Biden Administration Pares Down Lease Sales in Wyoming

Managing the Moratorium: Biden Administration Reduces Oil and Gas Lease Sales on Public Lands in Wyoming

President Biden’s 2021 moratorium on oil and gas lease sales sparked legal and policy shifts, leading to reduced approvals and increased federal royalty rates. As repercussions unfold, particularly in states like Wyoming, questions arise about the future of energy development on public lands. In this series, we explore these complexities and their broader impacts.

2021 Moratorium

Soon after taking office in January of 2021 President Biden signed Executive Order 14008, the result of which was an immediate pause by the department of interior on the sale of new oil and gas leases on public lands and in offshore waters. The moratorium was challenged that March by a group of 13 states and a permanent injunction was issued by the United States District Court for the Western District of Louisiana. However, the Biden Administration appealed the decision, and the Fifth Circuit Court of Appeals vacated the injunction. The Fifth Circuit’s decision led to a seven-month period during which no new leases were issued by the federal government, with the Administration eventually announcing the issuance of new leases in April 2022.

June 2022 Lease Sales

The lease sales made by the Department of Interior in June of 2022 signaled a significant departure from the leasing norms that preceded the 2021 moratorium, especially under the previous administration. Notably, after environmental review, the Secretary of Interior approved only 144,000 acres on 173 parcels of the 733,000 acres on 646 parcels nominated nationwide for leasing in that sale. This accounted for an 80% reduction in leasable acreage on lands managed by the Bureau of Land Management (“BLM”), as compared to the total acreage nominated. Additionally, the majority of the acreage approved for leasing was largely on land already being developed for oil and gas. A second notable outcome of the June 2022 lease sales was an increase in the royalty rate owed to the federal government to 18.75%. The first time in the over 100-year history of the Mineral Leasing Act that BLM has increased the royalty rate above the 12.5% statutory minimum.

2024 Wyoming Lease Sales

The BLM has already conducted one lease sale this year on lands they manage in the state of Wyoming. That first quarter sale resulted in BLM’s approval for lease of 13,416.92 acres over 30 parcels of the originally nominated 19,140.94 acres over 36 parcels. BLM’s second quarter sale, which is currently in the public comment period, proposes leasing 11,250.55 acres over 20 parcels. Compare this to the 2021 first quarter BLM lease sale that was blocked by President Biden’s Jan. 2021 executive order—476,506 acres over 383 parcels. The year before BLM’s first quarter sale leased 71,689 acres over 75 parcels. BLM’s current ethos towards leasing in Wyoming is clearly one of reduction.

Outlook

This is an area in which reasonable minds can disagree. On the one hand, a greater percentage of available leases are being sold under the scheme and there is an argument to be made that a reduction in available acreage will lead to less speculative leasing. On the other hand, restricting development on mineral rich sections of federal land, paired with an increase in the royalty rate owed by lessees certainly cannot have a positive effect on the industry. This cutback on land available for leasing appears to be the trend for the moment; however, with a presidential election coming in November, and with it the potential for a change in administration, only time will tell if this trend continues.

Written by James Harkin, Law Clerk at KMD Law.


References:

Louisiana v. Biden, 543 F.Supp.3d 388 (W.D. La. 2021), vacated and remanded sub nom. State of Louisiana v. Biden, 45 F.4th 841 (5th Cir. 2022).

Mineral Leasing Act of 1920 (as amended), 30 U.S.C. § 226.

BLM National NEPA Register, 2024 First Quarter Competitive Oil & Gas Lease Sale (2023).

BLM National NEPA Register, 2024 Second Quarter Competitive Oil & Gas Lease Sale (2024).

Press Release, United States Department of the Interior, Interior Department Announces Significantly Reformed Onshore Oil and Gas Lease Sales (Apr. 15, 2022), https://www.doi.gov/pressreleases/interior-department-announces-significantly-reformed-onshore-oil-and-gas-lease-sales.

Executive Order, The White House, Executive Order on Tackling the Climate Crisis at Home and Abroad (Jan. 27, 2021), https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/.

U.S. Department of the Interior, Report on the Federal Oil and Gas Leasing Program Prepared in Response to Executive Order 14008 (Nov. 2021).