Declaration of Energy Independence Act
The Declaration of Energy Independence Act would substantially change how the federal government leases onshore oil and gas resources, primarily by lowering royalty and rental rates, removing certain fees, and broadening the use of noncompetitive leasing. The bill aims to spur onshore energy development by making leases cheaper for producers, streamlining processes, and giving the Secretary of the Interior broader flexibility to modify royalties in hardship or uneconomic situations. It also introduces new and expanded noncompetitive leasing mechanisms, including specific provisions related to vesting future interests, abandoned mining claims, and special cases for tar sands, with the government retaining some authority to adjust royalties in certain circumstances. In short, the bill shifts incentives toward faster and cheaper access to federal onshore oil and gas, while restructuring key terms of lease issuance, term lengths, and royalty obligations. The net effect would likely be increased lease activity and production on federal lands, but with reduced federal royalty revenue and greater discretion for royalty relief in certain situations.
Key Points
- 1Royalty rates lowered: Onshore oil and gas leases would have their royalty rate reduced from 16 2/3 percent to 12 1/2 percent; reinstatement royalty provisions would also be adjusted to reflect lower rates (with specific changes to back-royalty calculations of 16 2/3 percent in certain reinstatement scenarios).
- 2Lower minimum bids and rents: The minimum bid per acre is reduced to $2 for a two-year period in two places (and for certain paragraphs), and annual rental rates are adjusted to $1.50 per acre per year for years 1–5, rising to not less than $2 per acre per year thereafter. Rentals for reinstated leases are cut from $20 to $10 per acre.
- 3Elimination of EOI fee: The one-time fee for expressions of interest is removed.
- 4Expanded noncompetitive leasing: The bill expands noncompetitive leasing, including:
- 5- A 12.5% royalty for noncompetitive leases.
- 6- A streamlined process for certain lands with no competitive bids, and a deadline-based path to issue these leases.
- 7- A vesting-interest provision allowing qualified holders with certain historical oil/gas production to elect noncompetitive leasing.
- 8- A primary lease term of 10 years, with extensions if drilling remains in progress and producing paying quantities.
- 9Special provisions and new authorities:
- 10- Tar sands and certain special areas receive explicit treatment (10-year primary term for those leases).
- 11- The Secretary can issue noncompetitive leases in specific abandoned oil placer mining claim situations, with minimum rental and 12.5% royalty.
- 12- The Secretary has authority to reduce royalties in petitions for noncompetitive leases and reinstated leases if economic conditions warrant or to avoid undue hardship.
- 13Conforming amendments and reorganizations: The bill makes several cross-reference updates and restructures parts of the Mineral Leasing Act to align with the new leasing framework, including provisions related to abandoned claims and reinstatement.
- 14Purpose and framing: The bill is titled to emphasize “energy independence,” positioning these changes as a means to accelerate onshore federal energy production.