'Broken' Oil Program Under Review

(Bloomberg) -- The U.S. government program for selling drilling rights on federal land is so “fundamentally broken” that changes could be needed to address climate change and ensure taxpayers get a greater value from extracted oil and gas, Interior Secretary Deb Haaland said Friday.

“The American taxpayers deserve to have a return on their investment,” Haaland said, stressing that the public lands managed by Interior are a shared asset.

“They don’t just belong to one sector or one industry. They belong to the outdoor economy, they belong to the kids who take their first breath, on a hike out on a trail,” Haaland told reporters. “They belong to everyone, and it’s our job to make sure that every voice is heard with respect to how we manage those lands.”

A week after taking office, President Joe Biden ordered the Interior Department to pause selling new oil and gas leases on federal lands and waters while the agency studies possible requirements on any future sales -- such as higher royalty payments, location restrictions and even limits on the number of tracts held by individual companies.

Although Haaland has repeatedly stressed the leasing pause is temporary, it could take months or years to implement substantive changes -- and the overhaul could have profound impacts on the future of energy development on public lands and waters now responsible for 22% of U.S. oil production and 12% of the country’s natural gas.

The Interior Department is taking public comment on how to proceed through April 15, with plans to issue an interim analysis outlining recommended changes this summer.

That report “will wrestle with some fundamental questions about the oil and gas program, including whether it’s delivering a fair return to American taxpayers, whether it fairly accounts for the impacts of climate, whether there’s adequate opportunity for public input, including from Indian tribes, and whether we have the right mechanisms in place to avoid irreparable harm to wildlife, water, sacred sites and beyond,” Haaland said.

Some environmentalists have urged a permanent halt to the sale of drilling rights on federal land and waters, arguing the territory should be enlisted in the fight against climate change, rather than used to produce the fossil fuels that drive the phenomenon. That dovetails with views that Haaland espoused long before she became Interior secretary, when she encouraged the end of fracking on federal lands.

But the oil industry has warned that an extended moratorium or a sharp crackdown on future leasing opportunities would curtail domestic energy supplies, harming U.S. national security interests while depriving federal coffers of revenue tied to the activity.

While oil leasing is paused, Interior is seeking to advance renewable energy development, including new coastal wind farms along the East Coast.

Haaland also emphasized her plans to boost conservation of federal lands, with a focus on stemming the decline of biodiversity, fighting climate and addressing inequities in the public’s access to nature.

Haaland, a former Democratic lawmaker from New Mexico who was sworn in as secretary last month, is also examining the boundaries of the Bears Ears National Monument in Utah, which was shrunk under former President Donald Trump. Haaland’s review, which will include meetings with local leaders and other stakeholders next week, could result in enlarging boundaries for the protected site.

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