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Witnesses warn royalties, leasing and bonding shortfalls leave taxpayers exposed
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Summary
Nonpartisan witnesses and committee members said royalty rates, noncompetitive leasing, insufficient bonding and methane waste have cost taxpayers revenue and created future liabilities; industry argued for modernization but emphasized progress on methane intensity reductions.
Taxpayers and watchdog groups told the subcommittee that longstanding weaknesses in onshore oil and gas leasing and oversight have left money and liability on the table.
Autumn Hanna of Taxpayers for Common Sense said the Department of the Interior had been on the Government Accountability Office’s high‑risk list for more than a decade and that the agency has not implemented many of the GAO's recommendations. Hanna testified that the federal government historically charged an outdated onshore royalty rate and that increases implemented in 2022 — raising an onshore royalty rate to 16.667% and tightening noncompetitive leasing and bonding — had been partially rolled back. "If Interior improved its oversight and increased royalty collections by even 1%, they could make big oil get closer to paying what they owe us to the tune of tens of millions of dollars a year," Ranking Member Dexter said in her opening remarks, summarizing concerns raised in witness testimony.
Hanna also cited large volumes of methane wasted on federal lands: "Between 2012 and 2021, 300,000,000,000 cubic feet of natural gas was wasted on federal lands." She said outdated bonding requirements historically transferred reclamation costs to taxpayers and estimated roughly $6 billion of potential outstanding liability for orphaned wells on federal lands. Committee members repeatedly asked whether the rollback of higher royalty rates would leave states and communities short of expected revenue; Hanna said states like Texas and Colorado charge higher royalty rates and that federal rates had been behind market levels.
Industry witness Dustin Myers of the American Petroleum Institute said the sector supports reducing methane emissions and pointed to a 61% decline in methane emissions intensity from U.S. oil and gas operations over the prior 15 years. Myers also emphasized that federal revenues from offshore and onshore leasing have been significant, citing more than $14 billion in federal oil and gas leasing revenue in 2024 and more than $150 billion in revenues since 2015.
How the record will move forward: The subcommittee accepted additional written questions for the record. Members asked witnesses for specific cost and collection estimates and pressed the Department of the Interior's record on GAO recommendations; no committee enforcement or legislation resulted directly from the hearing.
Reporter's note: Multiple numeric claims in testimony — for example, total recoverable resource estimates and some revenue allocations cited by the chair — should be checked against official Interior and Treasury data for accuracy before publication.
