Interior Department to resume oil and gas leasing, charge higher fees

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As pressure increases on the Biden administration to lower the price of fuel, the Interior Department announced on Friday plans to hold its first onshore oil and gas lease sales since President Biden took office.

The department said it plans to open roughly 144,000 acres up for lease next week and will charge oil and gas companies higher royalties to drill on federal land, raising the fees for the first time. Under the plans unveiled Friday, royalty rates would increase to 18.75 percent from 12.5 percent for oil and gas lease sales.

The long-awaited announcement follows a report the department issued last fall, which called for royalty fees to be more in line with the higher rates charged by most private landowners and major oil- and gas-producing states.

The Biden administration’s willingness to move forward with oil and gas leasing angered climate activists, who called the department’s plans a betrayal of the president’s pledge to ban new drilling on public lands.

According to the latest report from the U.N. Intergovernmental Panel on Climate Change, issued last week, the world is on pace to burn through its remaining “carbon budget” by 2030 — putting the ambitious goal of keeping warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) out of reach. Drilling on federal land and offshore is responsible for almost a quarter of the United States’ greenhouse gas emissions.

“This is pure climate denial,” Jeremy Nichols, climate and energy program director for WildEarth Guardians, said in a statement. “While the Biden administration talks a good talk on climate action, the reality is, they’re in bed with the oil and gas industry.”

Interior officials portrayed the pending lease sales as a significantly scaled-back version of what might have been, describing it as a pragmatic approach. In a news release, they noted that the acreage offered for auction is 80 percent less than the 733,000 acres of land in nine states that oil and gas companies had nominated.

“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,” said Secretary Deb Haaland. “Today, we begin to reset how and what we consider to be the highest and best use of Americans’ resources for the benefit of all current and future generations.”

The department’s plans are the latest example of the political tightrope the president is trying to walk. Ever since Russia’s invasion of Ukraine sent oil prices soaring, Biden has faced pressure to alleviate the pain Americans feel at the pump. He has urged U.S. oil companies to boost production and has released millions of barrels of oil from the Strategic Petroleum Reserve to compensate for the loss of Russian oil from global markets.

Earlier this week, the Environmental Protection Agency announced plans to allow the sale of gasoline blended with higher levels of ethanol through the summer, lifting a prohibition first put in place over concerns that burning ethanol-rich fuel in the summertime heat would worsen smog.

People who never considered themselves at risk from climate change are waking up to floods and fires. (Video: Monica Rodman/The Washington Post)

Yet at the same time, the administration is wary of alienating progressive Democrats and climate activists and has tried to couch its enthusiasm for oil and gas production as a necessary — and temporary — response to supply shortages while it works to expand cleaner sources of energy.

As a candidate, Biden vowed to ban new oil and gas drilling on federal lands. But in June 2021, U.S. District Judge Terry A. Doughty in Louisiana struck down the executive order temporarily suspending drilling, dealing a major blow to the president’s plans to cut greenhouse gas emissions from fossil fuels. The authority to suspend oil and gas leasing lies “solely with Congress,” Doughty wrote.

Last year, Interior held the largest offshore oil and gas lease sale in the nation’s history, auctioning off more than 1.7 million acres in the Gulf of Mexico. A federal judge later invalidated those leases, citing a flawed environmental analysis completed during the Trump administration. At the time, Biden administration officials said they could have been held in contempt of court if they hadn’t gone through with the sale, a legal interpretation that many environmental advocates have criticized.

“It’s important that they’re raising royalty rates,” said Abigail Dillen, president of Earthjustice. “But ultimately, oil and gas leasing at any significant scale is incompatible with the Paris agreement.”

Because most oil and gas production takes place on private and state-owned land, experts have said there’s little evidence that action by the Biden administration will bring down prices. Even if energy companies snap up new leases in the months ahead, it can take years to drill new wells and ramp up production.

On Friday, the U.S. oil industry heaped criticism on Biden officials for reducing the size of the lease sales and increasing royalty rates.

In an email, Kathleen Sgamma, president of the Western Energy Alliance, an oil and gas trade group, said forcing companies to pay higher fees for drilling would result in lower production, negating the administration’s efforts to bring prices down.

“While we’re glad to see [the Bureau of Land Management] is finally going to announce sales,” Sgamma wrote, “the extreme reduction of acreage by 80%, after a year and a quarter without a single sale, is unwarranted and does nothing to show that the administration takes high gasoline prices seriously.”

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