Interior Dept. Report on Drilling Is Mostly Silent on Climate Change
The department recommended higher fees for oil and gas leases, but there was no sign the government planned to take global warming into account when weighing new applications.,
WASHINGTON — The Interior Department on Friday recommended that the federal government raise the fees that oil and gas companies pay to drill on public lands — the first increase in those rent and royalty rates since 1920.
But the long-awaited report was nearly silent about the climate impacts from the public drilling program. The United States Geological Survey estimates that drilling on public land and in federal waters is responsible almost a quarter of the greenhouse gases generated by the United States that are warming the planet.
That silence angered environmentalists, who want the federal government to consider the climate impact of drilling when it weighs approval of new leases. That would be a first step toward ending new oil and gas drilling on public lands, something President Biden had promised when he ran for office.
The report comes as rising gas prices have created political headaches for the Biden administration and prompted calls from Republicans for increased domestic gas and oil production.
Environmentalists said they were concerned that the Biden administration was backtracking on a central climate pledge.
“We expected the agency to do a programmatic review of the entire fossil fuel leasing program that takes into account not only the environmental harms of drilling at the local and landscape level, but also the impact on the global climate crisis that we’re in,” said Brett Hartl, director of government affairs for the Center for Biological Diversity, a nonprofit group. “And that had never been done before. The agency had never taken a cumulative look at the harm that would come from burning the fossil fuels that would come out of these leases. If you wanted to accomplish what the president had promised, this was the best mechanism to achieve that promise.”
As a candidate, Mr. Biden promised to stop issuing new leases for drilling on public lands. “And by the way, no more drilling on federal lands, period. Period, period, period,” Mr. Biden told voters in New Hampshire.
This month, he appeared at a global climate summit meeting in Glasgow to urge other world leaders to take bold action to cut emissions from oil, gas and coal. Mr. Biden has pledged to cut United States greenhouse gas emissions by 50 to 52 percent below 2005 levels by the end of this decade. Interior Secretary Deb Haaland is a former environmental activist and former member of Congress who had a campaign website that included this quote from her: “We need to act fast to counteract climate change and keep fossil fuels in the ground.”
But last week, the Biden administration offered up to 80 million acres in the Gulf of Mexico for drilling leases — the largest sale since 2017. The administration was legally obligated to hold the lease sales after Republican attorneys general from 13 states successfully overturned a suspension on sales that Mr. Biden had tried to impose. Shell, BP, Chevron and Exxon Mobil offered $192 million for the rights to drill in the area offered by the government.
The Mineral Leasing Act of 1920 set up a system to allow private companies to lease public lands to extract oil and gas from the ground. In the century since, the royalties paid by companies have remained unchanged. Later, Congress passed the 1953 Outer Continental Shelf Lands Act to govern drilling in federal waters. Both laws set up a system that requires the government to auction leases at regular intervals.
Upon taking office, Mr. Biden issued an executive order calling for a temporary ban on new oil and gas leasing on public lands, which was to remain in place while the Interior Department produced a comprehensive report on the state of the federal oil and gas drilling programs.
Ms. Haaland sent the report to the White House in June.
Several environmentalists who have spoken to Ms. Haaland and her staff said that they had expected the June report to include two recommendations: an increase in the fees that oil and gas companies are charged to drill on public lands and the creation of a system to account for the environmental damage caused by burning the fossil fuels extracted under the leases.
Environmentalists noted that the report was issued during a long holiday weekend, when many Americans would be unlikely to be paying attention. Some drew comparisons to the Trump administration, which tried to bury a major climate change report, also by issuing it the day after Thanksgiving.
A spokeswoman for the Interior Department declined to comment on the timing the report.
The report ‘s recommendations regarding raising drilling fees are largely in line with legislation now making its way through Congress. The sweeping $2.2 trillion social policy and climate bill that passed the House of Representatives last week includes provisions that would increase federal royalty rates for oil and gas companies.
Multiple studies from government and fiscal watchdog groups have concluded that the federal government underestimates the value of the oil and gas resources on public lands, and undercharges companies for extracting the fuels. The Government Accountability Office has placed the federal government’s management of oil and gas resources on its list of “high risk” programs that are vulnerable to waste, fraud and abuse.
The royalties are still a major source of revenue: the federal government has so far collected $9.6 billion this year from drilling on public land and in federal waters, up from $8 billion last year.
As one way to raise revenue for the $2.2 trillion spending bill, Democrats included provisions in the legislation that would raise onshore oil and gas drilling royalty rates from 12.5 percent to 18.75 percent and set offshore rates at “not less than 14 percent.” At auctions of federal oil and gas leases on public lands, it would increase the minimum bid from $2 an acre to to $10 an acre. And it would increase the annual rents that companies must pay to the federal government to lease the land. According to the Congressional Budget Office, those changes would bring in about $2.5 billion in new revenue by the end of the decade.
Climate policy advocates said they supported raising those fees and royalties, but added that the increase would not slow drilling or climate change.
“That’s the stuff that needs to happen,” said Joel Clement, a former Interior Department official who resigned from the agency in protest during the Trump administration, and now serves as a senior fellow at the Harvard Kennedy School. “But it’s a first-base hit, not a double or a home run. And at this point, we have to have a home run on leasing on public lands. It’s one of the immediate climate levers that can bring real change. The leasing program must account for climate emissions. That’s how you get to a lasting moratorium on drilling.”
Mr. Clement and other climate policy experts said the Interior Department should incorporate the potential climate impacts of leasing oil and gas drilling into the assessments required by the 1970 National Environmental Policy Act, which says the government must consider ecological damage when deciding whether to permit drilling and construction projects.
If all assessments of the impacts of drilling on public lands were required to include the potential warming impact of burning the fuels within the leases, experts said, that would create the legal groundwork for the government to stop issuing new drilling leases.
But moving forward with such a policy would quite likely also create intense political blowback from Republicans, the oil industry and Democrats in oil and gas states. That could also create complications for the administration as it seeks to steer its broader spending bill through a razor-thin Democratic majority in Congress.
“The political tightrope is vexing, but the bottom line is that we have to end oil and gas leasing on public lands,” Mr. Clement said. “It’s not an exaggeration to say that doing so would change the global conversation on the energy transition.”
Lisa Friedman contributed reporting.