Administration's Federal Leasing Policy Continues to Raise Flags

Olivia Culver
Posted April 6, 2021

The Biden administration’s pause in new natural gas and oil leasing on federal lands and waters continues to look like a hard sell, not only in energy-producing states but also with traditional Democratic allies in organized labor.

We’ve talked about potential negative effects of the administration’s policy on leasing and have warned against even greater impacts to the economy and American energy security if the pause becomes a permanent ban on federal leasing and development (see here, here and here). Projected impacts from a full-on ban on leasing and development in an analysis by OnLocation include:

• Approximately 1 million jobs could be lost – nearly 120,000 in Texas, more than 62,000 in New Mexico and more than 48,000 in Louisiana
• Foreign oil imports could increase 2 million barrels per day
• Carbon dioxide emissions could increase 5.5%

Similar concerns surfaced as the U.S. Interior Department (DOI) held a forum on the federal oil and gas program. At the public session, Frank Macchiarola, API senior vice president of Policy, Economics and Regulatory Affairs, noted that federal lands and waters account for 22% of U.S. oil and 12% of U.S. natural gas production and urged DOI leaders to recognize the importance of this production to U.S. energy security, economic growth and continued environmental progress:

“Continued access to these critical resources and the billions of dollars in revenues derived from them are essential to maintaining America’s energy security. The facts are clear that oil and natural gas development on federal lands and waters provides affordable, reliable, and cleaner energy, and remains essential to America’s post-pandemic recovery and long-term economic growth.”

Sean McGarvey, president of North America’s Building Trades Unions, zeroed in on potential job losses:

“We must ask if an outright ban on federal leases is the best first step without addressing the downstream job impacts. The last bastions of middle-class employment are in gas and oil, petrochemicals, and power generation.”

The potential state and local impacts have prompted discussion by elected officials from both sides of the political aisle since the leasing pause was announced – policymakers especially concerned about possible economic effects, such as those detailed above in Texas, New Mexico and Louisiana.

This post noted that New Mexico Democratic Gov. Michelle Lujan Grisham and both Democratic U.S. senators warned against prolonging the leasing pause, citing the potentially debilitating effects of a permanent ban on critical state funding for infrastructure and education.

Four U.S. House Democrats from Texas – U.S. Reps. Vicente Gonzalez, Henry Cuellar, Lizzie Fletcher and Marc Veasey – wrote to President Biden, imploring him to reconsider the halt in light of a struggling mid-pandemic economy:

"As the United States works to emerge from the COVID-19 pandemic, which has killed more than 400,000 Americans and destroyed the livelihoods of many more, now is not the time to jeopardize American jobs, or the critical tax and royalty revenues that federal leases generate for local, state, and federal government that need funds now. Instead, we should invest in our nation’s infrastructure and create the jobs that will help our nation emerge stronger after this pandemic."

Louisiana Gov. John Bel Edwards echoed their plea in a statement, citing the leasing and development of natural gas and oil on federal lands and waters as “critical not only to the coastal Gulf states that host the infrastructure and support industries for Gulf OCS exploration, but to the economy and energy security of the nation as a whole.”

DOI itself acknowledges the benefits of federal energy production. It recently announced that offshore oil and natural gas production provided $249 million in FY2020 revenues for conservation, restoration and hurricane protection programs to Gulf states. Additionally, DOI announced $1.6 billion for maintenance projects, transportation and recreation infrastructure in national parks, national wildlife refuges and recreation areas, and Bureau of Indian Education schools. This funding, through the Great American Outdoors Act, is provided by energy development on federal lands and waters.

Much is at stake in terms of jobs, the economy, the environment and our national security from the administration’s position on new federal leasing. There’s clear, bipartisan concern for this policy, which should be carefully considered as the administration ponders its next step.