Energy leasing moratorium on public lands brings praise, lawsuit

President Joe Biden’s order issued Wednesday to pause new oil and gas leasing on public lands was praised by Coloradans who see the move as crucial to fighting climate change but was immediately met with a lawsuit by a Colorado-based industry group.

The order makes tackling climate change a priority and will be in place for public lands and waters while leasing and permitting practices for fossil fuel development undergo a “rigorous review.” It follows a directive issued Jan. 22 that halted new leases and permits for 60 days but allowed high-ranking Interior Department officials to approve activities on federally managed lands.

That directive is still in place.

Kelly Nordini, executive director of Conservation Colorado, said in a statement that Coloradans overwhelmingly support addressing climate change “based in science and grounded in equity and health to protect our state now and for future generations.”

Gov. Jared Polis, whose goal is to see the state’s electric grid 100% carbon-free by 2040, said in a statement  that Colorado will work closely with the Biden administration as it reviews policies around energy development on public lands.

“And as long as the review is completed expeditiously, we don’t expect an economic impact in the short-term with current market factors and the many existing unused leases and permits,” Polis said.

But the Denver-based Western Energy Alliance, an industry organization, said a recent study by a Wyoming trade group shows a prolonged leasing moratorium could cost eight Western states as much as $33.5 billion over Biden’s first term and 58,676 jobs annually. The president doesn’t have the authority to ban leasing on public lands, said Kathleen Sgamma, the group’s president, and the group filed a lawsuit Wednesday to stop the executive order,

“All Americans own the oil and natural gas beneath public lands, and Congress has directed them to be responsibly developed on their behalf,” Sgamma said. “President Biden cannot simply ignore laws in effect for over half a century.”

The alliance filed the lawsuit in federal court in Wyoming.

The oil and gas industry shares Biden’s goal of reducing carbon emissions and has taken great strides to meet the state’s ambitious climate goals, Lynn Granger, executive director of the American Petroleum Institute-Colorado, said in a statement. Biden’s decision to suspend new leasing on federal lands is misguided, she added, “particularly in Colorado and across Western and Southern states where such work is integral to providing Americans with affordable, reliable energy.”

Colorado is the seventh-biggest energy producer in the U.S. and about 36% of its lands are federally managed. Energy development occurs on both public and private lands in Colorado.

Last year, the state of Colorado received about $57 million in mineral royalty and fee revenue from energy development on public lands in the state. States get about 50% of the money.

However, conservation groups and other opponents of drilling on public lands say mineral royalties and fees should be raised to give the public a fair return on its lands. The advocacy group Taxpayers for Common Sense said between 2009 and 2018, Colorado and the federal government lost out on $1.3 billion in potential revenue because of outdated royalty rates while more than 80,000 acres of public lands in the state were leased noncompetitively.

On top of that, drilling opponents say public lands are supposed to be managed for multiple uses and millions of acres across the West that are under lease are sitting idle. At the end of fiscal 2019, there were 2.5 million acres under lease in Colorado, but only about 1.5 million acres in production, according to federal figures.

The move to renewable energy and electric vehicles will create more jobs and help minimize the effects of climate change, including wildfires and drought, a number of Colorado organizations said.

“We’re facing serious destruction of our lands, waters, air and wildlife, which increases the risks of disease pandemics and climate change-induced disasters,” said Gwen Lachelt, a former La Plata County commissioner and executive director of Western Leaders Network.

Brad Handler, senior fellow for public policy at the Payne Institute at the Colorado School of Mines, said he believes the near-term impact of the leasing moratorium will be much less than the industry says. Several companies anticipated a pause in leasing, which was a pledge that Biden made during the campaign, and they “filed applications aggressively and received permits,” particularly on public lands in the Permian Basin in southeastern New Mexico.

“A few of them say they have as much as four years of running room to proceed as normal,” Handler said. “So, I think the net impact on the industry will be very small.”

If the administration increases royalty rates and imposes more stringent regulations, “then we can consider what the longer-term impact is once we have a better sense of what they’re doing,” Handler added.

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