The Department of the Interior recently announced a final rule to revise the Bureau of Land Management’s (BLM) oil and gas leasing regulations, marking a major shift towards conserving our public lands and wildlife habitats.
The long-awaited Fluid Mineral Leases and Leasing Process rule represents a substantial advancement in responsible land management and a victory for conservationists, ranchers and all those who enjoy the outdoors—particularly in Montana, where public lands and wildlife are integral to our lifestyle and economy.
“We are thankful the Biden administration took action to protect the interests of Montana hunters and anglers. The oil and gas rule steers oil and gas away from wildlife habitat and family ranches and toward areas with existing resources and development, promoting intact migration routes,” said Frank Szollosi, Executive Director, Montana Wildlife Federation. “These common-sense reforms also protect Montana’s public lands and taxpayers from orphan and abandoned wells by requiring oil and gas companies to clean up any mess they make. The fair policies outlined in the oil and gas rule are long overdue for Montana wildlife and taxpayers.”
The last time the government attempted to reform the DOI’s oil and gas leasing program was in the 1980s, but it failed to address many persistent issues. The new rule is designed to close loopholes that have allowed private companies to exploit public lands for increasing profits. This updated oil and gas rule modernizes our antiquated leasing system to ensure that taxpayers are given a fair share for the use of their public resources. Additionally, the reforms require oil and gas companies to be responsible for the cleanup of their wells post-production, preventing Montanans from facing costly cleanups that jeopardize our wildlife and cherished public lands.
Ending Speculative Leasing
The new rule does not prohibit new oil and gas leasing on federal lands, but will lead to a more balanced leasing process that provides a better return to taxpayers and focuses on oil and gas drilling in areas most likely to be developed. Under this new rule, the BLM will prioritize oil and gas leasing efforts in areas that already have infrastructure or show high potential for production, in an effort to prevent the unnecessary disturbance of pristine landscapes that are valuable for wildlife and ecological health.
In Montana, BLM Dillon field office Resource Management Plan (RMP) identified that about 1.2 million acres, or 86%, of the eligible lands in Montana, have low or very low energy development potential. For decades, oil and gas companies have had the opportunity to lease this land through speculative leasing practices, diverting critical conservation resources for wildlife habitat.
In the last decade alone, nearly 220,000 acres of Montana’s public lands were leased noncompetitively, including in crucial big game habitat and priority habitat for greater sage-grouse. Noncompetitive leasing took all those public lands off the table for other uses while generating nothing for taxpayers, but thankfully the BLM’s new rule will help eliminate the antiquated practice of noncompetitive leasing.
Financial Reforms & Ensuring Taxpayers Receive a Fair Return
The rule updates financial terms to ensure that taxpayers receive a fair return from the exploitation of public lands. It does this by modernizing bonding requirements for leasing, development, and production to ensure taxpayers do not bear the cost of orphaned wells on public lands.
Recent polls have shown that a staggering 96% of Montana voters are in favor of making oil and gas companies financially responsible for post-development clean-up and restoration. This sentiment was further echoed during the BLM’s comment period, where over 260,000 individuals, many of them Montanans, voiced their opinions, with a whopping 99% in favor of the proposed changes.
The rule includes an increase in the royalty rates for oil and gas from 12.5% to 16.67%, aligning these rates with those typically found on state lands. This adjustment ensures a fair return to the public for natural resource extraction and reduces the incentive for extensive oil and gas operations on federal lands.
Notably, the rule also updates bonding rates for oil and gas leases from $10,000 to $150,000, the first update to these rates in over 60 years. This adjustment reflects a more realistic estimate of the costs associated with drilling and the potential risks, ensuring that oil and gas companies bear the costs of any environmental damage, including the clean-up of orphaned and abandoned wells.
The increase in minimum bids from $2 an acre to $10 an acre, along with higher rental rates and a new $5 per acre expression of interest fee, aims to curb speculative leasing. This type of leasing often prevents proper conservation management as it locks up public lands without leading to productive use. The rule also eliminates noncompetitive leasing, which is frequently speculative and results in underutilized lands.
Prioritizing Conservation
This rule is part of a broader effort to ensure that public lands serve multiple purposes — not just resource extraction but also conservation, recreation, and cultural preservation. It limits lease extensions, imposing stricter controls on how long companies can hold onto leases without development, ensuring lands are not tied up unproductively.
This approach not only benefits the environment but also enhances the quality of life for all who rely on these lands for their livelihoods, recreation, and heritage. BLM lands are among the nation’s most iconic open spaces in the West, supporting local economies, providing homes for wildlife, offering access to nature, and preserving countless human stories.
The implementation of these reforms comes after a robust public engagement process where stakeholders, including hunters, anglers, and conservationists, provided input that significantly shaped the final regulations.
Looking Forward: A Balanced Approach to Land Use
As we move forward, this rule promises a more balanced and sustainable approach to oil and gas leasing, reinforcing the importance of our public lands in maintaining biodiversity, supporting local economies, and preserving our heritage. For Montana, this is a crucial step forward in safeguarding our landscapes for future generations, ensuring that our public lands continue to be a source of pride and natural beauty.
This landmark rule is a testament to the power of advocacy and the importance of governmental accountability, reflecting a significant shift towards prioritizing the health of our public lands and the communities that depend on them.
