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Incoming BLM oil bonding rule could force out small producers, business owners say

Oil Rig behind Buffalo Ridge Elementary

GILLETTE, Wyo. — Discussion at the Campbell County Commissioners meeting on Tuesday was largely dominated by one subject: oil. A new rule from the BLM, the Fluid Mineral Leasing and Leasing Processes Rule, could have broad impacts for producers across the county when it goes into effect in June.

The BLM says that the rule is a long-overdue update to the regulatory framework for bonding requirements for the industry. Local producers, however, argue that the rule would skyrocket their costs and force many small operations out of business.

Clark Kissack spoke before the board on Tuesday alongside his wife Vicki, representing a group of producers concerned about the issue. The couple operates six oil wells, with two of those wells being federal wells bonded with a $25,000 statewide blanket bond, he said.

Under the new rule, their bond, the current statewide bond minimum, would increase from $25,000 to $500,000. According to a fact sheet published last month, the bonding changes would have a phase-in period for existing operations, but that may not make a difference in the end.

At the request of Chairman Shelstad, Kissack did a breakdown of costs for operating one federal well for the board. With incurred costs like maintenance as well as taxes, they come out several thousand dollars in the negative for the year.

Kissack said that he and his wife have only been operators for a year and a half and were alarmed to find out about the proposed rule after doing extensive homework prior to entering the industry. The couple financed the company from other investments they held, he said, likening the decision to a hand of poker.

“You look at that hand and you think, ‘Is it worth it? Should I jeopardize my future, my old age, to own these wells?’ At the time, we thought it was a good idea.” he said. “I’m telling you, if this happens, we’re folding. We’re out.”

When the BLM first announced the rule, five public meetings and a 60-day period of public comment were created to allow input from stakeholders, according to the agency. The period ended on September 22, 2023.

Former Campbell County Commissioner chairman Colleen Faber did submit a detailed letter in that period, but there is no avenue the board can currently take beyond that action, according to Commissioner Shelstad. Any legal action or lawsuit to halt the rule could not be filed until after the law comes into effect on June 22.

Faber’s letter argues that by enacting the regulations via rule making, an administrative process, the BLM sidesteps requirements through NEPA, — the National Environmental Policy Act — to involve local governments and citizens in decisions related to environmental laws.

Phil Jordan and Lee Wandler, relatives of Commissioner Bob Jordan, also spoke at the meeting. Wandler, Jordan’s nephew, said that the bond change was too much, too fast compared to current rates.

“I can see where they’re coming from, and their $25,000 bond is probably a little small, but they’ve left it since 1960. It’d be better if they did it in smaller increments, let’s just say go to $100,000,” he said. “I think a lot of people were shocked by the $500,000.”

Multiple comments were made throughout the meeting alluding to the Biden Administration and how the results of the upcoming November election could change this rule and similar action on the region’s coal, but Vicki Kissack encouraged those in the audience or watching via livestream to organize for the issue regardless.

“Trump is not our savior,” she said. “In a very nice, kind way, you better wake up. We need you grassroots people.”

Kissack also announced they were holding a public meeting with local legislators and public officials to discuss the issue with community members at 2 p.m. Sunday, June 2 at The Soup Kitchen building in downtown Gillette, located at 501 W. 1st St.

Correction: An earlier version of this story misstated Lee Wandler’s surname.