On June 8, 2017, the Bureau of Land Management Colorado will hold an online auction to sell leases for more than 100,000 acres of federal land for oil and gas development. Bids for the right to drill on these lands, which comprise 106 total parcels, will begin at $2 per acre.
BLM lease sales are nothing new. They occur quarterly in almost all western states. But The Colorado Independent’s recent article about this upcoming sale garnered such a fierce and widespread public response that we felt it was worth explaining how this process works.
Here are the answers to your online questions, from “Why does this process exist?” to “Can I bid?”
What is a BLM lease sale?
BLM lease sales are quarterly auctions administered by state BLM offices during which oil and gas developers bid for leases to drill on public lands. During each sale, land is bundled into parcels and buyers bid on these parcels starting at $2 per acre.
Sales are held quarterly in all states with a BLM presence, primarily in the 12 western states: Alaska, Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.
Traditionally held at BLM offices, sales are now held almost entirely online. Winning bidders have 10 years to develop the land, after which developers who have made progress towards extraction can retain the lease in perpetuity until drilling is completed.
How long have lease sales been going on?
The BLM has overseen the leasing of public lands for drilling and mining coal, oil, natural gas and other minerals since 1920, when Congress passed the Mineral Leasing Act. Prior to its passage, U.S. citizens were allowed to freely prospect for minerals on public lands, essentially operating under a “finders-keepers” policy for both discovered minerals and the surrounding lands needed to develop them. By 1909, a major oil rush in the West prompted such land-grabbing that the U.S. Geological Survey called for a different regulatory system.
Today, the BLM administers the Mineral Leasing Act by evaluating proposed areas for potential development, holding competitive auctions to lease these areas and overseeing the permitting process to develop them. According to the BLM website, members of the public, typically industry representatives, first nominate lands they wish to lease. The lands are then reviewed for “compliance with the area’s Resource Management Plan and other factors such as resource conflicts that might make the lands ineligible.” The BLM says the environmental review process is “multifaceted,” and includes input and coordination with other Federal and state agencies and the public. Some environmentalists say that the environmental review process is inadequate, and that public comments tend to go ignored.
Why are these sales held online?
For years, BLM lease sales looked like traditional in-person auctions: Bidders sat in a room and held up their bid cards while the auctioneer, often wearing cowboy boots and a Stetson, called out prices they liked.
In recent years, these sales became targets for environmental advocates, who often protested the sales with signs, banners and civil disobedience.
Last summer, after hundreds of activists attempted to block entry to a sale in Lakewood, Colorado, the BLM changed its rules to hold most auctions online. Amarillo, Texas-based EnergyNet now has an exclusive five-year contract to manage nearly all BLM sales.
In theory, any U.S. citizen can bid on these leases. On its website, the BLM writes, “You may qualify to hold an oil and gas lease if you are an adult citizen of the United States.”
But in practice, EnergyNet auctions filter out most buyers who do not work for oil and gas companies. According to Bloomberg Businessweek, ‘Under the terms listed on the [EnergyNet website], registered lessees must be able to prove that they’re professionals “engaged in the oil or gas or other minerals business on an ongoing basis.’”
How can I find out about the next lease sale?
BLM Colorado announces upcoming sales on its website and gives the public 30 days to protest nominated parcels.
Before announcing each sale, the BLM first publishes a list and maps of the nominated parcels, and later announces the results of the environmental assessment. The Bureau takes public comments for 30 days after each of these two steps.
The final public comment period for the more than 100,000 acres set to be leased in June has now ended.
For $2 an acre, can I bid to prevent the drilling?
Lease sales, particularly when they were held in-person, are technically open to the public. But unless you are an oil and gas developer with the intention to drill, the short answer is no, you cannot bid in BLM lease sales.
Says BLM Colorado spokesman Steven Hall, “The notion behind the auctions is that if you purchase a lease, your intention is to develop it. You have a 10-year window to develop that lease and ‘hold it by production,’ which is the phrase we use to say you have developed it and can hold onto it going forward.”
When asked about environmental advocates hoping to buy parcels to keep them from the hands of oil and gas developers, Hall acknowledged that the issue is “a really gray area.” He said he simply isn’t certain what the legalities of bidding are, or whether publicly announcing an intent to not drill can disqualify a person from obtaining a lease.
But past events show that the parcels really aren’t intended for the general public.
In 2008, a college student named Tim DeChristopher attended a BLM auction. After witnessing oil and gas companies buy acre after acre, something snapped, and the young activist ended up bidding on — and winning — nearly half of the parcels, racking up a hefty tab. When he made it clear that he was not actually going to buy the parcels, the feds threw the book at him, sentencing him to 21 months in prison for disrupting the sale.
Last year, writer and environmental advocate Terry Tempest Williams bid on and won two parcels of land near her home in Utah, hoping to keep the land from being drilled. After the sale, she handed the BLM her credit card to purchase the 1,120 acres. But last October, after months of deliberation, the BLM refunded Williams her money and denied her bids on the grounds that she was not planning to develop the land for drilling.
But as Williams notes, many operators buy parcels without immediate plans to develop them, choosing to wait until it makes economic sense to drill. She says she she was targeted unfairly.
“The agency claims that it cannot issue the leases because we did not commit to developing them,” she said in a statement. “The BLM has never demanded that a lease applicant promise to develop the lease before it was issued. In fact, a great many lessees maintain their leases undeveloped for decades, thereby blocking other important uses of the lands such as conservation and recreation.”
Williams said in October that she is evaluating her legal options, including possibly filing an administrative appeal with the Department of the Interior’s Board of Land Appeals.
Photo via BLM Colorado