Biden Sets Out Oil, Gas Leasing Reform 11/27 08:39
The Biden administration on Friday recommended an overhaul of the nation's
oil and gas leasing program to limit areas available for energy development and
raise costs for oil and gas companies to drill on public land and water.
WASHINGTON (AP) -- The Biden administration on Friday recommended an
overhaul of the nation's oil and gas leasing program to limit areas available
for energy development and raise costs for oil and gas companies to drill on
public land and water.
The long-awaited report by the Interior Department stops short of
recommending an end to oil and gas leasing on public lands, as many
environmental groups have urged. But officials said the report would lead to a
more responsible leasing process that provides a better return to U.S.
"Our nation faces a profound climate crisis that is impacting every
American," Interior Secretary Deb Haaland said in a statement, adding that the
new report's recommendations will mitigate worsening climate change impacts
"while staying steadfast in the pursuit of environmental justice."
The report completes a review ordered in January by President Joe Biden, who
directed a pause in federal oil and gas lease sales in his first days in
office, citing worries about climate change.
The moratorium drew sharp criticism from congressional Republicans and the
oil industry, even as many environmentalists and Democrats said Biden should
make the leasing pause permanent.
The new report seeks a middle ground that would continue the
multibillion-dollar leasing program while reforming it to end what many
officials consider overly favorable terms for the industry.
The report recommends hiking federal royalty rates for oil and gas drilling,
which have not been raised for 100 years. The federal rate of 12.5% that
developers must pay to drill on public lands is significantly lower than many
states and private landowners charge for drilling leases on state or private
The report also said the government should consider raising bond payments
that energy companies must set aside for future cleanup before they drill new
wells. Bond rates have not been increased in decades, the report said.
The Bureau of Land Management, an Interior Department agency, should focus
leasing offers on areas that have moderate to high potential for oil and gas
resources and are close to existing oil and gas infrastructure, the report said.
The White House declined to comment Friday, referring questions to Interior.
The federal leasing program has drawn renewed focus in recent weeks as
gasoline prices have skyrocketed and Republicans complained that Biden
policies, including the leasing moratorium, rejection of the Keystone XL oil
pipeline and a ban on oil leasing in Alaska's Arctic National Wildlife Refuge,
contributed to the price spike.
Biden on Tuesday ordered a record 50 million barrels of oil released from
America's strategic reserve, aiming to bring down gas prices amid concerns
about inflation. Gasoline prices are at about $3.40 a gallon, more than 50%
higher than a year ago, according to the American Automobile Association. Oil
prices dropped about 13% Friday as a new coronavirus variant first detected in
South Africa appeared to be spreading across the globe.
The Biden administration conducted a lease sale on federal oil and gas
reserves in the Gulf of Mexico last week, after attorneys general from
Republican-led states successfully sued in federal court to lift the suspension
on federal oil and gas sales that Biden imposed when he took office.
Energy companies including Shell, BP, Chevron and ExxonMobil offered a
combined $192 million for offshore drilling rights in the Gulf, highlighting
the hurdles Biden faces to reach climate goals dependent on deep cuts in fossil
The leases will take years to develop, meaning oil companies could keep
producing crude long past 2030, when Biden has set a goal to lower greenhouse
gas emissions by at least 50%, compared with 2005 levels. Scientists say the
world needs to be well on the way to that goal over the next decade to avoid
catastrophic climate change.
Yet even as Biden has tried to cajole other world leaders into strengthening
efforts against global warming, including at this month's U.N. climate talks in
Scotland, he's had difficulty gaining ground on climate issues at home.
The administration has proposed another round of oil and gas sales early
next year in Wyoming, Colorado, Montana and other states. Interior Department
officials proceeded despite concluding that burning the fuels could lead to
billions of dollars in potential future climate damages.
Emissions from burning and extracting fossil fuels from public lands and
waters account for about a quarter of U.S. carbon dioxide emissions, according
to the U.S. Geological Survey.
Environmentalists hailed the report's recommendation to raise royalty rates,
but some groups said the report falls short of action needed to address the
"Today's report is a complete failure of the climate leadership that our
world desperately needs,'' said Taylor McKinnon of the Center for Biological
Diversity, an environmental group.
The report "presumes more fossil fuel leasing that our climate can't afford"
and abandons Biden's campaign promise to stop new oil and gas leasing on public
lands, McKinnon said.
The American Petroleum Institute, the top lobbying group for the oil
industry, said Interior was proposing to "increase costs on American energy
development with no clear roadmap for the future of federal leasing."
Other groups were more upbeat.
"This report makes an incredibly compelling case both economically and
ecologically for bringing the federal oil and gas leasing program into the 21st
century," said Collin O'Mara, president and CEO of the National Wildlife
Federation. "Enacting these overdue reforms will ensure taxpayers, communities
and wildlife are no longer harmed by below-market rates, insufficient
protections and poor planning.''
The wildlife federation and other groups urged the Senate to include reforms
to the oil and gas program in Biden's sweeping social and environmental policy
bill. Many reforms, including a royalty rate increase and bans on drilling in
the Arctic refuge and along the Atlantic and Pacific Coasts, were included in a
House version of the bill approved last week.
Jennifer Rokala, executive director of the left-leaning Center for Western
Priorities, said the report "provides a critical roadmap to ensure drilling
decisions on public lands take into account (climate) impacts on our land,
water and wildlife, while ensuring a fair return for taxpayers.''
Republicans said the report was a continuation of what they call Biden's war
on domestic energy production.
While the report hides behind language of "necessary reforms'' and royalty
rate adjustments, "we know the real story,'' said Arkansas Rep. Bruce
Westerman, the top Republican on the House Natural Resources Committee.
The Biden administration "will bog small energy companies down in years of
regulatory gridlock, place millions of acres of resources-rich land under lock
and key (and) ignore local input,'' Westerman said. "Ultimately, the American
consumer will pay the price. Look no further than the skyrocketing prices you
are already paying at the gas pump.''
Experts say economic factors, including a slow rebound from the pandemic,
are tamping down U.S. oil and gas production. As the economy recovered,
production lagged and prices jumped to a seven-year high in October.