Onshore Oil and Gas
BLM's Management of Public Protests to Its Lease Sales Needs Improvement
Gao ID: GAO-10-670 July 30, 2010
The development of oil and natural gas resources on federal lands contributes to domestic energy production but also results in concerns over potential impacts on those lands. Numerous public protests about oil and gas lease sales have been filed with the Bureau of Land Management (BLM), which manages these federal resources. GAO was asked to examine (1) the extent to which BLM maintains and makes publicly available information related to protests, (2) the extent to which parcels were protested and the nature of protests, and (3) the effects of protests on BLM's lease sale decisions and on oil and gas development activities. To address these questions, GAO examined laws, regulations, and guidance; BLM's agencywide lease record-keeping system; lease sale records for the 53 lease sales held in the four BLM state offices of Colorado, New Mexico, Utah, and Wyoming during fiscal years 2007-2009; and protest data from a random sample of 12 of the 53 lease sales. GAO also interviewed BLM officials and industry and protester groups.
While BLM has taken steps to collect agency-wide protest data, the data it maintains and makes publicly available are limited. Although in 2007 BLM required its staff to begin using a module, added to its lease record-keeping system, to capture information related to lease sale protests, GAO found that the information BLM collected was incomplete and inconsistent across the four reviewed BLM state offices and, thus, of limited utility. Moreover, in the absence of a written BLM policy on protest-related information the agency is to make publicly available during the leasing process, each state office developed its own practices, resulting in state-by-state variation in what protest-related information was made available. As a result, protester groups expressed frustration with both the extent and timing of protest-related information provided by BLM. In May 2010, the Secretary of the Interior announced several agency-wide leasing reforms that are to take place at BLM. Some of these reforms may address concerns raised by protester groups, by providing earlier opportunities for public input in the lease sale process, thereby potentially giving stakeholders more time to assess parcels and decide whether to file a protest. A diverse group of entities protested the majority of parcels BLM identified in its lease sale notices during fiscal years 2007 through 2009 in the four states, for a variety of reasons. GAO found that 74 percent of parcels whose leases were sold competitively during this period by BLM state offices in Colorado, New Mexico, Utah, and Wyoming were protested. In examining a random sample of lease sales, GAO found that protests came from various entities, including nongovernmental organizations representing environmental and hunting interests, state and local governments, businesses, and private individuals. Their reasons for protesting ranged from concerns over wildlife habitat to air or water quality to loss of recreational or agricultural land uses. The extent to which protests influenced BLM's leasing decisions could not be measured because BLM's information does not include the role protests played in its decisions to withdraw parcels from lease sale. Regardless, BLM officials stated that the protest process can serve as a check on agency decisions to offer parcels for lease. In reviewing BLM's lease sale data in the four selected states during fiscal years 2007 through 2009, GAO found that 91 percent of the time, BLM was unable to issue leases on protested parcels within the 60-day window specified in the Mineral Leasing Act. Industry groups expressed concern that these delays increased the cost and risk associated with leasing federal lands. GAO found that, despite industry concerns, protest activity and delayed leasing have not significantly affected bid prices for leases; if protests or subsequent delays added significantly to industry cost or risk, it would be expected that the value of, and therefore bids for, protested parcels would be reduced. In addition, because federal lands account for a small fraction of the total onshore and offshore nationwide oil and gas output, the effects of protests to BLM leasing decisions on U.S. oil and gas production are likely to be relatively modest. GAO recommends that BLM (1) revisit the way it tracks protest information and in so doing ensure that complete and consistent information is collected and made publicly available and (2) improve the transparency of leasing decisions and the timeliness of lease issuance. Interior concurred with GAO's recommendations.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Franklin W. Rusco
Team:
Government Accountability Office: Natural Resources and Environment
Phone:
(202) 512-4597
GAO-10-670, Onshore Oil and Gas: BLM's Management of Public Protests to Its Lease Sales Needs Improvement
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Report to the Chairman, Committee on Natural Resources, House of
Representatives:
United States Government Accountability Office:
GAO:
July 2010:
Onshore Oil and Gas:
BLM's Management of Public Protests to Its Lease Sales Needs
Improvement:
GAO-10-670:
GAO Highlights:
Highlights of GAO-10-670, a report to the Chairman, Committee on
Natural Resources, House of Representatives.
Why GAO Did This Study:
The development of oil and natural gas resources on federal lands
contributes to domestic energy production but also results in concerns
over potential impacts on those lands. Numerous public protests about
oil and gas lease sales have been filed with the Bureau of Land
Management (BLM), which manages these federal resources.
GAO was asked to examine (1) the extent to which BLM maintains and
makes publicly available information related to protests, (2) the
extent to which parcels were protested and the nature of protests, and
(3) the effects of protests on BLM‘s lease sale decisions and on oil
and gas development activities. To address these questions, GAO
examined laws, regulations, and guidance; BLM‘s agencywide lease
record-keeping system; lease sale records for the 53 lease sales held
in the four BLM state offices of Colorado, New Mexico, Utah, and
Wyoming during fiscal years 2007-2009; and protest data from a random
sample of 12 of the 53 lease sales. GAO also interviewed BLM officials
and industry and protester groups.
What GAO Found:
While BLM has taken steps to collect agencywide protest data, the data
it maintains and makes publicly available are limited. Although in
2007 BLM required its staff to begin using a module, added to its
lease record-keeping system, to capture information related to lease
sale protests, GAO found that the information BLM collected was
incomplete and inconsistent across the four reviewed BLM state offices
and, thus, of limited utility. Moreover, in the absence of a written
BLM policy on protest-related information the agency is to make
publicly available during the leasing process, each state office
developed its own practices, resulting in state-by-state variation in
what protest-related information was made available. As a result,
protester groups expressed frustration with both the extent and timing
of protest-related information provided by BLM. In May 2010, the
Secretary of the Interior announced several agencywide leasing reforms
that are to take place at BLM. Some of these reforms may address
concerns raised by protester groups, by providing earlier
opportunities for public input in the lease sale process, thereby
potentially giving stakeholders more time to assess parcels and decide
whether to file a protest.
A diverse group of entities protested the majority of parcels BLM
identified in its lease sale notices during fiscal years 2007 through
2009 in the four states, for a variety of reasons. GAO found that 74
percent of parcels whose leases were sold competitively during this
period by BLM state offices in Colorado, New Mexico, Utah, and Wyoming
were protested. In examining a random sample of lease sales, GAO found
that protests came from various entities, including nongovernmental
organizations representing environmental and hunting interests, state
and local governments, businesses, and private individuals. Their
reasons for protesting ranged from concerns over wildlife habitat to
air or water quality to loss of recreational or agricultural land uses.
The extent to which protests influenced BLM‘s leasing decisions could
not be measured because BLM‘s information does not include the role
protests played in its decisions to withdraw parcels from lease sale.
Regardless, BLM officials stated that the protest process can serve as
a check on agency decisions to offer parcels for lease. In reviewing
BLM‘s lease sale data in the four selected states during fiscal years
2007 through 2009, GAO found that 91 percent of the time, BLM was
unable to issue leases on protested parcels within the 60-day window
specified in the Mineral Leasing Act. Industry groups expressed
concern that these delays increased the cost and risk associated with
leasing federal lands. GAO found that, despite industry concerns,
protest activity and delayed leasing have not significantly affected
bid prices for leases; if protests or subsequent delays added
significantly to industry cost or risk, it would be expected that the
value of, and therefore bids for, protested parcels would be reduced.
In addition, because federal lands account for a small fraction of the
total onshore and offshore nationwide oil and gas output, the effects
of protests to BLM leasing decisions on U.S. oil and gas production
are likely to be relatively modest.
What GAO Recommends:
GAO recommends that BLM (1) revisit the way it tracks protest
information and in so doing ensure that complete and consistent
information is collected and made publicly available and (2) improve
the transparency of leasing decisions and the timeliness of lease
issuance. Interior concurred with GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-10-670] or key
components. For more information, contact Frank Rusco at (202) 512-
3841 or ruscof@gao.gov.
[End of section]
Contents:
Letter:
Background:
BLM Maintains and Makes Publicly Available Incomplete and Inconsistent
Information Related to Protests to Its Lease Sales:
Most Parcels Identified for Lease Were Protested by a Diverse Group of
Entities for a Variety of Reasons:
Effects of Protests on BLM's Leasing Decisions and Overall Oil and Gas
Development Activities Were Difficult to Determine:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Protest Information from a Sample of Lease Sales in Four
Selected State Offices, Fiscal Years 2007-2009:
Appendix III: Description of Litigation on Selected Lease Sales:
Appendix IV: Comments from the Department of the Interior:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Extent to Which BLM's Module Is Missing Protested Parcels,
from a Sample of 12 Lease Sales, by State Office, Fiscal Years 2007-
2009:
Table 2: Protest Information on Parcels Whose Leases Were
Competitively Sold, by State Office, Fiscal Years 2007-2009:
Table 3: Protests Filed in a Sample of 12 Lease Sales, Fiscal Years
2007-2009:
Table 4: Numbers of Protested Parcels and Timeliness, by State Office,
Fiscal Years 2007-2009:
Table 5: Count of Protests Filed in a Sample of 12 Lease Sales, by
State Office, Fiscal Years 2007-2009:
Table 6: Groups and Individuals Filing Protest Letters in a Sample of
12 Lease Sales, by State Office, Fiscal Years 2007-2009:
Table 7: Reasons for Filing Protests, as Cited in Protest Letters from
a Sample of 12 Lease Sales in Four State Offices, Fiscal Years 2007-
2009:
Table 8: Chronology of Events Surrounding the Roan Plateau Lease Sale:
Figures:
Figure 1: Onshore Oil and Gas Leasing Activity on Federal Lands,
Fiscal Years 1988-2009:
Figure 2: Prices of Crude Oil and Natural Gas in Relation to U.S. Oil
and Gas Development Activity, 1990-2009:
Abbreviations:
BLM: Bureau of Land Management:
LR2000: Legacy Rehost System 2000:
NEPA: National Environmental Policy Act:
[End of section]
United States Government Accountability Office: Washington, DC 20548:
July 30, 2010:
The Honorable Nick J. Rahall, II:
Chairman:
Committee on Natural Resources:
House of Representatives:
Dear Mr. Chairman:
As development of the nation's domestic sources of oil and natural gas
intensified during the past decade, so did concern over the
environmental impact of such development. The number of challenges by
the public, largely in the form of protests, or objections, to federal
onshore oil and gas leasing decisions has also been high, prompting
debate over the effects of these protests on leasing and development
activities on federal lands. Disagreement among and criticism by
interested parties--ranging from energy industry and conservation
groups to state and local governments--have been escalating, with
potential ramifications for oil and gas development on federal lands,
as well as for proposed legislation and policy reforms. Differences
center on who or what kind of entities object to oil and gas
development decisions, the responsiveness of federal agencies to
protests, and whether such protests encourage the responsible
management of these resources or, rather, unnecessarily impede
industry access to federal energy resources.
The Bureau of Land Management (BLM), within the Department of the
Interior (Interior), is responsible for managing oil and gas resources
that lie under federal lands and under private lands for which the
federal government retains mineral rights; in fiscal year 2009,
federal lands accounted for 5.8 percent of the nation's total oil
production and 12.8 percent of total natural gas production.[Footnote
1] The majority of oil and gas development on federal lands occurs in
the western states, particularly in the Mountain West. For example, in
fiscal year 2009, the states of Colorado, New Mexico, Utah, and
Wyoming accounted for 70 percent of the oil produced on federal lands
and 93 percent of the natural gas.
To manage its responsibilities, BLM administers its programs through
its headquarters office in Washington, D.C.; 12 state offices; and
several subsidiary field offices. BLM headquarters develops
regulations and guidance for the agency, and the state offices are
responsible for administering the leasing of federal oil and gas
resources. Each BLM state office is required to conduct oil and gas
lease sales at least four times a year if public lands it manages are
available for leasing, and BLM receives nominations of lands for
leasing. At such lease sales, energy companies bid competitively to
buy the right to lease the parcels for oil and gas exploration and
extraction. The highest bidder is declared the winner and typically
then buys a lease, paying the amount bid for the parcel(s). The lease
holder also pays BLM rent each year on nonproducing land or royalties
on any oil or gas that is extracted.
At the various phases of oil and gas resource development--from
planning and leasing to exploration and operations--several mechanisms
allow the public to challenge BLM's decisions. During the leasing
phase, the public can present challenges through protests, appeals,
and litigation. Through protests, challengers essentially ask BLM to
reconsider its proposed decision to offer a parcel or parcels of land
for lease. An appeal is a request to the Interior Board of Land
Appeals--a body of administrative judges within Interior--to review
BLM's decision to dismiss or deny a protest.[Footnote 2] The public
can also challenge BLM's leasing decisions through litigation brought
in a federal court.
In 2004, we reported on the extent to which BLM gathered and used data
on protests and other public challenges to manage its oil and gas
program.[Footnote 3] We found that BLM's agencywide system for
recording leasing information was used inconsistently across the
agency to track protest information and that the system tracked only
limited protest data. We also found that BLM state offices used
multiple independent data collection systems, and these systems could
not be integrated with one another or with the agencywide system.
Because BLM lacked consistent and readily available nationwide data on
public challenges related to its leasing decisions, we recommended
that BLM standardize the collection of public challenge data in its
new agencywide automated system for selling leases and issue clear
guidance on how public challenge data should be entered into the new
system. In 2007, BLM added a module to its lease record-keeping system
to capture, among other things, information related to lease protests.
In light of continuing debate about public challenges, including
protests, you asked us to review federal oil and gas lease sale
decisions since our last report. Our objectives were to examine (1)
the extent to which BLM maintains and makes publicly available
information related to protests, (2) the extent to which parcels were
protested and the nature of protests, and (3) the effects of protests
on BLM's lease sale decisions and on oil and gas development
activities.
