Interior Announces New Lease Sales, But Uncertainty Remains

Federal natural gas and oil lease sales have finally been scheduled, but for onshore sales overseen by the Bureau of Land Management uncertainty still remains and no sales – not even those previously scheduled with completed environmental reviews, public comment and protest periods – will take place this year.

The Biden administration implemented a moratorium on federal leasing in January, a policy that a federal judge ruled as an illegal ban in June. After more than two months of slow walking its compliance of the ruling, Interior stated last month it would resume leasing, but only while appealing that court ruling, while also continuing to withhold its review of the leasing program.

The result of this purposely drawn-out process is that the newly-scheduled lease sales won’t happen until February of 2022, which means that an entire year will have passed without the Biden administration holding a single lease sale.

As Dan Naatz, executive vice president of the Independent Petroleum Association of America, said:

“Natural gas and oil lease sales are required by law, so this is a step in the right, and legal, direction.  However, the Biden Administration and the Democrat majority in Congress are making American energy production more and more difficult, through increased red-tape regulation and legal maneuvers.  Such roadblocks won’t help the nation’s best interests — from an economic or environmental standpoint.  Natural gas and oil royalties from federal lands are one of the nation’s largest revenue generators to the American treasury.  Natural gas production at home has also resulted in the country’s cleanest air in two decades.  And decreasing our dependence on foreign countries for our fuel is in the nation’s national security interest.  The United States must retain our position as the global leader in natural gas and oil production.”

Onshore Versus Offshore

According to a court filing by Interior last week, the Bureau of Ocean Energy Management will be publishing a sale notice later this month for Sale 257 in the Gulf of Mexico and intends to hold that sale in October. But that’s not the case for similar previously scheduled onshore sales.

Despite the fact that both onshore and offshore previously scheduled sales included extensive environmental reviews and ample opportunities for public input, Interior has chosen to redo all of that for parcels being offered on federal lands.

As Western Energy Alliance’s Kathleen Sgamma said:

“Announcing yet more analysis of lease parcels without scheduling the actual sales this year complies with neither the letter of the law nor the spirit of the judge’s order overturning the leasing ban. The environmental analysis was already completed for parcels that were ready to go to auction at the beginning of the year before the unlawful leasing ban was announced. There is no need to redo that analysis.”

Still No Leasing Review

Further, Interior continues to allude to making changes to the federal leasing program but has yet to clarify what those changes are, fueling uncertainty around domestic energy production.

The Biden administration justified its illegal leasing ban by stating that Interior needed to review the operations of the federal leasing program – an argument firmly rejected by a federal court. Judge Terry Doughty ruled:

“Although there is certainly nothing wrong with performing a comprehensive review, there is a problem in ignoring acts of Congress while the review is being completed.

“…By pausing the leasing, the agencies are in effect amending two Congressional statutes, OCSLA and MLA, which they do not have the authority to do.”

In response, Interior Secretary Deb Haaland repeatedly said this review would come “early summer.” But let’s face it, we’re approach Labor Day weekend, “early summer” has long passed, and there is still no review that’s been released.

It’s anticipated that the review could recommend a new set of rules, regulations, lease terms, and higher royalties that could make it nearly impossible for oil and natural gas companies to maintain productive operations on federal lands.

So, even with new lease scheduled, uncertainty will remain for the industry as long as the review isn’t published.

Interior is Appealing Judge’s Ruling

Additionally, Interior said in its filing it would finally comply with the judge’s ruling to resume lease sales, but only while simultaneously appealing that court ruling. The department announced at the time:

“The Department of the Interior (Interior) confirmed today that the Department of Justice (DOJ) has appealed the preliminary injunction entered by the district court in Louisiana v. Biden, which enjoined Interior from implementing the pause in new federal oil and gas leasing as set forth in Section 208 of Executive Order 14008. DOJ is appealing that decision to the United States Court of Appeals for the Fifth Circuit. Federal onshore and offshore oil and gas leasing will continue as required by the district court while the government’s appeal is pending.” (emphasis added)

It took a federal court ruling and weeks of feet-dragging to finally restart the leasing program, and still Interior is seeking to block the program in court, adding to uncertainty over whether or not these onshore sales will actually occur.

Administration Continues to Urge OPEC+ to Increase Supply

Ironically, while the Biden administration has spent most of 2021 trying to undermine American energy security, including this illegal federal lands ban and cancelling the Keystone XL pipeline, it is begging OPEC+ to increase oil production that can be imported into the United States.

Last month, National Security Advisor Jake Sullivan issued a statement:

“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery. The price of crude oil has been higher than it was at the end of 2019, before the onset of the pandemic.

“While OPEC+ recently agreed to production increases, these increases will not fully offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022. At a critical moment in the global recovery, this is simply not enough.”

Perhaps unsurprisingly, OPEC+ rejected the calls to increase production.

The Biden administration could respond by supporting the federal leasing program, but instead is appealing a judge’s ruling in an attempt to block new future lease sales.

That will give little confidence to companies operating on federal lands and will continue to undermine American energy security.

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