On November 26, 2021, the Department of the Interior (DOI) released its report on federal oil and gas leasing and permitting practices, following a review of onshore and offshore oil and gas programs.[1] President Biden ordered the review of the federal oil and gas program in Executive Order 14008, which was signed on January 27, 2021. The report identified several reforms that should be made to ensure the programs provide a fair return to taxpayers, discourage speculation, hold operators responsible for remediation, and more fully include stakeholders in decision-making.

The DOI’s report recommended that the Bureau of Land Management (BOEM) avoid offering lands with low production potential and instead focus on areas with moderate or high potential close to existing infrastructure. It also said that the Bureau of Ocean Energy Management (BOEM) should consider ending area-wide leasing, under which the entire planning area is offered with few exclusions for a smaller lease sale. According to the report, previous government reports have found that the practice has cost the agency billions of dollars and significantly reduces competition and the value of bids In addition, the report recommends raising royalty rates, which have not been raised in the last 100 years. The report also suggested raising the bonding rates as well. The report argued that bonding rates are 50 years old, and recent bankruptcies show the increasing risk of cleanup costs falling to taxpayers. The report notes that these recommendations are consistent with pending congressional proposals.

[1] https://www.doi.gov/pressreleases/interior-department-report-finds-significant-shortcomings-oil-and-gas-leasing-programs