The Oil Industry’s Grip on Public Lands and Waters May Be Slowing Progress Toward Energy Independence

“Balance” is a word frequently used to describe how the federal government should approach the management of national public lands and waters. In fact, the founding legislation of the U.S. Bureau of Land Management (BLM)—the largest land agency in the country—emphasizes the need for “balanced and diverse resource uses,” requiring that the lands under its jurisdiction be managed for a combination of conservation, recreation, wildlife habitat, and energy development, among other uses, to “meet the present and future needs of the American people.”¹

But what is the current balance of U.S. public lands and waters? The evidence is clear: Currently, oil and gas development is prioritized above all other land uses. For example, of all lands managed by the Bureau of Land Management, 90 percent are open to oil and gas leasing.² Offshore, more than half the outer continental shelf is open to oil and gas development. In fact, oil and gas is being prioritized not only on lands where fossil fuel resources are plentiful but also on lands that the Department of the Interior (DOI) has determined have low or even no drilling potential for oil and gas resources. Leasing on these low-potential lands is not just shutting out land uses such as recreation and conservation; it is also affecting the United States’ transition to homegrown renewable energy.³ A new Center for American Progress analysis finds that 77 percent—more than 78 million acres—of valuable renewable energy lands in western states are in areas with low oil and gas potential, but these lands are still prioritized for oil and gas leasing.

The United States can’t depend on oil and gas to lower high gas prices or to secure energy independence; it must transition to clean, renewable energy.⁴ Yet right now, the default to oil and gas is potentially putting that transition in jeopardy. Policymakers must prioritize the transition to clean energy by fixing the broken federal oil and gas program on public lands and waters.

Given the urgent need to transition the U.S. economy away from fossil fuels, the nation’s public lands can and should be used to strengthen its domestic energy supply in ways and places that make sense. In much of the western United States, that means solar, wind, and geothermal energy. Unfortunately, the prioritization of oil and gas leasing on lands that have no or low potential to produce oil and gas may be standing in the way of progress. For example, in a 2015 Resource Management Plan regarding oil and gas development in White River, Colorado, the BLM determined that “renewable energy projects could be incompatible with oil and gas activities and future development could be precluded by oil and gas activities.”⁵

CAP’s analysis overlays federal lands in six western states with little to no potential for oil and gas with U.S. Department of the Interior maps of solar energy variance areas,⁶ lands with potentially developable wind resources,⁷ and geothermal favorability areas.⁸ More than three-quarters of lands hosting these renewable energy resources are situated on lands that are not likely to have oil and gas resources but are still open for oil and gas leasing. This imbalance held essentially true across resource types: 77 percent of solar, 72 percent of wind, and 83 percent of the studied geothermal favorability areas are located on lands with low or no potential for developing crude oil. (see Table 1)

Table 1

There is significant overlap between lands with high renewable resources and lands with low or no oil potential in nearly every western state analyzed. Nevada, in particular, is notorious for speculative and low-potential oil and gas leasing.⁹ In the state, all three of the renewable resources examined had a more than 80 percent overlap with lands that have little to no potential for oil development. Moreover, although Nevada is considered one of the top states for solar potential—hosting more than 9 million acres of BLM-administered lands with potential for utility-scale solar development—more than 7 million acres of these lands are still prioritized for oil development; a whopping 41 million acres with geothermal availability overlap with lands with low to no oil potential.

Of course, not all lands should be used for energy development—be it oil or renewables—and the concept of balance with recreation, wildlife, conservation, and subsistence needs must be met. However, to meet President Joe Biden’s climate goal of reaching net-zero carbon emissions by 2050 and to break the economy’s ties to oil price volatility, the United States will need to site renewable energy projects on an estimated 145 million acres, much of which will need to be public lands and waters.¹⁰ The country is well under that target, and the prioritization of the oil and gas industry—even when the potential for oil and gas is low—is just one factor standing in the way.

