Proposed Regulatory Changes Would Raise the Cost of Oil Drilling on Public Land

Changes to regulations governing oil drilling on public lands proposed by the Biden administration could “dramatically increase the operators’ financial obligations, boost the royalties that companies pay and tighten permissive leasing regulations,” writes Nick Bowlin in High Country News.

“Many Western environmental advocates and public officials praised the proposal as the much-needed and long-overdue restructuring of a system that has always favored industry.” Bowlin notes that the financial assurance reforms included in the proposal are “a major deal,” with the new rules raising the bonding level for new leases and the state-level blanket bond to combat stagnant bonding levels that no longer cover the cost of site cleanup. “A 2019 report by the U.S. Government Accountability Office found that 99% of federal oil and gas leases have bonds that would be unable to pay for the full cost of cleanup.”

The proposal also raises the percentage oil companies must give to states and raises the minimum bid for public-land drilling lease auctions.

“Some climate advocates, however, said that an administration that calls itself a climate champion should be working to actively phase out public land oil and gas production, rather than attempting to reform it.” Bowlin points out that President Biden ran on a promise of ending oil drilling on public lands, “But during his first two years in office, his administration approved more oil and gas permits than former President Donald Trump did in the same time frame.”