The U.S. Bureau of Land Management announced a new rule Friday governing onshore oil and gas production that advocacy groups say will help protect the environment and cultural sites while also increasing the revenues the federal government receives from extraction.

The Fluid Mineral Leases and Leasing Processes rule updates bonding requirements, minimum bids and royalty rates.

This rule represents the first comprehensive update to the framework that the federal government uses for oil and gas leasing since 1988 and the first time that minimum bonding levels have been updated since 1960. It is also the first increase in royalty rates in more than a century.

“These are the most significant reforms to the federal oil and gas leasing program in decades, and they will cut wasteful speculation, increase returns for the public, and protect taxpayers from being saddled with the costs of environmental cleanups,” Interior Secretary Deb Haaland said in a press release.

She said that alongside efforts to clean up orphaned and abandoned wells nationwide, the new rule “will help safeguard the health of our public lands and nearby communities for generations to come.”

In terms of bonding, the minimum bonding level for a lease will increase to $150,000 and companies with multiple leases in a state will need at least $500,000 in bonding. This is a significant increase from the bond amount established in 1960 of $10,000, which the BLM says did not provide an adequate incentive for companies to meet reclamation obligations and was inadequate for covering the potential costs of reclaiming wells should the company fail to do so. This has been a problem as taxpayers have been paying to clean up orphaned wells.

Under the new rule, the bond amounts will be adjusted for inflation every ten years.

When it comes to royalty rates, the new rule sets that rate at 16.67 percent until Aug. 16, 2032. After that point, the 16.67 percent royalty rate will become a minimum rate. The past minimum royalty rate was 12.5 percent.

In terms of minimum bids, companies will now need to bid at least $10 per acre for federal oil and gas leases. This is an increase from $2 per acre. The new rate will be adjusted for inflation starting in 2032. Companies will also pay a rent of $3 per acre annually for the first two years after being issued a lease and then $5 per acre each year for the subsequent six years, after which the rate will increase to $15 per acre annually. In the past, companies have paid $1.50 per acre per year for the first five years and $2 per acre per year for the subsequent five years.

“We are finally providing American taxpayers with a fair return for the development of oil and gas on our public lands,” U.S. Sen. Martin Heinrich, a Democrat from New Mexico, said in a press release. “This rule strikes the right balance by protecting important wildlife habitat and cultural resources on our public lands from harmful drilling operations and holding oil and gas companies accountable for paying their fair share and cleaning up after themselves.” 

One area of New Mexico that could benefit from the new rule is Carlsbad Caverns National Park, which is situated in the Permian Basin and has faced risks due to nearby fossil fuel extraction.

According to the National Parks Conservation Association, those threats include the risk of gas or fluids leaking into cave passages, which could put visitors in danger.

The rule could empower the BLM to redirect the oil and gas development away from the cave, which could protect the underground caverns and prevent contamination of groundwater.

“This long-overdue Oil and Gas Rule is a safeguard for places like Carlsbad Caverns National Park and its connected landscape, surrounded by one of the nation’s most active oil and gas regions,” Emily Wolf, New Mexico Program Manager at the National Parks Conservation Association (NPCA), said in a press release.”By protecting these sensitive cave and karst areas around the park, this update should ensure the safety of visitors in underground cave passages, improve air quality and visibility, and protect the park’s—and surrounding landscape’s— spectacular geologic features and clean water resources.”

While the advocacy groups say the rule makes important changes that are decades overdue, some argue that it falls short of addressing climate change.

“While we welcome the long-overdue fiscal and bonding reforms contained in the final rule, we are disappointed that, despite specifically requesting comment on how the rule should address greenhouse gas emissions, the Bureau of Land Management chose not to make any changes to the final rule in response to the many comments it received on this issue,” Melissa Hornbein, senior attorney at the Western Environmental Law Center, said in a press release. “The Bureau has ample authority to institute the ‘lifecycle’ approach to the federal leasing program we recommended, which would have set the stage for the scientifically mandated managed decline of the federal oil and gas program that is critical to addressing the climate crisis while complying with the Inflation Reduction Act’s requirements for future leasing. While bonding, royalty, and other fiscal reforms are welcome, the Bureau once again missed a critical opportunity to make a meaningful difference with respect to climate with this rule.”

Advocates hope that fossil fuel production will be phased out on public lands in the future, but they say the rule announced Friday is a step forward.

“For decades, oil and gas companies have persistently gotten away with paying rock-bottom prices to drill on public lands with little to no real financial accountability,” Miya King Flaherty, Our Wild New Mexico Organizing Representative at the Sierra Club Rio Grande Chapter, said in a press release. “The federal oil and gas leasing program is broken and needs fundamental fiscal reform to ensure frontline communities and taxpayers are not left cleaning the mess. These common-sense updates are a welcome step and we hope the Biden administration will go further and phase out new oil and gas leasing so we can truly address the climate emergency.”