2Center or American Progress | A Continued Push or Reorm Is Needed on Public Lands’ Energy Leasing Title
The Mineral Leasing Act o 1920, as amended, governs the leasing o oil,natural gas, and coal on ederal lands, excluding national parks, nationalmonuments, and congressionally created wilderness areas.
The law isadministered by the Department o the Interior’s Bureau o Land Manage-ment, or BLM, which oversees leasing on the 258 million acres it manages;on the 385 million acres managed by other ederal agencies, such as theU.S. Forest Service; and on 57 million acres o land where the surace is pri-vately owned but the mineral rights are owned by the ederal government.For the lands it directly controls, the BLM, under the 1976 Federal LandManagement and Policy Act, must prepare resource-management plansto govern land uses, including which areas are suitable or leasing.
Thismanagement is generally or large areas o land, and or periods o 10 to 15years. According to the law, the BLM must apply the principle o multipleuse, which means utilization “in the combination that will best meet thepresent and uture needs o the American people.” It also requires theagency to take into account:
… the long-term needs o uture generations or renewable and nonre-newable resources, including, but not limited to, recreation, range, tim-ber, minerals, watershed, wildlie and fsh, and natural scenic, scientifc and historical values; and harmonious and coordinated management o the various resources without permanent impairment o the productiv-ity o the land and the quality o the environment with considerationbeing given to the relative values o the resources and not necessarily tothe combination o uses that will give the greatest economic return or the greatest unit output.
For its part, the U.S. Forest Service develops its own land-managementplans under the same general principles.Most oil and gas leasing is done through a competitive process. The BLMidenties areas available or leasing, and energy companies then nominateland parcels within those areas, generally no more than 2,560 acres, orquarterly auctions. Minimum bids o $2 an acre are required. Leases requirethe payment o at least 12.5 percent o the value o oil or gas that is pro-duced. There are also annual rental ees, starting at $1.50 an acre or the rst5 years o the 10-year lease, increasing by $2 an acre every year thereater.Hal o the unds rom royalties and ees go to the U.S. Treasury and hal tothe state where the minerals are located, except in Alaska, where the stategets 90 percent.
Owners o oil and gas leases must submit an application or a permit todrill or each well and cannot begin operations until the permit is approvedby the BLM. The application must include a drilling plan and a surace-useplan showing locations o drilling pads and how the area will be reclaimed.The BLM must allow public inspection o those applications and prepare anenvironmental review. The Forest Service has similar requirements.The BLM also administers coal leasing on ederal lands, under the MineralLeasing Act as amended—primarily by the 1976 Federal Coal LeasingAmendments Act—and through its own land-use planning. Leasing takesplace under two procedures established by regulation: regional coal leas-ing, where the BLM selects tracts to meet regional requirements deter-mined by teams o BLM ocials and state and local ocials, and throughso-called leasing by application, which means energy companies apply orspecic areas. Leases initially are in efect or 20 years, but can be automati-cally extended as long as coal is being produced in commercial amounts.No one company may own leases o more than 75,000 acres in a state or150,000 acres nationally.
By 1990 the BLM had all but abandoned the regional coal-leasing program,and today virtually all coal leases are done through leasing by application.As a 2012 study by the Institute or Energy Economics & Financial Analysisnoted, “By 1990, BLM’s regional coal teams had successully lobbied todisband, or decertiy, all 12 coal production regions,” and this “gave coalcompanies nearly complete control o coal mining,” most notably in thePowder River Basin, the source o most ederal coal.
Fossil-Fuel Leasing on Federal Lands: A Primer