FOR IMMEDIATE RELEASE
Contact: Ike Obi
Email: media@taxpayer.net
WASHINGTON, D.C., September 9, 2026 — Wyoming was the second-largest producer of oil and natural gas from federal lands over the last decade, but outdated leasing terms prevented taxpayers from receiving a fair return on that production, according to a new report from Taxpayers for Common Sense.
The report, Wyoming’s Federal Oil and Gas Leasing, and What It Has Cost Taxpayers, finds that applying an 18.75 percent royalty rate to oil and gas produced from federal lands in Wyoming would have generated an additional $4.2 billion in public revenue. Because roughly half of federal royalty revenue is returned to producing states, more than $2 billion of that additional revenue would have flowed directly to Wyoming.
“This is not revenue based on hypothetical production that might happen someday. The oil was produced and the gas was sold,” said Autumn Hanna, Vice President of Taxpayers for Common Sense. “The question is how much of that value should have been returned to the taxpayers who own these resources. For decades, federal policy has answered that question by giving taxpayers less.”
The report’s key findings include:
- Federal taxpayers could have received an additional $4.2 billion in royalty revenue if an 18.75 percent royalty rate had been applied to federal oil and gas production in Wyoming over the last decade.
- More than $2 billion of that additional revenue could have returned to Wyoming, where federal mineral revenue supports schools, infrastructure, and other public priorities.
- Outdated federal bonding standards could leave taxpayers exposed to approximately $1.7 billion in potential reclamation liabilities from currently producing wells.
Federal oil and gas operators are required to post bonds intended to cover the cost of plugging wells and reclaiming drilling sites. Under previous federal requirements average bond coverage amounted to only a small fraction of likely cleanup costs—$3,873 in bond coverage per well, compared to an estimated reclamation cost of approximately $71,000.
The Bureau of Land Management reported 26,020 producing federal oil and gas wells in Wyoming at the end of FY2025. Those wells could cost roughly $1.8 billion to clean up. If average federal bond coverage returned to approximately $3,873 per well, the government would hold only about $101 million in financial assurances, leaving taxpayers potentially responsible for the difference.
“Weak bonding requirements do not make cleanup costs disappear,” said Hanna. “They increase the likelihood that taxpayers will inherit the bill when an operator walks away or goes bankrupt. Wyoming taxpayers lose twice when federal policy collects too little from production and fails to secure enough money for the cleanup afterward.”
Congress updated federal oil and gas leasing terms in 2022, raising the minimum royalty rate for new onshore leases to 16.67 percent and strengthening other fiscal safeguards. In 2025, Congress reduced the royalty rate to 12.5 percent and restored noncompetitive leasing. The Department of the Interior has also proposed rolling back bonding standards adopted in 2024.
The report concludes that responsible oil and gas development and strong taxpayer protections are not in conflict. States including Texas and New Mexico charge royalty rates as high as 25 percent on state lands while maintaining substantial oil and gas production.
“Wyoming’s production record shows that oil and gas companies will develop valuable resources when the opportunity is there,” said Hanna. “Lower royalty rates do not create more oil and gas. They simply reduce the public’s share of the value produced.”
Taxpayers for Common Sense is a nonpartisan budget watchdog serving as an independent voice for American taxpayers. TCS works to ensure that taxpayer dollars are spent responsibly and that government decisions are transparent, accountable, and grounded in the public interest.
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