To conduct this work, we reviewed relevant laws, regulations, and BLM
guidance. We interviewed officials in BLM headquarters and BLM state
offices in Colorado, New Mexico, Utah, and Wyoming.[Footnote 4] We
also interviewed representatives from the energy industry, state
government, and nongovernmental organizations and discussed their
concerns about BLM's lease sale and protest process, including the
effects--both actual and potential--associated with protests to oil
and gas lease sales. We analyzed BLM's agencywide lease record-keeping
system, called Legacy Rehost System 2000 (LR2000), to determine what
protest data the agency maintains, how the data are used by the
agency, and the data's reliability. We also reviewed the process
followed by each BLM state office for reviewing protests and providing
information related to such decisions to the public, which included
assessing information available on BLM's Web site and through other
sources and synthesizing information gathered during our interviews.
To understand the extent to which parcels were protested and the
nature of protests, we reviewed protest information available in
LR2000, information available in notices of lease sales, and sales
results from BLM state offices for the 53 lease sales held in the four
state offices from fiscal year 2007 through fiscal year 2009. These
lease sales comprised 6,451 parcels covering roughly 6.9 million acres
of land. We also randomly selected for further analysis a sample of 12
of these 53 lease sales, to include 1 lease sale in each of the four
state offices in each fiscal year from 2007 through 2009. The 12 lease
sales comprised 1,244 parcels covering approximately 1.4 million acres
of land. For each lease sale in our sample, we obtained all submitted
protest letters and BLM's responses to these letters, analyzed whether
each parcel included in the lease sale was protested, and interviewed
BLM state office leasing officials. For protested parcels, we analyzed
information on who filed the protest and for what reasons, the outcome
of the protest, reasons for BLM's withdrawing any parcels from lease
sales, and whether BLM's decision was appealed or litigated. To
further examine the effects of protests, we reviewed BLM data on time
frames and competitive bid prices for all pending and issued leases
during fiscal years 2007 through 2009 in the four state offices. To
examine long-term relationships between various measures of energy
development and nationwide market prices of oil and gas, we analyzed
U.S. oil and gas production data from the Energy Information
Administration over the period from 1990 through 2009. We assessed the
reliability of these data and found them to be sufficiently reliable
for the purposes of this report. Appendix I presents a more detailed
description of our scope and methodology.
We conducted this performance audit from June 2009 through July 2010,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
The Mineral Leasing Act of 1920 charges Interior with responsibility
for oil and gas leasing on federal lands and on private lands where
the federal government has retained mineral rights.[Footnote 5]
Several other statutes and regulations also affect oil and gas leasing
and development on federal lands. For instance, the protection of
resources that may be affected by oil and gas activity is governed by
resource-specific laws, such as the Clean Air Act, the Clean Water
Act, and the Endangered Species Act. Under the National Environmental
Policy Act (NEPA), federal agencies are to evaluate the likely
environmental effects of proposed projects, including oil and gas
lease sales, through an environmental assessment or, if projects are
likely to significantly affect the environment, a more detailed
environmental impact statement.[Footnote 6] In addition, under the
Federal Land Policy and Management Act, BLM manages federal lands for
multiple uses, including recreation; range; timber; minerals;
watershed; wildlife and fish; and natural scenic, scientific, and
historical values, as well as for the sustained yield of renewable
resources. BLM manages oil and gas development on federal lands using
a three-step process. First, BLM develops areawide land use plans,
called resource management plans, specifying what areas will be open
to oil and gas development and the conditions to be placed on such
development. Second, BLM may issue leases for the development of
specific sites within an area, subject to requirements in the plans.
Finally, a lessee may file an application for a permit to drill, which
requires BLM review and approval.
BLM's lease sale process includes several key steps:
* Nomination of lands for sale. Interested members of the public and
industry can nominate lands for competitive lease by sending to a
particular BLM state office letters expressing interest in specific
tracts of land desired for lease. BLM itself may also identify parcels
for potential lease, although the majority of parcels leased in recent
years have been nominated by the oil and gas industry. Parcels
nominated for lease can vary in size; in the contiguous 48 states, the
maximum size of a parcel nominated for competitive lease is 2,560
acres.[Footnote 7]
* Review of parcels. Parcels nominated for lease are evaluated by BLM
field staff to determine whether the proposed land is available to be
leased and whether it conforms with BLM policies, regulations, and
land use plans. If the parcel is determined to be available, the
potential impacts of oil and gas leasing on the environment are then
evaluated as required under NEPA. If required, leasing restrictions
(called stipulations) are added to the proposed parcel to mitigate
potential impacts of leasing.
* Notice of lease sale. Once BLM has completed its reviews of
nominated parcels, it identifies those parcels it has determined may
be offered at the lease sale. These eligible parcels are included in a
public "notice of competitive lease sale," which is to be published at
least 45 days before the lease sale. BLM may, however, withdraw, or
defer, parcels included in the lease sale notice at any time before
the lease sale takes place. Such parcels may be subsequently offered
in a future lease sale if the agency conducts further review and
determines the parcels' suitability for leasing.
* Public protest period. The publication of a lease sale notice starts
the public protest period, in which concerned entities can file a
protest to BLM's inclusion of any or all parcels in that lease sale
notice. Included in the lease sale notice is guidance to the public on
the process to follow for protesting BLM's decision to offer lands
identified in the notice. Under BLM guidance, the agency considers
only protests received at least 15 calendar days before the date of
the lease sale, generally providing 30 days for the public to submit
protests. BLM dismisses a protest if the protest lacks a statement of
reasons to support it. Although BLM aims to review and resolve
protests before lease sales, if it cannot do so, it may elect to
include protested parcels in a lease sale. In such cases, BLM resolves
the protests before issuing leases for those parcels. If BLM finds a
protest to have merit, the agency does not issue leases for the
affected parcels, and it refunds any payments made.
* Competitive lease sale. The lease sale itself is a public auction,
with leases sold to the highest qualified bidder. Federal oil and gas
leases operate under a system in which the lessee receives the right
to develop and produce oil and gas resources under a specified time
frame and conditions in exchange for certain payments, including a
lump-sum payment called a bonus bid.[Footnote 8] Under the Mineral
Leasing Act, "leases shall be issued within 60 days following payment
by the successful bidder of the remainder of the bonus bid, if any,
and the annual rental for the first lease year,"[Footnote 9] thus
completing the lease transaction.[Footnote 10] BLM policy also directs
agency staff to resolve any protests related to a parcel before
issuing the lease on that parcel.[Footnote 11] The company pays annual
rent on the leased parcel until it begins to produce oil or gas (at
which time, the lease owner or operator pays royalties on the volume
of oil and gas produced) or until the lease expires or ends. Parcels
that do not receive competitive bids are available noncompetitively
the day after the sale and remain available for leasing for up to 2
years after the competitive lease sale date. The Energy Policy Act of
1992 requires BLM to offer all competitive and noncompetitive leases
at 10-year primary terms.
Over the past two decades, the number of federal onshore oil and gas
leases BLM has issued, as well as the number of acres, have varied.
Leasing activity was highest at the beginning of the period, with more
than 9,000 leases and over 12 million acres leased in fiscal year
1988. Both the number of leases and area leased then fell sharply for
several years, and in recent years the number has fluctuated between
2,000 and about 4,500 leases, and the area did not exceed 5 million
acres leased (see figure 1).
Figure 1: Onshore Oil and Gas Leasing Activity on Federal Lands,
Fiscal Years 1988-2009:
[Refer to PDF for image: combined line and vertical bar graph]
Fiscal year: 1988;
Leases issued each fiscal year: 9,234;
Acres leased each fiscal year: 12.2 million.
Fiscal year: 1989;
Leases issued each fiscal year: 8,352;
Acres leased each fiscal year: 7.8 million.
Fiscal year: 1990;
Leases issued each fiscal year: 6,552;
Acres leased each fiscal year: 5.5 million.
Fiscal year: 1991;
Leases issued each fiscal year: 5,465;
Acres leased each fiscal year: 4.4 million.
Fiscal year: 1992;
Leases issued each fiscal year: 3,990;
Acres leased each fiscal year: 3.2 million.
Fiscal year: 1993;
Leases issued each fiscal year: 4,040;
Acres leased each fiscal year: 3.2 million.
Fiscal year: 1994;
Leases issued each fiscal year: 4,159;
Acres leased each fiscal year: 3.8 million.
Fiscal year: 1995;
Leases issued each fiscal year: 4,528;
Acres leased each fiscal year: 3.9 million.
Fiscal year: 1996;
Leases issued each fiscal year: 3,375;
Acres leased each fiscal year: 2.5 million.
Fiscal year: 1997;
Leases issued each fiscal year: 4,182;
Acres leased each fiscal year: 3.5 million.
Fiscal year: 1998;
Leases issued each fiscal year: 4,105;
Acres leased each fiscal year: 3.6 million.
Fiscal year: 1999;
Leases issued each fiscal year: 3,075;
Acres leased each fiscal year: 3.6 million.
Fiscal year: 2000;
Leases issued each fiscal year: 2,900;
Acres leased each fiscal year: 2.7 million.
Fiscal year: 2001;
Leases issued each fiscal year: 3,289;
Acres leased each fiscal year: 4.0 million.
Fiscal year: 2002;
Leases issued each fiscal year: 2,384;
Acres leased each fiscal year: 2.8 million.
Fiscal year: 2003;
Leases issued each fiscal year: 2,022;
Acres leased each fiscal year: 2.1 million.
Fiscal year: 2004;
Leases issued each fiscal year: 2,699;
Acres leased each fiscal year: 4.2 million.
Fiscal year: 2005;
Leases issued each fiscal year: 3,514;
Acres leased each fiscal year: 4.3 million.
Fiscal year: 2006;
Leases issued each fiscal year: 3,985;
Acres leased each fiscal year: 4.7 million.
Fiscal year: 2007;
Leases issued each fiscal year: 3,499;
Acres leased each fiscal year: 4.6 million.
Fiscal year: 2008;
Leases issued each fiscal year: 2,416;
Acres leased each fiscal year: 2.6 million.
Fiscal year: 2009;
Leases issued each fiscal year: 2,072;
Acres leased each fiscal year: 1.9 million.
Source: BLM.
[End of figure]
The issuance of a lease starts a series of steps toward exploring for
and producing oil, gas, or both on the leased land. Along the way,
variables such as the market price of oil and gas and the costs of
infrastructure influence industry's estimates of the economic
viability of pursuing development on leased lands. Lease owners may
analyze available geologic information and conduct seismic or other
testing to ascertain the land's oil or gas potential and find the
resource. Companies may also try to acquire leases for surrounding
parcels to ensure they have sufficient acreage to make exploration and
production worthwhile. If companies believe that economically viable
reserves exist on their leased lands, they may begin preparing for
drilling, including completing environmental studies required to apply
for drilling permits. Before an oil and gas company can drill on
federally leased lands, it must submit to BLM an application for a
permit to drill. Once such permits are approved, companies may begin
exploration or development activities, including building roads to
well sites, drilling wells, and constructing pipelines and pipeline
facilities needed to transport the oil and gas to market. This entire
process can take as little as a few years or as long as 10 years, and
ultimately, leased areas may not necessarily contain oil and gas in
commercial quantities.
BLM Maintains and Makes Publicly Available Incomplete and Inconsistent
Information Related to Protests to Its Lease Sales:
Although BLM has taken steps to collect information related to
protests to its lease sales, we found that the information it
maintained and made available publicly was incomplete and inconsistent
across the four state offices we reviewed. In addition, protester
groups have raised concerns about the timing and extent of publicly
available information. In May 2010, the Secretary of the Interior
announced several agencywide leasing reforms that are to take place at
BLM, some of which may address concerns raised by protester groups, by
providing the public with earlier and more consistent data on which
parcels may become available for leasing, thereby giving these groups
longer to consider or prepare protests.
BLM Collects Agencywide Protest Data, but These Data Are of Poor
Quality and Limited Utility:
Although BLM has taken steps to collect agencywide protest data, we
found that these data were incomplete, inaccurate, inconsistent or
ambiguous, and therefore of limited utility. To better track protests,
BLM in 2007 required its staff to begin using a new module, which it
had added as a component of its LR2000 lease record-keeping system
specifically to capture, among other things, information related to
lease sale protests. All parcels included in a lease sale notice are
to be entered into LR2000, each with an assigned serial number and
other basic information, including location and acreage. In addition,
for each protested parcel, staff are to enter into the LR2000 module
who filed the protest; reasons for the protest; and the outcome, or
status, of the protest. The module should therefore contain complete
information on every parcel listed in lease sale notices that was
protested during the lease sale process. These parcels include parcels
deferred before a competitive lease sale, parcels sold at a
competitive lease sale, and parcels that did not receive a bid at a
competitive lease sale.
Concerning the completeness of the data, we found that some data
identifying parcels that had been protested were missing from the
module, particularly in the case of parcels that were deferred. We
compared the module's data with protest records obtained from BLM
state offices for a random sample of 12 of the 53 lease sales held in
Colorado, New Mexico, Utah, and Wyoming during fiscal years 2007
through 2009. For this sample, we found that the four state offices
varied in the extent to which data identifying protested parcels had
been entered into the module, ranging from fully complete to missing
information on deferred parcels, and potentially missing information
on parcels that had not been sold at a competitive lease sale (see
table 1). Specifically, data obtained from BLM state offices in our
sample showed that 68 parcels were protested and deferred. When we
looked for these same data in the module, however, we found that 28 of
the parcels--over 40 percent of deferred and protested parcels in our
sample--were missing. Although the results from our sample of 12 lease
sales cannot be generalized to all 53 lease sales, the extent of
missing information we found suggests that information on protested
parcels beyond our sample could also be missing.
