Funding an agency out of gross receipts gives managers an incentive to sell some resources that lose money. Funding an agency solely out of net receipts gives managers an incentive to control costs and to sell resources only when they make money. BLM managers have the best of intentions for the public's land. But when Congress almost automatically gives them a billion dollars each year, considerations other than efficiency become paramount. In many cases, this means that the BLM sells resources simply because it has the funds to do so.
Any institutional design creates incentives for managers.
The incentives they have today are to sell resources at a loss. Those incentives will remain so long as the BLM's budget comes from Congress and despite any amount of monitoring by environmental groups. The only lasting solution is to untie the BLM from Congressional appropriators. Such resources will be protected only if BLM managers have incentives to protect them. One way of doing this is to allow managers to charge fees for competing resources such as recreation.