Congress is requiring the Interior Department to offer all oil and gas leases on federal lands through competitive bidding, but it has rejected pleas from environmentalists for tougher lease planning requirements.
The provision is contained in the $598 billion omnibus spending bill signed into law last week.
Although coal leases and offshore oil and gas leases were required to be put out to bid under the old law, oil and gas leases on federal lands in the West had been auctioned only if the land included geologic structures of known petroleum potential.
Otherwise, tracts were leased to the first applicant or, if there was more than one applicant, a lottery was held.
Up to 15,000 leases are awarded every year. Only about 10 percent ever produce, but the government gets about $1 billion a year from them in royalties and other lease revenue from 72 million acres.
Some other energy-related provisions of the law:
An appropriation of $575 million for "clean coal" demonstration projects over two years, of which only $50 million is available in the current fiscal year. The Reagan administration had sought $850 million over two years.
The "clean coal" program is the administration's promise to Canada to do something about acid rain. Projects are supposed to reduce the flow of such pollution across the border.
An appropriation of $439 million to fill the Strategic Petroleum Reserve at 50,000 barrels a day instead of the $843 million and 100,000 barrels a day sought by the administration. The law waives a requirement for shutting in of the government's Elk Hills oil field in California under such circumstances
This represented a complete switch from the positions taken by the administration and Congress in previous years, when the administration sought to hold down or halt purchases for the reserve and Congress always insisted on more.
Critics have said for years that the Interior Department's Bureau of Land Management often lacked the ability to classify federal lands correctly as lying over "known geologic structures," which would make it subject to competitive bidding.
Some lottery winners made what these critics said were unjustified windfall profits, paying the government $1 per acre for leases they turned around and sold for several times that, while at the same time "boiler room" telephone operators preyed on the gullible by entering the lottery for them at high fees, the critics said.
Over the years, independent drillers fought attempts to change the system, arguing that it gave cash-strapped small operations a chance to find oil. The Interior Department also fought change, switching to join Sen. Dale Bumpers (D-Ark.) in drafting a bill only in 1986.
This year, environmentalists persuaded the House to add land-use planning provisions requiring the bureau to decide in advance what tracts were suitable for drilling and what tracts were not.
Independent drillers said that was an attempt to throw them off federal lands altogether, something environmentalists denied. Interior Secretary Donald Hodel said at one point he would recommend a veto if the planning requirements remained.
In conference committee negotiations to reconcile the two different bills passed by the House and the Senate, the Senate persuaded House negotiators to drop the planning provisions in exchange for studies by the General Accounting Office and the National Academy of Sciences.
"It's a significant disappointment for us," said Brooks Yeager, lobbyist for the Sierra Club.
But Yeager said he and his allies were pleased that requirements were added that would deny new leases to anyone not reclaiming the land after drilling; give the Forest Service the right to veto leasing decisions of the Bureau of Land Management, which handles mineral leasing in national forests, and permanently ban leasing in areas being studied for classification as off-limits wilderness. Such bans had been enacted year-by-year recently.
Other provisions raise the minimum rental, which is paid when there are no royalties from production, from $1 an acre to $2, and give the secretary discretion to increase the minimum after two years.
If a tract gets no bid in an auction, it may be leased on application at $1.50 an acre for two years afterward before coming under the auction requirement again.
The new requirements "will have a negative impact on future exploration," said Ron Harris, spokesman for the Independent Petroleum Association of America. "We're grateful that the legislation turned out to be a much sounder package than we feared."
James E. Cason, deputy assistant secretary of the Interior for land and minerals management, said, "We're pleased it's behind us. We got some things we wanted and didn't get some other things we wanted."
Coincidentally, Hodel last week waived the requirement that the acreage rental on non-producing leases rise from $1 per acre to $3 per acre in the last five years of a 10-year lease. A similar waiver was promulgated in October 1986.