On September 26th, the Bureau of Land Management (BLM), under the Department of Interior (DOI), offered 14 parcels totaling 26,853.94 acres of federal land for oil and gas development in Utah. The lease sale resulted in the sale of only 3 parcels encompassing 6,810 acres of federal land for oil and gas development, roughly 25% of the total acreage offered at the auction. The lease sales generated $89,085 in total revenue, which will be shared between federal and state taxpayers in Utah.

Of the acres bid on at auction, all were sold for the $10/acre statutory minimum, while the rest received no bids at all.

This was the eighth onshore federal oil and gas lease sale of 2023. So far this year, lease sales have been held in Kansas and New Mexico in May, North Dakota, Wyoming, Louisiana, and Mississippi in June, in Nevada in July, as well as Wyoming and North Dakota earlier this month.

Federal onshore oil and gas lease sales this year contain recent reforms that were enacted as part of the Inflation Reduction Act (IRA). They include:

• A federal onshore royalty rate of 16.67% (raised from 12.5%)
• Rental rates of $3/acre for the first 2 years, $5/acre for years 3-8, and no less than $15/acre for years 9-10 (raised from $1.50/acre for years 1-5 and $2/acre for years 5-9)
• Minimum bid of $10/acre (raised from $2/acre)
• End to noncompetitive leasing

For too long, oil and gas development on federal lands in Utah has failed to provide a fair return to federal or state taxpayers, who share 50% of revenue from federal leasing terms. New data included report: Giving it Away II: How Utah Continues to Lose from Oil and Gas Development on Federal Lands highlights how taxpayers have lost over $742 million in forgone revenue over the last decade under outdated royalty rates, rental rates, and policies that allow producers to release natural gas royalty-free. Taxpayers are also on the hook for $191 million in potential reclamation liability from currently producing oil and gas wells on federal land due to outdated bonding requirements that fail to cover the high costs of cleaning up orphaned wells.

The Bureau of Land Management is working to enact new reforms to better protect taxpayers and ensure a fair return with a new proposed rule. TCS submitted comments supporting provisions in the rule that would reform the long-broken bonding system and direct federal leasing away from important and sensitive cultural or environmental resources and toward areas with high oil and gas development potential. We also called for a more competitive royalty rate of 18.75%, which is what is charged by many states and in federal waters, after the 10-year period required by the IRA.

Finalizing the proposed rule and pursuing leasing in areas with the most industry interest will help taxpayers receive the revenue we are due. Taxpayers in Utah and across the country deserve a fair return for the resources we all own.