BLM’s Fluid Mineral Rule Proposes an End-Run Around Federal Law

Deep in the Department of Interior’s recently proposed 200+ page rule updating the Fluid Mineral Leases and Leasing Process is a not-so-welcome surprise for the American energy industry. The proposed rule introduces a “preference criteria,” a brand-new and potentially transformative mechanism that has flown relatively under the radar but could give the Biden administration yet another lever to block responsible oil and natural gas development.

In a nutshell, this would grant the Bureau of Land Management the authority to incorporate this new metric, “preference criteria,” into its oil and natural gas regulations, allowing BLM to exclude land parcels “with sensitive cultural, wildlife, and recreation resources” from potential oil and gas leasing even before environmental analyses are conducted.

The proposed rule follows a trend at President Biden’s DOI. Even without employing “preference criteria,” BLM has found ways to limit oil and natural gas development by trimming down acreage from lease parcels for unspecified reasons, adding costs to make drilling more expensive, and canceling lease sales altogether. The “preference criteria” metric would take things a step further, giving BLM veto power to remove lands from oil and natural gas development preemptively while bypassing existing safeguards and review processes.

This should come as no surprise – remember that one of President Biden’s first moves in office was to ban all leasing on federal lands, an illegal policy the administration only overturned under court order and when Russia’s war in Ukraine put American energy security at risk. Even after resuming federal lease sales, then-White House National Climate Advisor Gina McCarthy was clear that President Biden’s intent to block drilling on federal lands hadn’t changed:

“Let me answer your question very directly: President Biden remains absolutely committed to not moving forward with additional drilling on public lands.” (emphasis added)

It appears that the only thing that’s pushed DOI to hold oil and natural gas lease sales is federal law – lease sales are governed by the Mineral Leasing Act (MLA) and only Congress can stop the leasing program. Moreover, the Inflation Reduction Act (IRA) requires that BLM offer at least two million acres of federal land for onshore oil and natural gas development before new wind and solar leases are issued.

Concerningly, the new “preference criteria” metric could allow BLM to do an end-run around its IRA leasing obligations. Using the “preference criteria,” BLM could propose acreage for oil and gas leasing that no company has expressed interest in and count that acreage against the minimum that BLM is required to offer for sale under the IRA.

As the Independent Petroleum Association of America, the American Petroleum Institute, the Colorado Oil & Gas Association, and other industry groups pointed out in their comment letter, the “preference criteria” consideration would only affect oil and natural gas development on federal lands, setting up an unfair playing field:

“…despite BLM only nominally offering acreage for leasing or itself nominating tracts in which industry has indicated no interest, BLM could nonetheless unduly count such acreage against its IRA minimums for onshore oil and natural gas leasing to enable BLM to issue rights-of-way for wind and solar energy development on federal lands.”

BLM is already doing its absolute least to hold oil and natural gas leases while enabling a mad dash of renewable energy project development on federal lands. Earlier this month, Interior Secretary Deb Haaland announced DOI’s approval of fifteen new renewable energy projects on federal lands. And while any public land development – renewable or otherwise – runs the risk of impacting “sensitive cultural, wildlife, and recreation resources,” BLM evidently does not consider those resources important enough to prioritize upfront when evaluating renewable projects.

Bottom Line: Prioritizing “preference criteria” before considering environmental analyses, stakeholder input, production capacity, and economic impact would allow the Biden administration to continue running roughshod over local communities and businesses who support oil and natural gas development.

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