STATEMENT and ANALYSIS of Senate climate agreement

Jul 27, 2022

DENVER—The unprecedented climate agreement reached tonight as part of the broader budget reconciliation process includes significant measures to reduce America’s carbon emissions, including major reforms to the federal onshore oil and gas leasing program.

The Center for Western Priorities released the following statement from Executive Director Jennifer Rokala:

“This bill includes the first meaningful reforms to the oil and gas leasing system in a hundred years. If it becomes law, it will represent a turning point in America’s energy and climate policy. The climate measures in the reconciliation bill are a major victory for the country, and the reforms to oil and gas leasing will ensure taxpayers get a fair return during the transition to a clean energy economy.

“No bill is perfect, and there are major flaws in this final package, including mandatory oil lease sales of at least 2 million acres onshore and 60 million acres offshore. Reforming the system while locking in more drilling is taking two steps forward and another step backwards. 

“In all, we cannot let the bad overshadow the good this bill will ultimately provide for our children and grandchildren. Our thanks go out to the members of Congress who worked to get this deal over the finish line, especially Senators Bennet, Hickenlooper, Rosen, and Heinrich. Without their leadership and dogged support, these reforms would not have made it into the final package.”

Highlights of oil and gas leasing reforms in the Inflation Reduction Act:

  • Raises royalty rates for onshore oil leasing to 16.66%, up from 12.5%
  • Raises royalty rates for offshore oil leasing to between 16.66% and 18.75%
  • Raises minimum bids for onshore oil leasing to $10 per acre, up from $2 per acre
  • Raises rental rates for oil leases to $3 per acre, increasing to $5 then $15 if oil companies don’t use their leases
  • Adds a $5 per acre fee for expressing interest in federal land for leasing
  • Eliminates non-competitive leasing, instating secondary rounds of competitive auctions
  • Significantly increases bonding requirements for oil and gas drillers to at least $150,000 for an individual lease, $500,000 for all leases in a state, or $2,000,000 for all leases by a company nationwide
  • Adds a royalty on all methane that is extracted from public lands, including methane that is vented or flared
  • Funding for cleaning up abandoned oil and gas wells
  • Funding for methane mitigation and monitoring

Problematic measures in the Inflation Reduction Act:

  • Reinstates the contested November 2021 offshore lease sale 
  • Requires more offshore lease sales according to the Obama-era leasing plan of January 2017, including an offshore sale by September 2023
  • Requires the Interior Secretary to hold onshore and offshore lease sales of at least 2,000,000 and 60,000,000 acres, respectively, in order to hold renewable energy lease sales
  • Requires the onshore lease sale to include at least 50% of the acres nominated by oil and gas companies


  • By the numbers: Oil industry awash in permits, leases while pushing for more drilling [Westwise]
  • The oil industry’s public lands stockpile [Westwise]
  • Progress Report: President Biden’s first year on public lands [Westwise]
  • “No harm, no foul” doesn’t exist in oil and gas leasing [Storymap]