Split-estate ranchers, others oppose rule favoring O&G
Laura Lundquist
(Missoula Current) Landowners with a split estate constantly worry that some company will propose a drilling or mining project on their property. Now, some Western landowners are even more concerned with a Trump administration proposal that would limit their knowledge of and input on such projects.
On Monday, the Western Organization of Resource Councils submitted a letter to Interior Sec. Doug Burgum and Bureau of Land Management Director Stevan Pearce asking them not to rewrite the 2024 Onshore Oil and Gas Leasing Rule. The letter is signed by 16 split-estate landowners in Montana, North Dakota, South Dakota, Wyoming, Colorado, and New Mexico.
On June 22, the Department of the Interior announced it was revising two Bureau of Land Management rules: the oil and gas leasing rule and the waste prevention rule. It gave the public until Monday to submit comments on the changes.
With the 2024 oil and gas leasing rule, the Biden administration had increased the reclamation bond that extraction companies must pay to $500,000 from $25,000. Now the Trump administration is reversing that. The Department of the Interior is also eliminating the requirement that split-estate landowners be notified of mineral rights leased under their property, and it’s reducing the 90-day period for public participation to 10 days. It’s also going to allow companies to lease mineral rights at noncompetitive rates if the lease doesn’t sell at auction.
Those changes are a gut-punch to split-estate landowners like Montana rancher Terry Punt or Wyoming rancher Bob LeResche, who are worried that more oil and gas companies will be encouraged to lease the mineral rights under their ranches. They were among four ranchers who spoke during a press conference Monday.
When someone owns a split estate, it means they own the land but someone else owns the rights to the minerals below the surface. The BLM owns 700 million sub-surface acres of mineral estate that it can lease, not only beneath federal land but also private land. The surface landowners are at a disadvantage because, under federal and state law, the entity that owns or leases the mineral rights is allowed to drill or mine on the landowner’s property. The two parties are supposed to work things out before drilling starts, but that doesn’t always happen.
Punt was very worried in the late 1990s when a company leased the mineral rights beneath his century-old ranch without his knowledge for coalbed methane development. His cow-calf operation depends on having sufficient grass and water, most of which comes from the region’s shallow aquifers. But as a member of the Powder River Basin Controlled Groundwater Technical Advisory Committee, he knew the aquifers had been depleted and the surface water polluted where coalbed methane had been extracted. Fortunately, the gas market tanked before the companies started drilling on his land. But he knows he might not be so lucky with the next lessee.
“The compressor stations and infrastructure remain nearly 20 years after the last company pulled out and declared bankruptcy. This is the direct result of improper planning and low bonding rates,” Punt said. “The weakened protections threaten our continued existence on our land. With rising demand for power generation from hyperscale data centers, the need for these split estate minerals will only increase in the future. Let’s adopt a rule that protects the landowners and the public, not the bad actors in the oil and gas industry.”
LeResche said the Trump administration’s claim that higher bonds were a burden to “mom-and-pop” drilling companies doesn’t fly,because so many other kinds of businesses, such as building contractors, have bonding to cover their work. Similarly, everyone carries auto insurance to cover accidents.
“The bonding program is the proof of the financial ability to fix what you’re about to break. And it’s not an unusual thing, not a burden reserved for the oil and gas industry,” LeResche said. “Who would you rather have drilling an oil well and have the responsibility to clean it up? The last person you’d want is an undercapitalized mom-and-pop small operator.”
Down in New Mexico, split-estate owner Don Schreiber summarizes the proposed rule changes as “no notice, no voice and no future.” Schreiber and his wife ran a cattle operation in the San Juan Basin for almost 20 years before they quit due to the 22 gas wells drilled on their ranch. They’re still trying to keep extraction from further degrading their property. Schreiber said it took him almost five years to fight the BLM to get a contaminated well site cleaned up, so he shouldn’t be limited to just 10 days to try to negotiate more favorable terms in a lease.
“They just want landowners out of the way,” Schreiber said. “Going from 90 days to 10 days is just shutting us out. People have to organize. Frontline families might get a notice and have to drive three to four hours to Santa Fe from here. They have no budget, no money. But I can tell you who’s at every meeting: Every $200, $250-an-hour lawyer lobbyist for the oil company is there. Burgum, Pearce, BLM taking our voice away from us - that’s a crime.”
In their letter, the 16 landowners, half of whom are in Montana, asked Burgum and Pearce to protect their futures by leaving the leasing rule as it is so they will continue to be notified if the mineral rights under their land are leased and have more than 10 days to comment on any proposed lease.
The landowners aren’t alone in their opposition to the new rules. The Center for Western Priorities conducted an analysis of almost 16,000 comments submitted to the BLM and found more than 99% opposed the changes, especially the reduction in bonding amounts.
“For decades, taxpayers picked up the tab when drillers walked away from wells they couldn't afford to clean up because bonding requirements were set too low to cover costs. Rolling bond rates back doesn't modernize the oil and gas program—it just recreates the same mess that Western communities have spent decades trying to clean up,” said Rachael Hamby, Center for Western Priorities policy director.
Such a split-estate situation isn't limited to oil and gas leases. In 2024, a split-estate threatened to block the Great Montana Outdoors Conservation Easement in the Cabinet Mountains. Green Diamond Resource Company owns much of the former Weyerhaeuser timberland in northwest Montana and wanted to grant the state of Montana a conservation easement on 32,900 acres. WRH Nevada, who owns the mineral rights under Green Diamond’s land, opposed the conservation easement, worried it would interfere with mineral extraction. However, easements don’t block mining or drilling so the easement was finalized.
Contact reporter Laura Lundquist at lundquist@missoulacurrent.com.