Oil and gas reform; Getting my goat; Good news

No, Biden doesn't love fossil fuels more than Trump!

Jonathan P. Thompson

Jul 25, 2023

The News: The Biden administration has proposed the first substantial reforms to the federal oil and gas leasing program since the late 1980s. The rule would provide a fairer return to taxpayers by increasing royalty rates, rental amounts, and minimum reclamation bond amounts. The rule also aims to protect wildlife and cultural sites by steering development away from such areas and toward those with existing infrastructure.

The Context: Prior to 1920, oil and gas development fell under the Oil Placer Act of 1897 and the General Mining Law of 1872: If a driller thought a piece of public land could produce oil, they could stake a claim, develop the land, and eventually patent, or take title, to the land, virtually for free. There was no lease payment, no rent, and no royalties—it was a straight-out giveaway of the taxpayers’ land and minerals.

The folly of this system became apparent in the early 1900s, when the U.S. Navy transitioned its fleet from being coal-fired to oil-fueled, and someone realized that the federal government soon would be forced to purchase at a premium the very oil it had given away for free. The Naval Oil Reserves were withdrawn from the public domain under the Pickett Act of 1911 and the Senate began creating a better system based on a bill forwarded by Sen. Reed Smoot, a Utah Republican whose Mormon background had instilled in him a drive to steward the land and resources .

Oil tycoons and many Western politicians pushed back. “I am absolutely opposed to the leasing system, the paternalism, the bureaucracy, the autocracy, the un-American system that the leasing system entails,” said Sen. William King, a Utah Democrat. Sen. Albert Bacon Fall, of New Mexico, also wanted to preserve the free-for-all for the sake of his oil-rich buddies. But they realized that the alternative to leasing could be full-on nationalization of America’s coal, oil, and gas — and that was really scary.

So, instead of trying to kill the bill, Fall and friends set about to influence it. The ensuing back and forth resulted in the General Mineral Leasing Act, which was signed into law in 1920. It imposed a semblance of order upon the petro-frenzy while allowing corporations to take the American taxpayer’s oil and gas in return for a mere 12.5% royalty.

Congress has tweaked the Act over the years, most substantially in 1987, but its basic structure remains the same as when it was created. It still works in favor of oil companies and at the expense of the public lands and American taxpayers — the 1920 royalty rate stands, leases go for as little as $2 per acre, and statewide and nationwide reclamation bond amounts have remained unchanged since 1951, while individual lease bonds were last changed in 1960, and are not anywhere near enough to cover the cost of cleaning up and plugging a well.

.The Biden administration, guided by provisions in the Infrastructure Law and Inflation Reduction Act, is now setting out to prevent the outright bilking of the public by:

Increase production royalty rates from the current 12.5% to 16.67% on all leases issued in the ten years after the Inflation Reduction Act went into effect. Beginning in 2032, 16.67% will become the minimum royalty rate for new leases. This increase puts the federal rate closer to most state land rates (see chart above), but is still lower than the federal offshore rate of 18.75%. Still, it should substantially increase federal oil and gas royalty revenues, half of which goes back to the states where the commodity was produced.
Increase minimum bids for oil and gas leases from $2 per acre to $10 per acre, and up base rental rates incrementally over time, reaching $15 per acre per year in 2030. That’s a five-fold increase, which is great. Still, I can’t help feeling like the oil corporations are getting a pretty darned good deal — at our expense.
Establish an expression of interest fee. When an oil company has its eye on a particular parcel, it expresses interest in it and the BLM often puts it up for lease. This has been free of charge in the past. Under the new rule it would cost $5 per acre, which should reduce speculative leasing.
Increase minimum reclamation bond amounts. Current reclamation bonds — sort of like collateral against cleaning up a well — are a mere $10,000 per lease; $25,000 for all of a company’s leases in a single state; and $150,000 for all of a company’s federal land operations nationwide. This averages out to just over $2,000 per well, which is batscat crazy since the cost to reclaim and plug a single well easily can exceed $100,000. So it’s in a company’s best financial interest to walk away, forsake the bond, and abandon the well. Under the proposed rule, the bond for a single lease will jump up to a much more reasonable $150,000, while the statewide bond will be $500,000. Nationwide blanket bonds would be eliminated. It’s a long time overdue, but should help alleviate the abandoned well crisis of the future. Now we just have to get a handle on all the existing abandoned wells.
Incorporate preference criteria into oil and gas regulations. What this means is that the BLM would direct leasing away from areas with sensitive cultural resources or wildlife habitat and toward parcels that are more likely to produce oil or gas. This will hopefully mitigate impacts, avoid conflicts, and reduce speculative lease stockpiling.
~~Help alleviate the climate crisis by ending oil and gas drilling on public land~~.

