Biden resumes oil and gas leases on federal land at dramatically lessened scale

Washington Examiner

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The Biden administration announced Friday that it would resume lease sales for oil and gas drilling on federal land, though it plans to reduce the amount of land available significantly and will increase the royalty it charges companies for the oil and gas produced on the land.

The Interior Department said in a news release that it will make available 144,000 acres, an 80% reduction from the acreage originally nominated. It will also begin charging companies royalties of 18.75%, up from 12.5%.

The move brings the administration into compliance with a court order but comes as President Joe Biden has sought to encourage domestic production of oil and gas to tame soaring energy prices, especially gas prices above $4 a gallon, that have cut into support for his party before the midterm elections.

Secretary of the Interior Deb Haaland called the new plans a “reset” of the leasing program that was overdue.

“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of Tribal Nations, and, moreover, other uses of our shared public lands,” she said.

Biden ordered a pause on new federal oil and gas leasing during his first week in office, along with a review of the program and a “reconsideration of Federal oil and gas permitting and leasing practices.”

While the pause was eventually enjoined by a federal court, the administration did not move forward with any onshore lease sales in 2021. The single offshore lease sale, which was thrown out by a federal judge in January of this year, was held in November 2021.

The Interior Department released a report that same month in conjunction with Biden’s January executive order, establishing that royalty rates paid by lessees are too low and that the “fiscal components of the onshore Federal oil and gas program are particularly outdated.”

The Interior Department also recommended that the Bureau of Land Management, the subagency overseeing the program, should avoid leasing “low potential lands.”

Liberal lawmakers and environmentalists, many of whom have demanded an end to the leasing program, criticized the report at the time as having no teeth.

Green groups were similarly incensed by Friday’s announcement that the BLM is moving forward with new lease sales.

“It is unconscionable that the BLM will go forward with these oil and gas lease sales as we continue to see the devastating effects of climate change, particularly in the Southwestern United States,” said Deborah McNamara, campaigns director at 350 Colorado.

The Western Energy Alliance, which represents producers operating on federal lands, welcomed the Interior Department’s decision to resume sales “after violating the law for 15 months” but criticized the amended royalty rates and reduced acreage.

Biden promised during his presidential campaign to end leasing of federal lands and waters for fossil fuel development under programs authorized by Congress to address climate change but has faced obstacles from courts as well as criticism from Republican lawmakers and energy companies for inhibiting new production.

He now faces additional headwinds in the form of high energy prices, which, along with broader inflation, have soured the voters on his handling of the economy and have led the administration to take a range of measures meant to convince the public it is working to lower prices — including encouraging oil and gas producers to increase output.

At the same time, the administration has criticized companies holding leases that have not yet been developed and argued the industry doesn’t need more land.

The oil and gas industry, meanwhile, has argued that development takes time and that it needs longer-term assurances, in the form of new lease sales, that development will be encouraged.

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