Public land is no longer on sale to oil and gas companies

Meanwhile, the federal government will reassess the federal oil and gas companies leasing program. In a press release, the Interior Department said the goal of the leasing freeze is to “provide a path to align the management of America’s public lands and waters with our nation’s climate, conservation, and clean energy goals.”

Public land is no longer on sale to oil and gas companies

On Jan. 27, President Joseph Biden planted a continent-sized “not for sale” sign on the public lands and waters managed by the federal government. In an executive order — part of a sweeping set of orders focused on climate change — Biden directed Interior Secretary nominee Deb Haaland to reassess the federal oil and gas leasing system and, at least for now, to pause the sale of development rights to private companies.

The move upends the bipartisan status quo of selling vast stretches of the Western U.S. to fossil fuel companies. Currently, those companies hold leases to more than 26 million acres, more than half of which have yet to be drilled.

(About 10% of that untapped land was either auctioned off at the minimum bid price of $2 per acre or sold post-auction for even less by the Trump administration, according to Bureau of Land Management data compiled by The Wilderness Society.)

That means that the pause on new leases won’t stop drilling on federal lands. “We have a deep inventory of approved federal drilling permits in hand that essentially cover all of our desired activity over the next presidential term,” said David Harris, an executive vice president for Devon Energy Corporation, a major leaseholder in New Mexico’s Permian Basin, on an investor call in October.

“The dirty little secret is (a moratorium) may not have much of an immediate impact on production,” said Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center.

Still, pumping the brakes on the sale of federal fossil fuels marks a major policy shift. It sets the stage for a transition away from fossil fuel development, which has had major impacts on air pollution, water quality and wildlife in the Western U.S.

It also could put a major dent in climate warming emissions — fossil fuel production on federally managed land accounts for more than one-fifth of carbon dioxide emissions in the United States. In the short term, however, it will hurt the Western states and workers that depend on the industry’s revenue and jobs.

The Wilderness Society’s Federal Land Use and Transparency Tool provides the most recent spatial dataset of energy development by automating the aggregation of tabular data from the Bureau of Land Management’s LR2000 database and transforming that information into spatial data with the selection of the Public Land Survey System. With this spatial dataset, associated lease history and actions can be queried and displayed.

There is potential for boundary errors in this dataset due to incorrect PLSS legal land description formatting in the LR2000 database that may not translate to actual parcels.

THE OIL AND GAS leasing moratorium cuts off one important source of income for Western states. They won’t entirely lose revenue from federal fossil fuels: While no new leases will be sold, drilling under existing leases — and its accompanying royalties and other taxes — will continue.

But the states will lose the income from bonus bids on federal leases, which come when oil and gas companies drive up the auction price of certain parcels with particularly promising deposits. While bonus bids are typically much smaller than royalties, they can bring huge paydays: In 2018, one frenzied round of lease sales in southeastern New Mexico brought in nearly $1 billion in bonus bids. 

Meanwhile, the federal government will reassess the federal oil and gas leasing program. In a press release, the Interior Department said the goal of the leasing freeze is to “provide a path to align the management of America’s public lands and waters with our nation’s climate, conservation, and clean energy goals.”

The moratorium is expected to kick off a multi-year public environmental planning process during which the public and affected stakeholders, including tribal nations and state and local governments, will have a chance to weigh in on the future of oil and gas leasing. Multiple alternative outcomes will be presented, likely ranging from leaving the program as it is to ending future leasing completely.

To get an idea of what to expect, it helps to look back at a federal coal moratorium issued in the final year of the Obama administration. In January of 2016, the Bureau of Land Management started a process to evaluate the economic and environmental impacts of leasing federal land for coal mining.

Following that initial fact-finding mission, the agency concluded that modernizing the federal coal leasing program was necessary. Proposed options for doing so included raising royalty rates, increasing minimum bids, ending new leases entirely and requiring leaseholders to offset their carbon emissions or fund climate adaptation programs.

But when Ryan Zinke took the helm of the Interior Department during the Trump administration, he moved quickly to discard the comprehensive review and reopened federal land for coal leasing.

(The legality of that move is still being argued in federal court.) Despite efforts to open up more federal land for coal leasing, the industry has continued to nose-dive as bankruptcies mount from Wyoming to Appalachia. Since the coal moratorium was lifted, companies have pulled out of leasing applications for 10 times more coal than they’ve filed for.

BIDEN’S EXECUTIVE ORDER will not upset an industry that’s thriving: Domestic oil and gas production has been in a major bust for the past year. Reduced demand during the coronavirus pandemic and price wars between Saudi Arabia and Russia have driven down the price of oil and gas.

At times last summer, there weren’t any active oil and gas drilling rigs in Wyoming. Despite Trump’s “energy dominance” agenda, it wasn’t worth the cost of pumping it out of the ground.

Wyoming’s budget suffered from the lost revenue, and public services, including the state Department of Health, endured major budget cuts. (There were, however, some bright spots in a handful of counties and cities, where new wind installations bolstered local budgets.) Now, as Biden takes office, Wyoming has four active wells — significantly down from 2019, when there were usually 30-plus active rigs.

Even as he slammed the executive order as a major blow to Wyoming, Gov. Mark Gordon acknowledged in an interview that international markets are largely responsible for the state’s current lack of oil and gas production.

“That’s sort of the nature of the business,” Gordon said. Still, he argued that the delay in leasing and “byzantine federal regulations” mean that companies will look elsewhere in the future, taking jobs and public funding with them: “Capital most likely is going to say, ‘Gee, we love Texas, because we don’t have to deal with any of that BS,’ ” Gordon said.

The new executive order sets up a tug of war over the future of fossil fuel production on public lands. It’s one that’s likely to last throughout the Biden administration: oil and gas companies interests are already suing over the freeze. 

In a lawsuit filed the same day the order was signed, the Western Energy Alliance (WEA), a regional oil and gas lobbying group, argued that the order exceeded presidential authority and overrides existing laws that order regular lease sales of public lands.

“Drying up new leasing puts future development as well as existing projects at risk,” said Kathleen Sgamma, the president of WEA. (Former Interior Department solicitor John Leshy has argued the Interior Department has “ample legal authority to limit or call a halt to fossil fuel leasing on America’s public lands.”)

For advocates of climate action and leasing reform, it’s encouraging to see major changes starting in the second week of Biden’s presidency. “The Biden administration is way out ahead of where the Obama administration was,” said Schlenker-Goodrich. “There’s an urgency to move forward.”

Originally published at High country news