Washington, D.C. – Speculators and oil and gas companies are taking advantage of a little-known government leasing program that lets them stockpile public land at rock-bottom prices – often without public scrutiny – according to a new report from the Center for American Progress.
The report found that nearly a quarter of all the land leased by the U.S. Bureau of Land Management (BLM) over the past 10 years has been through this noncompetitive leasing program. It allows speculators and oil and gas companies to pick up parcels unsold at a competitive auction for cheap – a nominal filing fee and a $1.50 per acre rental payment. This program hurts taxpayers by giving away public lands at a lower rate and tying them up indefinitely so that they can’t be managed for other purposes, including conservation or outdoor recreation.
“These findings reveal a wasteful and unnecessary leasing program that siphons away the BLM’s limited resources and shortchanges taxpayers,” said Kate Kelly, CAP’s director for Public Lands. “Noncompetitive leasing is the bargain bin of the oil and gas world, and Congress should end this program that incentivizes speculation and minimizes the true value of public lands.”
Leases sold through the noncompetitive process generate little revenue and rarely end up in production, especially when compared to the leases sold through competitive auctions, the report found. More than half of noncompetitive leases are terminated early by the BLM, often because the lessee fails to pay the first rental payment. In other words, the BLM is wasting taxpayer resources to run an over-the-counter oil and gas leasing program that rarely produces oil and gas.
The noncompetitive leasing program appears to benefit oil and gas companies that are looking to pad their books with undeveloped reserves. It also seems to benefit speculators who are hoping to profit later off the cheap leases.
The report recommends that Congress terminate this noncompetitive leasing program and offers additional actions that the BLM could take to minimize waste and abuse in the onshore oil and gas program.
Read the report: “Backroom Deals: The Hidden World of Noncompetitive Oil and Gas Leasing” by Kate Kelly, Jenny Rowland-Shea, and Nicole Gentile.
For more information on this topic or to talk to an expert, please contact Sam Hananel at [email protected] or 202.478.6327.