US Bureau of Land Management’s rental policy hammered out in new report

The United States Government Accounting Office is the latest federal agency to suggest an overhaul of the Bureau of Land Management’s leasing policies for oil and gas exploration and production. In a new report, GAO suggests that BLM’s guidelines be changed and that its rental fees be reviewed.

BLM’s rental procedures and rates have been hotly debated since late November, when the US Department of the Interior said the agency’s rental program “does not provide a fair return to taxpayers, even before taking into account the resulting climate-related costs which must be borne by taxpayers ”.

The Build Back Better bill, which faces an uncertain future in the US Senate, would increase minimum rental costs from $ 2 per acre to $ 10 per acre and increase royalty rates paid by tenants.

In its report, the GAO said BLM has made many changes to its leasing processes since the federal acreage was opened for bidding in 1987, including the use of online auctions starting in 2016. Despite this, BLM has not updated its guidelines to account for these major changes.

“BLM policy requires that guidelines be updated promptly,” GAO said. “BLM has developed a new online system for submitting and processing applications, but has not published detailed guidelines to help users understand the new system despite the policy requiring it.”

The accounting office said BLM also needed to streamline its land nomination process, noting that between 2009 and 2019, 87 million acres of federal land were offered for lease, but that 18 million acres have been approved. Of this total, 14 million were actually rented.

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Leasehold appointments can be onerous for BLM as there is no cost to designate the square footage, but the agency still has to process the square footage.

“BLM incurs costs for processing all nominated acres, but does not recover all of those costs through its application fees, which are only billed when a lease is issued,” GAO said.

The agency said the oil and gas leasing process has undergone changes since it was last updated in 2005, but BLM has not considered adding a nomination fee.

The GAO said the BLM had done a poor job of tracking its costs, collecting “just a portion” of the costs its application fees were supposed to cover.

“BLM is based on outdated analysis of data collected three decades ago. Thus, BLM’s biennial review does not provide assurance that its fees reflect the relevant actual costs, ”the accounting office said.

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