MEMO: What Colorado needs to know about the budget bill’s oil and gas provisions

Right now, nearly 74% of BLM-administered lands in Colorado are open to oil and gas leasing, according to a new report by The Wilderness Society. But leaders in Congress, conditioned by President Trump’s drill baby drill agenda and farce “energy emergency” declaration, are trying to open even more lands at a cheaper price for profiteering oil and gas companies via an obscure legislative process designed to avoid the Senate filibuster called the budget reconciliation process.  

While the amendment that would have forced the sell-off of more than half a million acres of public lands in Nevada and Utah didn’t make the cut, the final bill still contains provisions that are part and parcel of the public lands sell-off agenda to drilling and mining companies. 

This memo specifically outlines the major oil and gas provisions in the House Budget Reconciliation bill that will directly impact Colorado's communities and public lands. The House passed the package early this morning, sending it now to the Senate. 

Reinstating outdated royalty rates from 16.67% back to 12.5% for production on leases 

Just last year, the Bureau of Land Management finalized the Oil and Gas Rule which modernized the antiquated federal oil and gas program and implemented a fairer royalty rate and fees, as enacted by the Inflation Reduction Act. These reforms included giving taxpayers a fair return for extraction of our public resources, protecting wildlife and cultural resources, and ensuring that oil and gas companies pay for cleaning up their messes. Now Republicans in Congress are trying to turn back the clock to 1920, when the royalty rate was first set. 

First on their list is reducing royalty rates from 16.67% back to the outdated 12.5% for production on leases. According to a 2023 analysis, Colorado communities have been robbed $811 million due to the 12.5% federal royalty rate, between fiscal years 2013-2022.  

If passed, this move will be wildly unpopular in Colorado. On state lands, the royalty rate for drilling is 20%. Additionally, recent polling from the National Wildlife Federation found that 81% of Coloradans agree that the BLM should keep fees as is for oil and gas development on public lands. 

Mandating quarterly lease sales in Colorado 

The budget reconciliation bill would mandate quarterly lease sales across the state, requiring that all industry-nominated lands be offered within 18 months. 

What’s more, the bill would reinstate something called “non-competitive leasing” – meaning parcels that aren’t sold at an auction are available for two years at bargain basement prices. This is a huge win for the oil and gas industry, and a huge loss for Colorado taxpayers, who will lose on incurring administrative costs that oil and gas companies would no longer have to cover. Public lands in the state get tied up in this process, keeping them from actually generating revenue through opportunities like expanded outdoor recreation. 

Acres sold noncompetitively are, by nature, less likely to produce, because acres with known oil or gas reserves tend to sell at competitive auctions -- according to government watchdogs, almost 99% of oil and gas leases sold noncompetitively between 2003 and 2019 never produced any oil or gas within their 10-year lease term. 

Cutting out opportunity for public input on oil and gas decisions 

74% of Coloradans oppose efforts to reduce the review process and opportunities for public input on what takes place on public lands, including oil and gas development. However, as written, the budget reconciliation text would cut opportunities to oppose oil and gas decisions at every turn of the leasing and permitting process. 

Colorado communities continue to experience a slew of impacts from fossil fuels development from local air pollution to ecological degradation. The social cost for all the emissions created during drilling, production, and transmission of oil and gas on all types of lands in Colorado is 1.5 times greater than the revenue the state currently collects from the oil and gas industry, according to a 2023 report by the Colorado Fiscal Institute. 

To connect with The Wilderness Society’s public lands policy experts and partners on the ground in Colorado, contact edenny@tws.org