Huffman, 20 Bicameral Colleagues Call on President Biden to Finalize Oil and Gas Bonding Reform This Month

April 04, 2024

Congressman Jared Huffman and Senator Michael Bennet alongside 20 Congressional colleagues urged President Biden to finalize the Bureau of Land Management’s (BLM) proposed Onshore Oil and Gas Leasing Rule by the end of the month.

“[T]he current oil and gas leasing program shortchanges the American public, locks up thousands of acres of land that could be put to other uses, invites speculation, and often leaves taxpayers on the hook to pay the cost of reclaiming orphaned wells and restoring surrounding lands and waters,” wrote Bennet and the lawmakers. “We urge your Administration to finalize pending regulations to modernize the Federal oil and gas leasing system by the end of April.”

Oil and gas bonding rates – intended to ensure industry operations are cleaned up after production ends — have not been updated since they were set more than sixty years ago, even to account for inflation. As a result, current bonding rates are wholly insufficient to cover the true costs of cleaning up drilling sites, and taxpayers are ultimately left to foot the bill. 

BLM’s proposed rule modernizes bonding rates to ensure that oil and gas companies – rather than taxpayers – pay the costs of cleaning up oil and gas wells. It also implements key reforms included in the Inflation Reduction Act such as increasing royalty rates and prohibiting non-competitive leasing. The proposed rule also focuses leasing decisions away from lands with little potential for oil and gas production, wildlife habitat, cultural resources, and other sensitive places; and limits access for operators with a history of noncompliance and abuse.

“BLM’s proposed rule includes important reforms that will save taxpayers money, help ensure lands are used for their highest value, and better protect communities and the environment,” continued the lawmakers. “We applaud BLM for moving forward with long overdue reforms to the onshore oil and gas leasing program, and urge your Administration to move quickly to finalize the agency’s proposed rule.”

In addition to Huffman and Bennet, U.S. Senators Catherine Cortez Masto (D-Nev.), Ben Ray Luján (D-N.M.), Jacky Rosen (D-Nev.), John Hickenlooper (D-Colo.), Martin Heinrich (D-N.M.), Alex Padilla (D-Calif.), Ron Wyden (D-Ore.), Angus King (I-Maine), Ed Markey (D-Mass.), Sheldon Whitehouse (D-R.I.), and Bernie Sanders (I-Vt.), and U.S. Representatives Raúl Grijalva (D-Ariz.), Mike Levin (D-Calif.), Melanie Stansbury (D-N.M.), Katie Porter (D-Calif.), Sydney Kamlager-Dove (D-Calif.), Alexandria Ocasio-Cortez (D-N.Y.), Susie Lee (D-Nev.), and Kevin Mullin (D-Calif.) also signed the letter.

“The Colorado Fiscal Institute thanks Senator Bennet and his congressional colleagues for their efforts to finalize the Biden administration’s proposed oil and gas rule to improve the stewardship of American lands. Passing these common sense oil and gas reforms would ensure Colorado taxpayers get a fair return from the development of publicly-owned resources. We join our leaders in Congress in urging the Bureau of Land Management to swiftly adopt it,” said Pegah Jalali, Research Manager, Colorado Fiscal Institute.

“Thank you to Senator Bennet and his colleagues for urging the Department of the Interior to finalize long overdue reforms to our antiquated federal oil and gas leasing system. Modernizing decades-old leasing processes and below-market rates is critical to ensure taxpayers receive a fair return and are not burdened with the growing costs of cleaning up abandoned wells. Raising royalty rates, rental rates, and minimum bids to account for inflation and align with state and private interests is common sense. Minimum bonding rates were set more than 60 years ago, updating them will help protect taxpayers from shouldering future cleanup costs. More than a quarter million Americans submitted supportive comments on the proposed rule, underscoring the broad public support for these fiscally prudent reforms that will generate much-needed revenue for taxpayers while better protecting our public lands and communities,” said Autumn Hanna, Vice President, Taxpayers for Common Sense.

“We’re thrilled to see the support from Senator Bennet and climate and public lands champions in Congress for this rule as these updates are long overdue. The status quo of favoring industry profits over our communities, lands and waters must be broken. This rule is a strong step toward fixing it and we urge the president to finalize this rule as quickly as possible,” said Miranda Badgett, The Wilderness Society.

