MEMO: BLM’s Update to Federal Oil and Gas Program Can Reap Benefits for New Mexico Communities and Public Lands

Next week on August 22nd, the Bureau of Land Management will hold a public meeting on the proposed Oil and Gas Rule in Albuquerque. BLM’s Oil and Gas Rule proposes several critical upgrades to the federal oil and gas program, which remains woefully outdated and riddled with de facto subsidies for fossil fuel companies. It lets oil and gas CEOs reap record profits while also offloading the costs of pollution and ecosystem destruction from their operations onto communities and public lands. 

Proposed in late July, BLM’s Oil and Gas Rule comes at a critical time as the BLM continues to auction off public lands for fossil fuel companies to drill in New Mexico. The draft rule came two months after an oil and gas lease sale in the state in May – the first onshore lease sale since the passage of the Inflation Reduction Act in August of 2022. BLM’s Oil and Gas Rule takes critical steps to rebalance this favoritism that’s been built into multiple facets of public lands management by focusing on the federal oil and gas program specifically. 

BLM Oil and Gas Rule makes long awaited reforms and includes fairer return to New Mexico communities for fossil fuel extraction on public lands. 

New Mexico communities experience firsthand the impacts of rampant fossil fuel development on their public lands. They are also one of the clearest examples of how the proposed reforms to the federal oil and gas leasing system will benefit communities throughout the West. 

Through several critical updates to this system, the BLM is using its existing legal authority to make fossil fuel companies pay a fairer share for extracting public resources, cover the cost of clean-up and restoration after drilling is finished, limit participation of bad actors and put guardrails on what lands are offered for oil and gas leasing – an effort that will better align oil and gas decisions on public lands with New Mexico’s public interest. 

The Oil and Gas Rule, which is undergoing a 60-day public comment period ending on September 22nd, includes the following proposed reforms to the federal oil and gas program.  

Enshrines several critical updates in the Inflation Reduction Act, including long overdue increases in the royalty and rental rates and terms for leasing and development on public lands. 

A new analysis conducted by Taxpayers for Common Sense found New Mexico communities lost an estimated $13.1 million in rental revenue and about 2.7 billion in royalties between fiscal years 2013 and 2022 from oil and gas leasing due to outdated rates. Following its post-IRA interim guidance, the BLM applied the updated rates to its May lease sale, including the new 16.67 percent federal royalty rate, increased from 12.5 percent. From just this lease sale alone, New Mexico can expect an estimated $7 million greater return over the next 20 years than it would have received under the outdated federal rates. By codifying these updates in agency regulations, the BLM’s Oil and Gas Rule makes them durable and ensures that New Mexico receives a fairer share from oil and gas companies’ use of its public lands.  

As the US energy transition accelerates and New Mexico communities call for a just transition away from fossil fuels, the fairer return these rate updates provide could help fund that off-ramp if strategically invested in economic diversification funds -- similar to the energy transition funds created by New Mexico’s 2019 Energy Transition Act.  

Updates bonding rules and rates that oil and gas companies are required to pay to fund clean-up and restoration costs of their projects. 

Once fossil fuel companies decide an oil or gas well is no longer economically profitable for them to drill, they can walk away, leaving these drilling sites unplugged and leaking toxins into groundwater and the air, which threatens the air quality and health of local communities. Not only do New Mexico’s over 1,700 abandoned and orphaned wells impair the ability for communities to enjoy their public lands, but they also come with an enormous bill to clean up. New Mexicans could be on the hook to pay more than $1 billion to clean up the oil and gas wells that have already been drilled on public lands in the state alone. 

When finalized, the BLM’s proposed rule will hold oil and gas companies accountable – an effort that 91 percent of New Mexico voters support. The updated bonding requirements in the Oil and Gas Rule will prevent the current orphaned well crisis from ballooning as oil and gas leasing and drilling continues in New Mexico. 

Includes reforms that embrace the Interior Department’s authority to put guardrails on what lands are offered for leasing, as well as who’s allowed to be a part of the process. 

Outdated leasing policies have wasted agency time and resources by recklessly allowing oil and gas companies to nominate and lease public lands in New Mexico with low or no potential for energy development or with important wildlife or recreation values, such as in the Rio Puerco watershed. Under the broken oil and gas leasing system, nearly 10,000 acres of land in the Rio Puerco watershed were leased for energy development, despite the fact that there is little potential of finding oil and gas in the area. 