How did public lands get to a point at which more than 75 percent of the best lands for renewable energy are prioritized for oil and gas? Fossil fuels remain the presumed preferred use of public lands, and existing regulations give the oil and gas industry excessive power in determining use outcomes. Renewables, on the other hand, go through a more robust process for leasing from which the oil industry has been largely exempt. This adds up to a system that places a thumb on the scale in favor of dirty fossil fuel technology at the expense of a clean energy future.

Nearly every step of the oil and gas leasing process on public lands is driven by the industry, starting with which lands are available for lease. Generally, companies submit nominations for parcels of land that they want to be available for auction, which determines what lands are offered up for lease. BLM’s industry-first leasing system allows anyone to anonymously nominate a parcel of land—for free—which kicks off the leasing process.¹¹ Oil and gas companies take full advantage of this broken system: From 2012 to 2021, the industry forced the BLM to expend time and resources processing nominations for leasing on nearly 107 million acres of public lands—nearly half of all BLM lands.¹²

When determining which lands to offer for oil and gas leasing, the BLM has historically examined whether lands are “eligible” and “available” for lease without any consideration given to eliminating conflicts with other resources or maximizing returns to taxpayers. As a result, there are few parameters on which public lands oil companies can access—or when they can access them. This lack of restriction even applies to lands with low and no oil potential: According to the U.S. Government Accountability Office, the BLM “does not perform an assessment of development potential” before offering leases for sale to the oil and gas industry, even though high-level development potential data are both public and easily accessible.¹³ Despite the small possibility for developing these lands, the oil industry still nominates and increasingly purchases leases on lands with low development potential. Fossil fuel companies can buy federal oil and gas leases for as little as $1.50 per acre, and holding more leases enables them to pad their books to look more favorable to investors.¹⁴

On the other hand, public lands leased for solar and wind energy go through full planning and leasing processes that look at both resource potential and any potential conflicts, such as critical habitat or overlapping rights of way, ahead of time.¹⁵ For example, lands with potentially developable wind resources are evaluated for siting considerations, including the presence of certain environmental resources or land use restrictions. Wind-resource areas that may be environmentally sensitive or are unlikely to be developed because of their ownership, designation, land use, or physical attributes are excluded from being identified as having potentially developable wind resources at all. Similarly, analyzing offshore areas for potential wind energy use requires that the U.S. Bureau of Ocean Energy Management (BOEM), the agency that oversees offshore energy development, identify suitable areas for leasing “through collaborative, consultative, and analytical processes that engage stakeholders, tribes, and State and Federal government agencies” as well as an environmental compliance review.¹⁶

Likewise, the cost of doing business for oil and gas on public lands has been dirt cheap for decades, with below-market bid, royalty, and rental rates and a cost-free ability to nominate lands for lease. Comparatively, nominations for onshore renewable leasing are priced from $5 to $15 per acre, and bid and rental rates are more closely aligned with the market.

Fortunately, new solar and wind rate reduction policies under the Biden administration aim to level the playing field.¹⁷

The Biden administration has made significant progress in prioritizing the renewable energy transition. In February 2022, the BOEM offered 488,000 acres in the New York Bight for offshore wind energy development, bringing in $4.37 billion from interested companies.¹⁸ Later, in May 2022, the BOEM held another competitive wind lease sale off the coast of the Carolinas that brought in an additional $315 million.¹⁹ The sales encouraged bidders to support workforce training programs and use the U.S. domestic supply chain for the projects. The BOEM is also expected to hold a first-of-its-kind offshore wind lease sale in northern and central California and the Gulf of Mexico by the end of the year. Notably, the Biden administration’s goal of deploying 30 gigawatts of offshore wind energy by 2030 would create 80,000 jobs and supply energy to power more than 10 million homes for a year.²⁰

Onshore, the administration is on track to meet its goal to permit 25 gigawatts of wind, solar, and geothermal energy on public lands by 2025. Last year, the BLM increased renewable energy permitting activities by 35 percent compared with the previous year. As of April 2022, the BLM has approved more than 120 renewable energy projects on public land that have a combined generating capacity of more than 12,000 megawatts, with many more leasing and permitting opportunities in the queue.²¹

The oil industry’s control over the use of U.S. national lands and waters has gone on long enough. In order to have real balance on public lands and waters and to meet national security and climate goals, policymakers must act now to address oil industry control and enable responsible and just renewable energy uses. They can do this through the following policy avenues.

