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President Joe Biden’s administration recently finalized a new rule designed to modernize the federal oil and gas leasing program. The rule increases the amount of money that energy companies must pay to lease and drill on federal lands, as well as gives federal land managers greater authority to protect sensitive wildlife habitats and cultural sites. Interior Secretary Deb Haaland stated that these reforms will help safeguard public lands and nearby communities for future generations, and are the most significant changes to the federal oil and gas leasing program in decades.

The finalized rule increases the royalties that companies must pay to the U.S. government for oil and gas extracted from public lands from 12.5% to 16.67%, as well as raises the minimum bid for leasing federal parcels from $2 to $10 per acre. These changes were required under the Inflation Reduction Act, a climate law passed by Democrats in 2022. The federal royalty rate for fossil fuel extraction had remained unchanged for over a century. Taxpayers for Common Sense applauded the move, stating that it is a crucial step towards ensuring a fair return and protecting American taxpayers.

In addition to the royalty increases, the rule seeks to hold companies accountable for cleanup costs in the event of bankruptcy by raising the minimum lease bonds to $150,000, a significant increase from the current $10,000 minimum. The Biden administration noted that the previous minimum no longer provided sufficient incentive for companies to meet their reclamation obligations, leaving taxpayers at risk for cleanup costs. However, oil and gas trade and lobbying organization Western Energy Alliance expressed concerns that the change to bond payments could drive small producers off public lands and stated that they intend to litigate the rule.

Environmental groups largely praised the administration’s action, applauding the efforts to rein in excesses of oil and gas corporations and address long-overdue problems related to drilling on public lands. The Sierra Club emphasized that these reforms set the stage for greater climate action on public lands, ensuring they are part of the climate solution rather than exacerbating the crisis. Despite these positive reactions, Republicans, including former President Donald Trump, have accused the Biden administration of being at “war” with fossil fuels, despite increases in U.S. crude oil production and natural gas exports during his tenure.

Senator John Barrasso, who has received significant campaign contributions from the oil and gas industry, criticized Biden’s energy policies, claiming that they make it economically difficult to produce energy on federal lands. Barrasso stated that reduced oil and natural gas production on federal lands would result in fewer jobs for Americans and potentially more money going to other countries like the Middle East, Venezuela, Russia, and Iran. The ongoing debate surrounding energy policy and environmental regulations highlights the broader discussions around the future of fossil fuel production in the United States.

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