February 1, 2021

Lawmakers React Negatively To President Biden’s Decision To Limit Drilling

According to Bloomberg, the Biden administration has issued at least 31 new drilling permits for operations on federal land and coastal waters.

Despite these moves, on January 27 President Joe Biden signed an executive order that calls for pausing new oil and gas leases on federal lands. Specifically, the order, available here, directs the U.S. Department of the Interior to limit new leases “to the extent possible,” while excluding oil activity on Native American lands that can be a serious revenue generator for tribes. The order also directs agencies to end federal subsidies for fossil fuels “as consistent with applicable law.” According to the American Petroleum Institute, federal areas account for 22 percent of U.S. oil production and 12 percent of natural gas output.

The U.S. Chamber of Commerce outlined three negative consequences the order is likely to have:

  • Economy and Jobs. Hundreds of thousands of jobs could be lost across the country, especially in New Mexico, Texas, Colorado, Louisiana, and Wyoming.
  • National Security. The order will push energy infrastructure investment to foreign sources, a move that will harm both U.S. economic and national security.
  • Environmental. Experts agree that the world will need oil and gas for decades, and that natural gas in particular is essential to meet emissions reductions goals and allow for the deployment of more renewable energy. Banning new production on federal lands could lead to more imports and increased greenhouse gas emissions.

Toby Mack from the Energy Equipment and Infrastructure Alliance, which MSCI is a member of, said the order “will cut deeply into state revenues from leases and production royalties that fund public services, especially in North Dakota, New Mexico, Texas, Louisiana, Wyoming and Colorado, while eliminating $8 billion of federal revenues from leases and royalties.”

The order already has garnered some opposition on Capitol Hill. Politico reported last week that Texas Democratic Reps. Vicente Gonzalez, Henry Cuellar, Lizzie Fletcher, and Marc Veasey already have urged the president to rescind the order. In a letter, the four lawmakers said, “A federal ban for any period of time will certainly imperil hundreds of thousands of jobs, entire communities, and billions of dollars in royalty revenues to the Federal Treasury and eliminate funding for important conservation programs such as the Land and Water Conservation Fund.”

Additionally, a group of 25 Republican senators released legislation last week that would block future moratoria for leasing on public lands without explicit authorization from Congress.

According to Axios, the order that President Biden signed last week also:

  • Sets a target of conserving 30 percent of the nation’s lands and oceans by 2030;
  • Elevates the climate’s role in foreign and security policy, including by requesting a national intelligence estimate on the security implications of climate change;
  • Creates a new task force of 21 agencies and departments to “enable a whole-of-government” approach to climate;
  • Directs federal agencies to “coordinate investments and other efforts to assist coal, oil and natural gas, and power plant communities”; and
  • Requires federal agencies to procure carbon-free power and zero-emissions vehicles.