Congresswoman Boebert's Restoring American Energy Dominance Act Receives Key Hearing
Today, Congresswoman Lauren Boebert’s bill aimed at protecting American energy producers received an important hearing in the House Natural Resources Subcommittee on Energy and Mineral Resources.
Congresswoman Lauren Boebert (CO-03) said, “The American people continue to struggle with record-high gas prices resulting from the Biden Administration's relentless assault on American energy. The proposed BLM Fluid Mineral Leases and Leasing Process rule would negatively impact energy producers nationwide, further increase gas prices, and take us further from American energy independence. My Restoring American Energy Dominance Act represents a promising first step in repairing the damage done to American energy and blocks this overreach by a rogue Administration operating in impunity.”
Tom Kropsatch, State Oil and Gas Supervisor for the Wyoming Oil and Gas Conservation Commission (WOGCC) said this in his written testimony, “To be straightforward, this proposed rule actively discourages development and by BLM’s own admission, will force oil and gas production off federal lands… Avoiding federal lands when drilling these horizontal wells is very difficult to impossible. Therefore, the impacts from any federal action are felt by the state and private mineral owners… What BLM fails to recognize is most small operators cannot obtain a surety bond without significant collateral, typically 100% cash collateral. In our review, we have determined that the minimum bond amount would exceed the gross annual revenue of more than 25% of the companies operating on federal lands in Wyoming.”
Background:
H.R. 6009, the Restoring American Energy Dominance Act took an important step in the legislative process today by receiving a hearing in the House Natural Resources Subcommittee on Energy and Mineral Resources.
Tom Kropsatch, State Oil and Gas Supervisor for the Wyoming Oil and Gas Conservation Commission, testified against the the Bureau of Land Management (BLM) Fluid Mineral Leases and Leasing Process rule and in support of Rep. Boebert’s bill. Read his full written testimony here.
On July 24, 2023, the BLM issued a proposed rule entitled Fluid Mineral Leases and Leasing Process. The proposed mandate would formally implement provisions from the partisan Inflation Reduction Act (IRA), which increased the royalty rate for production on federal lands while also increasing and creating new fees for producers.
While the proposed rule codifies pieces of the IRA, it also makes major, non-statutory, changes to the BLM’s onshore leasing program. The proposed mandate greatly increases bonding levels for production on federal lands (even though there are only 37 orphaned wells on federal lands). Increased bonding fee requirements disproportionately impacts smaller producers who can’t afford to operate in the surety market. These additional fees will ultimately harm returns and reduce revenues to state and local governments by disincentivizing development on federal lands.
Additionally, the proposed rule introduces “preference criteria” in federal leasing which could be devastating for future production on public lands. This is problematic if BLM field offices avoid leasing in all areas with endangered or threatened species, critical habitats, or nearby recreation areas. The proposed mandate could greatly limit leasing on federal lands under that criteria, in contradiction to the multiple-use mandate established in the Federal Land Policy and Management Act.
The proposed regulation proposes to create new fees and increase existing fees while limiting the use of lease suspensions and drilling permit extensions. This is especially egregious given the Administration’s poor track record with respect to lease sales and drilling permit approvals.
This proposed rule increases energy production costs while further disincentivizing operators from producing domestically. These new costs will ultimately be passed along to consumers, driving up energy costs for American families and further shifting production to countries like Russia, Saudi Arabia, China, and Venezuela.
Cosponsors of Congresswoman Boebert’s Restoring American Energy Dominance Act include: Rep. Pete Stauber (MN-08), Rep. Harriet Hageman (WY-AL), Rep. Paul Gosar (AZ-09), Rep. Doug Lamborn (CO-05). Rep. Tom McClintock (CA-05), Rep. Ralph Norman (SC-05), Rep. Mary Miller (IL-15), Rep. Clay Higgins (LA-03), Rep. Troy Nehls (TX-22), and Rep. Andy Ogles (TN-05).
Additional Background Courtesy of House Committee on Natural Resources Subcommittee on Energy and Mineral Resources:
Specifically, the rule proposes ending nationwide bonding and increasing the minimum bond amounts for individual lease bonds and statewide lease bonds from $10,000 to $150,000 and from $25,000 to $500,000 respectively. This significant increase will tie up capital that would otherwise be put back into production and is unjustifiable as there are only 37 orphaned oil and gas wells on BLM-managed lands. Additionally, the BLM has only utilized bonds to plug wells on federal lands 40 times over the last decade.
Last month, Republican Members of the Committee on Natural Resources sent a letter to the BLM requesting an extension in the comment period given the significant policy shifts included in the regulation. On September 27th, the BLM responded to that letter stating that they do not plan on extending the comment period and instead plan to rush the regulation towards completion. This bill would force the BLM to withdraw the rule and would prevent the BLM from finalizing a substantially similar rule.
The full text of the Restoring American Energy Dominance Act is available here.