Outdated Policies Costing Coloradans: The Need to Update BLM’s Oil and Gas Program
Last summer, the U.S. Department of the Interior proposed new rules to modernize the Bureau of Land Management’s (BLM) oil and gas leasing program on federal lands. The goal is to ensure taxpayers receive their fair return, balance environmental protections, and discourage speculation. Key proposed changes include:
- Increasing bonding requirements for leases to $150,000 minimum and $500,000 statewide to better cover potential cleanup costs if companies default. This updates outdated 1960s-era bonding levels.
- Steering leases away from wildlife habitat and cultural sites toward lands with existing infrastructure.
- Raising onshore royalty rates to 16.67% minimum, better aligning with offshore and state rates. Rates hadn’t changed in over 100 years prior.
- Codifying an increase in minimum bid price per acre from $2 to $10, with inflation adjustments thereafter.
- Increasing annual rental rates per acre to new minimums of $3 for the first 2 years and $5 for the next 6 years before reaching $15 thereafter.
- Adding a 5% per acre fee for expressions of interest in pieces.
The proposed rules codify recent legislative changes and aim to modernize the BLM oil and gas leasing program with fiscal reforms to increase public returns, enhance protections, and reduce speculation.
Oil and gas leases continue to be issued in Colorado without these modernized rules, and we the public bear the negative consequences. Outdated policies mean lower returns for taxpayers and inadequate protections for wildlife, habitats, and cultural sites in our state. Weak bonding requirements also mean oil and gas operators can walk away without cleaning up their wells and infrastructure, leaving the cleanup costs to fall on the public.
That’s why it is urgent for this proposed federal rule to be finalized as soon as possible. Once implemented for Colorado BLM leases, the $150,000 minimum lease bonds and $500,000 statewide bonds will give these operators much greater incentive to fulfill their obligations. Steering leases away from sensitive areas will limit habitat destruction. We’ll see fairer royalty rates better aligned with state and offshore levels – rates that haven’t changed at the federal level in over a century.
Most critically, we need assurance that oil and gas operators will clean up after themselves on our public BLM lands. the proposed increases to outdated, 1960s-era bond levels will help avoid situations where reclamation costs fall to taxpayers. Taxpayers for Common Sense estimates that outdated leasing terms have cost Coloradans an estimated $838 million in lost potential revenue. Taxpayers additionally face up to $371 million in likely reclamation expenses down the road. Higher bonds paired with reforms to rental rates and speculation disincentives will shift accountability firmly onto lease holding companies.
Finalizing these modernized rules quickly is imperative and urgent for Colorado’s lands, wildlife, resources and people. The longer outdated policies govern BLM’s onshore oil and gas leasing here, the more ripple effects our communities must bear from unfair returns, insufficient protections and reclamation liabilities. We must bring accountability and balance to this program now.
