Evaluating Competitive Oil and Gas Lease Sale Parcels for Future Lease Sales

IM 2023-007
Instruction Memorandum
In Reply Refer To:

3120 (HQ310) P 

Expires:

09/30/2026

To:

All State and Field Officials

From:

Assistant Director, Energy, Minerals and Realty Management

Subject:

Evaluating Competitive Oil and Gas Lease Sale Parcels for Future Lease Sales

Program Area:

Federal Oil and Gas Leasing Program

Purpose:

The purpose of this Instruction Memorandum (IM) and accompanying attachment is to provide guidance to the Bureau of Land Management (BLM) State and Field Offices regarding the evaluation of parcels from Expressions of Interest (EOIs) for a competitive oil and gas lease sale that are submitted and determined to be available for consideration pursuant to IM 2023-006 Implementation of Section 50265 in the Inflation Reduction Act for Expressions of Interest for Oil and Gas Lease Sales. The BLM manages the Federal onshore oil and gas leasing program pursuant to many statutes, including the Mineral Leasing Act of 1920, as amended (MLA), the Federal Land Policy and Management Act of 1976, and the Inflation Reduction Act of 2022 (IRA) (P.L. 117-169). The MLA, as amended by the Federal Onshore Oil and Gas Leasing Reform Act of 1987, states that competitive “[l]ease sales shall be held for each State where eligible lands are available at least quarterly” (30 U.S.C. § 226).

Specifically, this IM provides guidance to BLM offices in selecting parcels to be offered in oil and gas lease sales and it also supplements IM 2023-010, Oil and Gas Leasing – Land Use Planning and Lease Parcel Reviews. This IM informs the agency’s organization, procedures, and practice, and is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or equity by a party against the United States, its departments, agencies, instrumentalities or entities, its officers or employees, or any other person. This IM does not cover all the impacts of the IRA, which passed into law on August 16, 2022. Separate guidance on the Inflation Reduction Act is also being issued.

Administrative or Mission Related:

Mission Related. 

Policy/Action:

Lease Parcel Preference Criteria

The BLM office(s) will evaluate parcels from submitted EOIs for lease according to the following criteria:   

  1. Proximity to existing oil and gas development, giving preference to lands upon which a prudent operator would seek to expand existing operations; 
  2. The presence of important fish and wildlife habitats or connectivity areas, giving preference to lands that would not impair the proper functioning of such habitats or corridors;
  3. The presence of historic properties, sacred sites, or other high value cultural resources, giving preference to lands that do not contribute to the cultural significance of such resources; 
  4. The presence of recreation and other important uses or resources, giving preference to lands that do not contribute to the value of such uses or resources; and
  5. Potential for development, giving preference to lands with high potential for development.

After the conclusion of the scoping period but before issuing the draft National Environmental Policy Act (NEPA) document for the lease sale, the BLM office(s) will apply these criteria and assign a preference value of “high” or “low” to EOI parcels. The BLM will generally conduct environmental analysis for lease parcels with a high preference value first for potential inclusion in a lease sale and will defer lease parcels with a low preference value. Throughout the review period for the lease sale, BLM may also consider additional measures and deferrals to address the potential impacts of leasing, as well as new information that is presented during the NEPA process for the lease sale.

If there are no high preference parcels available for the sale, the office will select one or more low preference parcels that present the least conflicts based on the criteria listed above in this IM, including parcels deferred from previous sales, to analyze for potential inclusion in the sale. During its evaluation of previously deferred parcels, BLM will take into account any relevant comments previously provided by the public, including in regard to BLM’s application of the lease parcel preference criteria.

In so evaluating EOIs, BLM offices should be mindful that, pursuant to Section 50265(b)(1) of the IRA, the BLM may not issue wind or solar rights of way unless, among other conditions, it has offered the lesser of two million acres or “50 percent of the acreage for which expressions of interest have been submitted for lease sales during [the year prior to issuance of the right-of-way].”

