Biden’s plan to help evict energy revolution from federal land

New climate rules proposed under Inflation Reduction Act

Technological innovation has unlocked America’s oil and gas resources, turning the United States into an energy superpower. But the Biden administration has proposed new regulations that will hamstring the nation’s energy-rich federal lands with red tape and higher costs.

Rather than supporting the innovation and development that has powered the American economy for almost 20 years, the Biden administration is supersizing its regulations to help evict the energy revolution from federal land.

The Bureau of Land Management spearheads the proposed rule within the Department of the Interior, which is tasked with overseeing the federally owned mineral rights across 30% of American land.

Much of the rule seeks to implement provisions that were legislated through the so-called Inflation Reduction Act, including raising royalty rates for resources that developers extract.

In addition to bidding for access to federal lands at auction, developers typically pay a variety of added fees, including these royalties.

Under the proposed rule, minimum royalty rates, for example, would rise from 12.5% to 16.67%. The minimum bid per acre would similarly be raised fivefold, from $2 to $10, while the $1.50 annual rental fee per acre would initially be doubled.

That rental fee would jump to $5 for leases held longer than two years and to $15 for those held longer than eight years. Approximately 11% of the oil and 9% of the natural gas produced in America will incur these higher fees.

Though those figures may not seem large, for reference, Saudi Arabia produced approximately 10% of the world’s oil in June.

The new rule isn’t simply an exercise in implementing the “inflation reduction” climate law. On its own initiative, the administration is taking the opportunity to further hamper domestic energy production by raising the bonds that drillers post for potential environmental cleanup.

Individual lease bonds would increase 15-fold, from $10,000 to $150,000. Statewide bonds would be set 20 times as high, from $25,000 to $500,000.

Even further beyond what the climate law demands, the most aggressive effort to inhibit fossil fuel development on federal land is the proposed introduction of “preference criteria” in federal leasing. These criteria would allow the administration to consider a parade of social, cultural, and environmental factors when deciding what land is offered for oil and gas development.

Following the administration’s ill-fated moratorium on issuing new oil and gas leases on federal land, “the potential for oil and gas development” would be relegated to one of five nonbinding criteria.

These efforts to burden federal lands with red tape and raise the cost of development stand in stark contrast to the benefits of the American energy revolution that were achieved by opening federal land for development over several decades.

Unleashed by advances in drilling technology, abundant and cheap natural gas saves Americans around $203 billion each year and prevents thousands of cold-related deaths each winter.

Similarly, economists at the Federal Reserve of Dallas attribute 10% of gross domestic production growth in the years immediately after the 2008-09 financial crisis to the shale oil boom. Dampening energy development on federal land will curtail these benefits.

To justify the proposed rule, several Biden administration officials have cast the overhaul as an effort to ensure that taxpayers are not left with the bill for cleaning up abandoned wells and, more generally, that they receive a fair financial return on federal assets.

Yet this campaign for fiscal frugality comes roughly one month after the administration proposed cutting rents and fees by up to 80% for solar and wind developments on federal land.

Renewable energy developers would also enjoy greater access to noncompetitive bidding for land and rights of way, which enable developers to submit offers without the need for a public auction that may raise the price.

In contrast, the federal mineral development program is already the second-largest single contributor to the Treasury’s coffers, behind only the IRS. This huge contribution, coupled with the effort to give renewable energy companies access to federal land at bargain prices, makes clear that fiscal fairness isn’t a serious priority for the administration.

Federal lands have been part and parcel of the American energy revolution, which has unlocked both fossil fuel resources and economic prosperity. The administration’s efforts to restrict access to these resources through higher financial and regulatory burdens — far in excess of what Congress has mandated — will help evict this generational economic miracle from the nation’s common property.

David Bernhardt is chair of the Center for American Freedom at the America First Policy Institute. He previously served as U.S. secretary of the interior. Oliver McPherson-Smith is the director of the Center for Energy & Environment at the America First Policy Institute.