Interior Moves to Raise Drilling Fees on BLM Tracts

The Interior Department kicked off a major rulemaking Friday that would update fees oil and gas companies pay to drill on public lands.

The Bureau of Land Management published an advanced notice of proposed rulemaking (ANPR) that requests public comment on potential changes to oil and gas royalty rates, rental payments, lease sale minimum bids, civil penalty caps and financial assurances.

The public has 45 days to weigh in.

"It's time to have a candid conversation about whether the American taxpayer is getting the right return for the development of oil and gas resources on public lands," Interior Secretary Sally Jewell said in a statement.  "The BLM's regulations have not kept pace with technological advances and market conditions, so this is an important information-gathering step as we seek to improve the way the federal government does business."

The ANPR asks the public to suggest how BLM should craft a rule, but it is not a regulation in itself.

Updates to BLM's royalty rate structure would offer the agency important flexibility at a time when oil production has risen on public lands in each of the past six years, Jewell said.

Conservation groups have supported higher fees to produce and maintain leases on public lands.  Roughly half of those revenues go to the U.S. Treasury, with the rest going to the states where drilling occurs.

But today's move will generate blowback from energy companies that argue they already pay more to operate on federal lands due to longer permitting times and the persistent threat of lawsuits from environmental groups.

BLM's current royalty rate of 12.5 percent has not changed since the 1920s.  Western states typically charge significantly more, and Interior charges offshore drillers 18.75 percent on sales of oil and gas.

Read more at Interior Moves to Raise Drilling Fees on BLM Tracts