A proposal to modernize outdated Bureau of Land Management (BLM) oil and gas leasing regulations was announced July 20 by the Department of the Interior (DOI). The revision would ensure balanced development, better returns to taxpayers, and protections for wildlife and cultural sites.
“The Interior Department has taken several steps over the last two years to ensure the federal oil and gas program provides a fair return to taxpayers, adequately accounts for environmental harms, and discourages speculation by oil and gas companies," Laura Daniel-Davis, principal deputy assistant secretary for Land and Minerals Management, said in the news release. "This new proposed rule will help fully codify those goals and lead to more responsible leasing and development processes."
The proposal will update the leasing program's bonding requirements, minimum bids and royalty rates, the release reports. The actions would "increase returns to the public and disincentive speculators or less responsible actors," the release states.
Updating the fiscal terms of the leasing program is integral to the proposal, as federal onshore oil and gas royalty rates are consistently lower than on federal offshore and state-issued leases. The release reports that onshore royalty rates had remain unchanged for more than a century before the Biden administration; bonding levels have stayed the same for 60 years; and minimum bids and rents haven't changed for 30 years.
The proposal includes an increase in minimum lease bonding requirements to $150,000, from $10,000, where it's been since 1960; the statewide bond would go to $500,000, the release reports. The current $10,000 bond requirement has left taxpayers on the hook for the costs of reclaiming an abandoned gas or oil well, whereas the new amount provides incentives for companies to meet reclamation goals, according to the release.
Minimum land bids will be raised from the current $2 per acre to $10 per acre and would be adjusted periodically to account for inflation rates, the release states. The proposal would also direct oil and gas development toward areas with existing infrastructure or high production potential and away from sensitive wildlife habitats and cultural sites; and phase in increases to minimum rental rates and expressions of interest, according to the release.
The proposals codify provisions in the Inflation Reduction Act and the Bipartisan Infrastructure Law, recommendations from the DOI's November 2021 Report on the Federal Oil and Gas Leasing Program, and is consistent with Executive Order 14008, "Tackling the Climate Crisis at Home and Abroad," according to the release.
“The Department is committed to creating a more transparent, inclusive and just approach to leasing and permitting that serves the public interest while protecting natural and cultural resources on our public lands," Daniel-Davis said in the release.
