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Ben Gabriel and Frank Szollosi: Inflation Reduction Act a vital win for Montana

Sep 12, 2022 | 5 min read | Print Article

This article by Ben Gabriel and Frank Szollosi first appeared in Montana Standard on August 26, 2022

When the Inflation Reduction Act (IRA) became law, we secured a much brighter future for Montana than the one we had previously been facing. The bill marks an historic moment for our public lands, fish, and wildlife, and for taxpayers and communities around the state.

That’s because the IRA will deliver much-needed reforms to energy policies that haven’t been updated in more than a hundred years, policies that have cheated taxpayers and hamstrung agencies in being able to properly care for public lands, water quality, and outdoor recreation infrastructure.

The bill updates the royalty rate, minimum bid requirements, and rental rates that oil and gas companies pay to use our public land. According to Taxpayers for Common Sense, taxpayers in Montana have lost out on millions in revenue due to antiquated federal oil and gas fiscal policies. The reforms in the IRA will bring them into the modern era and ensure that companies are required to pay market rates for the lease of publicly-owned resources and taxpayers get a fair return, putting money back in the public’s pocket.

The bill also put an end to the outrageously wasteful practice of noncompetitive leasing. For over one hundred years, noncompetitive leasing incentivized companies to nominate lands for auction that have little to no value for oil and gas development but are rich in conservation or recreation resources. When the lands didn’t sell at auction, companies could then scoop those leases up at an off-the-shelf price of just $1.50 per acre the very next day. Companies were allowed to engage in this wasteful practice for far too long, simply to pad their investment portfolios with assets rather than to drill for oil and gas.

Noncompetitive leasing also forced the Bureau of Land Management to spend precious time and taxpayer money on processing and administering leases that resulted in no production, no jobs, or any other public benefits.

The Biden administration and the Department of the Interior must build upon this incredible achievement and go even further to protect taxpayers, public lands, wildlife, and hold oil and gas companies accountable for cleaning up their messes.

That means moving forward with a promised rulemaking for the federal oil and gas program that, along with implementing the important changes established in the IRA, also requires oil and gas companies to fully pay for potential clean-up costs, so that taxpayers aren’t stuck with the bill for the mess industry leaves behind. The rulemaking should also include mandating that the Interior Department avoid allowing speculative leasing in areas of low potential for oil development that could otherwise be managed to protect critical wildlife habitat.

The IRA is by no means a perfect bill, but it is nonetheless vitally important for addressing the climate crisis, which includes longer fire seasons and an increase in frequency of extreme weather events. The bill does that by making it much easier to conserve our public lands and waters – a must if Montana is going to remain resilient in the face of climate change.

It also does that by reducing the country’s emissions by 40% compared with their 2005 levels. But getting to those levels depends on successfully implementing the legislation. In coming years, we’ll be keeping a close eye on the current and future administrations’ actions and holding them accountable if the bill isn’t implemented.

For now, we are thankful that Congress and President Biden took this crucial action that modernizes the federal oil and gas leasing program and sets us on course to a future that is much more liveable than the one we were previously headed towards.