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As the Senate considers President Biden's Build Back Better Act, long-overdue financial fixes to America's century-old oil and gas leasing system hang in the balance. At the center of the fight is Senate Energy and Natural Resources Committee Chairman Joe Manchin, and the royalties that oil and gas companies pay when they extract oil and gas from public lands.
Oil industry groups sent a letter to Manchin this week, urging him to keep the discounted royalty rates that drillers have paid since the passage of the Mineral Leasing Act of 1920. Manchin is holding his cards close, telling reporters “I think adjustments need to be made. I’ve always thought adjustments need to be made,” but without elaborating on what adjustments he would support.
The version of the Build Back Better Act passed by the House would raise royalty rates on publicly owned oil and gas from 12.5 to 18.75 percent, bringing them in line with the rates that companies pay when drilling on state land. Senator Jon Tester of Montana noted that royalty rates in Texas are above 20 percent, so oil companies can easily afford a similar rate on national public land.
“I don’t know if it can pass the Senate, but I can tell you that taxpayers need to get a fair return on their investment,” Tester said. “Those are public lands owned by the taxpayer.”
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We’re starting to have resource damage from just the large number of folks going up there. I don’t want to call it a problem because the increased use is a positive sign that people are enjoying their national forests. But that extensive use does create management challenges.”
