WASHINGTON — The Biden administration announced Friday that it would resume selling leases for new oil and gas drilling on public lands but would also raise the federal royalties that companies must pay to drill, the first increase in those fees in more than a century.
The Interior Department said in a statement that it planned next week to auction off leases to drill on 145,000 acres of public lands in nine states. They would be the first new fossil fuel leases to be offered on public lands since President Joe Biden took office.
The move comes as Biden seeks to show voters that he is working to increase the domestic oil supply as prices surge in the wake of the Russian invasion of Ukraine. But it also violates a signature campaign pledge made by Biden, as he sought to assure climate activists that he would prioritize reducing the use of fossil fuels.
“And by the way, no more drilling on federal lands, period. Period, period, period,” Biden told voters in New Hampshire in February 2020.
In opening new land for drilling, while at the same time requiring companies to pay more to drill, Biden appears to be trying to walk a line between trying to both lower gas prices and fight climate change. While Biden came into office with the most ambitious climate change agenda of any president in history, his climate policies have been largely stalled, stymied by inaction in Congress.
Upon taking office, 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.
That report, issued in November, recommended an overhaul of the rents and royalty fees charged for drilling both on land and offshore. The report noted one estimate that the government had lost up to $12.4 billion in revenue from drilling on federal lands from 2010 through 2019 because royalty rates have been frozen for a century.
In opening up the new public lands for oil and gas permitting, the Interior Department will raise the royalty rates that companies must pay to the federal government to 18.75% of their revenues from 12.5%, an increase that could bring in billions of dollars for the federal government. Even at current levels, the royalties are a major source of revenue. Last year, the federal government collected $5.5 billion from drilling on public lands.
“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. “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.”
The new lease sales mark the second major step the Biden administration has taken to open up public lands and waters for drilling. Late last year, the Interior Department 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 that lease sale after Republican attorneys general from 13 states successfully overturned a suspension on sales that Biden had tried to impose. Environmental activists criticized the administration, saying the lease sales represented backsliding on Biden’s already-stalled climate change agenda.
“The Biden administration’s claim that it must hold these lease sales is pure fiction and a reckless failure of climate leadership,” said Randi Spivak, director of the public lands program for the Center for Biological Diversity. “It’s as if they’re ignoring the horror of firestorms, floods and megadroughts and accepting climate catastrophes as business as usual.”
But it comes as part of a recent series of steps that Biden has taken as he attempts to assuage voter anxiety over rising gasoline prices. This month, he announced the largest-ever release of oil from the nation’s Strategic Petroleum Reserve, reached a deal to increase natural gas exports to Europe, and called on Congress to enact legislation to compel oil companies to drill on their leases.
Those moves drew a tepid reaction from the oil industry.
“It’s a mixed message and strangely incoherent,” said Jeff Eshelman, chief operating officer of the Independent Petroleum Association of America, an industry group. “This administration has begged for more oil from foreign nations, blames American energy producers for price gouging and sitting on leases. Now, on a late holiday announcement, under pressure, it announces a lease sale with major royalty increases that will add uncertainty to drilling plans for years.”