If you haven’t been following the Biden Administration federal lands oil and gas leasing situation, there was a promised oil and gas review due in “early summer” that hasn’t come out yet. Meanwhile a federal judge told the Administration that legally couldn’t hold up leasing indefinitely. Today there was a balanced and comprehensive story in E&E News that covers it. Best of all, there’s no paywall.
The Interior Department raised anxieties on all sides last night when it announced plans to resume oil and gas leasing on public lands while it appeals a court ruling that banned the Biden administration’s earlier leasing moratorium.
But Biden officials offered few details on where, or when, new leasing might occur — typically muted messaging for the administration on the fraught battle over the future of the federal oil program. That reticence has left lingering questions from oil allies, conservation groups and politicians interested in Biden’s management of the country’s stores of crude oil and natural gas.
The White House froze new oil and gas lease sales shortly after President Biden took office. That order was part of a larger plan to do a comprehensive review of the federal oil program in light of its contribution to climate change, potentially raising royalty rates to offset climate costs.
Biden officials promised an interim report on that review by early summer but failed to follow through. The delay has stoked further tension with Republican lawmakers opposed to the leasing freeze.
Interior’s announcement that it plans to fight the judge’s ban on the moratorium irked the Congressional Western Caucus, whose members accused Biden of “failing the nation” for the leasing freeze after recently asking OPEC to increase oil production to depress gasoline prices.
I do think the Congressional Western Caucus raises an interesting point. So far there have been two national “no”s to oil and gas, Keystone Pipeline, that impacted Canada (an ally), and oil and gas leasing on federal lands. And there have been two international “yeses”; the Nordstream 2 Pipeline from Russia to Germany and to OPEC to increase production. It seems like the Keystone and federal land ban were mostly symbolic in comparison, and response to pressure to do so from some ENGO’s. The environmental upside of higher gas prices is that they would decrease demand, but the social justice downside is that people with less money would suffer.
Governor Newsome made this statement last year:
“As it relates to managing decline, we’ve got to address the issue of demand. California since 1985, has declined its (oil) production by 60 percent, but only seen a modest decrease in demand, 4.4 percent,” Newsom said. “And that means were making up for a lack of domestic production from Saudi Arabia, Ecuador, and Colombia, and that’s hardly an environmental solution when you look globally.”
And yet in April decided to phase out oil and gas extraction in California “as part of nation-leading effort to achieve carbon neutrality.” All very puzzling. Anyway, back to federal leasing. Also puzzling to me was this response:
For many environmentalists, Interior’s announcement that it would continue leasing represented a capitulation on the one firm action Biden had taken to curb federal drilling.
“With the climate crisis smacking us in the face at every turn, it’s hard to imagine a worse idea than resuming oil and gas drilling on federal lands,” said Robert Weissman, president of Public Citizen, in a statement last night.
But the Biden Administration is under a court order to.. follow the law. I’m sure there are very smart lawyers advising appointees about exactly how far they can go (or how long they can wait) before being in contempt. And the Administration appealed the decision. So not sure exactly what Weissman expects them to do.
A spokesperson for Interior declined to provide a time frame for new lease sales.
Jeremy Nichols, climate and energy program director for WildEarth Guardians, said the agency seems to be saying that it will lean on its discretionary authority under federal law around leasing decisions to address these issues before leasing resumes.
“Leasing will only happen once Interior chooses to exercise its discretion to lease and accounts for the myriad shortcomings of the onshore and offshore oil and gas leasing programs,” he said in an email.
That stance promises to rile the opposition, which has been steadfast in insisting that the White House must lease under federal law, as well as under the judicial mandate to lift the moratorium.
“The Interior statement was revealing,” said Kathleen Sgamma, president of the Western Energy Alliance, the first group to sue over the Biden leasing moratorium in January. “Apparently, Interior leadership thinks they are above the law.”
Among the things I don’t understand is why it is taking so long to come up with the “early summer” report..the Biden Admin has many smart, knowledgeable, and experienced people who have been thinking about this for years. They can call on anyone in the country. They have all the lawyers you could want to check on the legality. As Secretary Haaland said in May, “Everyone’s been working really hard on it. We expect to have it released in early summer.”
They don’t have to do an EIS or get public comment. So what’s holding it up?
