MEMO: Wyoming Communities and Public Lands Can Reap Benefits from BLM’s Update to Federal Oil and Gas Program

Tomorrow, the Bureau of Land Management will auction off over 67,000 acres of public lands to oil and gas companies to drill in Wyoming. This comes just after a sale in June of over 100,000 acres – the first in Wyoming since the passage of the Inflation Reduction Act in August of 2022. 

While the BLM continues to sell fossil fuel companies development rights on public lands, the federal leasing system under which it operates remains woefully outdated. Riddled with de facto subsidies for fossil fuel companies, the current system lets oil and gas CEOs reap record profits and offload the costs of pollution and ecosystem destruction from their operations onto communities and taxpayers. 

Proposed in late July, BLM’s Oil and Gas Rule takes critical steps to rebalance this favoritism and update the antiquated system that’s been built into multiple facets of public lands management by reforming the federal oil and gas program. 

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

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 align oil and gas decisions on public lands with Wyoming’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 2020 analysis conducted by Taxpayers for Common Sense found Wyoming lost an estimated $120 million in rental revenue and about $1.3 billion in royalties between fiscal years 2010 and 2019 from oil and gas leasing due to rock-bottom and decades-old rates. Following its post-IRA interim guidance, the BLM applied the updated rates to the June lease sale, including the new 16.67 percent federal royalty rate (increased from 12.5 percent) that now aligns with Wyoming’s royalty rate for state leases. From just this lease sale alone, Wyoming can expect an estimated $100 million greater return over the next 30 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 Wyomingites receive a fairer share from oil and gas companies’ use of their public lands.  

As the US energy transition accelerates and Wyoming ramps up its efforts to diversify its economy to be less reliant on fossil fuels, the higher return these rate updates provide could help fund an off-ramp from fossil fuels, if strategically invested in a permanent trust, similar to the state’s Permanent Land Funds that would fund community transition needs. 

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 enough, they can walk away, leaving sites unplugged and leaking toxins into groundwater and the air, posing hazards to fish and other wildlife. Not only do Wyoming’s over 2,000 orphaned wells impair the ability to enjoy its public lands, but they also come with an enormous bill to clean up. According to a 2018 study by GOA, based on existing bonding rates and the number of currently producing wells, Wyoming taxpayers could be on the hook for future clean-up bills amounting between $527.2 million and $4.2 billion for the mess industry leaves behind on the landscape. 

When finalized, the BLM’s proposed rule will hold oil and gas companies accountable – an effort that 85 percent of Wyoming's voters support. Although data show that combined oil and gas production from federal lands in Wyoming has been declining overall since 2010, 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 Wyoming. 

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 Wyoming with low or no potential for energy development or with important wildlife or recreation values, such as those on the doorstep of Seedskadee National Wildlife Refuge. 

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 instead manage landscapes with important fish and wildlife values, outdoor recreation, cultural resources and renewable energy potential for those better uses. 

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 Wyoming 

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 

Wyoming’s public lands are not immune to the ongoing impacts of climate change, from drought to extreme wildfire, which degrade landscapes alongside biodiversity loss and the ongoing impacts from fossil fuel extraction. 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 

Wind power generation in Wyoming has more than doubled since 2019 and accounted for 22 percent of the state's total electricity net generation in 2022. Earlier this summer, Biden administration officials, Wyoming elected officials, including Governor Mark Gordon, and energy utility leaders gathered to celebrate the groundbreaking of the TransWest Express transmission line, which will carry Wyoming wind energy across a 732-mile path to supply surrounding states. Echoing their sentiments, some residents are also arguing that with the energy transition well underway, Wyoming should be prepared to reap its economic benefits, while still protecting the public lands it values.  

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 wildlife 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, the BLM is considering adding more states, including Wyoming, 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 Wyoming, energy policy experts and scientists. For more information, contact Emily Denny of The Wilderness Society at edenny@tws.org.