Table 1: Extent to Which BLM's Module Is Missing Protested Parcels,
from a Sample of 12 Lease Sales, by State Office, Fiscal Years 2007-
2009:
BLM state office: Colorado;
Deferred parcels: No parcels missing;
Sold at a competitive lease sale: No parcels missing;
Not sold at a competitive lease sale: No parcels missing.
BLM state office: New Mexico;
Deferred parcels: Three parcels missing;
Sold at a competitive lease sale: One parcel missing;
Not sold at a competitive lease sale: Not possible to determine if
parcels missing[A].
BLM state office: Utah;
Deferred parcels: Seventeen parcels missing;
Sold at a competitive lease sale: No parcels missing;
Not sold at a competitive lease sale: No parcels missing.
BLM state office: Wyoming;
Deferred parcels: Eight parcels missing;
Sold at a competitive lease sale: No parcels missing;
Not sold at a competitive lease sale: Not possible to determine if
parcels missing[A].
Source: GAO analysis of BLM data.
Note: The sample included 12 lease sales, with 1 lease sale in each
state office each year, in fiscal years 2007, 2008, and 2009.
[A] The state office used different tracking codes for parcels listed
in lease sale notices than it used to identify parcels entered in the
module. When these parcels were not sold at a competitive lease sale,
we were unable to reliably match the tracking codes for these parcels
with the tracking codes in the module to determine whether all
protested parcels had been entered into the module. We were able to
match these codes, using the competitive lease sale results, when
parcels were sold at a competitive lease sale.
[End of table]
Further, when we examined protest data available in the module for all
53 lease sales, we found that protest information recorded in the
module was inaccurate, inconsistent or ambiguous, and therefore of
limited utility. For example, we found that the field in the module
identifying the status of a protest was left blank or read "pending"
for more than 1,100 parcels, even when leases for those parcels had
already been issued. In such cases, any protests would presumably have
been resolved, either because the protest was deemed to have no merit
or because concerns raised in the protests were addressed. We also
found that BLM state offices often used the same term in the module to
describe different outcomes in the leasing process. For example, in
some cases, the term "dismissed" was used for protests to parcels that
had been deferred, without indicating whether the agency had deemed
the protest to have merit. In other cases, the term "dismissed" was
applied to parcels for which protests had been found by the agency to
be without merit, and the parcels had been leased. In addition, much
of the information was entered into the module so generically that it
was difficult to discern what the information meant. Specifically, BLM
guidance calls for staff to enter the reason for a protest, but the
corresponding data field is limited to 255 characters (approximately
three lines of text). In practice, staff in the four state offices
entered only basic information, such as two-or three-word phrases,
without explanation or a reference to fuller information contained in
the protests themselves. For example, staff in the Colorado and
Wyoming state offices often listed "environmental concerns" as the
issue raised in protests. In matching descriptions of issues in the
module with the original protest letters, however, we found that
"environmental concerns" included a broad range of issues, including
concerns over threats to sensitive species or water quality, as well
as economic issues such as loss of recreational or agricultural land
uses.
BLM officials at both headquarters and state offices told us that
although staff are entering protest data into the module, they are not
using protest information from the module to monitor protest activity
but instead rely on other sources of information. According to a BLM
headquarters official, to monitor protests to lease sales,
headquarters officials rely on regular briefing memos provided by the
state offices for each lease sale, rather than review information in
the module. Similarly, across each of the four state offices, BLM
officials said that instead of the module, they use their own
detailed, informal spreadsheets to track protest activity and their
responses, which they can easily maintain and organize, often lease
sale by lease sale. BLM officials acknowledged that maintaining
protest information is important, although they also said that the
LR2000 module is not the most efficient or effective way to do so. BLM
state officials added that not only is the module's software unable to
extract and summarize data easily, but it is also inefficient for
entering certain information into the module. For example, if a
protest letter covers multiple parcels, initial protest information,
including who protested and the reasons for the protest, can be
entered into the module once and automatically applied to multiple
parcels in a single batch. But after BLM resolves and responds to the
protest, the module's software does not allow the response to be
entered once and applied automatically to the batch of parcels,
instead forcing the outcome of the protest to be entered separately
for each of the parcels. According to BLM state office officials, this
process can be time-consuming. (During the period of our review, the
total number of parcels in a lease sale notice ranged from 13 to 265.)
Protest-Related Information Varies across BLM State Offices, and
Protester Groups Have Raised Concerns about This Information:
We found that the amount of protest-related information BLM makes
publicly available varies across the four state offices in our review.
For example, the Utah state office is the only office of the four to
provide protest letters, as well as BLM's responses, on its Web site.
[Footnote 12] Similarly, only the New Mexico state office publishes on
its Web site an advance list of the parcels under consideration for
inclusion in a notice of lease sale. The other three state offices do
not make this information available on their Web sites, although a BLM
Wyoming state office program manager said the office would provide
this information upon request. According to BLM guidance, the agency
uses preliminary parcel lists primarily to request concurrence and
stipulation recommendations from selected federal or state entities.
Generally, such lists are not available to the public and do not
constitute official notice of a proposed BLM action, according to the
guidance. Nonetheless, protester groups we spoke with stated that they
wanted information in a time frame that was more conducive to
meaningful public participation. Specifically, several representatives
of protester groups said that because the protest period was generally
the one opportunity BLM provided for public input during the lease
sale decision-making process, it was critical that they have enough
time to thoroughly review each parcel included in a lease sale notice
before the formal 30-day protest period.[Footnote 13]
In addition, we found that the four state offices rarely make publicly
available detailed reasons for deferring parcels before a competitive
lease sale or provide information on whether or when deferred parcels
might be considered for a future lease sale. According to BLM
officials, the agency did not have written policy or guidance that
included the specific information the agency was to make publicly
available or when. Instead, each state office developed its own
practices, resulting in state-by-state variation in both what
information was made available and the timing of its release.[Footnote
14] BLM officials also said that in general, all documents supporting
a lease sale decision--including parcel reviews conducted with other
federal, state, and local entities; recommendations from BLM field
offices regarding the leasing of parcels; and protest letters and
decisions--would be available for review by the public upon request.
Some protester groups we spoke with stated that although BLM's
deferral of protested parcels from a lease sale achieved their
intended result, they nevertheless could not determine from publicly
available information whether this outcome was tied to reasons raised
in their protests. They also said they lacked information from BLM as
to whether deferred parcels would be offered at a future sale or to
what extent their concerns would be factored into BLM's future
decision making on those parcels.
In May 2010, the Secretary of the Interior announced several
agencywide leasing reforms that are to take place at BLM. Some of
these reforms may address some concerns raised by protester groups, by
providing the public with earlier and more consistent data about which
parcels may become available for leasing. BLM field offices are to
provide a new 30-day public review-and-comment period that precedes
the 30-day protest period. Doing so will potentially give stakeholders
longer to review parcels and decide whether to file a protest and, if
so, longer to prepare the protest. The reforms also require BLM state
offices to make available on their Web sites their responses to
protest letters filed during the protest period after a notice of
lease sale. According to BLM, among other goals, the intent of these
changes (which we have not evaluated) is to provide meaningful public
involvement, as well as more predictability and certainty, in the
leasing process.
Most Parcels Identified for Lease Were Protested by a Diverse Group of
Entities for a Variety of Reasons:
Most parcels identified in BLM lease sale notices from fiscal year
2007 through fiscal year 2009 in Colorado, New Mexico, Utah, and
Wyoming were protested; protests came from a diverse group of
entities, including nongovernmental organizations representing
environmental and hunting interests, state and local governments,
businesses, and private individuals. These groups and individuals
listed a wide variety of reasons for their protests, including
concerns that oil and gas activity would (1) impair fish and wildlife
habitats or air and water quality or (2) adversely affect recreational
or agricultural uses of the land.
Most Parcels Identified for Lease Sale Were Protested:
Overall, we found that 74 percent of parcels whose leases were
competitively sold in the 53 lease sales that took place in the four
state offices from fiscal years 2007 to 2009 were protested, although
this percentage varied considerably by state (see table 2).
Table 2: Protest Information on Parcels Whose Leases Were
Competitively Sold, by State Office, Fiscal Years 2007-2009:
BLM state office: Colorado;
Parcels with competitively sold leases: 677;
Parcels protested: 630;
Percentage protested: 93%.
BLM state office: New Mexico;
Parcels with competitively sold leases: 1,008;
Parcels protested: 575;
Percentage protested: 57%.
BLM state office: Utah;
Parcels with competitively sold leases: 624;
Parcels protested: 478;
Percentage protested: 77%.
BLM state office: Wyoming;
Parcels with competitively sold leases: 2,745;
Parcels protested: 2,043;
Percentage protested: 74%.
BLM state office: Total;
Parcels with competitively sold leases: 5,054;
Parcels protested: 3,726;
Percentage protested: 74%.
Source: GAO analysis of BLM data.
Note: In analyzing the universe of data available for the four state
offices, we evaluated only leases that were sold competitively. We did
so because our sample showed that protest data from BLM's module were
generally complete for parcels that were sold competitively, while
data for deferred and unsold parcels were potentially incomplete.
Competitively sold leases represented 5,054 (78 percent) of the 6,451
parcels contained in the 53 lease sale notices for the four state
offices.
[End of table]
Similarly, in our review of a sample of lease sales, we found that
most parcels were protested. To gain a further understanding of the
extent of protests beyond those parcels competitively sold (in other
words, to capture parcels deferred before lease sale and those that
did not sell competitively), we examined protest information for our
random sample of 12 of the 53 lease sales. Overall, we found that
1,035 of the 1,244 parcels (about 83 percent) in our sample were
protested over the 3 fiscal years, although the number of parcels that
were protested varied across the state offices (see table 3). We also
found that at least half the parcels were protested for each lease
sale in our sample (see appendix II). Of the 1,035 protested parcels
in our sample, 68 parcels (about 7 percent) were deferred before lease
sales; BLM dismissed protests for 763 parcels (about 74 percent); and
as of March 2010, BLM had yet to issue responses for protests to 204
parcels (about 20 percent).
Table 3: Protests Filed in a Sample of 12 Lease Sales, Fiscal Years
2007-2009:
BLM state office: Colorado;
Parcels in lease sale notices: 193;
Parcels protested: 173;
Percentage protested: 90%.
BLM state office: New Mexico;
Parcels in lease sale notices: 281;
Parcels protested: 205;
Percentage protested: 73%.
BLM state office: Utah;
Parcels in lease sale notices: 201;
Parcels protested: 198;
Percentage protested: 99%.
BLM state office: Wyoming;
Parcels in lease sale notices: 569;
Parcels protested: 459;
Percentage protested: 81%.
BLM state office: Total;
Parcels in lease sale notices: 1,244;
Parcels protested: 1,035;
Percentage protested: 83%.
Source: GAO analysis of protest data obtained from BLM state offices.
[End of table]
Parcels Were Protested for a Variety of Reasons by Nongovernmental
Organizations, Governments, Businesses, and Individuals:
We found that a diverse group of entities filed protests for parcels
included in our sample of lease sales, including nongovernmental
organizations, governments, businesses, and individuals (see appendix
II). Many of the nongovernmental organizations were environmental
organizations; for example, the Center for Native Ecosystems was
listed as a party on 13 of the 86 protest letters across three state
offices in our sample.[Footnote 15] Other nongovernmental
organizations representing hunting, fishing, and recreational
interests also commonly filed protests. Governments included both
state and local governments, such as a state natural resource
department and county commissioners. Businesses were represented by
ranching and recreational interests, and private individuals were
often residents concerned that their lifestyles or properties would be
affected by the proposed leasing activity. In many instances, several
groups jointly filed a single protest letter. For example, for one
lease sale in New Mexico, multiple businesses--representing ranching,
recreational, and other interests--and several nongovernmental
organizations submitted a protest letter. Similarly, in one lease sale
in Wyoming, an association of churches signed a protest letter
alongside five nongovernmental conservation organizations. In
addition, according to BLM officials, the agency also often received
"repeat" protests, where the same groups raised issues they had
previously raised in protests that BLM had dismissed in earlier lease
sales; "blanket" protests, where all the parcels identified in a lease
sale notice were protested for general reasons; or "mass duplicate
protests," where multiple entities filed the same letter. For our
sample of protest letters, we did not analyze the extent to which any
of the protests fell into these categories.
In our analysis of each of the 86 protest letters in our sample, we
found that the reasons cited for the protests varied considerably. We
found that the reasons outlined in the letters generally fell into
four broad areas: alleged impacts on fish and wildlife and their
habitats; degradation of the natural environment, such as air or water
quality; effects on human uses, such as recreation or agriculture; or
potential violations of statutes or policies (see appendix II). For
instance, many of the letters stated that certain parcels identified
for oil and gas leasing were located on lands of high conservation
value and that oil and gas activities would disrupt important species'
habitats, such as sage grouse breeding and nesting sites; migratory
routes and winter ranges for big game, such as elk and mule deer; or
the riparian habitats of sensitive fish species, such as cutthroat
trout. Several of the letters stated that because some of the parcels
were located in areas that had been proposed for or had received a
wilderness or other conservation designation, leasing the area to oil
and gas development would come into direct conflict with that proposed
designation. Many of the letters also raised concerns that oil and gas
development on the land would affect use of the land for recreational
or business-related purposes, including hunting, fishing, hiking,
horseback riding, ranching, and other agricultural uses. In addition,
entities filing protests frequently raised concerns that offering
certain parcels for lease would violate particular statutes or
policies. For instance, a number of the protest letters stated that
offering certain parcels for lease would be in potential violation of
the Federal Land Policy and Management Act because leasing those
parcels would be inconsistent with BLM's current land use plans or
responsibility to ensure that public lands were not unnecessarily or
unduly degraded. Other protest letters stated that BLM had potentially
neglected to (1) conduct sufficient site-specific environmental
analyses, (2) identify potential adverse environmental effects, or (3)
consider an adequate range of alternatives when selecting certain
parcels for lease sale--allegations that, if true, could put BLM in
violation of NEPA.