Yeah, no, the administration is not going that far yet. The proposed rule does mention greenhouse gases, but only barely. Here’s what the rule has to say:

… the analysis of the impacts of leasing these parcels would also address the potential impacts of direct, indirect, and cumulative greenhouse gas emissions from leasing in accordance with the National Environmental Policy Act (NEPA) and applicable legal precedent. … the BLM requests comment on whether the preference criteria or other portions of this proposed rule should be expanded, or new provisions added, to discuss analysis of greenhouse gas emissions and related decision-making based on the analysis.

In other words, they’re kind of putting this one onto us. So send your comments to Interior now (the official public comment period apparently has not opened yet).

From the Gets My Goat Desk

Pretty much anytime the Biden administration does anything regarding federal oil and gas policy, you can count on someone reminding us that Biden promised to end oil and gas leasing on public lands and then pulling out this line: “the Biden administration has approved more oil and gas drilling permits on public lands than the Trump administration did over an equivalent period of time.”

That’s not untrue, but it is misleading. And therefore, it gets my goat.

Biden hasn’t ended fossil fuel development on public lands, but he has made steps in the right direction. He’s proposed various reforms — such as the ones noted above along with methane emissions rules and so forth — that should mitigate some of development’s impacts. And he’s leased out less land than his predecessors.

So for environmental groups to try to make Biden out to be more fossil-fuel-friendly than Trump is not only inaccurate, but also unproductive. Trump stocked his cabinet with right wing extremists and corporate stooges, eviscerated environmental protections left and right, and desperately promoted public land exploitation.

And, guess what? Trump — over the course of his term — issued far more drilling permits on a monthly average than Biden did. Here’s the stats (I know I just ran this the other day, but it looks like some folks need to see it again):

As you can see, Biden’s permitting pace (270 per month) was faster than Trump’s first two years (256 per month). But then Trump started tossing drilling permits out like candy at a parade (407 per month for his last two years). Under Biden, meanwhile, the agency has gradually slowed its permitting tempo (222 per month for the first nine months of this fiscal year).

So the tally so far is:

Trump’s monthly APD average over his full term: 331
Biden’s monthly APD average thus far: 260

By all means keep hammering on Biden for not living up to his climate promises. But can we please retire this outdated and inaccurate talking point?

Sorry, but here’s another one from the Gets My Goat Desk. I see it over and over: Some smart person presents concrete data about the temperatures in Phoenix on social media:

And inevitably a bunch of trolls who used to live in Phoenix pounce with replies like this one:

No. It’s. Not.

Phoenix has suffered through 26 consecutive days of 110 degrees Fahrenheit or higher and it looks like the streak will continue for the rest of the month. The previous record 110+ F streak: 18 days back in 1974.
Phoenix’s average daily temperature so far for July is 102.5 degrees. That’s a whopping seven degrees higher than “normal.” And remember, “normal” is for 1991-2020, which itself was warmer than the previous 30-year normal, which was warmer than the one before that, and so on.
27 all-time highest maximum temperature records have been broken or tied in the Southwest so far this month. More alarming, 72 highest minimum temperature records were matched or broken across the West this month. That includes in Phoenix, where the overnight low was a searing 97 degrees F on July 19. Sure. It’s always this hot.
It’s so hot birds are dying, goddamnit!

Look, if you want to debate how much this unprecedented heat is caused by climate change versus the urban heat island effect versus naturally occurring heat domes, go right ahead. Automatically blaming it all on climate change without evidence isn’t much better. But you can’t ignore the data: These temperature readings were taken at the same place in a reliable manner over the course of decades. It’s frigging hot out there, people!!!!

And that friggin’ heat and lack of a meaningful monsoon so far have begun erasing the aridification-easing effects of the wet and cool winter, darnit. On July 4, Colorado and the Four Corners region were drought-free. In just two weeks’ time, a swath of abnormal dryness had invaded the area, as is shown in the U.S. Drought Monitor map below. I also noticed that the Animas River dropped below median flows for the date for the first time this summer.

And it’s just gonna get worse, at least for the next month.

Good News Department

On July 14, the Wildlands Conservancy sealed the deal and acquired a 320-acre parcel in and around Cottonwood Wash on the outskirts of Bluff, Utah. It’s a huge win for conservation and the community of Bluff. The private parcel will now be preserved, rather than developed, and open to the public.