U.S. considering hike to royalty rate for drillers at onshore auctions

Jan 31 (Reuters) - The Biden administration is considering raising the royalty rate that drilling companies must pay on oil and gas leases that it plans to sell in the first quarter, according to a draft notice posted but then removed from the U.S. Bureau of Land Management (BLM) web site.

The royalty rate for leases offered this quarter would be 18.75%, up from the 12.5% minimum rate required by law, according to the post, which was viewed by Reuters on Monday.

An Interior Department official said the notice had been posted inadvertently. "The BLM accidentally posted some pre-decisional draft language on their website," the official said.

The post was later removed.

If the higher rate is finalized, the move would be in keeping with President Joe Biden's pledge to reform oil and gas leasing on federal lands as part of his climate change agenda.

The administration is planning onshore lease sales in several states this quarter. Biden had paused drilling auctions after taking office, but that effort failed after producing states sued.

Last week, a court order invalidated an offshore lease sale in the Gulf of Mexico that the administration held in November, raising questions about the government's plans to hold the onshore sales.

Congress has mandated that the United States hold regular auctions of public lands for oil and gas development.

The federal drilling program has been a big source of public revenue for decades but has also drawn the ire of activists concerned about its impact on the environment and returns to taxpayers.

In a report on the federal oil and gas leasing program published late last year, Interior said the 12.5% rate had been in place for a century and was "out of step with modern times."

Reporting by Nichola Groom; Editing by Richard Valdmanis and Richard Pullin

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