DOI Will Not Stop the Drilling in the Face of Climate Commitments

Environmental Policy Brief #129 | By: Todd J. Broadman | December 10, 2021

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Policy Summary

With President Biden’s COP26 climate pledge as backdrop, his administration has been issuing oil leases at a record pace. Biden said that climate change is “the challenge of our collective lifetimes, an existential threat to human existence as we know it. And every day we delay the cost of inaction increases.” His pledge is to cut U.S. emissions by up to 51% over the next nine years. At the end of October, the administration had approved 3,091 new drilling permits on public lands at a rate of 332 per month, outpacing the Trump administration’s 300 permits per month in fiscal years 2018-2020.

Just last month, the Department of the Interior (DOI) resumed offshore oil leasing in the Gulf of Mexico, putting up for auction 80 million acres. The plan for 2022 begins with more than 700,000 acres of public land up for drilling lease. The mixed messages have drawn sharp criticisms from both sides of the aisle; while Democrats prefer stronger action to limit oil and gas production, the Republicans insist that limiting domestic production would only increase global emissions from overseas suppliers.

A recently issued DOI report on oil leases crossed Biden’s desk; he had requested that agencies review all rules and policies that impact climate change.  The DOI has the authority to make most changes through regulation. Some of the report’s recommended changes include an increase in oil lease royalty rates paid by the companies to the DOI. Royalty rates generally range from 16.67% to up to 25%. An exception is the North Slope of Alaska with a 12.5% rate. If royalty rates do increase, there will likely be smaller and fewer lease bids.

Higher rates are being positioned as a benefit for taxpayers and as a way of discouraging speculation in leasing federal acreage. Another report recommendation is to implement stricter controls on oil drilling site remediation. Currently in place is a $2-per-acre minimum bid for most federal leases, a minimum established in 1987. Per the report, “such low prices for leases, coupled with generous 10-year lease initial terms that are frequently extended, encourage speculators to purchase leases with the intent of waiting for increases in resource prices, adding assets to their balance sheets, or even reselling leases at a profit rather than attempting to produce oil or gas.”

The administration has received hundreds of requests from environmental groups and Native tribes in support of a blanket ban on new fossil fuel leasing and permitting. Citing the National Environmental Policy Act, Federal Lands Policy Management Act, Endangered Species Act and other laws, these groups claim that the continued issuance of oil leases breach legislated environmental protections. “I cannot help but feel misled, disheartened and disappointed when I witness actions such as the Department of Interior taking steps to lease more public lands to oil and gas,” said Jade Begay, the climate justice campaign director with the Native American advocacy group NDN Collective.

Policy Analysis

The DOI report and its recommendations do little to change the rate of carbon exploration and drilling on federal public lands. While Anne Hedges, director of policy for the Montana Environmental Information Center, went as far to say, “It’s a betrayal to his commitment to the world to decrease methane emissions and then immediately ignore these emissions for oil and gas development on public lands,” Interior Secretary Deb Haaland, walked a finer line in defending the lackluster report: “The DOI has an obligation to responsibly manage our public lands and waters — providing a fair return to the taxpayer and mitigating worsening climate impacts — while staying steadfast in the pursuit of environmental justice.” 

There was widespread criticism that the conclusions lacked “meaningful analysis” and amounted to “misrepresenting” how oil development actually works. The intended impact on tax rolls will be minimal, as will be its effect on overall petroleum stocks. Vague references to climate commitments such as making an effort “to monetarily account for the costs of carbon dioxide, methane, and nitrous oxide,” left many disappointed.


Interior Secretary, Deb Haaland – Photo taken from: Native News Online

If nothing else, the DOI report provides clarity on economic policy: the necessity of short-term economic gains outweighs the longer-term environmental impacts of seeking out and using new sources of carbon energy. This should come as no surprise given that there is no clear plan to coordinate with oil conglomerates a move to renewables.

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