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Biden administration seeks to raise the price to drill for oil and gas on public lands

The royalty rate of 12.5 percent has been in place since 1920.

NANTUCKET, Mass. — The Biden administration called Friday for oil and gas companies to pay more to drill for oil and gas on public lands, arguing taxpayers are being short-changed by low rates that have stayed stagnant for more than a century.

In a long-awaited report, the Interior Department said the federal leasing program must be overhauled to deliver better returns for the public and avoid damage to the environment and wildlife. Still, the administration stopped short of urging a permanent end to leasing government land to drill for fossil fuels, despite pleas from climate change advocates.

“Our nation faces a profound climate crisis that is impacting every American,” Interior Secretary Deb Haaland said in a statement. “The Interior Department has an obligation to responsibly manage our public lands and waters, providing a fair return to the taxpayer and mitigating worsening climate impacts while staying steadfast in the pursuit of environmental justice.”

Nearly 27 million acres of land overseen by the federal Bureau of Land Management are currently under lease by oil and gas companies who have drilled more than 96,000 wells and continue to bid on more.

Since the leasing program was put into place in 1920, the royalty rate of 12.5 percent has never been raised. The report calls the rates “out of step with modern times.”

The Biden administration isn’t specifying exactly what the new rate should be other than to say it should be higher, arguing that “taxpayers have not received a fair rate of return due to outdated fiscal terms.” The report points out that the royalty rates are lower for onshore drilling on federal lands than they tend to be for state-owned lands or offshore leases.

The Biden administration released the report the day after the Thanksgiving holiday, as President Joe Biden and his family were vacationing in Nantucket.

The report also calls for taking climate change into account in selling off new leases to drill, but does not go as far as to spell out exactly how oil and gas extracted from public lands are contributing to global warming.

Some environmental groups that want the federal government to stop leasing public lands for drilling altogether responded negatively, with the Center for Biological Diversity calling them “trivial changes” that are “nearly meaningless in the midst of this climate emergency.” The Biden administration has been unable to totally stop leasing public lands due to court action from Republican state attorneys general and was forced to hold a sale last week.

“The agency is formally taking responsibility for and seeking to address something that has long been widely acknowledged: we have a broken and outdated leasing system,” said Alexandra Adams, senior director of federal affairs for Natural Resources Defense Council.

The American Petroleum Institute, which lobbies for oil and gas companies, criticized the move given that Biden has also been working to lower gas prices including through release from the Strategic Petroleum Reserve.

“During one of the busiest travel weeks of the year when rising costs of energy are even more apparent to Americans, the Biden Administration is sending mixed signals,” API Senior Vice President Frank Macchiarola said.