7/23/2019 Land Hoarders: How stockpiling leases costs taxpayers

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LAND HOARDERS:

How Stockpiling Leases

is Costing Taxpayers

rent and are not required to make progress ondeveloping energy resources that would requireroyalty payments. While the leases are suspended,the oil and gas companies retain control of thelands; which prevents them from being managed formultiple uses for the benet of the public—be it forrecreation, conservation or possibly development byother companies.

Oil and gas companies aresupposed to develop the publicland leases they are privileged

to hold in a timely manner, or give themup. These lands have been set aside

under energy leases for the benet ofthe American taxpayer. However, oil andgas operators have made a habit of exploitingloopholes known as “suspensions.” Thesecompanies effectively take the control of the leaseout of the hands of public ofcials, and off thebooks—by stockpiling leases. This land hoardingmust be addressed to protect America’s taxpayerand our public lands.

Current law allows leases to be “suspended”—effectively put on hold—ensuring the leases donot expire even while companies are not paying

22,370

270,191

1,075,618

593,427

929,510

16,169

172,759

78,840

SUSPENDED LEASE ACRES PER STATE

While SUSPENSIONS can be a useful(even necessary) tool, currentsuspensions include millions of acresthat have been on hold for decadesand have already cost taxpayers morethan $80 million in lost rents alone.

7/23/2019 Land Hoarders: How stockpiling leases costs taxpayers

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The Wilderness Society has reviewed decadesof suspension justications and found that whileeases may be appropriately put on hold to allowfor thorough environmental review of proposeddevelopment, the Bureau of Land Management’s(BLM) current approach to granting and managingease suspensions is awed, raising a number ofconcerns:

Lease suspensions are cheating U.S. taxpayers

of rental and royalty payments. Lease suspensions can allow industry to evade

Congressional intent to diligently developand provide timely and reasonable access tofederal oil and gas resources.

Lease suspensions can preclude the BLM’sability to achieve its multiple-use mandate.

We recommend immediate action to addressthese problems and ensure lease suspensions are

appropriately applied in the future:

1. The BLM must identify and end suspensionsthat are no longer justied and should haveexpired years ago.

2. The Government Accountability Ofce(GAO) should initiate an investigation andproduce a report to further dene the scopeof the problem and remedial actions.

3. The BLM should issue new policy and

training to guide future lease suspensionsand ensure suspensions are only grantedwhen truly needed and managed to ensurethey end in a timely manner.

4. The BLM should also issue a new policyrequiring greater opportunities for publicparticipation, transparency (includingannual reporting) and oversight of bothnew suspension requests and existingsuspensions.

WHAT ARE LEASE SUSPENSIONS?

Suspensions of oil and gas leases canbe used to extend the life of federalmineral leases beyond their primaryterms (which is ten years), even whenthe lessee has not made efforts todevelop these resources or produced

any oil or gas. A federal mineral leasesuspension, under the Mineral LeasingAct, “tolls” (effectively puts on hold) theoperating and production requirementsof a lease, including the obligationsto make rental and royalty payments,and extends the primary term of thelease by the length of the suspension.The BLM may either “direct” that alease be suspended or, upon review of

an application submitted by a lessee,“assent to” a request for a suspension.

A suspension may be granted onlywhere suspending operations andproduction would be “in the interest ofconservation of natural resources.” 

The phrase “conservation of naturalresources” has been broadly construed,and provides for suspension of onshoreoil and gas leases either:

(1) because use of the lease has beenprecluded by an act, omission, ordelay by a federal agency, such asdenying the lessee “timely access”to the property; or

(2) in the interest of conservation,which can mean preventing eitherdamage to the environment or lossof mineral resources.

 Millions of acres are subjec

o unjusified lease suspensions

ha receive litle or no oversigh

once graned.

Photo: Paul Lowry - ickr