Effects of Protests on BLM's Leasing Decisions and Overall Oil and Gas
Development Activities Were Difficult to Determine:
We could not measure the extent to which protests influenced BLM's
leasing decisions through the information BLM maintains because the
agency did not document the role protests played in its decisions to
defer parcels; protests were, however, associated with delays in
leasing. In addition, we found that despite industry concerns,
protests did not significantly affect bid prices and that the effects
of protests on nationwide oil and gas production in the near term are
not likely to be significant.
The Extent to Which Protests Affected BLM's Lease Sale Decisions Could
Not Be Measured:
We could not measure the extent to which protests affected BLM's lease
sale decisions because of limited information BLM maintains on
protests. Not only were protest data incomplete, but BLM did not
consistently document the reasons for its deferrals or the extent to
which it found protests to have merit. In our review of a sample of 12
lease sales in the four state offices, we found that when BLM deferred
a protested parcel before the lease sale, the agency did not provide
the reasons for the deferral in its response to the protest letter.
Rather, BLM stated that because the parcel was deferred, the protest
was "dismissed as moot" or the parcel was "not subject to protest."
For such deferrals, BLM did not indicate whether the protest had merit
or to what extent, if at all, the protest factored into the agency's
decision to defer the parcel. Similarly, although in principle a
protest could also play a role in BLM's decision to modify the acreage
or stipulations on a parcel, in reviewing BLM's responses to the
protest letters in our sample, we could not determine if BLM made any
such changes because of a protest.
BLM officials explained that many interacting factors influenced
leasing decisions, and it was not always possible to specify the
extent to which protests affected their decisions. In our sample of
protested parcels deferred before lease sales, however, we found that
issues similar to those raised in the protest letters were often cited
by BLM officials as the reason for deferrals. Specifically, we found
that for 56 of the 68 deferred protested parcels in our sample, the
reasons BLM cited were similar to issues raised in the protest letters
for those same parcels. For example, several conservation groups
protested the lease sale of several parcels in Utah's February 2007
lease sale because, according to the protest letter they filed
jointly, recent archaeological research showed that a particular
mountain gap had special significance as an ancient astronomical
observatory. According to BLM officials, BLM deferred the sale of
these parcels, on which they had already placed some restrictions to
oil and gas development, so they could further review the area's
importance as a cultural resource and the potential need for
additional protection. On the other hand, some protested parcels were
deferred for administrative reasons unrelated to issues cited in
protest letters. For example, the New Mexico state office deferred one
parcel from its July 2008 lease sale after it determined that land
within the parcel was already under lease.
BLM officials provided anecdotal accounts in which protests influenced
their decisions, and they acknowledged that the protest process can
serve as a check on agency decisions to offer parcels for lease sale.
In some instances, according to the officials, protests brought issues
to their attention that they may not otherwise have factored into
their decision making and therefore ultimately improved their
decisions. For example, according to a BLM Colorado state office
program manager, the office deferred the lease sale of several parcels
after a conservation group alerted the office through the protest
process that the parcels potentially contained habitat for a
threatened plant species, as well as areas that had been designated
for state and national historic and natural preservation. Similarly,
officials in the New Mexico state office said they deferred the lease
sale of multiple parcels after reviewing information submitted by
protesters, including a letter submitted by the New Mexico Department
of Game and Fish, and determining that the areas contained key habitat
for the desert bighorn sheep, a state endangered species, and that
further review of the lands' leasing suitability would therefore be
warranted.
In addition, some protests resulted in appeals to the Interior Board
of Land Appeals or litigation in federal court, which could have
ultimately affected BLM's leasing decisions. Although data were not
available to determine how many appeals or legal challenges were
associated with the protests submitted during the period of our
review, we did examine appeals and litigation associated with our
sample of lease sales. Within our sample, one appeal to the Interior
Board of Land Appeals was filed by a group that had protested parcels
included in Wyoming's April 2008 lease sale. The board dismissed this
appeal in October 2009, holding that the protesting organization
lacked standing to appeal because it failed to establish that it or
any of its members had used, or in the future would use, any of the
protested parcels. In addition, groups filed lawsuits challenging
BLM's lease sale decisions from New Mexico's July 2008 lease sale and
Colorado's August 2008 lease sale; both cases were pending as of May
2010 (see appendix III).
Leases on Protested Parcels Were Often Delayed:
We found that a majority of leases for protested parcels in the four
state offices from fiscal year 2007 through 2009 were issued after the
60-day window specified in the Mineral Leasing Act.[Footnote 16] BLM
officials explained that, starting in the early 2000s, the overall
number of protests rose in tandem with an increase in oil and gas
development activities and an increase in activities in contentious
areas, such as those potentially containing wilderness-quality lands
or areas that had not before been leased for oil and gas. According to
BLM officials, responding to the large number of protests, some of
which raised complex issues, increased staff workloads and made it
difficult for them to respond to protests and issue leases within the
60-day window.
When we examined lease issuance time frames for all competitively sold
leases for parcels from the 53 lease sales held in the four state
offices during fiscal years 2007 through 2009, we found that BLM was
able to issue leases within the 60-day window for almost all
unprotested parcels.[Footnote 17] But BLM was not able to meet this
window for almost 91 percent of the protested parcels it sold
competitively during this time. The percentage varied by state office:
In New Mexico the percentage was about 52 percent, while in the other
three state offices it was more than 91 percent, ranging up to almost
100 percent in Wyoming (see table 4). The Wyoming state office
prepared one consolidated response to all protest letters filed for a
particular lease sale, and thus, a BLM official explained, leases were
not issued for any protested parcels until concerns raised in each of
the protests were resolved and BLM had responded.
Table 4: Numbers of Protested Parcels and Timeliness, by State Office,
Fiscal Years 2007-2009:
Colorado: [Empty].
BLM state office: Colorado;
Protested parcels: Late: Number: 581;
Protested parcels: Late: Percentage: 94.8%;
Protested parcels: On time: Number: 32;
Protested parcels: On time: Percentage: 5.2%;
Protested parcels: Total: Number: 613;
Protested parcels: Total: Percentage: 100%.
BLM state office: New Mexico;
Protested parcels: Late: Number: 299;
Protested parcels: Late: Percentage: 52.3%;
Protested parcels: On time: Number: 273;
Protested parcels: On time: Percentage: 47.7%;
Protested parcels: Total: Number: 572;
Protested parcels: Total: Percentage: 100%.
BLM state office: Utah;
Protested parcels: Late: Number: 403;
Protested parcels: Late: Percentage: 91.4%;
Protested parcels: On time: Number: 38;
Protested parcels: On time: Percentage: 8.6%;
Protested parcels: Total: Number: 441;
Protested parcels: Total: Percentage: 100%.
BLM state office: Wyoming;
Protested parcels: Late: Number: 2,039;
Protested parcels: Late: Percentage: 99.9%;
Protested parcels: On time: Number: 2;
Protested parcels: On time: Percentage: 0.1%;
Protested parcels: Total: Number: 2,041;
Protested parcels: Total: Percentage: 100%.
BLM state office: Total;
Protested parcels: Late: Number: 3,322;
Protested parcels: Late: Percentage: 90.6%;
Protested parcels: On time: Number: 345;
Protested parcels: On time: Percentage: 9.4%;
Protested parcels: Total: Number: 3,667;
Protested parcels: Total: Percentage: 100%.
Source: GAO analysis of BLM data.
Note: The 3,667 parcels evaluated in this analysis whose leases were
competitively sold include protested parcels for which leases were
issued, as well as protested parcels whose leases were sold as of
March 2010 but whose leases had not been issued. In total, leases for
3,726 protested parcels were competitively sold during our review
period, but we excluded 59 of these parcels from our analysis because
BLM indicated that leases for these parcels had been canceled or
because errors in the data precluded their use.
[End of table]
The time it took BLM to issue the leases also varied. For the
protested parcels for which leases were issued, about 46 percent were
issued within 6 months, about 54 percent were issued within 6 months
to 1 year, and less than 1 percent took up to 2 years.[Footnote 18] In
addition, as of March 2010, BLM had not issued leases for more than
1,200 protested parcels (representing about 24 percent of all parcels
sold competitively during this time), the majority of which were from
lease sales held during fiscal year 2009 in Utah and Wyoming. While
our analysis is consistent with the assertion from BLM officials that
an increased workload from protests resulted in delays issuing leases,
it was not sufficient to establish a cause-and-effect relationship
because the available data did not allow us to examine whether factors
other than protests, such as other workload demands in the state
office, may also have contributed to lease issuance delays.
Despite Concerns, Protest Activity and Delayed Leasing Have Not
Significantly Affected Bid Prices, and Near-Term Effects on Nationwide
Oil and Gas Production Are Not Likely to Be Significant:
We found that protest activity did not systematically decrease bid
prices for leases during the period we reviewed and that overall
effects on near-term nationwide oil and gas production are not likely
to be significant, despite industry concerns over protests and delays
in issuing leases. Specifically, industry officials we spoke with said
that if an energy company cannot count on timely issuance of leases,
it could be hard-pressed to make fully informed decisions on how to
develop a group of leased parcels. If the lease on one parcel within a
group is delayed, for example, a company may not find it cost-
effective or feasible to develop the rest of the parcels in that
group. In some cases, companies are concerned that capital may be tied
up while BLM is resolving protests and deciding whether to issue the
companies' leases. Because companies make payments to BLM at the time
of lease sale, they may find themselves financially constrained while
awaiting BLM's decision and at the same time have no assurance that
BLM will grant their leases.[Footnote 19] According to industry
representatives, uncertainty over protested parcels--including delays
in lease issuance, parcels' ultimate availability, and additional
restrictions that may be placed on them--might lower the amount
potential lessees may be willing to bid for those parcels. In
addition, industry representatives expressed concern that the delays
and uncertainty related to protests could result in reduced acreage
available for leasing and therefore ultimately also limit domestic oil
and gas production.
The results of our analysis showed no systematic effect of measures of
protest activity on bid prices, although our analysis did not account
for all possible determinants of bid prices.[Footnote 20] For example,
when we compared the average bid price per acre for protested parcels
against the average bid price per acre for unprotested parcels for
lease sales held in the four state offices during fiscal years 2007
through 2009, we did not find a systematic effect of protest activity
on bid price. In the 29 lease sales where estimation was possible, we
found that for 3 lease sales in Wyoming, the average bid price per
acre was significantly higher for unprotested parcels than for
protested ones.[Footnote 21] In 3 other lease sales in Colorado, New
Mexico, and Utah, however, we found a significant association between
higher bid price per acre and protested parcels. In the 23 other
sales, we found no statistically significant correlation. Similarly,
when we analyzed the number of protests per parcel and average bid
prices, we did not find a systematic effect. Here, in the 36 lease
sales where estimation was possible, we found that for 4 of them--1 in
Colorado and 3 in Wyoming--higher average bid prices per acre were
associated with fewer protests. For 2 lease sales in New Mexico and
Utah, the converse was true, and lower average bid prices per acre
were associated with fewer protests. In the 30 other sales, there was
no significant relationship. Finally, for the number of days of delay
in issuing leases on protested parcels, we found no consistently
significant statistical relationship with lower average bid price.
[Footnote 22]
While industry representatives also expressed concern that protest
activity could result in reduced acreage available for leasing, it was
not possible to determine the extent to which acreage was withheld
from leasing as a result of protests because BLM did not document
whether protests influenced its decisions to defer parcels from lease
sales. During the period of our review, about 1 million acres, or 15
percent, of the approximately 6.9 million acres of land included in
the lease sale notices in the four state offices were deferred before
lease sale. Given the limitations of BLM's data, however, we could not
determine how much of this deferred acreage was protested or, for
deferred acreage that was protested, whether it was subsequently
leased in a later sale. This deferred acreage thus represents an upper
limit to the potential acreage that could have been withheld from
leasing because of protests to date in the four state offices. In
addition, BLM had not yet resolved protests filed on another 1.4
million acres, or about 20 percent, of the approximately 6.9 million
acres of land identified in the lease sale notices, and resolution of
many of these protests has been on hold following direction from BLM
headquarters to await specific policy changes before resolving pending
protests. For instance, according to officials in the Wyoming state
office, the office was directed not to issue protest responses for its
protested parcels--which included more than 1,000 parcels covering
approximately 1.2 million acres for parcels protested during our
review period--until the parcels' suitability for leasing was reviewed
in light of new guidance covering sage grouse habitat and wilderness
policy. As a result, it is too early to determine the effects of
protests on the acreage where protests have yet to be resolved, and
ultimately it may not be possible to distinguish the effects of
protests from the effects of simultaneous policy changes. Further,
because oil and gas producers generally have up to 10 years from a
lease's issuance in which they can begin developing the lease, the
effect of leasing decisions may not be felt for several years after
the lease sale.
At the national level, the near-term effect of protests on U.S. oil
and gas production is likely to be relatively modest because federal
lands account for a small fraction of the total onshore and offshore
nationwide oil and gas output. Specifically, in fiscal year 2009,
federal lands accounted for 5.8 percent of the nation's total oil
production and 12.8 percent of total natural gas production. Assuming
the federal share of production remains comparable in the future, and
production on federal lands falls by 15 percent (the percentage of
deferred acreage), nationwide oil production would be reduced by 0.9
percent, and natural gas production would fall by 1.9 percent. If, in
addition to the 15 percent of deferred acreage, BLM were to withdraw
the acreage represented by the additional 20 percent of protested
parcels whose protest decisions were still pending--a total reduction
of 35 percent--the corresponding combined loss nationwide would be 2.0
percent for oil and 4.5 percent for natural gas.
