In the push to deliver on campaign promises, Interior Department’s energy drive looms large

WASHINGTON – With control over more than 500 million acres of public land and hundreds of millions of acres offshore, Interior Secretary Ryan Zinke is moving rapidly to promote American production of coal, oil and gas – a critical piece of President Donald Trump's vision for "making America great again."

In the past few weeks alone, Zinke has lowered the price companies must pay the government for offshore drilling; acted to accelerate approval for onshore drilling permits; approved exploratory drilling in the Arctic's Beaufort Sea; and scheduled lease sales on Western lands the Obama administration had deemed off limits.

And Zinke's moves have immediate impact. While Trump's ambitious plans to overhaul the tax code and renegotiate international trade pacts remain far off, and his campaign to roll back environmental regulations will take months to produce results for industry, Zinke is taking concrete action to deliver on one of Trump's most important campaign promises.

As a candidate, Trump pledged that within his first 100 days he would "lift the restrictions on the production of $50 trillion dollars' worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal." While federal rules prevent him from wiping out these curbs overnight, Trump has taken what he describes as "historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations."

At this task, Trump remarked during an event at Interior in late April, Zinke "is doing an incredible job."

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Elizabeth Gore, chair of the government relations practice at Brownstein Hyatt Farber Schreck, said Trump's clear vision on the subject has allowed Zinke to move ahead more quickly than some other appointees.

"They had very defined policy objectives from the get go – as opposed to some areas where we're still struggling to get meat on the bones, beyond the bullet points," Gore said.

Since taking office, Trump has issued two major executive orders on energy development, ordering the reversal of several of President Barack Obama's signature climate rules, as well as limits Obama imposed on drilling in the Arctic, Atlantic and Pacific oceans. Interior officials have moved rapidly to implement those orders, citing them in multiple federal notices seeking big shifts in policy.

On July 6, for example, as he outlined a new secretarial order aimed at speeding the oil and gas permitting process within the department's Bureau of Land Management, Zinke said: "This is just good government, and will further support the president's goal of American energy dominance."

The department has repeatedly upended Obama-era rules that sought to extract higher royalty payments from the energy industry or set new limits on where and how companies can develop publicly owned resources.

The same day Zinke moved to expedite permits, Interior's Bureau of Ocean Energy Management announced it would lower the rate companies must pay the government for shallow-water offshore drilling projects from a planned 18.75 percent to 12.5 percent. Months earlier, Interior's Office of Natural Resources Revenue suspended a new accounting system that would have compelled coal firms and other companies to pay millions of dollars in additional royalties on minerals on federal land.

Critics say these moves will imperil fragile habitats and the species that depend on them, while also depriving taxpayers of the returns they deserve on public resources. The moves could also slow the development of renewable energy sources, such as wind and solar, critics say.

In an interview, acting BLM director Michael Nedd said his agency strives to balance the need for energy with the need to safeguard the environment.

"One could argue – I don't know, but one could argue – that under the previous administration that scale could have been tipped too far on the environmental side and energy wasn't developed," Nedd said. "So right now, what we're looking at is, how can we have that balance?"

Nedd said the administration is allowing firms to develop all forms of energy, including renewables, "and then let the market choose."

Kathleen Sgamma, president of the Western Energy Alliance, a consortium of independent energy producers, met with Zinke in April to discuss federal energy policy.She and five top oil and gas officials from the group made the case to Zinke and his deputies that less restrictive federal rules would free their industry to create more high-paying jobs.

"We can help put working-class people back to work, the main constituency of President Trump, back to work," Sgamma said, adding that the new "mind-set" at Interior "is very helpful."

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Environmentalists and some state officials are protesting the moves. Last month, the attorneys general for California and New Mexico filed suit in federal court challenging Interior's about-face on royalty payments for federal minerals, saying it "nullifies much-needed, common-sense regulations that were formulated through a time-intensive rulemaking process."

California and New Mexico also filed suit July 5 charging that the department's decision to delay implementation of a rule limiting methane emissions from oil and gas operations on federal land deprives them of millions of dollars in payments needed to support education.

Kate Kelly, who served as a senior adviser to former interior secretary Sally Jewell and now directs the public lands program at the liberal Center for American Progress, said in an email that Zinke's "singular focus" on energy development "is starting to shift how the department operates," particularly regarding the collection of royalties.

One area of clear friction is Obama's identification of priority habitat for the dwindling numbers of greater sage grouse in 11 Western states. The plan took years to develop and received the approval of both Republican and Democratic governors.

Under Zinke, BLM has already scheduled lease sales in at least two areas in Wyoming and Utah identified as priority habitat for the birds. The agency is also moving ahead with a lease sale near Utah's Dinosaur National Monument, though the National Park Service had in the past objected to the project.

"Leasing these lands, most of which do not even have high potential for development according to the BLM's own analyses, has a lot of risk and not a lot of benefit – except, presumably, to show that more leasing can be considered anywhere at any time," said Nada Culver, senior counsel at the Wilderness Society.

Recent developments in the energy market have made the federal government a less central player over the past decade, in part because of new oil and gas finds and easier leasing practices on private lands. The federal share of crude oil production dropped from nearly 36 percent in fiscal year 2010 to 21 percent in FY 2015, according to the Congressional Research Service, while its share of natural gas production dropped from nearly 33 percent in FY 2006 to just 16 percent in FY 2015.

Federal lands remain more central to coal production, accounting for roughly 40 percent of the coal that's burned in American power plants each year. Zinke lifted a year-long moratorium the department had imposed on federal coal leasing, but it is unclear how many buyers there will be: Several companies privately informed department officials last year that they had sufficient supplies for the near term.

Given the continuing retirement of coal-fired power plants, fresh interest in federal coal leases may reflect "a new period of speculation" rather than a rise in demand, said Tom Sanzillo, director of finance for the Institute for Energy Economics & Financial Analysis, in an email.

And Mike Cantrell, co-chairman of the Oklahoma Energy Producers Alliance, noted that public equity offerings in the shale oil industry dropped dramatically this year. Opening up more federal areas to drilling could depress current prices even further.

Still, Erik Milito, who directs the American Petroleum Institute's upstream and industry operations, said Interior is establishing the kind of "stable regulatory regime" that allows firms to make long-term plans.

"It will take some time," he said, "but the signals are very positive."