The fossil fuel industry and unions pushed the Biden administration Thursday to end its pause on federal oil and gas lease sales quickly, arguing the policy won’t reduce greenhouse gas emissions and would lead to job and revenue losses in affected states.
“We must ask if an outright ban on federal leases is the best first step without addressing the downstream job impacts,” said Sean McGarvey, president of North America’s Building Trades Union, a group that represents many workers employed in the fossil fuel industry. “The last bastions of middle-class employment are in gas and oil, petrochemicals, and power generation.”
KEY DEMOCRATS PUSH BIDEN TO REFORM, NOT END, OIL AND GAS LEASING ON FEDERAL LAND
The Biden administration’s Interior Department did not tip its hand on if it will make permanent the indefinite pause on oil and gas leasing as it took testimony from these groups and other stakeholders during a more than four-hour public forum.
President Joe Biden promised a ban as one of his signature campaign pledges to help combat climate change, but the pause has already been met with opposition from allies, including governors of Democratic-led states and unions.
The pause on new lease sales does not stop companies from obtaining permits to drill and develop oil and gas on existing leases.
At the very least, the Biden administration signaled Thursday it won’t revert to prior leasing practices that Democrats and environmentalists say are too deferential to the fossil fuel industry and not fiscally prudent.
“Fossil fuels will continue to play a major role in America for years to come, but too often, the extraction of resources has been rushed to meet the false urgency of political timetables, rather than with careful consideration of the impacts to the environment and future generations of Americans,” Interior Secretary Deb Haaland said to kick off the virtual forum.
The one-time event was designed to inform the Interior Department’s plan to propose updates to the federal oil and gas program by early summer as Biden decides whether to turn the pause into a ban.
More likely, the Biden administration will work with Congress on reforms to raise costs and impose stricter regulation on oil and gas development on public lands and waters.
House and Senate Democrats have recently introduced a suite of legislation to raise royalty rates, increase public input into the leasing process, require cleanup and remediation of abandoned wells, and crack down on methane emissions from oil and gas.
The royalty rates that companies pay to the government to drill on public onshore lands haven’t been raised since the 1920s, while minimum bid requirements set at $2 an acre have not been lifted in decades.
Critics of low royalty rates and bid requirements say raising them would deter speculation and raise more revenue for taxpayers.
Haaland, in her opening comments, said the Trump administration offered “vast swaths” of public lands and waters for drilling, “prioritizing fossil fuel development above all other uses.”
The Interior Department has tried to make the case that the oil and gas industry banked leases and permits before Biden came into office, protecting against the possibility of a ban.
Of the more than 26 million acres of onshore land already under lease to the oil and gas industry, nearly 13.9 million of those acres are nonproducing, according to Interior.
Oil and gas industry leaders, however, took exception to Interior’s characterization that companies have been “stockpiling” permits and leases.
Frank Macchiarola, senior vice president of policy at the American Petroleum Institute, said once a company obtains a lease, it still takes time to assess whether there is a “commercial quantity” of oil and gas that is actually worth producing.
Most leases do not contain sufficient oil and gas and are returned to the government, he said. But while companies make that assessment, they are still paying the federal government rental fees.
For example, Joe DeDominic, president of Anschutz Exploration, a company that is currently holding more than 1,000 federal leases in Wyoming’s Powder River Basin, said in written testimony provided to the Interior Department that many of its leases are nonproducing, “but all of them are part of a long-term exploration and production plan that could lead to installation of thousands of wells over decades.” (Anschutz Exploration is owned by the same parent company as the Washington Examiner.)
“We do not treat federal leases as individual short-term investments to dip and flip,” DeDominic said.
Environmental groups, however, urged Biden to follow through on his campaign promise and say he has broad discretion in managing public land and can decide to emphasize conservation or renewable energy development instead of oil and gas leasing.
Nathalie Eddy, interim field team manager and Colorado and New Mexico field advocate at Earthworks, said stopping new leases would represent the beginning of a “managed transition away from fossil fuels.”
Michael LeVine, senior arctic fellow at the Ocean Conservancy, said starting with stopping development on public lands and waters would be a first step to “working toward ending fossil fuel extraction” altogether.
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The Interior Department was not ready to pick a side, though, as it weighs the sometimes competing demands of unions and environmentalists while assuring the oil and gas industry that fossil fuels won’t go away overnight.
“We have a lot to think through,” said Laura Daniel Davis, Interior’s principal deputy assistant secretary of land and mineral management, in concluding remarks.