With the current supply of federal lands already under lease, however,
oil and gas development and production may be able to increase along
with any demand for such production. Of federal lands that are
currently leased, 12 million acres are producing oil or gas, whereas
33 million acres have not been developed. Factoring in both federal
onshore and offshore leases, a total of 67 million acres have not been
developed, while 22 million acres are producing oil or natural gas.
While they may not all contain viable resources, some of these 67
million acres may provide a buffer for the energy industry--federal
lands or waters that could be developed--if producers wanted to
respond to market conditions with a rapid rise in development and
production activity. Energy industry representatives said that while
various factors influence a company's decision to develop leases, the
prices of oil and gas are a big driver. We examined the movements of
oil and gas prices from 1990 through 2009 in relation to development
activities as measured by oil and gas wells drilled and found that
percentage changes in the prices of oil and gas closely paralleled
percentage changes in development activity (see figure 2). The peaks
and troughs in the patterns of these variables largely overlapped,
strongly suggesting that during the past two decades, development
activity reacted quickly and proportionally to changes in the prices
of oil and gas.[Footnote 23]
Figure 2: Prices of Crude Oil and Natural Gas in Relation to U.S. Oil
and Gas Development Activity, 1990-2009:
[Refer to PDF for image: 2 multiple line graphs]
Calendar year: 1990;
Change in Oil prices: 19%;
Change in Exploratory and developmental oil wells drilled: 21.7%;
Change in Natural gas prices: -3.9%;
Change in Exploratory and developmental natural gas wells drilled:
16.8%.
Calendar year: 1991;
Change in Oil prices: -14%;
Change in Exploratory and developmental oil wells drilled: -3.3%;
Change in Natural gas prices: -6%;
Change in Exploratory and developmental natural gas wells drilled:
-13.6%.
Calendar year: 1992;
Change in Oil prices: -5.6%;
Change in Exploratory and developmental oil wells drilled: -25.1%;
Change in Natural gas prices: 4.8%;
Change in Exploratory and developmental natural gas wells drilled:
-13.6%.
Calendar year: 1993;
Change in Oil prices: -11.5%;
Change in Exploratory and developmental oil wells drilled: -2.8%;
Change in Natural gas prices: 16%;
Change in Exploratory and developmental natural gas wells drilled:
22.5%.
Calendar year: 1994;
Change in Oil prices: -7.3%;
Change in Exploratory and developmental oil wells drilled: -20.1%;
Change in Natural gas prices: -9.9%;
Change in Exploratory and developmental natural gas wells drilled:
-4.3%.
Calendar year: 1995;
Change in Oil prices: 5.1%;
Change in Exploratory and developmental oil wells drilled: 11.8%;
Change in Natural gas prices: -18.1%;
Change in Exploratory and developmental natural gas wells drilled:
-13.2%.
Calendar year: 1996;
Change in Oil prices: 17%;
Change in Exploratory and developmental oil wells drilled: 11.9%;
Change in Natural gas prices: 36.6%;
Change in Exploratory and developmental natural gas wells drilled:
12.8%.
Calendar year: 1997;
Change in Oil prices: -7.2%;
Change in Exploratory and developmental oil wells drilled: 19.2%;
Change in Natural gas prices: 6.6%;
Change in Exploratory and developmental natural gas wells drilled:
17.3%.
Calendar year: 1998;
Change in Oil prices: -29.4%;
Change in Exploratory and developmental oil wells drilled: -33.2%;
Change in Natural gas prices: -14.8%;
Change in Exploratory and developmental natural gas wells drilled:
-0.5%.
Calendar year: 1999;
Change in Oil prices: 31.7%;
Change in Exploratory and developmental oil wells drilled: -38.2%;
Change in Natural gas prices: 9.7%;
Change in Exploratory and developmental natural gas wells drilled:
-0.1%.
Calendar year: 2000;
Change in Oil prices: 51.4%;
Change in Exploratory and developmental oil wells drilled: 87.3%;
Change in Natural gas prices: 61.9%;
Change in Exploratory and developmental natural gas wells drilled:
52.7%.
Calendar year: 2001;
Change in Oil prices: -16.1%;
Change in Exploratory and developmental oil wells drilled: 9.8%;
Change in Natural gas prices: 6.6%;
Change in Exploratory and developmental natural gas wells drilled:
29.7%.
Calendar year: 2002;
Change in Oil prices: 2.1%;
Change in Exploratory and developmental oil wells drilled: -23.9%;
Change in Natural gas prices: -25.3%;
Change in Exploratory and developmental natural gas wells drilled:
-21.5%.
Calendar year: 2003;
Change in Oil prices: 15.1%;
Change in Exploratory and developmental oil wells drilled: 19.8%;
Change in Natural gas prices: 60.3%;
Change in Exploratory and developmental natural gas wells drilled:
19.6%.
Calendar year: 2004;
Change in Oil prices: 28.9%;
Change in Exploratory and developmental oil wells drilled: 8.1%;
Change in Natural gas prices: 8%;
Change in Exploratory and developmental natural gas wells drilled:
16.6%.
Calendar year: 2005;
Change in Oil prices: 30.1%;
Change in Exploratory and developmental oil wells drilled: 22.3%;
Change in Natural gas prices: 28%;
Change in Exploratory and developmental natural gas wells drilled:
17.9%.
Calendar year: 2006;
Change in Oil prices: 13.3%;
Change in Exploratory and developmental oil wells drilled: 24.2%;
Change in Natural gas prices: -15.3%;
Change in Exploratory and developmental natural gas wells drilled:
15.8%.
Calendar year: 2007;
Change in Oil prices: 5.4%;
Change in Exploratory and developmental oil wells drilled: 2.9%;
Change in Natural gas prices: -5.9%;
Change in Exploratory and developmental natural gas wells drilled:
1.3%.
Calendar year: 2008;
Change in Oil prices: 29.5%;
Change in Exploratory and developmental oil wells drilled: 27.6%;
Change in Natural gas prices: 19.7%;
Change in Exploratory and developmental natural gas wells drilled:
3.5%.
Calendar year: 2009;
Change in Oil prices: -36.2%;
Change in Exploratory and developmental oil wells drilled: -23.3%;
Change in Natural gas prices: -52.2%;
Change in Exploratory and developmental natural gas wells drilled:
-44.2%.
Sources: GAO analysis of data from the Bureau of Labor Statistics and
the Energy Information Administration.
Note: Prices and development measures reflect nationwide onshore and
offshore oil and gas activity. Oil prices are given in 2009 dollars
per barrel, prices for natural gas in 2009 dollars per 1,000 cubic
feet. Change is plotted as (1) the percentage change from year to year
in oil or gas prices and (2) the percentage change from year to year
in the number of exploratory and developmental wells drilled, which
shows how the two variables have moved together over the past two
decades.
[End of figure]
Conclusions:
BLM must continue to balance interest in developing the nation's
domestic sources of oil and natural gas on federal lands with ensuring
that such development is done in an environmentally responsible manner
and in line with its mandate to manage these lands for multiple uses.
The protest period provided before new oil and gas leases are issued
allows the public an opportunity to comment on a parcel before the
right to develop that parcel passes to a private company, and protests
provide an opportunity for BLM to carefully examine lease sale
decisions in light of the issues that protests raise. This protest
process has its trade-offs, however. Specifically, issues raised in
protests can help BLM ensure that the best leasing decisions are made,
but protests have also been associated with delays and may increase
industry uncertainty over the availability of federal lands for oil
and gas leasing. Although BLM has taken steps to collect agencywide
protest data, when we tried to evaluate the effects of protests, we
were hindered by the incompleteness, inconsistency, and ambiguity of
these data. Protester groups have also been dissatisfied with BLM's
lack of protest-related information. Without more robust protest
information, BLM, Congress, and the public lack a full picture of
protest activity and how protests affect leasing decisions. As
Interior reforms the leasing process, BLM has an ideal opportunity to
(1) revisit how it maintains protest-related information and makes it
publicly available and (2) develop the means to respond to protests
and issue leases with fewer delays, without compromising the
thoroughness of review.
Recommendations for Executive Action:
To improve the efficiency and transparency of BLM's process with
regard to protests of its lease sale decisions and to strengthen how
BLM carries out its responsibilities under the Mineral Leasing Act, we
recommend that the Secretary of the Interior direct the Director of
BLM to take the following two actions:
* revisit the agency's use of the module for tracking protest
information and, in so doing, determine and implement an approach for
collecting protest information agencywide that is complete,
consistent, and available to the public and:
* in implementing the Secretary of the Interior's leasing policy
reform issued in May 2010, take steps to improve (1) the transparency
of leasing information provided to the public, including information
to explain the basis of agency decisions to include or exclude
particular parcels in a lease sale and, to the extent feasible,
documentation of the role, if any, that protests played in final lease
decisions, and (2) the timeliness of lease issuance, without
compromising the thoroughness of review.
Agency Comments:
We provided the Department of the Interior with a draft of this report
for review and comment and received a written comment letter from
Interior (see appendix IV). In its written comments, Interior
generally agreed with our findings and concurred with our
recommendations. The department also identified specific actions it
has taken and plans to take to implement these recommendations. With
regard to our first recommendation, about revisiting BLM's use of the
module for tracking protest information, Interior wrote that by the
end of calendar year 2011, BLM will determine if the module can be
redesigned or if another application would be more effective and will
implement an approach to better track protest-related information. In
addressing our second recommendation, on improving the transparency of
its lease decisions and the timeliness of lease issuance, Interior
wrote that its onshore leasing reform policies will provide the
increased public participation, transparency, and timeliness called
for in the recommendation. Interior's letter states that with leasing
reform, there will be additional environmental review and a new
opportunity for public comment and that adjustments to the "lease
parcel list" may be made on the basis of public comments received. We
stress, however, that as any adjustments to parcel lists are made, it
will be important for BLM to explain and document the rationale behind
its decisions to include or exclude particular parcels in a lease
sale. Interior's letter also stated that the department believes its
ability to adequately address a protest within required time frames
will be addressed by posting the lease sale notice 90 days before
lease sale (instead of 45 days), extending the period BLM has to
evaluate and respond to protests before a lease sale.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to the appropriate congressional committees, Secretary of the
Interior, Director of the Bureau of Land Management, and other
interested parties. In addition, the report will be available at no
charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff members have any questions about this report,
please contact me at (202) 512-3841 or ruscof@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this report. GAO staff who made major
contributions to this report are listed in appendix V.
Sincerely yours,
Signed by:
Frank Rusco:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
This report examines (1) the extent to which the Bureau of Land
Management (BLM) maintains and makes publicly available information
related to protests, (2) the extent to which parcels were protested
and the nature of protests, and (3) the effects of protests on BLM's
lease sale decisions and on oil and gas development activities.
For all three report objectives, we reviewed relevant laws,
regulations, and Department of the Interior and BLM guidance. We
interviewed officials in BLM headquarters and visited and interviewed
officials from BLM state offices in Colorado, New Mexico, Utah, and
Wyoming. (The New Mexico state office has jurisdiction over Kansas,
Oklahoma, and Texas, as well as New Mexico, and the Wyoming state
office has jurisdiction over Wyoming and Nebraska. The data presented
in this report for the New Mexico and Wyoming state offices include
data for all the states under their jurisdiction.) We selected these
four states because collectively they accounted for 69 percent of oil
and 94 percent of natural gas produced on federal lands from fiscal
year 2007 through fiscal year 2009 and, according to BLM headquarters
officials with whom we spoke, received a high number of protests to
their lease sales over this same period. In addition, we interviewed
stakeholder groups, including representatives from the energy
industry, state government, and nongovernmental organizations, to
discuss their concerns about BLM's lease sale and protest process,
including the effects--both actual and potential--associated with
protests to BLM oil and gas lease sales.
To conduct our work, we obtained and analyzed BLM data from three
different sources. First, using lease sale records from the BLM state
offices for the 53 lease sales held in the four selected state offices
from fiscal year 2007 through 2009, we gathered data on each of the
parcels contained in the lease sale notices, including parcel number,
acreage amount, and whether the parcel was deferred or the acreage was
modified before lease sale.[Footnote 24] The 53 lease sales comprised
6,451 parcels covering 6.9 million acres of land. For those parcels
that were offered at lease sale, we gathered data on final acreage
amounts and whether the parcels sold competitively (that is, during
the lease sale auction; parcels unsold at auction may be leased
noncompetitively later). For parcels that sold competitively, we also
recorded the winning bid amount per acre, as well as the total bid
amount. Second, we obtained lease information from the agency's lease
record-keeping system, Legacy Rehost System 2000 (LR2000), for all
leases issued in the four state offices from fiscal year 2007 through
March 25, 2010, including the type of lease (competitive or
noncompetitive), the lease sale date, and the date the lease was
issued. Third, for fiscal years 2007-2009, we obtained protest
information from BLM's "public challenge module," which it developed
as a component of LR2000 to track protests, among other things, to its
lease sales. (BLM required staff to begin entering protest information
in the module starting in 2007.) Using unique identifiers assigned to
each parcel, we then matched the records obtained from the three data
sources and merged them to conduct various data analyses.