And Mark Squllace’s take:
Mark Squillace, a natural resource law expert at the University of Colorado Law School, said the administration is going to increase royalty rates and fees, alongside other drilling restrictions. That will increase revenues in the near term while depressing some public oil development in the long term.
But the administration has bigger fish to fry when it comes to climate action, he said, noting that the industry is overwhelmingly located on private land and there isn’t much to be done about the large amounts of public land held by industry already.
“I don’t think that oil and gas development on public lands will be the sword that the administration is prepared to die on,” he said.
But back to the domestic oil and gas workers. The fine folks of OPEC countries (of questionable human rights, and environmental regulations) are preferable to our own workers and regulations for producing the oil and gas products we use everyday? Not a socially just, nor environmentally beneficial, solution.
As to why the Interior oil and gas report is delayed, you are correct it should be easy to issue. Secretary Salazar and Jewell launched a similar effort that got well down the road. That administration examined raising royalty rates, fees, rentals and bond amounts. Jewell and BLM Director Kornze testified and spoke out on these issues. Salazar wanted to raise the federal onshore royalty rate to the same rate as off-shore oil and gas, but Jewel was concerned that the rate would entirely disincentivize federal onshore leasing with negative consequences for the Feds and states. She had an additional analysis conducted on what was the best rate. Time ran out on doing the necessary rule makings to put the policies into law, but the policy work was done. So why the delay— the administration’s controversial BLM nominee is hanging in the balance, the word is that this “early summer” report would not help her confirmation.
Here’s some context to consider.
US drilling approvals increase despite Biden climate pledge
By MATTHEW BROWN Associated Press Jul 12, 2021
Approvals for companies to drill for oil and gas on U.S. public lands are on pace this year to reach their highest level since George W. Bush was president, underscoring President Joe Biden’s reluctance to more forcefully curb petroleum production in the face of industry and Republican resistance.
The Interior Department approved about 2,500 permits to drill on public and tribal lands in the first six months of the year, according to an Associated Press analysis of government data. That includes more than 2,100 drilling approvals since Biden took office January 20.
New Mexico and Wyoming had the largest number of approvals. Montana, Colorado and Utah also had hundreds each.
Read the full article here: https://missoulian.com/news/state-and-regional/us-drilling-approvals-increase-despite-biden-climate-pledge/article_0f8b642d-91b9-5fba-bd04-20f9838a6dd0.html
Tue, but the court challenges are focused on lease sales which have been “paused.” The Mineral Leasing Act of 1920 as amended by FOGRMA in 1987 states that Interior “shall” hold quarterly oil and gas lease sales of all eligible land. States get 49% of all bonus bids and first year rentals paid to the Feds for leases after those sales. To states like WY and NM those monies fund critical social services. That’s what is at issue in these challenges.
Matthew and Rebecca,
I’m not an expert on this (Rebecca, I suspect you are) but have sat in many many (!) discussions with federal legal folks about the “gap leases” in Colorado during our Colorado Roadless effort.
My understanding is that there is the leasing process, which is done quarterly, which confers some legal rights as the $ change hands, and as Rebecca says, goes into the Treasury and to the States.
Then the company submits an APD or application for permit to drill. I think the AP story is talking about these, although it’s not clear as it could be.
The thing about the way it has been covered by stories like “us drilling approvals increase despite Biden”, I think it means APDs on land that has already been leased. I don’t understand the motivation of the O&G industry, but if I were them (they? Subjunctive?) I’d think I’d better get my leases permitted before the Biden Admin thinks of something to restrict them, which would of course have legal challenges but..an APD in the hand is worth two in the legal bush.
It’s kind of like the Biden Admin saying “we’re going to try to shut off your water to the extent we legally can”. .. Then when everyone heads to the well with the biggest buckets they can find, they are still getting water, so they were wrong to complain about getting shut off.
Based on my experience, what’s underplayed in this AP story is the legal question and what’s overplayed is the political side.
“The administration’s defenders say it’s being pragmatic in the face of a Senate split 50-50 between Democrats and Republicans and questions over whether the government could legally stop drilling on leases already sold to companies.
That’s meant forgoing a drilling ban in hopes of getting bipartisan support for a huge infrastructure package that includes clean energy incentives and other measures to address global warming.
“It’s the long game. … You’ve got to appease some of those oil and gas state senators,” said Jim Lyons, who was deputy assistant Interior secretary under Barack Obama and is now an environmental consultant. “It means jobs back home for thousands of workers. You can’t just pull the plug overnight.”
