New Federal Onshore Oil & Gas Lease Sale

In November of 2021, the Department of the Interior (DOI) released a report on the federal oil and gas program that included specific recommendations for ensuring more responsible leasing and development of these resources on public lands.

Last month, the Biden Administration announced that it would be resuming oil and gas lease sales on public lands and the upcoming sale will include significant changes to the federal leasing program.

Among other changes, the BLM will:

• Avoid leasing in lands with low or no potential for oil or gas development. It makes no sense to lease public lands in places where there is little actual chance that oil drilling will take place. Moving forward, the BLM has stated that they will avoid leasing in these low-potential areas and focus leasing on places where viable oil and gas resources are known to exist.
• Concentrate leasing near existing development. BLM’s offering of leases in areas with existing oil and gas infrastructure means new projects are more likely to be sited in locations where impacts from development have already occurred, minimizing the effects of new development. Leasing near existing development is a common-sense measure that will help avoid the fragmentation of important habitats where development does not exist.
• Increase the royalty rate to 18.75% for leases sold. Increasing the royalty rate for drilling on public lands from 12.5%—a rate that was set in 1920 and has not been increased since—brings the federal rate more in line with what is required for drilling on state lands. This market-adjusted royalty will improve the rate of return to taxpayers.

It is important to note that these actions by the BLM and Interior Department will not have any short-term effect on the price of gasoline. 

In Colorado, there were originally 119 parcels with more than 141,000 acres being considered for leasing in the sale. After BLM conducted environmental analysis of all lands proposed for leasing, as well as undertaking additional analysis because of public comments received on the sale and consistent with DOI’s recent report, only nine parcels covering some 5,000 acres will be offered. In New Mexico there were only six parcels with 530 acres originally proposed in the sale. After BLM in New Mexico conducted environmental analysis and undertook review of the parcels using additional criteria, they have not identified any parcels that warrant deferral. Wyoming was set to auction off 459 parcels covering some 568,000 acres. In the draft environmental assessment, BLM in Wyoming proposed a modified leasing alternative that would defer 260 parcels due to conflicts with priority habitat for Greater sage-grouse. Following the release of the sale notice, BLM is now offering 129 parcels totaling 133,000 acres, having deferred the sage-grouse habitat parcels as well as an additional sixty-one parcels (45,000 acres). 

It is encouraging to see that President Biden and Secretary Haaland have put taxpayers and our public lands, wildlife, waters, and climate first, by advancing common sense reforms to the federal oil and gas leasing system in these lease sales. RMFU is hopeful that the Department of the Interior and Congress will soon begin working towards even more long-lasting, programmatic reform to this antiquated program.