A century-old federal law designed to boost energy development allowed the government to sell drilling rights without taking bids on 38% of U.S. public land that officials leased to oil and gas companies over a 16-year period. More than 527,000 of those acres — going for as little as $1.50 an acre — were in Colorado, federal records show.
This noncompetitive process has its critics, including U.S. Sen. John Hickenlooper, who introduced a bill Thursday to require competitive bidding.
“Noncompetitive leasing encourages speculation on public lands at taxpayers’ expense,” said Hickenlooper, a Democrat who long has been seen by political observers and lawmakers as an ally of the oil and gas industry. “Westerners lose out when large swaths of land are set aside for speculation — instead of conservation or recreation.”
The Competitive Onshore Mineral Policy via Eliminating Taxpayer-Enabled Speculation (COMPETES) Act says federal land managers “shall not issue onshore oil and gas leases except through a competitive bidding process.” Cosponsored by Democratic New Mexico Sen. Martin Heinrich, the measure will be pushed as part of the White House’s Build Back Better legislation package to expand the social safety net and address climate change.
The federal government owns 640 million acres of land, much of it the West, and is charged with managing this public land under policies meant to balance energy development, grazing, recreation and conservation.
The Bureau of Land Management is required to hold online lease sale auctions for parcels that individuals or companies nominate anonymously to be auctioned for possible future drilling. Bidding can bring in $100 an acre and more, but the Mineral Leasing Act of 1920 also allows noncompetitive leasing. If nobody bids in an auction, BLM officials offer drilling rights for two years for a $75 application fee at a bargain rate of $1.50 an acre.
BLM records show noncompetitive drilling rights were given for land in northwestern Colorado that includes the Little Book Cliffs and Demaree Canyon, as well as land around the Arapaho National Wildlife Refuge in Jackson County.
Western Energy Alliance leaders who advocate for oil and gas industry access to public lands did not respond to the Denver Post’s calls seeking comment. Energy companies have relied on access to U.S. public lands and offshore waters to help reduce U.S. dependence on foreign oil.
The Government Accountability Office (which is the investigative arm of Congress) has said the leasing process is at high risk for abuse. A GAO investigation completed in November 2020 found that 62% of the 89 million acres leased for oil and gas drilling between 2003 and 2019 raised $14.3 billion in revenues for taxpayers. The other 38% of the land, about 33 million acres, was leased for oil and gas drilling without competitive bidding and raised $1.8 billion in revenues.
GAO investigators calculated that competitive lease sales lead to nearly three times greater revenues for taxpayers.
Often, companies hold drilling rights to preserve options, waiting for profitable market conditions. The GAO found 7% of public land leased both competitively and noncompetitively for drilling was used to produce oil and gas.
BLM officials acknowledged frequent selling of drilling rights without going through competitive bidding, and told the Denver Post they’re reconsidering this practice.
“The BLM is reviewing how the public’s land and the public’s energy and mineral resources are managed in light of climate change and to ensure that the public gets fair value for the public’s resources,” BLM spokesman Steven Hall said. He added that the areas under lease for drilling “are still available for multiple uses.”
Hickenlooper, who was once employed as an oil and gas industry geologist, has supported responsible energy production during his political career — going so far as to sip fracking fluid in 2011 as governor when environmentalists raised concerns about groundwater contamination.
But he also has championed public lands protection and this year backed President Joe Biden’s moratorium that temporarily blocks new drilling on public land. Hickenlooper also signed onto a bill introduced by Sen. Michael Bennet that would require energy companies to set aside funds in advance to guarantee proper cleanup and land restoration when drilling is done.
A coalition of environment organizations praised Hickenlooper’s effort, including the Wilderness Society, a national group that tries to protect public land.
“In 1920, it may have made sense to incentivize fossil fuel production using our public lands. But now we know a quarter of our greenhouse gas emissions are coming from public lands, and we’re seeing worse weather, droughts, more intense fires,” Wilderness Society Colorado director Jim Ramey said. “Ending this practice of noncompetitive leasing is an important piece of the broader puzzle of bringing 21st-century energy programs up to snuff.”