BLM rejects environmentalist offer to buy and hold federal oil and gas leases

In February 2016, Utah environmentalist and author Terry Tempest Williams offered to purchase two federal oil and gas leases on property near her home in Southern Utah. Her intention, as stated in a column later appearing in the New York Times, was to keep the resources in the ground “until science finds a way to use those fossil fuels in sustainable, nonpolluting ways.”

Earlier this week the U.S. Bureau of Land Management (BLM) rejected the offer.

The BLM said under the terms of the standard lease agreement submitted by Williams and her husband the leasing party agrees to “exercise reasonable diligence in developing and producing … leased resources.” Statements in the media attributed to Williams led the BLM to conclude Williams did not intend to diligently develop the resources described in the lease. Because it appeared to the BLM that Williams would not comply with the lease agreement, it chose to reject the offer.

The BLM action likely will provoke more conflict over development of federal oil and gas resources in Utah and elsewhere in the west.

For more background on this and related issues see the following Knowledge Problem posts: one, two, three, four, and five.

I have sent the following statement in response to a media inquiry:

The BLM’s rejection of Terry Tempest Williams’ lease offer is just one of many actions highlighting the need for a reconsideration of public policy toward oil and gas development on federal lands.

Federal lands containing oil and gas resources often present significant cultural, recreational, or other environmental values. Federal law requires the BLM to ensure developers take reasonable efforts to protect these alternative values. Given the diverse views of oil and gas development across the American public, however, conflict is inevitable.

Some citizens are quite concerned about climate change and want to keep fossil fuels in the ground. Some citizens want to keep specific areas out of production to protect local environmental or recreational values. For many citizens, their primary interest in federal minerals is in producing the minerals to help keep energy prices down and to boost federal revenues. The BLM has no method that can tell them which citizens should prevail in each case of conflict.

For this reason, I have advocated reforms (along with Shawn Regan of the Property and Environment Research Center) to enable environmental, recreational, or other groups to participate directly in federal oil and gas leasing activities. Under our market-based approach to federal resources, should a group of citizens desire a property be held out of development they simply need to outbid others for the development rights.

Such solutions to conflict are already available in the case of privately owned mineral rights—an environmental group can purchase such rights, decide whether development can occur, and if allowing development the group can impose any restrictions deemed necessary to protect a site’s environmental values. The Audubon Society allowed oil and gas production for many years on property in Louisiana. Oil and gas revenues produced by the development helped fund expansion of Audubon’s wildlife refuge and other society operations.

For many years, the only options in cases of conflicting views over development of federal oil and gas minerals seemed to be to engage in costly administrative processes, perhaps followed by court action or lobbying Congress. Williams’s actions pointed to the possibility of a compromise respecting both environmental values and taxpayer interests. With further policy development, this more market-based approach can provide a straightforward way to strike a balance between energy development and the protection of competing resource values.

I do not know whether the law supports Terry Tempest Williams in the BLM rejection of the lease offer. But if the law does not support Williams, it should change.

 


2 thoughts on “BLM rejects environmentalist offer to buy and hold federal oil and gas leases

  1. Yes, but they have to pay the royalties and the income taxes that a real developer would have to pay if he really drilled and found the oil as well as the up front lease payment.

  2. Royalties are payments to mineral owners when the developer removes and sells the minerals. Since the mineral owners retain the minerals in this case, no need to pay royalties.

    And by the way no oil and gas development company would want to pay ‘as if’ royalties on leases they hold undeveloped.

    The conservationist holding an undeveloped federal oil and gas lease should pay annual rental payments (just like everyone else does). Perhaps the rental payments should be higher than the $1.50/acre/year current minimum, but that is a separate issue.

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