RELEASE: New Analysis Highlights Need for Policies to Ensure Taxpayers Receive a Fair Share on Public Lands

Apr 23, 2015

In the first three months of 2015, a quarter of federal onshore oil and gas leases sold for $2.00 per acre

DENVER – An analysis released today by the Center for Western Priorities reveals that oil and gas companies continue buying up leases on American public lands at next-to-nothing prices.

Between January 1st and March 31st of this year, over 166,000 acres of national public lands were leased to oil and gas companies in seven Western states. Nearly 41,000 acres—or 25 percent—were sold at the minimum bid of just $2.00 per acre.

The percentage of leases selling at the minimum spiked during the first quarter of 2015. According to a CWP analysis, in 2014 only 15 percent of leases sold for the minimum bid of $2.00 per acre.

“The fact that oil and gas companies can buy ridiculously cheap leases on our national public lands is symptomatic of a leasing system that’s weighted towards the oil and gas industry at the expense of American taxpayers,” said Greg Zimmerman, policy director with CWP. “Now is the time for our leaders to balance the scales and ensure all Americans receive a fair share from oil and gas development on our public lands.”

The new data comes on the heels of an announcement from the Interior Department and the Bureau of Land Management that they are beginning a process of reexamining outdated royalty rates, rental rates, minimum bids, and bonding requirements on public lands.

Under current rules, companies pay a 12.5 percent royalty to produce oil and gas on public lands. The federal royalty – last updated in the 1920s – is well below those assessed by Western states, which charge rates between 16.67 percent and 25 percent.

Additionally, companies pay an annual rental rate of $1.50 per acre during the first five years of a lease and $2.00 thereafter to maintain nonproducing oil and gas leases. Low rental rates encourage the practice of stockpiling unused leases and provide little incentive for companies to bring leases into production, according to the Government Accountability Office.

Previous research conducted by CWP highlights how much taxpayers are losing from low royalty and rental rates. The gap between the federal and state royalty rates shortchanges American taxpayers $500 million per year. Small increases to the rental rate could generate an additional $56 million for taxpayers annually.