“The National Wildlife Federation applauds Senator Bennet’s call to the Department of the Interior to protect our nation’s federal public lands and the irreplaceable wildlife they support. The common-sense reforms in the proposed rule will hold oil and gas companies accountable for cleaning up messes they leave behind on our public lands, instead of allowing abandoned infrastructure to jeopardize the health of communities and critical habitats. Widely supported across the West, the proposed rule will ensure that our public lands are better managed to benefit the communities and wildlife that depend on them. The National Wildlife Federation joins Senator Bennet and his congressional colleagues in urging the Department of Interior to finalize the oil and gas leasing rule as soon as possible,” said Bailey Brennan, public lands attorney, National Wildlife Federation.

“Rocky Mountain Farmers Union stands with Senator Bennet and his colleagues in their request for the Bureau of Land Management to quickly finalize its oil and gas rule to protect the public lands that so many Americans depend on. Modernized bonding rates will prevent abandoned and orphaned wells from harming producers, rural communities, and the natural resources they rely on, while ensuring taxpayers aren’t left with a billion-dollar bill to clean up industry messes. Common sense reforms in the oil and gas rule will also limit speculative oil and gas leasing on lands where development has little to no chance of occurring, allowing for better land management for grazing and other natural resource priorities. These reforms are essential to protecting our public lands and should be finalized as soon as possible,” said Chad Franke, President, Rocky Mountain Farmers Union.

In October 2023, Bennet brought together 10 of his Senate colleagues to support updated oil and gas bonding requirements in BLM’s proposed Onshore Oil and Gas Leasing Rule, and to call on Biden administration leaders to swiftly review public input and finalize the rule. The proposed rule aligns with Bennet’s Oil and Gas Bonding Reform and Orphaned Well Remediation Act and follows his letters to the Biden administration in December 2022 and July 2023 urging them to update the nation’s antiquated oil and gas bonding system. 

The text of the letter is available HERE and below.

Dear Mr. President:

We urge your Administration to finalize pending regulations to modernize the Federal oil and gas leasing system by the end of April. We support the common-sense reforms included in the Bureau of Land Management (BLM)’s proposed Onshore Oil and Gas Leasing Rule, which will bring enormous benefit to our nation and public lands. 

Our public lands are essential to fishing and hunting, wildlife and land conservation, livestock grazing, and our states’ outdoor recreation economies. BLM’s proposed rule includes important reforms that will save taxpayers money, help ensure lands are used for their highest value, and better protect communities and the environment. Many of these reforms were recommended in the Department of Interior’s (DOI) review of the Federal oil and gas leasing program, released in November 2021.  That review was bolstered by an earlier Government Accountability Office (GAO) report, focused on the need for updated bonding rates.  These reports illustrate how the current oil and gas leasing program shortchanges the American public, locks up thousands of acres of land that could be put to other uses, invites speculation, and often leaves taxpayers on the hook to pay the cost of reclaiming orphaned wells and restoring surrounding lands and waters. 

The proposed rule implements critical reforms included in the Inflation Reduction Act, such as an increased royalty rate on par with state rates, a realignment of rents and minimum bids to account for decades of inflation, a prohibition on non-competitive leasing, and a new fee to ensure oil and gas operators carefully consider the lands they nominate for lease. The proposed rule also uses existing authorities to:

•          Increase outdated minimum bonding rates to ensure that oil and gas companies – rather than taxpayers – pay the costs of well clean-up and remediation;

•          Focus leasing decisions away from lands with little potential for oil and gas production, wildlife habitat, cultural resources, and other sensitive places;

•          Limit access to the leasing program for operators with a history of noncompliance and abuse.

These reforms are critical to update and improve the oil and gas leasing program to help ensure it better supports the needs of our communities, while protecting the environment and our public lands. They are also broadly supported by voters across the West. Colorado College’s Conservation in the West Poll recently found that 90 percent of surveyed voters in eight Mountain West states support requiring oil and gas companies, rather than federal and state governments, to pay for clean-up and land restoration costs after drilling is finished. In addition, over 260,000 Americans submitted public comments for the record on the BLM’s proposed rule — the vast majority of which are supportive of the rule.

We applaud BLM for moving forward with long overdue reforms to the onshore oil and gas leasing program, and urge your Administration to move quickly to finalize the agency’s proposed rule. 

We look forward to hearing from you on this important matter.

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