Because we have been tracking the federal oil and gas leasing for years and believe that taxpayers have been shortchanged by BLM and oil and gas companies through low royalty and rental rates, low minimum bonus bid and the noncompetitive leasing process.
The century-old royalty rate of 12.5 percent cost taxpayers up to $12.4 billion in lost revenue over the last decade compared to the rate for offshore federal oil of 18.75 percent. Meanwhile, private and state interests charge royalties as high as 25% on adjacent and nearby lands.
Out-of-date rental rates:
Rent for leased lands were first set in 1987, at $1.5/acre for the first 5 years and then $2/acre for the second half of the lease term. Had BLM simply adjusted for inflation on rental rates, it could have collected $335 million more over the last decade in rents alone, saving taxpayers money.
The existence of noncompetitive sale process allows oil and gas companies to nominate lands for auction, not submit any bid on the day of auction and snag it the very next day with a noncompetitive offer without paying a bit. In one case, a lease sale in Montana in December 2017 offered 204 parcels of land and only 55 of which received a bid. Highland Montana Corporation swooped in to get 132 out of the remaining 149 parcels of land the next day, acquiring 67,000 acres without a single bid. In fact, according to a GAO report, noncompetitive leases comprised about 27% of all leases and 38% of all acreage over 2003-2019. The report also found that only 1.2% of noncompetitive leases from 2003 to 2009 ever entered production
We believe that taxpayers win when we reform the broken and outdated leasing system and bring it into the 21st century. With these reforms:
- Raising royalty rates
- Eliminate non comp
- Increasing min bids
- Adjusting rental rates