Biden orders indefinite moratorium on new oil and gas leasing on federal lands

President Biden issued an executive order Jan. 27 that mandates a “pause” on new oil and gas leasing on federal lands, onshore and offshore, “to the extent consistent with applicable law,” while a comprehensive review of oil and gas permitting and leasing is conducted by the Interior Department.

There is no time limit on the review, which means the president’s moratorium on new leasing is indefinite.

The order does not restrict energy activities on lands the government holds in trust for Native American tribes, the White House said.

Existing leases, unaffected by the moratorium, can provide oil and gas for decades to come, but in diminishing amounts as fields are drained down. The length of the “pause” may determine whether US production is significantly reduced at some point in the future.

Oil and gas associations expressed fears of more aggressive actions to come.

“While this move suspends new leasing, this decision appears to be a first step toward a policy of banning natural gas and oil development on federal lands and waters,” the American Petroleum Institute said.

Subsidies and zero pollution

Biden’s order includes the possibility of raising federal royalties. Interior “shall consider whether to adjust royalties associated with coal, oil, and gas resources extracted from public lands and offshore waters, or take other appropriate action, to account for corresponding climate costs.”

The order directs federal agencies to identify fossil fuel subsidies in their policies “and then take steps to ensure that, to the extent consistent with applicable law, federal funding is not directly subsidizing fossil fuels.”

Tax deductions denounced by some critics as “subsidies” have been written into the federal tax code, which limits what agencies can do, but they have some leeway in terms of defining qualifying deductions, and they have some flexibility on setting fees to support agency work.

The order requires the development of a plan to use federal purchasing power to foster development of a carbon pollution-free electricity sector no later than 2035, and zero-emission government vehicle fleets at some point.

US electric grids draw most of their power from gas-fired and coal-fired power plants. Electric vehicles exist as options in limited supply for small vehicles but not heavy trucks.

Strong reactions issued

Support for Biden’s action emerged quickly from Democrats in Congress.

"President Biden is laying the foundation for bold, government-wide action that puts us on a path to net-zero emissions by 2050," said Sen. Tom Carper (D-Del.), the top Democrat on the Senate Environment and Public Works Committee.

“Now it’s time for Congress to come together and seize on this moment,” Carper said in a statement not only praising Biden’s action but hoping for complementary legislation.

“The last four years have been a feeding frenzy on our public lands and waters, and this moratorium is the right way to start our overdue transition,” said Rep. Raul Grijalva (D-Ariz.), chairman of the House Natural Resources Committee.

By contrast, Republicans saw lost jobs and revenues without real environmental benefits.

“Despite all the hot air from climate alarmists, banning new oil, gas, and coal leases on federal land and waters will do nothing to address climate change,” said Sen. John Barrasso (R-Wyo.). “Energy producers will simply go elsewhere.”

Industry groups fearful

Industry associations questioned the legality of the action and feared worse to come.

“This decision is contrary to law and puts America on a path toward increased imports from foreign nations,” said Erik Milito, president of the National Ocean Industries Association. “The Department of the Interior has a legal obligation to expeditiously develop America’s energy resources,” he added, alluding to such laws as the Outer Continental Shelf Lands Act.

Dan Naatz, senior vice-president of government relations and political affairs at the Independent Petroleum Association of America, issued a statement indicating the strongest pessimism about a “pause” that has no termination date.

“Do not be fooled, this is a ban,” Naatz said.

He noted that federal lands and waters together accounted for 22% of US oil production and 12% of US gas production in 2019, according to the Energy Information Administration.

Liberal and environmental activists also voiced expectations of stronger action to come, and they welcomed the prospect.

John Podesta, chairman of the liberal advocacy group Center for American Progress and a Democratic Party stalwart, told reporters he expected the Biden administration to start setting various “key targets and key dates” for a transition away from fossil fuels. His implication was an array of timetables beyond Biden’s goal of a carbon-free power sector by 2035.

Fred Krupp, president of the Environmental Defense Fund, similarly anticipated much change to be directed for the transportation and power sectors and, eventually, economy-wide changes, for the sake of limiting climate change.

Krupp, like Podesta, is very plugged in with the Democratic Party.