Proposed Rule Change Would Bring BLM Oil and Gas Leasing into the Modern Era

Update: the BLM announced updates to its oil and gas leasing policies in April 2024. Read our statement here. 

The U.S. Bureau of Land Management (BLM) has announced a proposed rule that would update the cost of doing business on public lands and help to balance the extraction of natural resources with the conservation of wildlife habitat and the preservation of landscapes sacred to Indigenous peoples. BLM manages nearly 40 percent of U.S. public lands: 245 million acres, ranging from the pink and orange-ribboned slot canyons of the Southwest to the endless sagebrush sea across the Intermountain West. An estimated 300 bird species spend at least part of their lives there, including Burrowing Owls and the Greater Sage-Grouse, which is already under stress across much of its range.  

BLM is charged with balancing the protection of America’s natural legacy with managing the 30 percent of the nation’s mineral wealth that lies beneath the surface. But over the past 50 years, the agency has mainly focused on extractive uses (coal, and oil and gas), applying rules governing that extraction that have been unchanged for decades. When current BLM oil and gas leasing policy was last updated, Gerald Ford was in the White House, the Bee Gees were on the radio and a gallon of gas cost an average of 59 cents. The BLM’s approach to oil and gas leasing has been the equivalent of a polyester leisure suit – painfully outdated. 

That may be about to change. The proposed rule change represents a big step forward towards the BLM fulfilling its mission, delivering common-sense policies that balance responsible development with land and wildlife conservation.  

How Oil and Gas Leasing Works 

Under the Mineral Leasing Act of 1920 (MLA), the BLM is authorized to hold quarterly lease sales in every state where lands are “eligible and available” for leasing. Currently, 90 percent of the public lands overseen by the agency are open to oil and gas leasing. That’s 192 million acres – an area roughly the size of Colorado, New Mexico, and Wyoming combined. Among these, nearly half are already under lease by oil and gas companies but not being used. 

Once an area has been leased, sometimes for as little as $1.50 an acre, a company has 10 years to explore and develop any potential oil and gas after receiving a drilling permit from BLM. In practice, these permit applications are almost always approved. If the lessee has begun drilling by the end of the 10-year term, the lease term can be extended as long as it continues to produce oil or gas.  

In a 2021 report, the Department of the Interior, the BLM’s parent agency, found that the BLM’s leasing policy on public lands “historically, has failed to provide the Federal Government with a fair return; exposed the Federal Government to significant reclamation-related liabilities; lacked adequate cost recovery mechanisms; and encouraged speculative leasing and wasteful development practices.”  In other words, America’s federal oil and gas program is antiquated. The rules that govern oil and gas on public lands are decades-old and prioritize oil and gas leasing and development over important uses like hiking, biking, fishing, hunting and other every-day activities – even in areas where oil and gas potential is low.  

Proposed Rule Change 

The Biden Administration has proposed a change to the federal oil and gas leasing program that includes reforms to bring the program into the 21st century. These reforms would help reduce conflict between drilling and other uses that are essential to supporting Westerners’ way of life: open land, healthy wildlife habitat, recreation, and conservation. 

Why does this matter? In a continuation of BLM modernization, the changes to oil and gas leasing would help to advance better land management that balances development with conservation and sacred lands. This proposed rule builds on and informs recent BLM developments, including the agency's restoration of mitigation policies, draft public lands rule, and revisions to the Greater Sage-Grouse resource management plans (RMP). 

Among other things, the proposed rule would:  

• Prioritize oil and gas development on lands with high potential for production and away from important environmental and cultural sites 

More than half of the federal oil and gas leases that have been sold over the past decade are on lands with little to no potential for oil and gas development and production. Companies stockpile these leases to pad their books and attract investors. Leases on lands with low development potential put lands that support important fish and wildlife habitat at unnecessary risk of development and can also complicate efforts to site and develop renewable energy projects. 

The draft rule would direct the BLM to screen proposed leases against a new set of criteria as they assess potential for drilling and production.  Removing areas from consideration that overlap with sensitive wildlife habitat, recreation areas and cultural sites is critical for protecting our public lands, waters and wildlife. The proposed rule also encourages development on public lands with high production potential and existing infrastructure, minimizing disturbances to the lands and improving return on investment for operators. 

Audubon has fought to ensure that oil and gas leasing is balanced with important habitat for wildlife and birds. This proposed change would ensure that the BLM considers wildlife habitat before leasing, and could be strengthened by including specific direction to the BLM not to lease important areas for birds, habitat and wildlife connectivity. The BLM should be proactive in reducing conflicts between energy development and the incomparable wildlife and cultural resources found on these lands. 

• Modernize bonding requirements for leasing, development, and production to reduce the future burden to American taxpayers 

What happens to an old oil and gas well when an oil and gas company goes bankrupt, or moves on? Taxpayers are currently on-the-hook for billions in clean-up costs for the growing number of orphaned and abandoned wells on public lands, which leak climate-warming methane emissions and can be a danger to wildlife and communities. 

The proposed rule makes it clear that oil and gas companies must be responsible for reclamation costs – not taxpayers. Federal oil and gas bonds are an insurance policy for taxpayers in case companies will not or cannot clean up after themselves. These bonds are based on rates that were first set in the 1950s and 60s and have not been increased since. This rule would modernize the bonding requirements for operators that want to do business on public lands. This creates an incentive for companies to meet their reclamation obligations on public lands, while limiting the burden on taxpayers if the federal government needs to step in.   

• Cement key fiscal reforms from recent and popular federal legislation  

The draft rule includes key provisions to implement fiscal reforms, including modernizing royalty rates, rental rates, and minimum bids to align with the Inflation Reduction Act - thus bringing in more revenue to state budgets and to the U.S. Treasury.  The increase in royalty rates brings the federal rate closer in line with the rates most state and private mineral owners receive. Taxpayers are by law entitled to a fair return from public lands leasing and drilling. 

The BLM’s proposed changes to leasing rules are a long-overdue win for Western communities. Audubon supports these efforts and encourages the public’s involvement in determining the future of our nation’s public lands. The public comment period for the proposed Onshore Oil and Gas Leasing Rule ends September 22, 2023. For more information about the rule, how to comment, and about the series of public meetings, visit the BLM’s Onshore Oil and Gas Leasing Rule page. Our communities are counting on the Administration to enact these urgent, common-sense reforms.