To determine the reliability of the three data sources, we interviewed
officials responsible for the data and data systems; reviewed system
documentation including manuals, users' guides, and guidance; and
performed electronic and logic tests of the data. On the basis of our
assessment, we concluded that the lease sale record data and the
LR2000 lease data were sufficiently reliable for our purposes. To
further assess the completeness of the protest information contained
in the module, we compared the module's data with protest records
obtained from BLM state offices for a random sample of 12 of the 53
lease sales held in the four state offices during fiscal years 2007-
2009.[Footnote 25] The 12 lease sales comprised 1,244 parcels covering
roughly 1.4 million acres of land.[Footnote 26] From our assessment of
the module, we found that it did not contain complete records: While
the module was sufficiently reliable in containing parcels that sold
competitively, it did not always contain records for parcels BLM
withdrew (deferred) before lease sales. Additionally, we found that
the protest-related information the module did contain was not always
complete, accurate, or consistent and therefore was not reliable.
To determine what information BLM makes publicly available related to
protests, we reviewed the process followed by each BLM state office
for reviewing protests and providing information about such decisions
to the public, which included interviewing BLM state office officials,
reviewing protest-related information available on BLM's Web site and
through other sources, and synthesizing information gathered during
our interviews with stakeholder groups. To determine the extent to
which parcels were protested and the nature of protests, we compared
BLM's lease sale records with the data available in BLM's public
challenge module. In addition, we further reviewed protest information
for our random sample of 12 lease sales. Specifically, for each lease
sale in our sample, we obtained and analyzed all submitted protest
letters, which totaled 86, and BLM's responses to these letters. We
analyzed information on whether each parcel included in the notice for
each of these lease sales was protested and, for protested parcels,
the outcome of the protests, including whether BLM's protest decisions
were subsequently appealed or litigated. We also analyzed information
on the groups filing the protests and their reasons for filing them
(see appendix II).[Footnote 27] For protested parcels BLM deferred
from lease sales, we also interviewed BLM state office leasing
officials about the reasons they deferred these parcels and compared
their reasons with the protest letters for the same parcels.
To determine the extent to which protests could affect the timing of
BLM's lease sale decisions, we analyzed data on all parcels BLM sold
competitively in the four state offices during fiscal years 2007-2009,
using BLM's lease sale records, lease issuance dates from LR2000, and
protest information from the public challenge module. Specifically,
for all parcels sold competitively during this period whose leases had
been issued or remained unissued as of March 25, 2010, we calculated
the length of time between each parcel's sale date and lease issuance
date. We based our determination of whether a lease was issued late on
the date of the lease sale plus 15 days to allow for the 10 business
days that winning bidders have to submit required payments to BLM. We
cross-tabulated the data into a three-way table and examined the
association among whether a parcel was issued late, whether it was
protested, and the state in which the parcel was located. In
conducting tests of statistical significance, we found that protested
parcels were significantly more likely to be issued late, even after
accounting for state office. Given the data available, however, we
were unable to examine the association between whether a lease was
issued late and other potentially relevant factors, including workload
in the state offices, the number of protests, the validity of concerns
raised in protest letters, and the amount of review that was required
by BLM to resolve protests. Thus, although our analysis is consistent
with the hypothesis that protests contribute to lease delays, it is
not sufficient to establish a cause-and-effect relationship.
To examine the extent to which protests could affect the bid prices of
leases, we analyzed BLM's lease sale and protest data for all
competitively sold leases for parcels in the four state offices during
fiscal years 2007-2009. Specifically, to determine if bids and protest
activity were associated, we conducted several statistical analyses.
We analyzed data on the price of bids per acre and several measures of
protest activity, including whether the lease sale was protested, the
number of protests received for a specific parcel, and various
measures of delay in issuing leases on protested parcels after a lease
sale.[Footnote 28] We conducted a separate statistical analysis for
each lease sale in each of the four state offices, which allowed us to
control for location (at the state office level) and for factors that
might vary over time, such as oil and natural gas prices.[Footnote 29]
To analyze the extent to which protests could affect oil and gas
development activities, we collected and analyzed national data on oil
and gas development and production activities, specifically, the
number of exploratory and developmental wells drilled and data on oil
and gas prices from the Bureau of Labor Statistics and the Energy
Information Administration. To assess the ability of development and
production in the oil and gas industries to respond to changes in oil
and natural gas prices, we analyzed how movements in those prices from
1990 through 2009 changed in relation to development and production
activities over the same period. To determine the proportion of
federal lands that were leased, the proportion leased and under
production, and how these proportions compared with total oil and gas
production nationwide, we obtained from BLM and analyzed oil and gas
leasing and production data on federal lands, and we obtained U.S.
production data from the Energy Information Administration; these data
were for fiscal year 2009. We assessed the reliability of these data
and found them to be sufficiently reliable for the purposes of this
report.
We conducted this performance audit from June 2009 through July 2010,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Protest Information from a Sample of Lease Sales in Four
Selected State Offices, Fiscal Years 2007-2009:
The following tables present information based on our review of a
sample of 12 lease sales held in the state offices of Colorado, New
Mexico, Utah, and Wyoming from fiscal year 2007 through fiscal year
2009. The tables are based on a total of 86 protest letters associated
with the 12 sampled lease sales.
Table 5: Count of Protests Filed in a Sample of 12 Lease Sales, by
State Office, Fiscal Years 2007-2009:
Fiscal year 2007:
BLM state office (lease sale): Colorado (August);
Parcels in lease sale notice: 109;
Parcels protested: 104;
BLM action on protested parcels: Deferred: 10;
BLM action on protested parcels: Dismissed: 94;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): New Mexico (July);
Parcels in lease sale notice: 114;
Parcels protested: 73;
BLM action on protested parcels: Deferred: 1;
BLM action on protested parcels: Dismissed: 72;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): Utah (February);
Parcels in lease sale notice: 79;
Parcels protested: 76;
BLM action on protested parcels: Deferred: 14;
BLM action on protested parcels: Dismissed: 5;
BLM action on protested parcels: Pending[A]: 57.
BLM state office (lease sale): Wyoming (April);
Parcels in lease sale notice: 159;
Parcels protested: 96;
BLM action on protested parcels: Deferred: 0;
BLM action on protested parcels: Dismissed: 96;
BLM action on protested parcels: Pending[A]: 0.
Fiscal year 2007: Total;
Parcels in lease sale notice: 461;
Parcels protested: 349;
BLM action on protested parcels: Deferred: 25;
BLM action on protested parcels: Dismissed: 267;
BLM action on protested parcels: Pending[A]: 57.
Fiscal year 2008:
BLM state office (lease sale): Colorado (August);
Parcels in lease sale notice: 46;
Parcels protested: 31;
BLM action on protested parcels: Deferred: 0;
BLM action on protested parcels: Dismissed: 31;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): New Mexico (July);
Parcels in lease sale notice: 80;
Parcels protested: 80;
BLM action on protested parcels: Deferred: 2;
BLM action on protested parcels: Dismissed: 78;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): Utah (June);
Parcels in lease sale notice: 13;
Parcels protested: 13;
BLM action on protested parcels: Deferred: 3;
BLM action on protested parcels: Dismissed: 0;
BLM action on protested parcels: Pending[A]: 10.
BLM state office (lease sale): Wyoming (April);
Parcels in lease sale notice: 265;
Parcels protested: 218;
BLM action on protested parcels: Deferred: 0;
BLM action on protested parcels: Dismissed: 218;
BLM action on protested parcels: Pending[A]: 0.
Fiscal year 2008: Total;
Parcels in lease sale notice: 404;
Parcels protested: 342;
BLM action on protested parcels: Deferred: 5;
BLM action on protested parcels: Dismissed: 327;
BLM action on protested parcels: Pending[A]: 10.
Fiscal year 2009:
BLM state office (lease sale): Colorado (September);
Parcels in lease sale notice: 38;
Parcels protested: 38;
BLM action on protested parcels: Deferred: 10;
BLM action on protested parcels: Dismissed: 28;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): New Mexico (April);
Parcels in lease sale notice: 87;
Parcels protested: 52;
BLM action on protested parcels: Deferred: 9;
BLM action on protested parcels: Dismissed: 43;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): Utah (March);
Parcels in lease sale notice: 109;
Parcels protested: 109;
BLM action on protested parcels: Deferred: 11;
BLM action on protested parcels: Dismissed: 98;
BLM action on protested parcels: Pending[A]: 0.
BLM state office (lease sale): Wyoming (February);
Parcels in lease sale notice: 145;
Parcels protested: 145;
BLM action on protested parcels: Deferred: 8;
BLM action on protested parcels: Dismissed: 0;
BLM action on protested parcels: Pending[A]: 137.
Fiscal year 2009: Total;
Parcels in lease sale notice: 379;
Parcels protested: 344;
BLM action on protested parcels: Deferred: 38;
BLM action on protested parcels: Dismissed: 169;
BLM action on protested parcels: Pending[A]: 137.
Total for 3 fiscal years:
Parcels in lease sale notice: 1,244;
Parcels protested: 1,035;
BLM action on protested parcels: Deferred: 68;
BLM action on protested parcels: Dismissed: 763;
BLM action on protested parcels: Pending[A]: 204.
Source: GAO analysis of protest data obtained from BLM state offices.
[A] As of March 2010.
[End of table]
Table 6: Groups and Individuals Filing Protest Letters in a Sample of
12 Lease Sales, by State Office, Fiscal Years 2007-2009:
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Colorado, August 2007 (109/104):
Group or individual filing protest letter: Alamosa Riverkeeper;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Amigos Bravos;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Center for Native
Ecosystems;
Number of protested parcels in letter: 104.
Group or individual filing protest letter: Conejos County Board of
Commissioners;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Costilla County Board of
Commissioners;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individuals (2);
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individuals (2);
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 4.
Group or individual filing protest letter: Private individuals (2);
Number of protested parcels in letter: 1.
Group or individual filing protest letter: Private individuals (2);
Number of protested parcels in letter: 1.
Group or individual filing protest letter: San Luis Valley Ecosystem
Council;
Number of protested parcels in letter: 9.
Group or individual filing protest letter: The Wilderness Society,
Colorado Environmental Coalition, San Juan Citizens Alliance, Western
Colorado Congress, Friends of the Yampa, San Luis Valley Ecosystem
Council;
Number of protested parcels in letter: 11.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 56.
Group or individual filing protest letter: Western Resources Advocates
on behalf of the Colorado Environmental Coalition, Colorado Mountain
Club, San Juan Citizens Alliance, The Wilderness Society;
Number of protested parcels in letter: 9.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Colorado, August 2008 (46/31):
Group or individual filing protest letter: Aspen Valley Land Trust;
Number of protested parcels in letter: 1.
Group or individual filing protest letter: Center for Native
Ecosystems;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Colorado State Department
of Natural Resources;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Earthjustice and Western
Resource Advocates on behalf of Colorado Environmental Coalition,
Colorado Mountain Club, Center for Native Ecosystems, Colorado Trout
Unlimited, Environment Colorado, National Wildlife Federation, Natural
Resources Defense Council, Rock the Earth, Sierra Club, The Wilderness
Society, Wilderness Workshop;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Gunnison County Board of
County Commissioners;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: National Wildlife
Federation, Colorado Wildlife Federation;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Pitkin County Commissioners;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Private individuals
(13,031);
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Private individuals (1,600);
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Sierra Club and private
individuals (2,239);
Number of protested parcels in letter: 31.
Group or individual filing protest letter: Trout Unlimited National,
Colorado Trout Unlimited;
Number of protested parcels in letter: 31.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Colorado, September 2009 (38/38):
Group or individual filing protest letter: Center for Native
Ecosystems;
Number of protested parcels in letter: 35.
Group or individual filing protest letter: Colorado State Department
of Natural Resources, Division of Wildlife;
Number of protested parcels in letter: 5.
Group or individual filing protest letter: Congressman John T. Salazar;
Number of protested parcels in letter: 4.
Group or individual filing protest letter: National Wildlife
Federation, Colorado Wildlife Federation;
Number of protested parcels in letter: 7.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 38.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 19.
Group or individual filing protest letter: Western Resource Advocates
on behalf of Colorado Environmental Coalition, Center for Native
Ecosystems, San Luis Valley Ecosystem Council;
Number of protested parcels in letter: 16.
Group or individual filing protest letter: Wolf Springs Ranches Inc.;
Number of protested parcels in letter: 2.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): New Mexico, July 2007 (114/73):
Group or individual filing protest letter: Forest Guardians, Dine
CARE, New Mexico Wildlife Federation;
Number of protested parcels in letter: 73.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): New Mexico, July 2008 (80/80):
Group or individual filing protest letter: Western Environmental Law
Center on behalf of Amigos Bravos; Albuquerque Wildlife Federation;
Arroyo Hondo Land Trust; Back Country Horsemen of New Mexico, Lower
Rio Grande Chapter and Middle Rio Grande Chapter; Bell Fine Jewelry;
Caudill Enterprises/Caudill Custom Stocks; Common Ground United;
Defenders of Wildlife; EcoFlight; Environment New Mexico; Masonry
Structures, Inc.; New Mexico Trout; New Mexico Wilderness Alliance;
New Mexico Wildlife Federation; Oil and Gas Accountability Project, a
program of EARTHWORKS; Rancho Cerro Pelon; Reflective Images, Inc.;
Rio Grande Return; Rocky Mountain Clean Air Action; San Juan Citizens
Alliance; Southwest Environmental Center; Upper Gila Watershed
Alliance; Viva Rio Arriba Ranch;
Number of protested parcels in letter: 51.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 51.
Group or individual filing protest letter: WildEarth Guardians;
Number of protested parcels in letter: 80.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): New Mexico, April 2009 (87/52):
Group or individual filing protest letter: Western Environmental Law
Center on behalf of Amigos Bravos, Center for Biological Diversity,
Common Ground United, Natural Resources Defense Council, New Mexico
Wildlife Federation, San Juan Citizens Alliance, Southwest
Consolidated Sportsmen, WildEarth Guardians;
Number of protested parcels in letter: 52.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Utah, February 2007 (79/76):
Group or individual filing protest letter: Center for Native
Ecosystems, Forest Guardians;
Number of protested parcels in letter: 69.
