Bills advance to raise costs for oil and gas on federal lands, toughen methane rules

Democrats on the House Natural Resources Committee approved bills May 5 to raise royalties, minimum bids, minimum rents, bonding requirements, and a variety of other costs for oil and gas companies operating on federal lands, as well as eliminate noncompetitive leasing.

The action followed by one week the committee’s approval of a bill that would force an aggressive reduction of methane emissions from the oil and gas sector.

All of the bills won approval on party-line votes. Democrats insisted they were assuring taxpayers of fair compensation for use of public lands with measures that would generate more money for federal and state government. They cited higher state and private royalties to buttress their position that increased federal royalties would not deter leasing.

Republicans argued the measures would drive companies away from federal lands, leading to a reduction in revenues and jobs and greater dependence on foreign energy sources.

As with many measures relying on the votes of one party, the bills may win passage by the full House but have trouble in the Senate.

More money, tighter restrictions

The bills, and some of their most prominent provisions, included:

H.R. 1517, introduced by Rep. Katie Porter (D-Calif.). It would raise the minimum royalty for onshore federal oil and gas production to 18.75% from its current 12.5%; raise the minimum bid to $10/acre (as amended during the committee action) from the current $2/acre; raise minimum rent to $3/acre from current $1.50/acre; add inspection fees; increase penalties; impose royalties on all natural gas vented, flared, or leaked except for 48 hours of an emergency. The committee approved the bill on a 23-14 vote.

H.R. 1505, introduced by Rep. Alan Lowenthal (D-Calif.). It would increase minimum bonding amounts to cover the cost of closing down oil and gas wells and restoring the land, setting the new levels at $150,000 for individual surface-disturbing activity of each entity on a lease and $500,000 for all surface-disturbing activities of an entity in a state. It would be phased in over 3 years and adjusted every 3 years thereafter for inflation. The committee approved the bill on a 23-15 vote.

H.R. 1503, introduced by Mike Levin (D-Calif.). In addition to royalty and rent requirements parallel to those in Porter’s bill, Levin’s legislation would eliminate noncompetitive leasing; limit lease terms to 5 years instead of the current 10; set a fee of $15/acre for expressions of interest, to cover the government’s administrative costs; require the Bureau of Land Management to issue regulations governing hydraulic fracturing; give an operator 90 days to reach an operations agreement with a surface owner, with arbitration costs paid by the operator; allow lease development after 90 days of arbitration if the Interior Department concludes a good-faith effort was made. The committee approved it on a 24-15 vote.

EPA would set methane rules

H.R. 1492, introduced by Diana DeGette (D-Colo.). It would cut methane emissions from all of the oil and gas sector, not just applying to work on federal lands as in the other bills listed above. It was approved on a 24-19 vote Apr. 28, a week before the other bills advanced.

DeGette’s bill would set a national goal of reducing the quantity of US methane emissions from the oil and gas sector in 2025 to 65% below 2012 emissions, and a goal of cutting the emissions in 2030 to 90% below 2012 emissions. The Environmental Protection Agency (EPA) would be assigned the task of figuring out how to accomplish that.

The EPA would be required issue final regulations to achieve the 2025 goal no later than Dec. 31, 2022. The agency would be required to issue final regulations to achieve the 2030 goal no later than Dec. 31, 2023.