Groups Urge Inclusion of Revenue-Raising Oil and Gas Leasing Reforms in Reconciliation Package

WASHINGTON, D.C. – Public Citizen and six other watchdog groups sent a letter today to the U.S. Senate and U.S. House majority leadership urging the inclusion of federal oil and gas leasing reforms in the reconciliation package. These reforms would raise significant revenue by ensuring that taxpayers receive fair market-rate returns on publicly owned resources and reducing potential federal and state liability for cleanup costs, the groups wrote.

“We ask that you incorporate reconciliation language approved by the House Natural Resources Committee updating federal oil and gas bonding standards and minimum bids, rents, and royalty rates; ending non-competitive leasing; and ending the leasing of lands with low or no potential for oil and gas development,” the letter reads.

The Government Accountability Office has repeatedly found that the federal oil and gas leasing program is vulnerable to waste, fraud, abuse, or mismanagement, and needs transformation. The government has lost up to $12.4 billion in revenue in the past decade due to below-market royalty rates for drilling on public lands and waters, according to Taxpayers for Common Sense.

The onshore program’s fiscal policies are outdated, failing to account for increased production, falling behind inflation, and lagging behind state rates. The onshore royalty rate has not changed since 1920, while rental rates and minimum bids have not been updated since the 1980s.

The groups said that stagnant rates have resulted in a non-competitive leasing, in which oil and gas companies can hoard public lands for next to nothing, preventing other productive uses. According to a GAO report, 99% of recently issued non-competitive leases never produced oil or gas. Taxpayers are not earning royalties from the overwhelming majority of these leases.

Thus, Congress should end the practice of selling leases without a competitive bid, the groups said. Updating these components of the federal oil and gas leasing system would help advance responsible management of our shared public resources and will protect the interests of taxpayers and future generations, the letter concludes.

The letter was signed by Public Citizen, Accountable U.S., Oil Change U.S., Oxfam America, Taxpayers for Common Sense, the Project on Government Oversight, and Publish What You Pay – United States.