I guess if you interview political folks like Jim, that’s what you get. I think the piece would have been greatly helped by interviewing a lawyer familiar with O&G statutes and regs. It also makes me think that part of what is perceived as increasing partisanship could be the tendency to see things through that lens from media folks and their choice of interviewees (unintentionally fueling partisanship?).
And the way it’s framed politically, the R’s must be for leasing, whereas as we’ve seen D New Mexico also gets a great deal of funding from federal O&G. As Secretary Holland (from NM says): “Gas and oil production will continue well into the future and we believe that is the reality of our economy and the world we’re living in,” Haaland told Colorado Republican Rep. Doug Lamborn.”
I had a paywall from the Missoulian but found the story (may be different) here.
https://apnews.com/article/joe-biden-business-science-environment-and-nature-6ac8ff49970e4b052489678b40e3ba82
Some additional context I just saw from a CBD staffer on Twitter:
Avg. number of onshore oil and gas drilling permits approved per month:
– Biden 369 (through 17 Aug 21)
– Trump 300 (FY 18-20)
That was a curious thing, Matthew, in the article.
“Under former President Donald Trump, a staunch industry supporter, the Interior Department reduced the time it takes to review drilling applications from a year or more in some cases, to just a few months.
Companies rushed to lock in drilling rights before the new administration. And in December, Trump’s last full month in office, agency officials approved more than 800 permits — far more than any prior month during his presidency.
The pace dropped when Biden first took office, under a temporary order that elevated permit reviews to senior administration officials. Approvals have since rebounded to a level that exceeds monthly numbers seen through most of Trump’s presidency. ”
Did the Trump Admin get a bunch of BLM folks on board working on it so they could be approved faster, and these folks are still there? I wonder what the explanation is for this. Maybe the CBD person knows.
Or maybe it’s just that more are in the approval pipeline (so to speak) because of the motivation I spoke of before… get them approved before conditions change.
To answer your question on why APDs were approved more quickly in Trump, one important factor was the NEPA implementation policies put in place by Secretary Bernhardt. There were hard deadlines for the amount of time BLM could spend on APD EAs and hard page limitations. There was also accountability up the leadership structure on EIS — meetings with Secretary/Dep. Secretary and required approvals. A positive innovation was assigning and getting a specific Interior solicitor to work with the BLM on NEPA compliance early on to prevent litigation issues. “Energy Dominance” (oil and gas) was a key policy initiative of Trump’s and focus and budget dollars for oil and gas were the result. As to your earlier question/observation, APDs largely ebb and flow with the market — when oil and gas are up so are APDs, when they are down APDs go down. I do think companies “stockpiled” APDs after November 2020. Also remember oil prices went negative during COVID, government and oil and gas offices were shut during COVID, financing for oil and gas development dried up to focus on renewables instead, an anti oil and gas administration was elected, then put a pause on leasing and required D.C. political officials to approve oil and gas permits that Field Offices would typically approve, in short lots of uncertainty in 2020-earl 2021. In mid-2021, oil and gas prices started to go up. IMO I think a combination of improved prices and fear of the next shoe dropping from Biden team that is are what is resulting in these higher APDs numbers. I think what we are hearing from green groups is more about keeping the pressure on D’s to pass the 3 Trillion Reconciliation bill with their climate change policy initiatives, than concern over APD processing.
Thanks Rebecca! This is very helpful. How could I forget about prices, since I just renewed my propane contract?
I can’t help but cross reflect on other TSW topics… I wonder whether some of the BLM innovations on APDs might help the FS on fuels projects? In Region 2 we always worked with OGC on NEPA compliance early (and with the Solicitors office on the ever-litigated coal and oil and gas projects) but it didn’t seem to help much (or maybe that was as good as it gets- 10 years of litigation). Wish someone would do a “lessons learned” on those BLM innovations.. maybe they did?
Also, when do “we” trust which local officials of what agency to do what? As per (some fire) scientists letter re: prescribed fire, local is best when it comes to PB and WFU because of their local knowledge and conditions, but perhaps (others think) not so much when it’s an APD on the table. I think it’s kind of an important question as it touches on public perceptions of career employees in the field, and how that can be used by various political actors (and scientists acting to influence policy).