WASHINGTON (AP) — The Obama administration took a first step Friday toward a possible increase in fees charged for oil and gas companies to drill on federal lands.
The Bureau of Land Management issued a notice seeking public comment on whether regulations are needed to give the government more flexibility to set fees.
Government auditors have consistently questioned whether the 12.5 percent royalty now being charged is too low. But a low royalty rate also encourages oil and gas exploration, and any increase would likely raise protests from industry and others that it will lessen production and increase prices at the pump.
Interior Secretary Sally Jewell says the current regulations have failed to keep pace with technological advances and market conditions. She described the notice issued Friday as an important step.
“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,” Jewell said in a press release.
The Government Accountability Office has recommended that BLM be allowed to raise or lower onshore royalty rates as necessary. The auditors also said the bureau needs to do a better of justifying any changes it makes.
The department’s news release said the review of its fees will also include a thorough analysis of the cost of doing business on federal lands.
“We welcome input from all parties on how taxpayers can be better assured adequate compensation from oil and gas production on public lands,” said Janice Schneider, an assistant secretary at the department.
Julia Bell, a spokeswoman for Republicans on the House Committee on Natural Resources, described the administration’s review of the fees as “the latest regulatory assault on oil and gas development on federal lands” and that it shouldn’t make it harder for producers to operate there.
Matt Lee-Ashley, a senior fellow at the Center for American Progress, a liberal research and advocacy group, applauded the review.
“The royalty rate for oil and gas on U.S.-owned lands has lagged behind the royalty rate of states and for offshore areas like the Gulf of Mexico, and has been costing local governments and taxpayers hundreds of millions of dollars in lost revenue,” he said.