Key Questions Ahead of the Federal Lands Report
The U.S. Interior Department is soon expected to release its review of the federal oil and natural gas leasing program that was prompted by President Biden’s Executive Order 14008 which banned new leasing while the review was conducted.
Two weeks ago, in response to a lawsuit filed by 13 states, a federal judge in Louisiana ruled that the administration had no authority to enact a leasing ban during the review without approval from Congress. However, the Interior Department has yet to restart lease sales despite pledging to “comply with the decision.” As a result, the illegal leasing ban remains in effect.
During a House Natural Resources Committee hearing last week, Interior Secretary Deb Haaland said the department was still reviewing the court decision, but as Energy In Depth noted, the judge’s ruling is only 44 pages long and makes it very clear that this leasing ban violates the law.
Now with the release of the department’s review of the leasing program imminent, here are the key questions:
Will Democrats From Energy States Make Any Public Comments?
Several top Democrats from energy-producing states criticized the illegal ban this spring, including Louisiana Gov. John Bel Edwards. In New Mexico, Gov. Michelle Lujan Grisham expressed concerns and the state’s two U.S. Senators – Martin Heinrich and Ben Ray Luján – similarly weighed in:
“We oppose an indefinite federal ban on oil and gas leasing, and we urge the administration to complete its review and resume responsible leasing as soon as possible.” (emphasis added)
Will these Democrats make any public comments on the review if it recommends continued restrictions on the energy industry in their states?
Will the Review Immediately Restart the Leasing Program?
In the federal court ruling, the judge granted a preliminary injunction lifting the ban – which the administration still has not done.
When the Interior Department released its review, will it also lift the illegal ban and restart lease sales?
Will the Review Be A De Facto Ban?
While the Interior Department has promised to “comply with the decision” from the federal judge who ordered the ban be lifted, the administration could work to implement a ban through other ways. Namely, by recommending a set of unrealistic 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.
Will this upcoming review result in a regulatory onslaught that injects additional uncertainty into federal lands development?
Is This Still about Climate Change?
On the campaign trail, then Candidate Biden repeatedly said he would ban leasing on federal lands to address the climate crisis, including in his official climate plan. His executive order in January 2021 was part of his strategy to “tackle the climate crisis at home and abroad.” But Interior’s discussions on it lately have had little to do with emissions; instead, they’ve largely focused on fiscal issues like royalty rates.
Notably, the order itself suggests royalty rates could be used to “account for corresponding climate costs.” But on Capitol Hill recently, Secretary Haaland said the administration wants “to make sure American taxpayers are getting a good return on their investment.”
Why has the department seemingly shifted its focus away from climate change as it relates to future leasing?
The federal leasing program already provides tremendous tax benefits for states like New Mexico, which had $1.5 billion flow into the state budget in 2020. Likewise, Colorado, North Dakota, Utah, and Wyoming would all receive significantly lower tax revenue if a leasing ban continues.
And the benefits go well-beyond the fiscal ones – a strong domestic energy supply ensures affordable, reliable energy for consumers and manufacturers alike, enabling the production of the many products we rely on daily. It’s also a key source of employment, particularly in a state like New Mexico where high-paying jobs – like those in the oil and gas industry – are otherwise tough to find.
When Will the Final Review Be Issued?
The upcoming review is only an “interim report” with the department still working on a final review of the leasing program.
When will that final review be issued?
Further, if the draft report proposes changes without indication of what those changes may be, the continued uncertainty could also lead to diminished investment and production.
Will the industry continue to operate under a cloud of uncertainty in the months (or years) that it takes for that final review to be published?