The Oil and Gas Rule’s proposed leasing reforms, when finalized, will deprioritize lands with little to no potential for energy development so that the BLM can avoid the wasteful practice of speculative leasing and manage landscapes with important fish and wildlife values, outdoor recreation, cultural resources and renewable energy potential for those better uses – an effort that 74 percent of New Mexico voters support. 

Oil and Gas Rule makes long awaited reforms, but BLM could go further to apply climate-impacts lens to public lands in this and future rulemakings 

The BLM can make even more progress by making updates to the oil and gas program that respond to the negative impacts that climate change has on public lands and public lands resources themselves. It can do this through additional reforms to the leasing and nomination process and making equally crucial updates to the permitting side of the oil and gas program. The BLM not only has existing legal authority – but also an obligation – to align oil and gas decisions on public lands with the public interest, including safeguarding public wellbeing and preventing permanent degradation to the lands and ecosystems we all depend on in the face of climate change. 

BLM Oil and Gas Rule part of series of policy updates that together could drive era of more comprehensive, holistic public lands management in New Mexico 

The Oil and Gas Rule is one of a set of necessary policy improvements the BLM is pursuing this year that should work as a package, putting public lands to work on the challenges of the 21st century – countering climate change and biodiversity loss while safeguarding cultural knowledge and resources, and expanding safe, healthy access to nature for all people. 

Public Lands Rule 

New Mexico’s public lands are not immune to the ongoing impacts of climate change, from drought, extreme heat and wildfire, which degrade landscapes alongside biodiversity loss and the ongoing impacts from fossil fuel extraction. For example, officials say intense heat may have played a role in a recent rockfall next to the only campground in Chaco Culture National Historic Park that nearly crushed a cliff dwelling dating back to approximately the 1130s. 

While the BLM’s Oil and Gas Rule updates how and where oil and gas companies claim stake on public lands, its proposed Public Lands Rule places land health and resilience of whole ecosystems on equal footing with other uses, like fossil fuel extraction, for the first-time. 

The Public Lands Rule does this using additional tools (e.g., designations like Areas of Critical Environmental Concern) and priorities (e.g., managing for intact landscapes and land health standards) that allow local land managers to make decisions to best manage the areas under their care, with strong public and Tribal nations input. At the same time, the rule also creates an additional tool called conservation leasing, which can be a win-win for both responsible renewable energy deployment on public lands and protecting wildlife by enabling mitigation opportunities to offset development impacts on habitat or other values of public lands.     

Renewable Energy Rule and Western Solar Plan 

The amount of total electricity generation from renewable resources in New Mexico was more than five times greater in 2022 than in 2015, and in 2022 alone, renewable resources supplied about 42 percent of New Mexico's in-state electricity net generation. With an energy transition well underway in the state, New Mexico should be prepared to reap its economic benefits. 

This sentiment is echoed by New Mexico’s elected officials and legislation like the Energy Transition Act which sets a statewide renewable energy standard of 50 percent in the state. Senator Heinrich also recently touted the economic benefits of the SunZia transmission line, which will take clean energy in New Mexico to utilities in Arizona and California. 

Paired with the Public Lands Rule’s conservation leasing, the BLM’s proposed Renewable Energy Rule and forthcoming updates to the Western Solar Plan – if implemented together thoughtfully – levels the playing field between renewable energy and fossil fuel developers to help accelerate and continue momentum for the clean energy economy on public lands and ensures that this development doesn’t occur at the expense of communities and ecological habitats.  

• For the Renewable Energy Rule to effectively incentivize responsible wind and solar energy development on public lands, it requires a robust and well-designed revision to the Western Solar Plan that includes substantial community involvement, Tribal consultation, sound science and balancing deployment with minimized impacts on ecosystems and communities. 

• As part of this solar programmatic update, BLM is reviewing the process for new Designated Leasing Areas, variance areas and exclusion areas, adjusting exclusion criteria and seeking to identify new or expanded areas to prioritize solar deployment. 

The Biden administration simply can’t align public lands management with 21st century challenges by tackling any of these policies in isolation. Implementing this suite of BLM plans collectively can establish a more holistic vision for public lands management that addresses the challenges of climate change and the wildlife extinction crisis, alongside equitable decision-making with strong community input and robust Tribal consultation. 

The Wilderness Society is here as a resource if you have questions or need assistance in reporting. We can connect you with community advocates in New Mexico, energy policy experts and scientists. For more information, contact Emily Denny of The Wilderness Society at edenny@tws.org.