How the Build Back Better Act Will Benefit Wildlife, Outdoor Recreation, American Taxpayers

For far too long, an antiquated oil and gas leasing system has undermined wildlife conservation, hampered outdoor recreation opportunities, and short-changed American taxpayers. A recently-released report from the Department of the Interior confirms that oil and gas companies have been charged well below market rates for leasing public lands. The system also squelches competition and fosters reckless speculation on lands that have little or no potential of ever producing oil and gas. Finally, it fails to collect enough bond money to pay for the cleanup of abandoned oil and gas wells that leak toxic chemicals into our lands, waters, and air.

It’s time for Congress and the Biden Administration to make changes to the system so that our wildlife and public lands can thrive and so that all Americans can benefit from them. The Build Back Better Act that has been passed by the House of Representatives and is awaiting Senate action contains three concrete reforms that would update this antiquated system.

Raise royalty rates

For over 100 years, the federal onshore drilling royalty rate has not changed, meaning that taxpayers aren’t getting a fair market price from oil companies for the privilege of using our public lands. Far higher rates are currently charged for oil drilling on private and state lands – and it’s time to update the rates charged on federal lands. According to the Government Accountability Office, royalty and rental rates could be increased — greatly benefiting taxpayers and state budgets — with “negligible” impacts on production. It’s long past time for the rates to be raised. The Build Back Better Act will raise royalty payments to 20%, which will raise an additional $5-38 million annually.

End the practice of noncompetitive leasing

The current leasing system also hampers conservation and recreation initiatives by a decades-old practice of noncompetitive leasing. It allows energy speculators to bid on leases for as little as $1.50 an acre. Most of the time, these leases are never developed because there is little or no potential for oil. But because they are under lease, they aren’t managed for conservation and recreation – activities that could actually generate money for state and local governments.

Credit: Bureau of Land Management

Wildlife watching, hunting, fishing, and other outdoor recreation is an economic engine that generates $887 billion in consumer spending, creates more than 7 million jobs, and raises more than $120 billion every year in federal, state, and local tax revenue. Those numbers could grow even larger if so many of our federal lands weren’t tied up in noncompetitive leases that will never be developed for oil and gas. Noncompetitive leasing is a prime example of government inefficiency that wastes time and taxpayer resources. The Build Back Better Act puts an end to this wasteful practice.

Raise bonding rates to clean up orphaned wells

Finally, the Interior Department report notes that orphaned wells on federal public lands pose serious health risks by leaking methane and other toxins into the air and water. Wells become “orphaned” when an oil company goes bankrupt and can’t afford to properly cap and clean up its wells. There are at least 2.6 million documented orphaned wells in this country and it will take $280 billion to plug them properly. (There’s likely another 1.2 million abandoned wells that haven’t been documented which would raise those costs even more.) 

The bipartisan infrastructure bill that was recently signed into law makes a historic investment of $4.7 billion to clean up some of these wells, but we need to ensure taxpayers aren’t on the hook for future cleanups.

Orphan well plugging
Orphan well plugging. Credit: Ohio Department of Natural Resources

That’s why it’s critical to raise bonding rates. For far too long, the government has been charging too little for bonding — that is the fee companies are charged in advance to cover cleanup costs. In fact, less than 1% of the money needed for such cleanups has been collected. The Build Back Better Act raises the bonding rates so taxpayers won’t pay for future cleanups. 

Historic opportunity to fix a broken system

It’s time for the Senate to take action by passing these long-overdue common sense reforms to the oil and gas leasing system. There are also steps the Biden Administration can and should take immediately as well. Our nation’s public lands belong to all of us. It’s time to modernize the leasing system so that wildlife, outdoor recreationists, rural communities, taxpayers, and small businesses can reap the benefits of healthy and thriving public lands well into the future.

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