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Tuesday, April 2, 2013

Energy Projects on Federal Lands: Leasing and Authorization

Adam Vann
Legislative Attorney

Recent concerns over energy supply and pricing have led some to look increasingly to federal lands as a potential energy source. This report explains the legal framework for energy leasing and permitting for onshore lands subject to the control of the federal government.

The report first reviews the laws and regulations affecting leasing of federal lands for exploration and production of oil, natural gas, and coal, as well as the permits that lessees must obtain in order to explore for and produce these resources. This leasing process has evolved over the last century under the framework established by the Mineral Leasing Act of 1920 (MLA). Oil, natural gas, and coal leasing and production on federal land pursuant to this act are currently overseen by the Bureau of Land Management (BLM), an agency within the U.S. Department of the Interior (DOI). Federal lands identified in the area’s Resource Management Plan (RMP) as amenable to oil, coal, or natural gas exploration and production may be leased by BLM, so long as such activities in that area are not prohibited by statute or regulation. Such lands are usually leased to the highest bidder as determined by competitive auction. Leaseholders are generally required to pay both rental fees and royalties (a percentage of the value of produced oil, natural gas, or coal) to the U.S. government.

The report also addresses existing laws and regulations that govern the use of federal lands for renewable energy projects, including geothermal, wind, and solar energy. BLM oversees permitting for these projects. Geothermal projects are leased in accordance with the requirements of the Geothermal Steam Act of 1970. That act functions similarly to the MLA; lands that are amenable to geothermal projects are leased to the highest qualified bidder. In contrast, wind and solar projects on federal lands are not authorized by leases, but rather by obtaining a right-of-way from BLM. These rights-of-way are issued pursuant to the requirements of Title V of the Federal Land Policy and Management Act (FLPMA), and holders of these rights-of-way must make monthly rental payments to the U.S. government.

This framework provides BLM and the federal government with flexibility to use federal lands to help satisfy the nation’s energy needs, while generating revenue for the federal government and protecting environmentally sensitive areas.

Date of Report: March 28, 2013
Number of Pages: 23
Order Number: R40806
Price: $29.95

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