The Highlights:

• First federal oil and gas lease sale in Ohio since 2019 and the largest since 2010.
• 2,777 acres of public land were offered and leased for oil and gas development in Ohio, all at below-market rates.
• The sale had an average bid of $3,948 per acre, with individual leases selling for between $10 and $9,751 per acre.
• Taxpayers will lose $7.9 million in royalty revenue from future production on these leases.

On September 15, the Bureau of Land Management (BLM) offered 2,777 acres of public land in the Wayne National Forest, located in Monroe and Washington counties, to be leased for oil and gas development. 2,777 acres were leased at the recently reduced federal royalty rate of 12.5%. The result is an estimated $7.9 million in lost royalty revenue over the life of these leases.

This sale adds to mounting losses. TCS estimates that taxpayers have already lost more than $1.5 billion in projected royalty revenue from leases sold since July 4, 2025, when the FY2025 reconciliation law reduced the federal onshore royalty rate to 12.5%, below what states and private landowners typically charge.

Today’s lease sale also raises fundamental questions about how to balance responsible oil and gas development with important, alternative uses of our public lands.

Oil and Gas Development in Ohio’s Wayne National Forest:

Federal oil and gas leasing in Ohio is sparse. There are currently 297 authorized leases in the state, spanning 37,827 acres. For comparison, this is less than 1% of the 4.1 million acres leased for oil and gas development in New Mexico. Most active leases in Ohio were issued decades ago; BLM has held just 7 competitive auctions in the state over the last decade, leasing less than 3,000 acres combined. Today’s sale is the largest in Ohio since 2010.

Energy development on federal lands in Ohio is minimal. While oil production has steadily declined over the last decades, natural gas production jumped in 2017, largely thanks to advances in hydraulic fracturing—aka fracking, the process of injecting liquid deep underground at a high pressure to extract oil or gas. Despite this increase, Ohio still accounts for little of total oil and gas development on federal lands (0.001% and 0.06%, respectively, over the last 5 years). The BLM predicts that any new wells drilled on the newly leased land in the Wayne National Forest will be horizontal, hydraulic fracturing natural-gas wells. These “unconventional” fracking wells would be new to Wayne National Forest, according to the Ohio Oil and Gas Association

The Wayne National Forest is Ohio’s only national forest. Approximately 200,000 people visit the forest annually for its hiking, paddling, hunting, fishing, and wildlife viewing opportunities, raising some concerns that increased oil and gas development in the National Forest would negatively impact recreation opportunities, which generate $7.4 million annually, and create environmental and health risks for neighboring communities.

Since 2006, BLM has issued 79 leases in Wayne National Forest but only 5 have been developed for oil and gas production (according to the Reasonably Foreseeable Development Scenario for Oil and Gas Activities, 2020 -2034, Wayne National Forest). This is the first lease sale held in Wayne National Forest since March 2017. The parcels offered in today’s lease sale appear to be associated with expressions of interest submitted between June 2017 and February 2020.

The lease sale comes 8 months after the U.S. Forest Service (USFS) finalized a new rule that makes it easier to lease national forest land for oil and gas development. Under the new rule, DOI no longer conducts site-specific reviews for nominated parcels, instead depending solely on individual national forest plans. Wayne National Forest currently operates under a 2006 framework. USFS began an assessment to revise the 2006 plan in April 2018, but the revision was cancelled in January 2021.

Lease Sale Results:

Today’s lease sale offered and leased 40 parcels, totaling 2,777 acres. Competitiveness varied widely, with parcels selling for between $10 and $9,751 per acre.

Lease sale results are highly dependent both on the specific parcels offered in the sale and current market conditions. And, as noted above, there is little federal oil and gas leasing in Ohio, making it particularly difficult to evaluate today’s sale. In the last competitive auction in Ohio, held in December 2019, BLM offered and leased 3 parcels at an average bid of $845 per acre. In the last competitive auction in Wayne Nationla Forest, held March 2017, BLM offered and leased 20 parcels at an average bid of $4,500 per acre.

The BLM anticipates little future production from these leases. In its analysis of leasing impacts, BLM states that “it is expected that only a very small percentage of this acreage will actually be developed.” Leasing land that is unlikely to ever enter production can block other, productive uses of our federal lands, including recreation, conservation, and alternative resource development. Non-producing leases also generate significantly less revenue for taxpayers as royalties make up 96% of revenue from the onshore oil and gas program. With other valuable uses for National Forests, the lack of revenue and production value of leasing these lands raises serious taxpayer concerns.

Below-Market Royalty Rates Waste Millions in Taxpayer Revenue

Every parcel sold today, and in all recent sales, was leased with a 12.5% royalty rate—meaning that any production will shortchange taxpayers. The Bureau of Land Management estimates that the parcels leased today could, in a high production scenario, hold 81 wells and ultimately produce 47 billion cubic feet of natural gas over their lifetimes. Based on the White House Office of Management and Budget FY2026 price projections, which are used to estimate federal royalty revenue from onshore leases, that production could be worth roughly $188 million. At the 12.5% royalty rate, taxpayers would receive about $23.5 million in royalty revenue, roughly $7.9 million less than we would receive under a 16.67% rate.

Given the current number of wells on federal land in Ohio and historic production trends in the state, this is likely an overestimate. However, it demonstrates the scope of long-term taxpayer losses from leases issued with a below-market royalty rate.

Leasing decisions are driven by development potential and market conditions. Recent competitive lease sales have shown that companies bid under both the higher 16.67% royalty rate and the lower 12.5% rate. In fact, average bids across the country were higher in 2023 and 2024 under the higher rate ($978 and $2,149 per acre, respectively) than they had been during the preceding decade ($379 per acre from 2013-2022). The lower royalty rate did not make these leases more competitive. It simply reduced the future royalty revenue.

Lowering Financial Assurance Requirements Increases Taxpayer Risk

After production ends, oil and gas producers operating on federal land are required to plug their wells and reclaim surrounding sites. To guarantee that cleanup of these potentially hazardous and environmentally harmful sites is paid for, producers must post a bond before drilling begins. If a company abandons its wells or goes bankrupt, the bond is forfeited and used to help cover reclamation costs. BLM currently accepts two types of bond coverage: bonds for an operator’s wells on an individual lease, with a minimum of $150,000, and bonds covering all wells owned by an operator within a state, with a minimum of $500,000. But this June, DOI proposed to lower minimum bond requirements to their decades-old minimums. Without adequate safeguards, the leases issued today could add to growing clean up liabilities.

Federal Leasing Should Support Responsible Development, Generate Revenue, and Protect Taxpayers

Oil and gas developed on federal lands belongs to the American people. Leasing should occur where it makes economic sense and fiscal terms should ensure taxpayers receive a fair return from the development of our nation’s valuable resources.