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

Next week on August 29th, the Bureau of Land Management will hold a public meeting on the proposed Oil and Gas Rule in Denver. BLM’s Oil and Gas Rule proposes several critical upgrades to the federal oil and gas program, which remains woefully outdated and riddled with de facto subsidies for fossil fuel companies.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 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. With 3.7 million acres of their public lands tied up for oil and gas drilling, 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. Many residents are actively resisting as development on state and federal lands creeps closer into their neighborhoods.   

Following BLM’s proposed Public Lands Rule, which received more than 150,000 comments, over 3,000 of those from Coloradans, the Oil and Gas Rule is another opportunity for Colorado residents to weigh in on agency efforts to reform public lands management to benefit them and their public lands. 

BLM Oil and Gas Rule makes long awaited reforms and includes fairer return to Colorado 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 better align oil and gas decisions on public lands with Colorado’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 2019 analysis conducted by Taxpayers for Common Sense found Coloradans lost out on an estimated $38.5 million in rental revenue and about $433 million in royalties between fiscal years 2009 and 2018. The BLM has not held an oil and gas lease sale in Colorado since the passage of the Inflation Reduction Act in August of 2022 that directed the agency to apply updated rates to all future lease sales, including the new 16.67 percent federal royalty rate, increased from 12.5 percent. This change brings BLM’s rate closer to Colorado’s 20 percent royalty rate for drilling on non-federal lands. By codifying these updates in agency regulations, the BLM’s Oil and Gas Rule makes them durable and ensures that Colorado finally receives a fairer share from oil and gas companies’ use of its public lands.  

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, posing hazards to fish and other wildlife. Not only do Colorado’s over 1,000 orphaned and abandoned wells impair the ability to enjoy its public lands, but they also come with an enormous bill to clean up. Based on existing bonding rates and the number of currently producing wells, Colorado taxpayers could be on the hook for future clean-up bills amounting between $134 million to $1.07 billion for the mess industry leaves behind on its landscapes. 

When finalized, the BLM’s proposed rule will hold oil and gas companies accountable — an effort that 92 percent of Colorado’s voters support. Senator Bennet echoed this call earlier this year when he sent a letter to the Department of the Interior advocating for bonding reform in line with his own proposed Oil and Gas Bonding Reform and Orphaned Well Remediation Act. 

Although data show that the overall trend for combined federal oil and gas production from federal lands in Colorado has been declining overall since 2014, 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 Colorado. 

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 Colorado with low or no potential for energy development or with important wildlife or recreation values, such as North Park and the Dolores River Canyon. 

When finalized, DOI’s proposed oil and gas rule will help curb the wasteful practice of speculative leasing and help expand opportunities for conservation and recreation for all who enjoy and rely on thriving wildlife and public lands across the state — an effort that 71 percent of Colorado voters support and expands on Senator Hickenlooper's COMPETES Act, signed into law via the Inflation Reduction Act, which ends the process of non-competitive leasing and frees more public lands for outdoor recreation, conservation and other uses, like renewable energy development. 

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 

Earlier this month, BLM issued a draft management plan for public lands in western Colorado which considers closing 1.6 million acres to oil and gas leasing. In contrast, under the existing resource management plans for the area, 80 to 87 percent of lands are currently open to oil and gas leasing. The significant reduction in proposed available lands is in part the result of the BLM redoing a previously inadequate climate impacts assessment. This type of thoughtful and holistic weighing of climate impacts and public lands values is critical at a time when Colorado is experiencing the dire impacts of a warming climate, like more severe drought, more intense and excessive heat and severe storms.  

Outside of individual resource management plans within Colorado, the BLM can make even more progress by making updates to the federal 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 Colorado 

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 

Colorado’s public lands are not immune to the ongoing impacts of climate change, from drought and flooding 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., by clarifying 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 

At the same time, renewable energy is expanding across the state. Since 2010, Colorado's total renewable electricity net generation has more than quadrupled and it accounted for 37 percent of the state's total generation in 2022. With an energy transition well underway in the state, Colorado should be prepared to reap its economic benefits. 

This sentiment is echoed by the state’s elected officials. Governor Polis recently signed a package of bills into law that would reduce greenhouse gas emissions by 100 percent by 2050, using a variety of tactics like streamlining local solar energy development. 

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. This will help accelerate and continue momentum for the clean energy economy on public lands and ensure 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, the 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 Colorado, energy policy experts and scientists. For more information, contact Emily Denny of The Wilderness Society at edenny@tws.org.