Oil and gas companies must pay more to drill on public lands under new Biden administration rule

WASHINGTON (AP) — Oil and gas companies will have to pay more to drill on public lands and satisfy stronger requirements to clean up old or abandoned wells, according to a final rule issued Friday by the Biden administration.

The Interior Department’s rule raises royalty rates for oil drilling by more than one-third, to 16.67%, in accordance with the sweeping 2002 climate law approved by Congress. The previous rate of 12.5% paid by oil and gas companies for federal drilling rights had remained unchanged for a century. The federal rate was significantly lower than what many states and private landowners charge for drilling leases on state or private lands.

The new rule does not go so far as to prohibit new oil and gas leasing on public lands, as many environmental groups have urged and as Democratic President Joe Biden promised during the 2020 campaign. But officials said the proposal would lead to a more responsible leasing process that provides a better return to U.S. taxpayers.

The plan codifies provisions in the climate law, known as the Inflation Reduction Act, as well as the 2021 infrastructure law and recommendations from an Interior Department report on oil and gas leasing issued in 2021.

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