Offices will use the National Fluids Lease Sale System (NFLSS) to indicate the low-preference parcels by using the deferral process and to track the parcels for which incomplete environmental analysis precludes their offering at the next sale.  Attachment 1, Guidelines for Evaluating Lease Parcels in Expressions of Interest and Recording Preferential Status in NFLSS, contains guidance for evaluating the EOI lease parcels, recording the preference in NFLSS, and disclosing the actions taken to evaluate EOI parcels in the NEPA document.  

Status of Pending EOIs

In the past, the BLM has offered certain lands for leasing that the EOI submitter was no longer interested in, and then received no bids on those lands. The longer it takes to offer a parcel on a lease sale, the more likely it is that the interest in the parcel may diminish. Therefore, the BLM will close all EOIs that have remained pending for three or more years. The State Office will notify each EOI submitter of a planned closure when the BLM has the contact information for the EOI submitter. The notice will provide 30-days for the EOI submitter to express a continuing interest in the EOI(s), which would result in the EOI remaining active. When the BLM closes EOIs in the NFLSS due to the age of the request, the BLM should update the EOI to a status of Closed or Rejected.  

Legal Effect

This IM is not a rule, regulation, or other legally binding instrument, and the recommendations it contains may not apply to a particular situation based upon the individual facts and circumstances. Nothing in this IM is intended to be a regulation, modify, or amend any Federal laws or regulations, or create any rights or cause of action or trust obligation that any person or party may enforce through litigation or otherwise against the United States Government or any of its employees. This IM is solely intended to aid the BLM in the management of the Federal Oil and Gas Leasing Program. This IM is not legally enforceable. To the extent that there is any inconsistency between the provisions of this IM and any Federal regulations or laws, the regulations or laws will control.

Budget Impact:

There will be a minimal increase in demand on staff time with the implementation of this policy due to additional resource analysis and NFLSS data entry. The magnitude of the increase will depend on the number of EOIs received for each lease sale. All BLM offices have the capacity to accomplish the required EOI evaluation goals of this policy.   

Background:

The BLM developed this policy in response to direction in the Department of the Interior (DOI) Report on the Federal Oil and Gas Leasing Program (November 26, 2021). The report states: 

The BLM should carefully consider what lands make the most sense to lease in terms of expected yields of oil and gas, prospects of earning a fair return for U.S. taxpayers, and conflicts with other uses, such as outdoor recreation and wildlife habitat. 

The BLM offices will use the evaluation policy provided in this IM to focus its leasing efforts on lands critical to oil and gas development and reducing conflicts with other resources in the public land.  

Manual/Handbook Sections Affected:

This IM supplements existing policy; provides additional review criteria to inform the decision-making process for oil and gas leasing; and supersedes any conflicting guidance or directive found in the BLM IM 2023-010 Oil and Gas Leasing – Land Use Planning and Lease Parcel Reviews, and Handbook H-3120-1, Competitive Leases, Rel. 3-338. The BLM will incorporate the policy contained in this IM in its next revision of BLM H-3120-1. 

Contact:

If you have questions or concerns regarding this IM, please contact Nicholas Douglas, Assistant Director, Energy, Minerals and Realty Management, at ndouglas@blm.gov or 970-256-4944. For program questions, your staff may contact Lonny Bagley, Acting Chief, Division of Fluid Minerals, (HQ-310) at lbagley@blm.gov or 307-261-7777; or Peter Cowan, Senior Mineral Leasing Specialist (HQ-310) at picowan@blm.gov or 720-838-1641. 

Coordination:

This policy was coordinated with DOI Office of the Solicitor, and the BLM Headquarters Energy, Minerals, and Realty Management Directorate (HQ-300), Division of Fluid Minerals (HQ-310), and State Offices. 

Signed By

Nicholas Douglas
Assistant Director
Energy, Minerals and Realty Management

Authenticated By

Ambyr Fowler
Division of Regulatory Affairs and Directives (HQ-630)