For decades, the Bureau of Land Management has considered 90% of the 8 million acres it manages in Montana suitable for oil and gas leasing. It doesn’t matter if the lands offer any real production potential or if leasing and drilling harm the wildlife habitat, water quality, cultural riches, recreational opportunities, and everything else on these lands that Montanans cherish.
The amount of public lands available for oil and gas leasing is just one glaring indication among many that the Department of the Interior has, for far too long, favored private interests over the American public. It’s no wonder the Government Accountability Office (an independent, nonpartisan watchdog agency) often cites the department’s oil and gas leasing program as “vulnerable to waste, fraud, abuse, and mismanagement.”
Thankfully, Congress acted on cleaning up the program when it passed the Inflation Reduction Act last year. The bill includes numerous reforms to the federal oil and gas leasing program, helping ensure the program works for everyone, not just special interests. But before those reforms can be implemented, the Interior Department and BLM must codify them in their administrative rulemaking. They took the first step in doing just that when they issued a long-awaited proposed oil and gas rule on July 20.
Here’s what the proposed rule would do:
- Hold oil and gas companies responsible for cleaning up oil and gas well sites after production has ended. The rule would raise minimum federal bonding rates to more closely reflect the true costs of plugging and reclaiming well sites. It would also eliminate the use of nationwide bonds, which currently allow oil and gas companies to drill enormous numbers of wells across the country under a single, inadequate bond. The changes will help ensure taxpayers are not left footing the exorbitant clean-up bills and that wells are not left uncapped, contaminating water, air, and wildlife habitat.
- Ensure taxpayers receive a fair return on private industry’s use of land and resources that belong to all of us. The rule raises the minimum bid on leases and increases the royalty and rental rates that oil and gas companies must pay to drill on public lands. It also proposes that, after the 10-year period following the IRA’s enactment, the rental rates and minimum lease bid will be indexed for inflation.
- Wipe noncompetitive leasing off the books entirely. The proposed rule removes all references to or allowances for noncompetitive leasing from the Code of Federal Regulations. This means that companies can no longer lease public lands for less than the minimum bid offered at a competitive auction. Before the IRA became law, companies could get away with leasing public lands for as low as $1.50 and acre by buying up leases no one had bid on in competitive auctions.
Wild Montana is fully in favor of all of these reforms, all of which will help protect public lands that Montanans depend on from contamination, unscrupulous speculation, and neglect. But we think there’s room for some improvement. We are therefore encouraging the Interior Department and the BLM to expand the oil and gas rule so that:
- The BLM is not allowed to lease lands with little or no drilling potential at the expense of other values, like wildlife habitat conservation and outdoor recreation.
- The Interior Department is required to review and make necessary updates to the onshore royalty rate, rental rates, and minimum bid at regular intervals. This will help ensure that rates and fees align with larger economic trends and that taxpayers continue to receive a fair return on industry’s use of publicly-owned resources.
- The BLM requires companies to address inactive wells within two years – to either put the wells back into production or formally begin the reclamation process. This will help reduce the number of inactive wells contaminating public lands.
- DOI and BLM are compelled to create a screening process that identifies bad actors and prevents them from leasing public lands. This list of bad actors should be available to the public for accountability and transparency.
The Interior Department is accepting public comments on the rule until Sept. 22, 2023. You can join us in support of the rule and the improvements we recommend by visiting wildmontana.org/ogrule.
Aubrey Bertram is a staff attorney at Wild Montana and director of the organization’s climate and energy program.