For more than 200 years, through the U.S. General Land Office and U.S. Grazing Service, the federal government has generated revenue by leasing federal land for various purposes including cattle grazing, oil and gas development, and wind and solar energy.
Today, the Bureau of Land Management manages 380,000 square miles of federal land.
Companies leasing this land pay the federal government to rent the acreage, then pay a “royalty” in the case of oil and gas, a “grazing fee” for cattle, and a “capacity fee” for wind and solar. Other interests pay similar fees.
Since We the People own the land, we should be happy to see the federal government making money from the assets we own. It helps, in a small way, reduce the amount of taxes we might otherwise pay. (We should point out this is not about Yosemite Sam or Old Faithful. Not all federal lands have national parks on them.)
However, a new proposal by the Biden administration to allow entities to lease federal land for conservation and restoration purposes has current industry lease-holders up in arms. They see it as a “backdoor way to exclude mining, energy development and agriculture,” according to the Associated Press.
Their case is not strong.
The leases in place are in place. An occupied apartment can’t be rented to another occupant, nor can an already leased plot of land be leased to another entity. Lease termination is not part of the plan.
Further, only 37,500 square miles of 380,000 have been leased for drilling. That leaves roughly 342,500 square miles for someone else.
It can also be assumed that the 37,500 square miles currently under lease represent the most valuable acreage available for the purposes of the leaseholders. In the case of oil and gas, the U.S. oil industry is smart and employs the best geologists in the world. Much of this acreage has not had so much as a hole poked in it. If they’re not drilling the most valuable acreage, why should they feel threatened over the other less valuable land?
They shouldn’t. It remains undrilled because the cost of drilling vs. expected amount of production vs. price per barrel equation is not favorable now. If it was, all 900 (give or take a few) drilling rigs in the U.S. would be leased. Instead, as of May 16, according to Baker-Hughes, only 731 rigs are in operation — but the vast majority are not on federal land.
The director of the Bureau of Land Management, Tracy Stone-Manning, says, “There are rules around how we do solar development. There are rules around how we do oil and gas. There have not been rules around how we deliver on the portions of [federal law} that say, ‘Manage for fish and wildlife habitat, manage for clean water.’”
That’s fair enough, but as always, the devil is in the details. The other industries leasing federal land not only pay to rent acreage, but also pay some kind of fee based on what’s produced and sold from that acreage. How can a royalty be charged if the leaseholder has no intention of producing or selling anything?
Will rent be higher for conservation in recognition that no royalties will be collected? Will credit be given for habitat reclamation or carbon sequestration?
There are many questions to be answered, and it’ll get uglier from here. Already, one member of the Senate from a western state has called the changes a new tool to give “radicals” a chance to shut out the public.
If everything is radical, nothing is radical. This seems another unnecessary Washington political fight. Or it will until something radical actually happens.