The SFRED coalition supports modernizing royalties and other fees for drilling on public lands. Image: Judith Kohler
WASHINGTON – The nearly century-old federal royalty rate for drilling on public lands and decades-old bonding requirements are woefully inadequate to ensure Americans a fair return on their resources and offset impacts to fish, wildlife and water and lost fishing and hunting opportunities, a national sportsmen’s coalition said Tuesday.
The Sportsmen for Responsible Energy Development coalition wrote in a letter to the Bureau of Land Management that it supports aspects of the agency’s preliminary proposal on updating the royalty rate, at 12.5 percent since the 1920s, and the minimum bond amounts, rental payments and lease bids. The organization recommended raising the base royalty rate to 16.67 percent, what several states require, and develop tiered rates to reflect market conditions, the potential of the minerals and impacts on hunting, fishing and fish and wildlife habitat.
“The BLM’s move to update these regulations is welcome and long overdue for sportsmen who wish to see important fish and wildlife habitat valued in step with energy development,” said Ed Arnett, senior scientist for the Theodore Roosevelt Conservation Partnership. “Specifically, increasing royalty rates to reflect the risk that development could pose to sensitive fish and wildlife habitat on public lands will help ensure that resources are available to offset unavoidable impacts to habitat and provide continued access to the high-quality hunting and fishing experiences that fuel local economies.”
Coalition members encouraged the BLM to raise its bond requirements, noting the current levels date back more than 50 years. The bonds, or financial assurances that public lands, including important fish and wildlife habitat, will be reclaimed, are: $10,000 for an individual lease; $25,000 statewide for all the leases of a single operator; and only $150,000 to cover all the leases of a single company nationwide.
Fair return on public resources
In contrast, some states impose higher bonds for deeper wells on state lands and for a single operator’s leases statewide, ranging from $50,000 in Montana and New Mexico to $250,000 for more than 50 wells in Arizona.
“BLM’s bonding requirements are grossly inadequate to ensure that public lands degraded by oil and gas development are restored and that taxpayers don’t wind up on the hook for clean-up costs,” said Kate Zimmerman, the National Wildlife Federation’s public lands policy director. “Current requirements, which haven’t been updated in more than 50 years, allow companies to post a single nationwide reclamation bond of only $150,000 — regardless of the hundreds or even thousands of wells that an operator may have across the country. In an industry that suffers from boom and bust cycles, as in the case of recent bankruptcies due to dropping oil prices, that is just plain irresponsible.”
In addition, SFRED said the current rental rates of $1.50 to $2 per acre don’t reflect market values and fail to provide incentive to develop leases in a timely, responsible manner. Coalition members support increasing the minimum lease bid from $2 per acre, “particularly in areas that have high resource conflicts,” such as land near important fish and wildlife habitat and water resources important to communities and businesses.
“Responsible energy development starts with adequate funding for management agencies to do their jobs. Hunters and anglers expect the BLM to manage for multiple uses, including a balance between energy development and fish and wildlife habitat, but this comes with a price tag,” said Corey Fisher, the energy team leader for Trout Unlimited. “Any update of royalty rates needs to ensure a revenue stream for management that is commensurate with levels of development, and that a portion of these funds can be used to achieve a balance between energy development and habitat conservation.”