Onshore Oil and Gas: BLM's Management of Public Protests to Its Lease Sales Needs Improvement
Published: 2010-07-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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.
section_title: What GAO Recommends
paragraphs: 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.

section_title: Letter
paragraphs: 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. 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. 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. 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 enteredinto the new system. In 2007, BLM added a module to its lease record- keeping system to capture, among other things, information related t 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. 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.
subsections: section_title: Background
paragraphs: 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. 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. 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.
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. 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,” thus  completing the lease transaction. BLM policy also directs agency staff to  resolve any protests related to a parcel before issuing the lease on that  parcel. 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 fig. 1).
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.
section_title: BLM Maintains and Makes Publicly Available Incomplete and Inconsistent Information Related to Protests to Its Lease Sales
paragraphs: 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.
subsections: section_title: BLM Collects Agencywide Protest Data, but These Data Are of Poor Quality and Limited Utility
paragraphs: 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.
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.)
section_title: Protest-Related Information Varies across BLM State Offices, and Protester Groups Have Raised Concerns about This Information
paragraphs: 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. 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  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 publ ic  and do not constitute official notice of a proposed BLM action, accordingto the guidance. Nonetheless, protester groups we spoke with stated that  e to  they wanted information in a time frame that was more conduciv 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.
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. its release. 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.
section_title: Most Parcels Identified for Lease Were Protested by a Diverse Group of Entities for a Variety of Reasons
paragraphs: 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.
subsections: section_title: Most Parcels Identified for Lease Sale Were Protested
paragraphs: 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).
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 app. 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).
section_title: Parcels Were Protested for a Variety of Reasons by Nongovernmental Organizations, Governments, Businesses, and Individuals
paragraphs: 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 app. 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. 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 app. 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.
section_title: Effects of Protests on BLM’s Leasing Decisions and Overall Oil and Gas Development Activities Were Difficult to Determine
paragraphs: 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.
subsections: section_title: The Extent to Which Protests Affected BLM’s Lease Sale Decisions Could Not Be Measured
paragraphs: 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 app. III).
section_title: Leases on Protested Parcels Were Often Delayed
paragraphs: 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. 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. 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.
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. 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.
section_title: 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
paragraphs: 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. 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. 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. 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.
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 fig. 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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendations for Executive Action
paragraphs: 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.
section_title: Agency Comments
paragraphs: 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 app. 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  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.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: 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. 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. The 12 lease sales comprised  1,244 parcels covering roughly 1.4 million acres of land. 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 app. II). 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. 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.
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.
section_title: Appendix II: Protest Information from a Sample of Lease Sales in Four Selected State Offices, Fiscal Years 2007-2009
paragraphs: 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.
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.
section_title: Appendix III: Description of Litigation on Selected Lease Sales
paragraphs: 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.
subsections: section_title: New Mexico’s April and July 2008 Lease Sales
paragraphs: 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. 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. 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.  As of May 2010, this case was pending.
section_title: Colorado’s August 2008 Lease Sale
paragraphs: 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.  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.
section_title: Utah’s December 2008 Lease Sale
paragraphs: 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.
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.
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. 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.” 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.
section_title: Appendix IV: Comments from the Department of the Interior
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Acknowledgments
paragraphs: 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.