have increased reclamation costs. Communities should not be left to foot the bill when a well is left unreclaimed. These orphaned wells often leak methane that contribute to our climate crisis, while aging infrastructure allows contaminants to pollute our lands and waterways. Clean air and water are western values. Both are threatened by delayed or incomplete reclamation of oil and gas wells, unless lawmakers enact this bill to increase bond amounts and close the gap on reclamation costs. 

Transparency in Energy Production Act (Lowenthal)
Almost a quarter of the nation’s greenhouse gas emissions comes from fossil fuel development on public lands and waters. And the pollution created from both extracting and burning these fossil fuels in cars, power plants and beyond is released into the air and water that our communities breathe and drink. The legislation led by Rep. Lowenthal, is a good first step at addressing these environmental injustices, climate crisis, and helping state and local leaders make informed decisions about their communities’ energy needs. With greater information, we have a more informed citizenry, who can make better decisions about their futures as we transition to clean energy economy. TEPA, directs companies seeking or holding a lease to drill on public lands to track and report the amount of energy production and resulting emissions from federal lands and waters, and more specifically, the following:

• Uses standards established by nationally recognized Sustainable Accounting Standards Board (SASB) to report the amount, type, and source of fossil fuels produced under Federal leases, including the methane gas released by venting, flaring, and fugitive release on federal lands.
• Reports the amount of energy produced by renewable energy projects on federal lands.

• Makes information publicly available through a database created and maintained by the Department of the Interior.

CONTACT:

• Alex Thompson, Senior Communications Manager, 860-416-0564, alex_thompson@tws.org

The Wilderness Society is the leading conservation organization working to protect wilderness and inspire Americans to care for our wild places. Founded in 1935, and now with more than one million members and supporters, The Wilderness Society has led the effort to permanently protect 111 million acres of wilderness and to ensure sound management of our shared national lands. www.wilderness.org.