Take all low-potential lands for oil and gas off the table for fossil fuel leasing

Companies—and the federal government—can predict fairly accurately where and to what degree lands will yield developable oil and gas. Therefore, lands without reasonable expectations of producing economically viable oil or gas should not be available for companies to lease. Sen. Catherine Cortez Masto (D-NV) and Rep. Susie Lee (D-NV) have introduced legislation, the End Speculative Oil and Gas Leasing Act, that would do exactly this.²² Prohibiting oil and gas leasing on public lands that are determined at the planning stage to have low or no potential for development would allow those lands to be reprioritized for other uses, such as renewable energy development, conservation, or recreation.

Reform the broken oil and gas program from top to bottom

The federal oil and gas program has long been broken.²³ The program—which the Government Accountability Office has considered “high risk” for more than a decade—is full of loopholes, subsidies, and outdated policies that are meant to put the oil and gas industry first and U.S. public lands and communities last.²⁴ For too long, this broken system has caused taxpayers to lose out on billions of dollars in additional revenue while prioritizing corporate profits and allowing the oil and gas industry to stockpile millions of acres of unused leases.

Congress has the opportunity to pass important legislative reforms that would modernize the federal oil and gas program, including by ending the leasing of lands with low or no potential for oil and gas drilling and other speculative practices such as noncompetitive leasing; raising the royalty rate, minimum lease bid amount, and rental rates; and requiring that oil and gas companies—not taxpayers—are held responsible for the full cost of cleaning up the wells the companies drill on federal lands and waters.²⁵ If considered under reconciliation, many of these changes would be revenue raisers.²⁶ However, the Biden administration should not wait for Congress to act to take on reforms that can be achieved administratively through a rulemaking.

Increase responsibly sited, just renewable energy on public lands and waters

Through lease sales and permitting prioritization, the Biden administration has already taken considerable action to incentivize and expand renewable energy on public lands and waters. Now, Congress should consider the Public Land Renewable Energy Development Act (PLREDA), which would facilitate investment in high-quality renewable resources, ensure a fair revenue share for affected communities, and minimize impacts to wildlife and cultural sites.²⁸

End oil and gas leasing in the next 5-year plan

The five-year plan is a federally mandated process that determines the offshore oil and gas leasing schedule for the following five years. On July 1, 2022, the Department of the Interior released its proposed 2023–2028 plan, which could include anywhere from 0 to 11 lease sales once finalized.²⁹ The next 90 days are critical, as the program is subject to public comment. The final plan must prioritize a clean energy transition and protect coastal communities by offering no new oil and gas leases.

Crack down on taxpayer-subsidized speculation and require oil and gas companies to use land or lose it

Right now, oil and gas CEOs are idly sitting on 12.3 million acres of leased but undeveloped U.S. public lands and approximately 9,000 approved but unused federal onshore permits to drill.³⁰ Oil and gas companies should be required to either use or give up their unproductive public lands so they can be managed for better uses, such as conservation, climate mitigation and adaptation, outdoor recreation, and renewable energy.³¹

The prioritization of oil and gas on national public lands—even on lands without oil-development potential—is slowing the transition to renewable energy. Fossil fuel companies receive blatant favoritism over renewable energy development on public lands and waters, even as the world faces a climate crisis. To address this problem, the Biden administration and Congress must bring the public interest back into federal land and water management. Proactively stewarding national resources and transitioning to a clean energy economy is essential to “meet the present and future needs of the American people” and to lead the country to energy independence.³²

The authors would like to thank Michael Freeman, Nicole Gentile, Steve Bonitatibus, Julia Schroeder, Keenan Alexander, and Meghan Miller for their contributions to this report.