On April 30^th, the Bureau of Land Management (BLM), under the Department of the Interior (DOI), held an auction for oil and gas leases on federal land in Montana and North Dakota. The sale in Montana offered 17 parcels, totaling 3,624 acres, of which 2,278 acres received a bid and were sold. This compares to the 13 parcels, accounting for 2,358 acres, offered in North Dakota, of which every acre received a bid and was sold.

Between the two states, a total of 5,981 acres were offered at auction and 4,635 acres were leased for oil and gas development. This was the fourth onshore lease sale held by BLM in 2024, with sales held in March in Wyoming, North Dakota, and Mississippi.

The results of the lease sale varied greatly between the two states. In Montana, 93% of the total acres leased were sold at the statutory minimum bid of $10/acre. The remaining leases were sold at $11/acre and $12/acre, respectively. Low minimum bids are common for federal land leased in Montana; between FY2013 and FY2022, 36% of acres leased in the state were sold for less than $10/acre. This average bid was lower than Montana’s 2016-2020 statewide average of $24.78/acre.

In contrast, the average bid in North Dakota was $271.69/acre. One parcel received the statutory minimum bid and one parcel, with just 17.83 acres, received a high bid of $32,001/acre. The average bid per acre was higher than the 2016-2020 statewide average of $125.41/acre but lower than the previous sale’s average of $1,032.01/acre and last year’s average of $1,446.44/acre.

This was the first lease sale of the year held in Montana and the second of the year held in North Dakota.

Taxpayers in this most recent sale and last year’s sales benefited from the critical leasing reforms passed by Congress in 2022, including:

• A federal onshore royalty rate of 16.67% (raised from 12.5%)
• Rental rates of $3/acre for the first 2 years, $5/acre for years 3-8, and no less than $15/acre for years 9-10 (raised from $1.50/acre for years 1-5 and $2/acre for years 5-9)
• Minimum bid of $10/acre (raised from $2/acre)
• End of noncompetitive leasing

For too long, outdated and below-market leasing terms limited taxpayer revenue from oil and gas development on federal lands. In North Dakota, taxpayers lost $1.3 billion in potential revenue over the last decade. Other policies, like noncompetitive leasing and low minimum bids, allowed entities to acquire leases without any intention of development – locking land from other uses and providing little return to taxpayers. For example, in Montana, only 4 leases issued noncompetitively since 2000 ever entered production.

On April 12^th, 2024, the BLM finalized a new leasing rule which codified many of the fiscal reforms made by Congress and implemented other needed changes, such as improving oil and gas bonding requirements. Additionally, the rule will help direct leasing to appropriate locations and increase processing fees, allowing the BLM to cover the cost of administering the federal oil and gas program. The final rule will increase returns to taxpayers, disincentivize speculative leasing, and hold the oil and gas industry more accountable.