In a U.S. Department of the Interior report issued Friday, the agency recommends several price increases and reforms for companies drilling for oil on federally owned lands to modernize the regulations and increase the amount of revenue for taxpayers.
"Our nation faces a profound climate crisis that is impacting every American. 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," Secretary Deb Haaland said in a press release Friday announcing the report’s findings. "This review outlines significant deficiencies in the federal oil and gas programs and identifies important and urgent fiscal and programmatic reforms that will benefit the American people."
The report is part of an executive order from President Joe Biden in January to reevaluate governmental policies relating to the climate crisis, including harvesting fossil fuels from federal lands.
"The United States and the world face a profound climate crisis," the Jan. 27 order reads. "We have a narrow moment to pursue action at home and abroad to avoid the most catastrophic impacts of that crisis and to seize the opportunity that tackling climate change presents. Domestic action must go hand in hand with United States international leadership, aimed at significantly enhancing global action. Together, we must listen to science and meet the moment."
According to the report, prices for leases, and the royalties earned on sales of oil from federal lands, have not changed in 100 years since Congress enacted the Mineral Leasing Act in 1920 that allows companies to bid as little as $2 per acre for 10 years, with an even lower amount should no one bid on a parcel of federal land during its auction period.
On developed parcels, companies pay a royalty rate of 12.5% of the realized sales of minerals harvested from the parcels, which is the rate established in the 1920 law.
Other states and private landowners now charge between 16-18% for such royalties, the report found.
The report cited a 2017 General Accounting Office report that found higher prices were not leading to a decrease in production on lands where royalties were increased.
The agency estimates that the country lost up to $12.4 billion in revenue between 2010-19 due to the lower pricing.
Another area the report wants to deal with is discouraging "speculators" and "bad actors" from buying up the leases at a cheap rate and then either selling them for a profit or neglecting to use them for production.
The report found that more competitive parcels, leasing for around $100 per acre were 20 times more likely to be developed and produce oil than parcels leased for less.
Among the recommended changes to the policies are to increase the bond amounts posted by those leasing the land to ensure they develop the parcels for production instead of buying on speculation or reselling the leases.
© 2022 Newsmax. All rights reserved.