Biden administration to hold its first oil drilling lease sales on federal lands
The Biden administration is set to hold lease sales for new oil and gas drilling on public lands starting this week and, for the first time, it will implement new regulations for producers.
The oil auctions will effectively be the administration’s first, since the only other lease sale it has held was tossed in court on environmental grounds.
But neither industry nor green groups are particularly pleased with the sales, as industry wanted more land and fewer stipulations while many climate hawks wanted no lease sales at all.
The Biden administration is expected this week to auction off parcels of federally owned land for drilling in seven Western states.
The sale in Wyoming is expected to be by far the largest, with 130,000 acres available for lease, while the next largest comes in at just a few thousand acres.
The other sales will take place in Montana, North Dakota, Nevada, Utah, New Mexico and Colorado.
When it announced the sales in April, the Interior Department said it was shrinking the overall land it was making available by 80 percent compared to the total amount of land it originally considered for the sale.
The department also announced that it would hike fees that oil companies pay to the government for the oil they extract, raising royalty rates from the 12.5 percent imposed on previous sales to 18.75 percent for the new sales.
In a statement from the time, the department said that the changes would help with “addressing deficiencies” in the program.
“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,” Interior Secretary Deb Haaland said in a statement at the time.
“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,” she added.
The lease sales are not expected to immediately impact the country’s oil supply, since it takes more than four years on average from the time they acquire their leases for companies to begin producing oil. But at a time when many Americans are struggling with skyrocketing gasoline prices, the optics of the sale could matter.
Industry has mixed feelings about the sales. Frank Macchiarola, the senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, said he’s glad the administration is holding the sales but didn’t like the smaller size or other stipulations.
“We are concerned about the reduction in available parcels, we’re concerned about royalty rate increases, we’re concerned that the administration’s approach … is limited at a time when we really need something bold,” he said.
But he added that the organization is “pleased that finally the administration is actually moving forward with leasing. We’ve seen an unprecedented delay in oil and gas leasing.”
Meanwhile, the administration’s decision to hold lease sales at all has irked left-wing environmentalists who note that locking in more oil and gas drilling will worsen climate change.
“Why are they having these lease sales given the climate impacts that the Biden administration itself recognizes?” asked Michael Freeman, a senior attorney at Earthjustice.
“There’s a clear contradiction between what the Biden administration says it wants to do on climate and what it’s doing with these lease sales,” he added.
But others were more understanding, saying they believe the Biden administration did the most it could to implement important reforms without running afoul of the federal judiciary.
“We look at it from a perspective of what is possible right now given the regulatory framework, given the legal landscape, what is defensible, and that is, from our perspective, where this lease sale landed as good as it could have given where the courts are,” said Aaron Weiss, deputy director of the Center for Western Priorities.
The sales are slated to be the first onshore lease sales held under the Biden administration, which paused new oil and gas leasing during much of its first year as it reviewed the federal program.
But that pause was halted by a court — and the Biden administration held an offshore lease sale in November.
The offshore sale, however, was also struck down in court on environmental grounds, making this week’s sales likely to effectively be the first the Biden administration is holding.
Macchiarola, with the oil industry group, described the new lease sales as the “bare minimum,” saying the administration should do more to ramp up oil production.
“It’s a small step in the right direction, but we need to see a lot more out of this administration,” he said.