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Tuesday, September 22, 2020

It’s time to fix our broken oil and gas leasing system

Throughout the COVID-19 pandemic, our public lands have provided desperately needed solace and responsible recreation opportunities for millions of people. Majestic, sweeping landscapes with seemingly limitless horizons refresh us and inspire us. Unlike other countries, our public lands are the nation’s birthright. That’s why it is so important that we end the exploitation of these lands.

Under federal law, the Bureau of Land Management within the Department of Interior is charged with managing our public lands for multiple purposes: from energy development and ranching to recreation and conservation. Unfortunately, in recent years, a single-minded pursuit of unfettered oil and gas development threatens to degrade our public lands permanently.

A fair amount of attention has been given to some of the very special places where leasing has been proposed: Chaco Canyon in New Mexico, the Ruby Mountains in Nevada, the Sand Dunes in Colorado, and the world-famous Slickrock Trail outside Moab, Utah.

But what doesn’t get enough attention (and is even more concerning) is the manner in which the oil and gas leases are being offered. While people may disagree about the future of fossil fuel extraction on public lands, we can surely agree that critical wildlife habitat and recreational areas should be avoided, that all leasing should be conducted through transparent, competitive processes that result in companies paying fair-market royalties and fees, and that strong safeguards and bonding requirements should be in place to reclaim drilling sites.

None of this is currently happening.

The way the Interior leases public lands is fundamentally broken. In the past three years, BLM has offered up huge swaths of public lands and offshore waters for leasing without consideration of conservation and recreation impacts. Auctions of unprecedented size are held regardless of anticipated energy demand, locking up lands for decades while driving down government revenues. Parcels not receiving bids at auction are often sold through “non-competitive” leasing, whereby speculators can snap up rights for as little as $1.50 an acre.

This whole approach makes no fiscal sense. If there isn’t enough interest at auction to pay a fair-market price, why would we shortchange taxpayers and give away leases for pennies on the dollar? Speculators have purchased more than 840,000 acres (an area larger than Rhode Island) in this way since 2017. Some parcels may never be drilled because there’s virtually no potential for oil there, yet the company that owns the leases has exclusive rights to the land, so it is unlikely to be managed for other uses, such as restoring wildlife habitat or expanding recreation.

On those lands where energy production does occur, taxpayers are losing out. The royalty rate paid by onshore oil and gas companies is 12.5%, which is well below the market rate and hasn’t changed in 100 years. The Congressional Budget Office conservatively estimated that raising the rate to 18.75% (closer to the rate for state lands, private lands, and offshore leases) would generate at least $200 million in net federal income over the next 10 years with an equal amount going to the states.

Indiscriminately leasing public lands for oil and gas drilling at bargain-basement prices is both bad for our natural resources and bad for taxpayers. We need to hit the pause button and enact commonsense reforms. Several proposals, including one from Sen. Jon Tester of Montana this month, have been introduced in Congress to attempt to bring oil and gas leasing into the 21st century. Leasing must only occur through competitive bidding processes. Companies must pay fair-market royalty rates. Parcels with important wildlife habitat or recreation value should not be auctioned, nor should low-potential lands. And we need to create hundreds of thousands of jobs reclaiming abandoned mines and orphaned oil and gas wells that scar landscapes and pollute waterways across the country.

America’s public lands are natural treasures that belong to everyone. It’s time we started treating them like it.

Collin O’Mara is the president and CEO of the National Wildlife Federation. David Jenkins is the president of Conservatives for Responsible Stewardship.



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