Group or individual filing protest letter: Southern Utah Wilderness
Alliance, Natural Resources Defense Council, The Wilderness Society,
National Trust for Historic Preservation;
Number of protested parcels in letter: 14.
Group or individual filing protest letter: Vessels Coal Gas, Inc.;
Number of protested parcels in letter: 3.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Utah, June 2008 (13/13):
Group or individual filing protest letter: Center for Native
Ecosystems;
Number of protested parcels in letter: 10.
Group or individual filing protest letter: Red Rock Forests, private
individual;
Number of protested parcels in letter: 13.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 12.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Utah, March 2009 (109/109):
Group or individual filing protest letter: Center for Native
Ecosystems;
Number of protested parcels in letter: 97.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 95.
Group or individual filing protest letter: Red Rock Forests;
Number of protested parcels in letter: 29.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 67.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Wyoming, April 2007 (159/96):
Group or individual filing protest letter: Biodiversity Conservation
Alliance, Wyoming Outdoor Council, Center for Native Ecosystems,
Powder River Basin Resource Council, Clark Resource Council, Friends
of the Red Desert;
Number of protested parcels in letter: 68.
Group or individual filing protest letter: Center for Native
Ecosystems, Biodiversity Conservation Alliance;
Number of protested parcels in letter: 47.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 21.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Wyoming, April 2008 (265/218):
Group or individual filing protest letter: Biodiversity Conservation
Alliance, Center for Native Ecosystems, Wyoming Outdoor Council, Clark
Resource Council, Wyoming Wilderness Association;
Number of protested parcels in letter: 45.
Group or individual filing protest letter: Center for Native
Ecosystems, Biodiversity Conservation Alliance;
Number of protested parcels in letter: 209.
Group or individual filing protest letter: National Audubon Society;
Number of protested parcels in letter: 33.
Group or individual filing protest letter: Private individuals (2);
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Private individual;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 73.
Group or individual filing protest letter: Wyoming Outdoor Council,
Natural Resources Defense Council, Wyoming Chapter of the Sierra Club,
The Wilderness Society, Biodiversity Conservation Alliance, Wyoming
Association of Churches;
Number of protested parcels in letter: 2.
Group or individual filing protest letter: Wyoming Wilderness
Association;
Number of protested parcels in letter: 2.
BLM state office, lease sale date (parcels in lease sale
notice/parcels protested): Wyoming, February 2009 (145/145):
Group or individual filing protest letter: Biodiversity Conservation
Alliance, Wyoming Outdoor Council;
Number of protested parcels in letter: 145.
Group or individual filing protest letter: Center for Native
Ecosystems, Biodiversity Conservation Alliance;
Number of protested parcels in letter: 106.
Group or individual filing protest letter: National Outdoor Leadership
School, High Wild and Lonesome Horseback Adventures, LLC;
Number of protested parcels in letter: 5.
Group or individual filing protest letter: Theodore Roosevelt
Conservation Partnership;
Number of protested parcels in letter: 72.
Group or individual filing protest letter: Trout Unlimited;
Number of protested parcels in letter: 1.
Group or individual filing protest letter: Western Resource Advocates
on behalf of National Audubon Society, Audubon Wyoming;
Number of protested parcels in letter: 28.
Group or individual filing protest letter: Wyoming Outdoor Council,
The Wilderness Society, Natural Resources Defense Council,
Biodiversity Conservation Alliance, Greater Yellowstone Coalition;
Number of protested parcels in letter: 8.
Source: GAO analysis of protest data obtained from BLM state offices.
[End of table]
To analyze the reasons for filing protests, we reviewed each of the 86
protest letters associated with the 12 lease sales in our sample. To
document the concerns raised in each letter, we developed categories
through an inductive process that involved reviewing a small number of
protest letters and then identifying natural groupings, or categories,
of concerns. Two analysts then independently reviewed the letters and
compared the categories. Table 7 presents the overall categories of
concern we encountered and illustrates the types of concerns we
identified in reviewing the protest letters.
Table 7: Reasons for Filing Protests, as Cited in Protest Letters from
a Sample of 12 Lease Sales in Four State Offices, Fiscal Years 2007-
2009:
Category of concern: Fish and wildlife and their habitats;
Concerns cited:
* Effects on sensitive species or their habitats, including species
listed as endangered, threatened, or candidates under the Endangered
Species Act, or species otherwise identified as sensitive, such as
sage grouse, native fish species, or bald eagles;
* Effects on fish and wildlife species not identified as sensitive,
including impacts on population, health, behavior, or habitats, such
as the breeding and nesting sites of birds, migratory routes and
winter ranges for big game such as elk and mule deer, or the riparian
habitats of fish species.
Category of concern: Natural environment;
Concerns cited:
* Water quality, such as impacts from sedimentation, polluted runoff
contaminating surface or ground water, water supply or drinking water
quality, or watershed health;
* Air quality, including increased emissions of carbon dioxide, carbon
monoxide, nitrous oxide, methane, or air particulates, or impacts on
the ozone layer;
* Other environmental concerns, such as noise pollution, climate
effects from greenhouse gas emissions, soil erosion, or wilderness
characteristics.
Category of concern: Human use;
Concerns cited:
* Public enjoyment and use, including impacts on hunting, fishing,
hiking, biking, camping, horseback riding, scenic views, and human
health and safety;
* Cultural sites, such as potential harm to ancestral grounds,
historic sites, and other archaeological or paleontological resources;
* Livelihood and economies, such as concerns about livestock and
agricultural productivity, impacts on local businesses, state revenues
from leasing, and rural and noneconomic values including ways of life
and suburban encroachment.
Category of concern: Alleged violations of statute or policy;
Concerns cited:
* Potential violations of federal laws, including the Clean Air Act,
Clean Water Act, Endangered Species Act, Federal Land Policy and
Management Act, National Environmental Policy Act, Mineral Leasing
Act, and National Historic Preservation Act;
* Potential violations of Interior or BLM policies or guidance,
including Interior policy on analyzing potential climate change
impacts when undertaking planning and management activities and BLM
guidance on how to manage species with special status or on
determining the adequacy of environmental analyses before making
leasing decisions.
Source: GAO analysis of protest data obtained from BLM state offices.
[End of table]
[End of section]
Appendix III: Description of Litigation on Selected Lease Sales:
This appendix describes litigation surrounding several of BLM's oil
and gas lease sales held during fiscal years 2007-2009: New Mexico's
April and July 2008 lease sales of parcels across New Mexico,
Colorado's August 2008 lease sale of parcels atop the Roan Plateau in
northwestern Colorado, and Utah's December 2008 lease sale of parcels
in eastern Utah.[Footnote 30]
New Mexico's April and July 2008 Lease Sales:
In March 2008, several environmental and community organizations filed
a protest opposing the leasing of all 51 parcels located in the state
of New Mexico that BLM identified in its lease sale notice for its
April 2008 lease sale, arguing, among other things, that BLM failed to
adequately analyze the environmental effects of greenhouse gas
emissions that would result from past, present, and future oil and gas
development on BLM lands. In April 2008 BLM carried out the lease sale
after removing 40 of the 100 originally proposed parcels from the
sale, and in July it dismissed the protests on the remaining parcels
that were offered at the lease sale.[Footnote 31] The agency noted
that on receipt of the groups' protest letter, it directed each BLM
field office in New Mexico to prepare a new environmental assessment
to analyze the potential impacts from lease exploration and
development and to account for potential greenhouse gasses during
exploration, development, and transportation.
In May 2008, BLM announced the next lease sale, identifying 80
parcels, to be held in July. Numerous groups filed protests against
all the parcels located in New Mexico, raising issues similar to those
that were raised at the April sale. BLM field offices completed their
greenhouse gas environmental assessments just before the July sale.
BLM held the sale in July, offering 78 parcels for lease, and
dismissed all the protests the following October. In January 2009,
several of the groups that had filed protests challenged the April and
July 2008 New Mexico lease sales in federal court.[Footnote 32] The
groups argued, among other things, that BLM's planning and decision-
making process for the lease sales failed to address the global-
warming impacts of the oil and gas development, in violation of the
National Environmental Policy Act, the Federal Land Policy and
Management Act, and Department of the Interior Secretarial Order 3226.
[Footnote 33] As of May 2010, this case was pending.
Colorado's August 2008 Lease Sale:
In June 2007, BLM approved a resource management plan providing for
oil and gas development on the Roan Plateau. In August 2008, BLM
conducted a lease sale including parcels on top of the plateau, all of
which were protested by multiple groups. The Assistant Secretary of
the Interior for Lands and Minerals dismissed the protests related to
the parcels on the plateau, and BLM issued these leases in September
2008. Environmental organizations filed a lawsuit challenging both the
resource management plan and the lease sale, arguing that these
actions violated the National Environmental Policy Act and the Federal
Land Policy Management Act.[Footnote 34] Four settlement conferences
have occurred, the most recent in May 2010, but the parties did not
reach agreement, and as of May 2010, the case was pending. See table 8
for a more detailed chronology of the events surrounding the Roan
Plateau lease sale.
Table 8: Chronology of Events Surrounding the Roan Plateau Lease Sale:
Date: November 1997;
Action: National Defense Authorization Act for Fiscal Year 1998 (Pub.
L. No. 105-85, § 3404(a)) transfers management authority over the Roan
Plateau Planning Area from the Department of Energy to BLM.
Date: November 2000;
Action: BLM begins its resource management plan amendment process for
the transferred lands.
Date: November 2004;
Action: BLM issues a draft environmental impact statement for the
resource management plan amendment.
Date: October 2006;
Action: BLM receives 42 protest submissions by the close of the public
protest period.
Date: June 2007;
Action: BLM amends the Glenwood Springs Field Office resource
management plan to provide for oil and gas development atop the Roan
Plateau. BLM dismisses all protests against the proposed plan.
Date: December 2007;
Action: Colorado's governor requests BLM to limit oil and gas
development atop the plateau.
Date: March 2008;
Action: BLM further amends the resource management plan to designate
additional protected acreage atop the plateau, although less than the
amount Colorado requested.
Date: June 2008;
Action: BLM announces it will offer for leasing in August all BLM
lands available for mineral development on the plateau.
Date: July 2008;
Action: Environmental groups challenge BLM's approval of the resource
management plan amendment and proposed lease sale in federal court,
alleging that these actions violated (1) the National Environmental
Policy Act by, among other things, failing to analyze a reasonable
range of alternatives to the plan's oil and gas development approach
and (2) Federal Land Management Policy Act by failing to ensure
compliance with the Clean Air Act's ozone requirements (Colorado
Environmental Coalition v. Salazar, D. Col., Case 1:08-cv-01460-MSK-
KLM). The state of Colorado files a protest to the lease sale,
asserting that the sale fails to protect valuable fish and wildlife
habitat, will not maximize economic return to the state, and could
result in the state's not receiving its share of mineral bonuses and
royalties. Several environmental groups file protests as well, making
arguments similar to those in the lawsuit.
Date: August 2008;
Action: BLM holds a lease sale for all of its lands atop the plateau
designated as available for oil and gas development.
Date: September 2008;
Action: Assistant Secretary of the Interior for Lands and Minerals
dismisses the protests against the lease sale. Because the Assistant
Secretary, rather than a BLM official, dismisses the appeals,
protesters cannot appeal the dismissals to the Interior Board of Land
Appeals.
Date: October 2008;
Action: BLM issues the leases for all parcels sold at the lease sale.
Date: March 2009;
Action: Settlement discussions begin in Colorado Environmental
Coalition v. Salazar.
Date: May 2010;
Action: Latest settlement discussions fail to produce agreement.
Source: GAO analysis.
[End of table]
Utah's December 2008 Lease Sale:
In December 2008, BLM's Utah state office held a lease sale offering
over 100 parcels in eastern Utah, many of which were protested. In
January 2009, in response to a lawsuit by several environmental
groups, a federal district court entered a temporary injunction
against the sale of 77 of the parcels after concluding that the groups
had established a likelihood of success on their claims that the lease
sale violated the National Environmental Policy Act, the Federal Land
Policy and Management Act, and the National Historic Preservation Act.
[Footnote 35]
In February 2009, the Secretary of the Interior concluded that the
issues raised by the court, along with other concerns that had been
raised about the lease sale, merited a special review. Citing
controversy over the degree of coordination between BLM and the
National Park Service regarding some of the parcels offered for sale,
as well as over the adequacy of BLM's environmental analyses
associated with the parcels, the Secretary issued a memorandum to
BLM's Utah state office, directing it to withdraw the 77 parcels
covered by the injunction from further consideration in this lease
sale.[Footnote 36]
In May 2009, several winning bidders and three Utah counties filed
suits in federal district court in Utah, seeking to compel the
government to issue the leases.[Footnote 37] The bidders and counties
argued, among other things, that the Secretary's action violated a
provision of the Mineral Leasing Act stating that "leases shall be
issued within 60 days following payment by the successful bidder of
the remainder of the bonus bid, if any, and the annual rental for the
first lease year."[Footnote 38] The government contends that nothing
in the 60-day provision prevents the Secretary from withdrawing a
parcel from consideration in a lease sale at any time before lease
issuance. As of May 2010, these cases were still pending.
[End of section]
Appendix IV: Comments from the Department of the Interior:
United States Department of the Interior:
Office Of The Secretary:
Washington, DC 20240:
July 14, 2010:
Mr. Frank Rusco:
Director, Natural Resources and Environment:
Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Rusco:
Thank you for the opportunity to review and comment on the Government
Accountability Office (GAO) draft report entitled, "BLM's Management
of Public Protests to Its Lease Sales Needs Improvement," (GA0-10-
670). The Department of the Interior (Department) appreciates the
recognition of its efforts toward collecting agency-wide protest data
and implementing leasing reform policies to improve public involvement
and transparency for lease sales. The GAO's draft report contains two
recommendations "to improve the efficiency and transparency of BLM's
process with regard to protests of its lease sale decisions and to
strengthen how BLM carries out its responsibilities under the Mineral
Leasing Act." The Department generally agrees with the findings and
concurs with the two recommendations.
