New Mexico U.S. Sen. Martin Heinrich backs bill to reform oil and gas leasing

Adrian Hedden
Farmington Daily Times

A Congressional initiative to reform federal oil and gas leasing was backed by New Mexico’s senior U.S. Sen. Martin Heinrich who contended the current system shortchanges taxpayers and should be amended.

The Competitive Onshore Mineral Policy via Eliminating Taxpayer-Enabled Speculation (COMPETES) Act was introduced by U.S. Sen. John Hickenlooper on Oct. 7 and was cosponsored by Heinrich and U.S. Sen. Jackie Rosen (D-NV).

Heinrich, a frequent advocate for increased regulations on oil and gas and expanding use of federal land for outdoor recreation and renewable energy, argued the bill would support New Mexico taxpayers and increase opportunities for conservation of federal land.

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In New Mexico, the state that ranks second in the nation for oil production, more than half of fossil fuel operations occur on federal land.

The industry makes up about a third of the state’s budget, leading industry leaders to argue federal regulations on oil and gas production could disproportionately impact New Mexico.

Meanwhile, environmental and conservation groups maintain New Mexico could be one of the most heavily-polluted states due to ongoing growth in oil and gas operations on public land.

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The COMPETES Act would end the practice on non-competitive bids, which are used by oil and gas companies to lease land from the federal government for drilling and other activities.

Non-competitive bids occur during a federal land lease auction when a certain company nominates a parcel of land but it fails to attract any bidders.

Federal law then requires the U.S. Bureau of Land Management to offer up the un-bid land for a non-competitive lease, charging $1.50 per acre – a price much lower, Heinrich and Hickenlooper argued, than typical auction rates.

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“The process for non-competitive oil and gas leases is bad for our public lands and ends up costing taxpayers,” Heinrich said. “That’s why I’m joining Senators Hickenlooper and Rosen to close this loophole and ensure our public lands are managed fairly, while increasing opportunities for outdoor recreation and conservation.”

A report from the Center for American Progress showed New Mexico ranked sixth among western states for acreage sold to the industry through the non-competitive process between 2009 and 2018 at 16,869 acres.

That amount was dwarfed by Nevada’s 2.1 million acres sold noncompetitively during the same time frame, followed by Wyoming at 263,570 acres and Montana at 262,768 acres.

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“Noncompetitive leasing cheats taxpayers out of receiving a fair return for the use of their public lands. Without collecting a bonus bid, and without competition to better ensure that the price reflects market value, the process effectively gives away public lands to speculators or private industry,” the report read.

“Once the leases are sold, taxpayers also lose out on the opportunity cost of the ability to auction the acres under more favorable conditions for a higher price in the future.”

In a statement upon introducing the bill, Hickenlooper said noncompetitive leasing meant western states lost out on opportunities for conservation and recreation.

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“Non-competitive leasing encourages speculation on public lands at taxpayers’ expense,” he said. “Westerners lose out when large swaths of land are set aside for speculation instead of conservation or recreation.”

Mary Greene, public lands attorney with the National Wildlife Federation said the low cost of noncompetitive leases amounted to a “giveaway” to the oil and gas companies seeking to operate on public land.

She argued public dollars were wasted further when the BLM was forced to administer noncompetitive leases that were often unlikely to produce oil or gas.

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Under BLM regulations, leases can be held for 10 years or as long as they produce oil and gas, meaning a lease can sit inactive, the land blocked from any other use, for up to a decade.

A December 2020 report from the Government Accountability Office (GAO) found competitive leases average three times the revenue as noncompetitive.

Just 1 percent of noncompetitive leases ultimately produced oil and gas during the primary 10-year term, compared with 26 percent for competitive leases that sold with bids of more than $100 per acre.

“This common-sense bill will put a stop to the wasteful practice of issuing oil and gas leases for as little as $1.50 an acre,” Greene said. “It also improves government efficiency.

“Instead of spending time administering leases that will never be developed or generate money, this bill ensures that taxpayer dollars are spent on projects that will restore wildlife habitat, maintain clean water, and expand trails and recreation opportunities.”

Adrian Hedden can be reached at 575-618-7631, or @AdrianHedden on Twitter.