Updates will help reduce conflict between energy development and our sporting traditions
The Bureau of Land Management recently released a set of proposed changes to its oil and gas leasing program. The reforms would apply to hundreds of millions of acres of federal lands coveted by hunters and anglers. Fully 90 percent of the 245 million acres of federal land under BLM authority are currently available for oil and gas leasing and development, with more than 26 million acres under lease in 2021.
In an effort to address potential impacts to wildlife habitat and public access, sportsmen and sportswomen have been working to promote responsible approaches to energy development for decades. While the debate over domestic energy policy can be heated, it is hard to argue the fact that many of BLM’s existing rules governing oil and gas leasing on public lands are at least half a century old, and they have often put oil and gas leasing and development at odds with other resource values. The BLM’s proposed reforms will modernize its onshore oil and gas leasing regulations to help reduce the conflict between oil and gas development and other important multiple-uses, including hunting, fishing, and wildlife habitat.
The proposed rule would help reduce conflict, in-part, by cutting down on the practice of speculative leasing so that those lands can instead be managed for other uses—like habitat conservation to support abundant wildlife populations. Speculative leasing occurs when an oil and gas company leases land with no real potential for economically viable oil and gas production—preventing BLM from being able to effectively manage that land for other important multiple-uses that may not be compatible with oil and gas. The rule addresses this by prioritizing leasing in places with existing oil and gas infrastructure or high production potential. The proposed rule would also implement the Inflation Reduction Act’s mandated reforms of the oil and gas leasing program, ensuring taxpayers get a fair return for the development of public minerals and ensuring responsible development when public land oil and gas resources are leased to private companies.
The Mineral Leasing Act of 1920 requires federal regulators to ensure adequate bond coverage before oil and gas companies can drill on federal land. The proposed rule would additionally reform the bonding rates that oil and gas companies must post in order to ensure public lands are cleaned up when companies abandon wells—a provision that was not included in the Inflation Reduction Act but has long been supported by several organizations in the hunt-fish community.
Specific provisions of the proposed rule include:
Bonding requirements: The rule proposes to increase the minimum lease bond amount (the upfront fee to ensure eventual well cleanup) to $150,000, and the minimum statewide bond to $500,000. The rule also proposes to eliminate nationwide and unit bonds. The existing lease bond amount of $10,000—established in 1960—no longer provides an adequate incentive for companies to meet their reclamation obligations, nor does it cover the potential costs to reclaim a well should this obligation not be met. The current, outdated bond requirement increases the risk that taxpayers will end up covering the cost of reclaiming wells in the event the operator refuses to do so or declares bankruptcy. The Department of the Interior has made available more than $1 billion in the past two years from Bipartisan Infrastructure Law funding to clean up orphaned oil and gas wells on federal, state, and private lands. This proposed rule aims to prevent that burden from falling on the taxpayer in future years.
Protecting Wildlife and Cultural Resources: The rule would help steer oil and gas development away from important wildlife habitat or cultural sites, and toward lands with existing infrastructure or high production potential.
Royalty rates: Proposed changes to royalty rates reflect provisions in the Inflation Reduction Act. Royalty rates for leases issued for 10 years after the effective date of the Inflation Reduction Act are 16.67 percent. After August 16, 2032, the rate of 16.67 percent will become the minimum royalty rate.
Minimum bids: The proposed rule includes a provision of the Inflation Reduction Act that increased the national minimum bid from $2 per acre to $10 per acre. The minimum acceptable bid is important because it establishes the starting bid at the BLM’s oil and gas lease auctions. A fair rate of $10 will help ensure that only lands with actual development potential are leased at auction.
Base, or minimum, rental rate: Pursuant to the Inflation Reduction Act, for leases issued in the 10 years after its enactment, the proposal includes a rental of $3 per acre, or a fraction thereof, per year during the first 2-year period beginning upon lease issuance, $5 per acre per year, or a fraction thereof, for the following 6 years, and then $15 per acre, or a fraction thereof, per year thereafter. After August 16, 2032, those rental rates will become minimums and are subject to increase.
Expressions of Interest: The Inflation Reduction Act established a new fee for expressions of interest. The proposed rule includes that fee, which is $5 per acre, or a fraction thereof. Requiring a fee for Expressions of Interest will help reduce speculative leasing.
Final Thoughts and How to Get Involved
We understand that most Americans still drive gasoline-powered vehicles and don’t want to be hit at the pump. These updates will not impact domestic energy production but will ensure taxpayers receive a fair rate of return on that development, while reducing conflict between energy development and our sporting traditions.
The proposed Oil and Gas Rule, in concert with other ongoing BLM efforts including the Public Lands Rule, the Wind and Solar Rule, and updating the Western Solar Plan, is an important part of a comprehensive approach to managing public lands to bring energy development into the 21st century, while maintaining robust wildlife populations, access, and opportunities for future generations of hunters and anglers. You can find these documents on BLM’s website at blm.gov.
We support these efforts and encourage you to get involved. BLM has announced a 60-day public comment period on the proposed Oil and Gas Rule and will be holding a series of public meetings. Look for future communication here at trcp.org and on our social media for updates on the rulemaking.
Photo Credit: Josh Metten