The GAO first recommends that BLM "revisit the way it tracks protest
information and in doing so ensure that complete and consistent
information is collected and made publicly available." The Department
concurs with Recommendation 1. The Public Challenge Module reviewed in
the draft report has not been a useful tool for the Bureau of Land
Management (BLM) or the public. While policy and data entry standards
have been established to collect relevant information regarding
protests, appeals, and litigation, the system as established has
limited utility because the collection of public challenge data has
been incomplete and inconsistent. The BLM will revisit the agency's
use of this module and determine if the module can be redesigned, if a
commercial off the shelf (COTS) application would be more effective,
or if the existing LR2000 case recordation system can be modified to
effectively collect and make available public challenge data. Once
analyzed, the BLM will implement an approach to better track protest-
related information by the end of calendar year 2011.
The GAO next recommends that the BLM improve (a) "the transparency of
leasing information provided to the public" with respect to the basis
for its leasing decisions; and (b) "the timeliness of lease issuance,
without compromising the thoroughness of review". The Department
concurs with Recommendation 2. As acknowledged in the draft report,
the BLM is implementing new onshore leasing reform policies that will
provide earlier opportunities for public input in the lease sale
process. The Department believes that these reform policies will
provide the increased public participation and transparency suggested
under Recommendation 2. Prior to leasing reform, most lease sales were
based solely on the prior NEPA analysis conducted in support of the
Resource Management Plan (RMP). Prospective lease sale parcels
received a field office review prior to the sale to ensure conformance
with the RMP. With leasing reform, prospective lease parcels will now
undergo additional environmental review and a new opportunity for
public comment. Adjustments to the unsigned NEPA documents and lease
parcel list may be made based on the public comments received. Prior
to the lease sale the public will be afforded the opportunity to
protest individual parcels. The results of the protest resolution may
also be incorporated into the NEPA document and associated decision.
The BLM will post all associated NEPA documents along with all protest
response decisions for each sale on that state's web page. The posted
NEPA documents and protest response decisions will provide the public
with insight into the role these protests played on lands offered, and
if these protests influenced the BLM's decision to lease a parcel. The
Department believes implementation of this new process will address
the transparency and public access concerns under Recommendation 2.
Recommendation 2 also called for improving the timeliness of lease
issuance. To address this concern, the Notice of Competitive Oil and
Gas Lease Sale will now be posted 90 days before a sale (as compared
to using the required minimum period of 45 days), This extended
timeframe will continue to provide the public with an opportunity to
protest specific parcels in a lease sale, and will also provide a
better opportunity for the BLM to evaluate and respond to protests
prior to the sale, The Department believes that this will improve the
BLM's ability to adequately address a protest within the timeframes
required for lease issuance under the Mineral Leasing Act.
If you have any questions about this response please contact LaVanna
Stevenson-Harris, BLM Audit Liaison Officer, at 202-912-7077.
Sincerely,
Signed by:
Wilma A. Lewis:
Assistant Secretary:
Land and Minerals Management:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Frank Rusco, (202) 512-3841 or ruscof@gao.gov:
Acknowledgments:
In addition to the individual name above, Tim Minelli, Assistant
Director; Catherine Bombico; Adam Bonnifield; Mark A. Braza; Ellen W.
Chu; Bernice Dawson; Justin Fisher; Charlotte Gamble; Alyssa M.
Hundrup; Richard P. Johnson; Michael Kendix, Michael Krafve; Jena
Sinkfield; Douglas Sloane; and Jeff Tessin made key contributions to
this report.
[End of section]
Footnotes:
[1] The Bureau of Ocean Energy Management, Regulation, and Enforcement
(formerly the Minerals Management Service), also within Interior, is
responsible for managing offshore oil and gas resources under federal
jurisdiction. This report does not include offshore leases.
[2] The Interior Board of Land Appeals is part of Interior's Office of
Hearings and Appeals. It reviews and adjudicates appeals concerning
Interior's land management and mineral resource decisions, including
leasing decisions made by BLM state offices.
[3] GAO, Oil and Gas Development: Challenges to Agency Decisions and
Opportunities for BLM to Standardize Data Collection, [hyperlink,
http://www.gao.gov/products/GAO-05-124] (Washington, D.C.: Nov. 30,
2004).
[4] The New Mexico state office has jurisdiction over Kansas,
Oklahoma, and Texas, as well as New Mexico, and the Wyoming state
office has jurisdiction over Wyoming and Nebraska. The data presented
in this report for the New Mexico and Wyoming state offices include
data for all the states under their jurisdiction.
[5] The Mineral Leasing Act of 1920 (Pub. L. No. 66-146 (1920)), as
amended, and the Mineral Leasing Act for Acquired Lands (Pub. L. No.
80-382 (1947)), as amended, provide the legislative authority for
federal oil and gas leasing. BLM's oil and gas leasing regulations are
located at 43 C.F.R. pt. 3100. BLM cannot issue leases for National
Forest System lands over the objection of the U.S. Forest Service. 43
C.F.R. § 3101.7-1(c). Generally, for lands administered by other
agencies, BLM must either obtain the consent of (for acquired lands)
or consult with (for public-domain lands) the agency responsible. 43
C.F.R. § 3101.7-1(a),(b).
[6] BLM also documents compliance with NEPA using a "determination of
NEPA adequacy," where the agency determines that a proposed action is
adequately covered by an existing environmental assessment or
environmental impact statement.
[7] In Alaska, the maximum size of a competitively leased parcel is
5,760 acres.
[8] This bonus bid is a onetime amount equal to the amount of the
highest bid. There is a minimum bonus bid that BLM will accept of $2
per acre or fraction thereof, but there is no maximum bid.
[9] 30 U.S.C. § 226(b)(1)(A). On the day of the lease sale, the
minimum bonus bid of $2 per acre and the first year's rent are due to
BLM. Winning bidders then have an additional 10 business days to pay
the remainder of any additional bid amount that was made above the $2
minimum.
[10] SUWA v. Norton, 457 F.Supp.2d 1253, 1255-56 (D. Utah 2006).
[11] Bureau of Land Management, Oil and Gas Adjudication Handbook:
Competitive Leases, BLM Manual Handbook H-3120-1 (Washington, D.C.,
1993), 39. BLM regulations state that the authorized officer may
suspend the offering of a specific parcel while considering a protest
or appeal against its inclusion in a notice of competitive lease sale.
43 C.F.R. § 3120.1-3.
[12] In March 2010, BLM's Wyoming state office posted on its Web site
the protest letters it received from its June 2008 lease sale forward.
[13] During its land use planning under the Federal Land Policy and
Management Act of 1976, as amended (43 U.S.C. § 1701 et seq.), in
which BLM determines, among other things, which lands in a planning
area may be available for leasing, BLM provides opportunities for
public involvement and comment, as well as a specific protest period,
before finalizing its land use plans. It is not uncommon, however, for
many years to pass between the time the land use plan is issued and
when a specific parcel is reviewed for lease sale. Our review focuses
only on the information made publicly available during the lease sale
process.
[14] In contrast, for its land use planning, BLM has developed
specific agencywide policy for the process to be followed for
reviewing protests, including a goal of resolving protests to the land
use plan within 100 days of the close of the protest period and making
final reports on the resolution of protests available to the public
via the Internet.
[15] The stated mission of the Center for Native Ecosystems is to use
the best available science to participate in policy and administrative
processes, legal actions, and public outreach and education to protect
and restore native plants and animals in the Greater Southern Rockies.
[16] We express no view on whether the Mineral Leasing Act requires
BLM to issue leases before the 60-day period expires, even if protests
are pending for those leases, because this issue is in litigation in
federal district court in Utah. See appendix III for a description of
this litigation.
[17] Of the 1,316 competitively sold leases for parcels that were not
protested, we found that all leases were issued within the 60-day
window, except for leases on 23 parcels. For these leases, BLM
officials explained that lease issuance was delayed because they were
waiting for the lessee to submit required paperwork to join the parcel
to a unit already in place or they were resolving protests for other
parcels in the lease sale; for one lease, issuance was delayed because
of staffing issues.
[18] An additional five leases, which represent less than 0.25 percent
of the leases issued during this period for protested parcels, were
issued after 2 years.
[19] According to BLM officials, as of May 2010, the agency was
holding more than $84 million in industry payments for unissued leases
in Wyoming and more than $10 million in Utah.
[20] Energy companies take a number of factors into consideration when
making leasing and other oil and gas development decisions. These
factors may include the regulatory environment, the proximity of
parcels to existing productive wells, and geologic information likely
to indicate the potential productivity of a parcel. We were unable to
control for all these factors in our analysis, although we did control
for parcel size, factors that vary over time (such as oil and gas
prices), and state office location.
[21] Although a total of 53 lease sales were held during this period
in the four state offices, some of the lease sales had too few
observations to conduct the analyses. For example, for lease sales
where all parcels in the lease sale were protested--so no comparison
with unprotested parcels was possible--it was not possible to measure
any effect on bonus bid per acre.
[22] Because delays in issuing leases occur after a lease sale (that
is, after leases have been sold to a winning bidder), a delay itself
could not directly affect bids during that sale. Nevertheless, delays
are often associated with protests, as our analysis showed, and delays
may reflect features of protested parcels that bidders might already
know of that would cause them to offer lower bids, or bidders may be
reluctant to bid as much if potential delays are possible.
[23] The relationships illustrated by the figure reflect correlation
coefficients between percentage change in oil prices and percentage
change in wells drilled for oil, and between percentage change in gas
prices and percentage change in gas wells drilled, equal to 62 percent
and 77 percent, respectively.
[24] Colorado held 12 lease sales during this period, New Mexico held
12, Utah held 11, and Wyoming held 18, for a total of 53.
[25] To ensure representation of each state office (Colorado, New
Mexico, Utah, and Wyoming) in each fiscal year in our overall sample,
we randomly sampled the lease sales from each state office and each
fiscal year separately and compiled our overall sample from these
results. We excluded Utah's December 2008 lease sale from the list of
sales from which we drew our sample because this sale was the subject
of Interior-level reviews, and the status of this sale is the subject
of pending litigation (see appendix III).
[26] Because of small sample size, we cannot generalize the results
from our sample to the entire population of lease sales.
[27] We found that for some lease sales in our sample, additional
protest letters were filed after BLM's deadline. We reviewed these
letters, but because BLM declined to consider these letters, we did
not include them in our count of protests or our analyses of who
protested and why.
[28] We recognize that delays in issuing leases do not occur until
after the lease sale, so such delays cannot affect sale bids directly.
It is still possible, however, that long delays might reflect other
factors potentially affecting lease development that are not captured
in the data, and such factors might be known to bidders before the
lease sale and affect their behavior or bid pricing.
[29] Other factors--such as proximity to existing productive wells,
geologic information, and other technical information about the likely
productivity of the area--may affect bid prices, but we were unable to
control for them because data were not available.
[30] GAO expresses no views as to the merits of any of the legal
arguments in these pending cases.
[31] According to BLM officials, the agency removed 39 of these 40
parcels from the sale for reasons related to litigation not associated
with the protests.
[32] Amigos Bravos et al v. United States Bureau of Land Management et
al., Civ. No. 09-37 (D.N.M. filed Jan.14, 2009).
[33] Section 3 of Order 3226, as in effect at the time the complaint
was filed, states: "Each bureau and office of the Department [of the
Interior] will consider and analyze potential climate change impacts
when undertaking long-range planning exercises, when setting
priorities for scientific research and investigations, when developing
multi-year management plans, and/or when making major decisions
regarding the potential utilization of resources under the
Department's purview." This direction specifically applies to
"planning and management activities associated with oil, gas and
mineral development on public lands." Two days after the Amigos Bravos
complaint was filed, Interior amended Order 3226 to, among other
things, remove the specific reference to oil, gas, and mineral
development activities. Order 3226, amendment No. 1 (Jan. 16, 2009).
In September 2009, Interior repealed the amendment, thus restoring the
original language of the order.
[34] Colorado Environmental Coalition v. Salazar, Civ. No. 08-1460 (D.
Colo. filed July 11, 2008).
[35] Southern Utah Wilderness Alliance v. Allred, 2009 WL 765882, Civ.
No. 08-2187 (D.D.C. Jan. 17, 2009).
[36] The Secretary directed BLM not to accept the high bids on the 77
contested leases and withdrew the leases from further consideration.
By this time, however, BLM had already accepted the winning bidders'
initial payments (including bonus bids and first-year rents) of each
lease sold. The agency subsequently refunded those payments. In the
Allred case, plaintiffs challenged the adequacy of the lease sale, as
well as certain resource management plans in Utah that identified
specific areas as available for oil and gas leasing. Because the
leases were withdrawn, plaintiffs did not pursue the lease sale
portion of the case, but as of March 2010, the resource management
plan portion of the case was pending. A list of the 77 leases is
available at [hyperlink,
http://www.blm.gov/wo/st/en/info/newsroom/2009/february/table_of_utah_oi
l.html] (visited April 27, 2009).
[37] Impact v. Salazar, Civ. No. 09-435 (D. Utah filed May 13, 2009);
Twilight Resources v. Salazar, Civ. No. 09-442 (D. Utah filed May 13,
2009); Uintah County v. Salazar, Civ. No. 09-440 (D. Utah filed May
13, 2009).
[38] 30 U.S.C. § 226(b)(1)(A).
[End of section]
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