Interior takes first step toward possible hike in oil, drilling fees, seeks public comment

The Obama administration took a first step Friday toward a possible increase in fees charged for oil and gas companies to drill on federal lands.

The Bureau of Land Management issued a notice seeking public comment on whether regulations are needed to give the government more flexibility to set fees.

Government auditors have consistently questioned whether the 12.5 percent royalty now being charged is too low. But a low royalty rate also encourages oil and gas exploration, and any increase would likely raise protests from industry and others that it will lessen production and increase prices at the pump.

Interior Secretary Sally Jewell says the current regulations have failed to keep pace with technological advances and market conditions. She described the notice issued Friday as an important step.

"It's time to have a candid conversation about whether the American taxpayer is getting the right return for the development of oil and gas resources on public lands," Jewell said in a press release.

The Government Accountability Office has recommended that BLM be allowed to raise or lower onshore royalty rates as necessary. The GAO also said the bureau needs to do a better of justifying any changes it makes.

The department's news release said the review of its fees will also include a thorough analysis of the cost of doing business on federal lands.

"We welcome input from all parties on how taxpayers can be better assured adequate compensation from oil and gas production on public lands," said Janice Schneider, an assistant secretary at the department.