By Ella Nilsen and Matt Egan, CNN
A long-awaited Department of Interior report on federal oil and gas leasing, tellingly released on Black Friday, is drawing criticism from multiple fronts.
The review, which was expected in June, recommended an increase in leasing fees for companies seeking to drill for oil and gas on federal land and water. But while it mentioned climate change as an important factor to consider in the leasing process, it did not suggest how the federal government should weigh the crisis in its decisions. Nor did it call for a halt on federal drilling leases — a pledge President Joe Biden campaigned on.
Environmentalists are slamming the report for tiptoeing around climate change. It’s also being criticized by the oil industry for suggesting drillers pay more to extract fossil fuels from public lands.
The timing of the report and its weak recommendations underscore the tough politics the Biden administration faces as it attempts to achieve the President’s climate goals, especially with a razor-thin Senate majority where industry-friendly West Virginia Sen. Joe Manchin is Democrats’ swing vote.
Biden is also facing attacks on inflation. A full-throated crackdown on federal drilling, landing at a time when gas prices are hovering near seven-year highs, would have provided even more ammo for those blaming Biden for pain at the pump.
Climate advocates told CNN the precarious politics in Congress around Biden’s ambitious legislative agenda is also hampering what the administration can achieve on climate change through agency action.
“In some ways they’re handcuffed by the ambition to get Build Back Better through,” Joel Clement, a former Interior Department official and a senior fellow at Harvard University’s Belfer Center for Science and International Affairs told CNN. “They can’t be seen as really leaning in on climate change, which is tough to take, and is entirely due to certain senators.”
One source with knowledge of the Senate negotiations told CNN that Manchin insisted he see the Interior report to learn more about the House reforms in the reconciliation package. But Manchin hasn’t explicitly said whether he supports the leasing reforms, the source added.
“As the packages got more and more delayed, the report got delayed in parallel,” the source said.
Manchin’s spokesperson Sam Runyon didn’t respond to a request for comment.
Interior press secretary Tyler Cherry reiterated the report’s recommendations in a statement to CNN, including an increase in leasing fees and considering environmental concerns in leasing decisions.
“Analyses of the effects of greenhouse gas emissions are ongoing and will be incorporated in the Department’s planning and reviews as it moves forward with leasing consistent with court direction,” Cherry told CNN in a statement.
The Interior recommendations would have to be implemented by Congress, and royalty rate increases are currently in the Build Back Better bill, which was passed by the House last month and is currently being negotiated in the Senate.
“The report provides an incredibly compelling justification for why the reforms in Build Back Better are necessary,” Collin O’Mara, president of the National Wildlife Federation, told CNN.
Manchin — the chair of the Senate Energy and Natural Resources Committee — is being lobbied by industry to oppose the rate increases and other fees. The American Petroleum Institute, the US Oil and Gas Association, the National Ocean Industries Association and other oil and gas industry trade groups wrote a letter to Manchin on Wednesday encouraging him to remove the fees and rate increases.
“It is our hope that as this bill is considered by the Senate these punitive provisions are removed and the legislation instead focuses on economy-wide and broad-based actions to craft a 21st century natural resources policy,” the letter says.
As a vote looms on the president’s climate and economic agenda, the White House is stepping cautiously around the issue of inflation and high gas costs — which Republicans have been roasting the president for.
“Biden’s getting slammed by Republicans for high pump prices,” an industry analyst told CNN before the Interior report’s release. “They are already dinging him for his pause on oil and gas leasing, and a new document announcing major changes to federal leasing policy would be more fodder for these kinds of political attacks.”
After the report was released, the American Petroleum Institute put out a statement criticizing the Biden administration for “mixed signals” on the future of its oil and gas leasing program.
“Days after a public speech in which the White House said the president ‘is using every tool available to him to work to lower prices and address the lack of supply’, his Interior Department proposed to increase costs on American energy development with no clear roadmap for the future of federal leasing,” API’s Senior Vice President of Policy, Economics and Regulatory Affairs Frank Macchiarola said in a statement.
Limiting the report’s proposed reforms didn’t do much to quell Republican attacks, either. On Monday, Republican Sen. John Barrasso of Wyoming took to the Senate floor to blast Biden and the Interior Department for even proposing raising royalty rates, describing them as “additional fees — more taxes, more expenses” on federal oil and gas leases.
“If President Biden and his department of the Interior get their way, the prices will go up even higher,” Barrasso said. “Inflation is here to stay under the Democrats.”
In reality, Covid, not Biden, is the primary driver of inflation.
The rapid shutdown of the US economy, followed by a robust rebound, has meant supply simply can’t catch up with demand. Bottlenecks in supply chains have driven prices up on everything from food and TVs to used cars.
At the same time, oil production by OPEC nations and US oil companies has lagged behind the recovering appetite for gasoline, jet fuel and diesel.
Industry and climate advocates alike were also frustrated about the timing of the report, which was delayed for months as lawmakers repeatedly asked Interior officials when it would be made public.
“Releasing it on the Friday after Thanksgiving on one of the slower news cycles of the year is emblematic of what the report said and did,” Kyle Tisdel, a senior attorney focusing on climate and energy at the Western Environmental Law Center, told CNN. “It’s certainly a complicated mix of factors but ultimately the result is a tremendously cautious and tepid approach on these issues, and an approach that doesn’t follow through on campaign promises that were made.”
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