Full Title: A Fair Share: The Case for Updating Federal Royalties
Author(s): Center for Western Priorities
Publisher(s): Center for Western Priorities
Publication Date: 6/2013
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Antiquated federal royalty rates are depriving taxpayers and many Western states of urgently needed revenue that could be used to pay down the national debt, expand access to hunting, fishing, and recreation opportunities, protect public lands, and improve infrastructure strained by oil and gas drilling operations.
The federal onshore royalty rate has not been updated since the 1920s, remaining at 12.5 percent. Most oil and gas producing states in the Western United States charge a significantly higher royalty rate than the federal government—typically a rate of 16.67 percent or 18.75 percent—to produce oil and gas on state-owned lands. Texas collects twice the federal rate in royalties.
Sequester cuts and budgetary restrictions have strained local, state, and federal budgets, creating a significant need to revisit our royalty policies. This paper looks at current federal royalty rates and examines opportunities for tax-payers to receive a fair return on energy resources while encouraging the diligent development of federal oil and gas leases.