By Valerie Volcovici and Nichola Groom
WASHINGTON (Reuters) – The Trump administration’s mass layoffs of federal workers have slowed the government’s ability to permit some new energy projects in a potential setback to President Donald Trump’s ‘drill, baby, drill’ agenda, according to state officials, lawmakers and agency representatives interviewed by Reuters.
The situation reflects one of the unintended consequences of the spate of firings spearheaded by Elon Musk’s Department of Government Efficiency, which are intended to slash wasteful public spending but current and former officials say are running counter to Trump’s vow to expand production of everything from oil and gas to power generation and electric transmission. That strategy was partly detailed in a series of executive orders signed by the president to open vast new areas of Alaska and offshore for new drilling.
The cuts since mid-February have hit employees at agencies that play a crucial role in the process needed to issue permits for new federal and tribal energy production, including the Bureau of Land Management, the Bureau of Indian Affairs, and the Bureau of Ocean Energy Management.
“Streamlining organization charts in an effort to make government more efficient will not impact the President’s Drill Baby Drill agenda, and any hyperventilating about cutting waste, fraud, and abuse is irresponsible,” said White House spokesperson Harrison Fields.
Permitting has slowed in some of the nation’s top-producing oil and gas states, like New Mexico and Alaska, as well as among Native American tribes that rely on fossil fuel extraction for revenue for public services like schools, Reuters reporting showed. While federal lands and waters account for nearly a quarter of total U.S. oil output and generate public revenue in the form of production royalties, it is not clear how much new production has been affected by the job cuts. Overall the U.S. produced an average of 13.23 million barrels per day (bpd) in 2024, according to the Energy Information Administration.
“I don’t understand these broad cuts,” said Mike Celata, who served as BOEM’s regional director for the Gulf of Mexico for seven years, including during Trump’s first term. “You’re talking about an agency that essentially has brought billions of dollars of revenue into the Treasury.”
The process of rigorous environmental reviews is critical to insulating government oil and gas auctions and drilling programs from litigation that can derail fuel producers’ plans, Celata added. Lawsuits on behalf of environmental groups have delayed or canceled many energy projects, leases and drilling auctions both onshore and offshore in recent years.
“You’ve got to follow that process,” he said. “Loss of people becomes a problem.”
AGENCIES MUST BE ‘PROPERLY STAFFED’
More than 20,000 federal employees are estimated to have lost their jobs so far, almost all of them probationary workers that have less than a year in their current roles, and another 75,000 have taken a buyout, out of the 2.3 million federal civilian workforce. More cuts are expected in the coming weeks.
This includes over 2,000 workers in the Interior Department, which runs the Bureau of Land Management, the Bureau of Indian Affairs, and the Bureau of Ocean Energy Management. At least 250 employees at the Bureau of Land Management, which oversees energy and mineral production on 245 million acres, have lost their jobs, according to the National Treasury Employees Union representing BLM employees.
“We do not anticipate any impacts, said a spokesperson from the Interior Department. “By streamlining operations, we are strengthening our ability to serve the public while making government more effective and accountable.”
The American Exploration & Production Council trade group representing independent U.S. energy producers declined to comment on the job cuts, but said it was crucial that permitting offices are adequately staffed.
“An essential element of unleashing American energy dominance is the regular and predictable issuance of permits for energy projects, and maintaining key personnel is critical to that,” said Wendy Kirchoff, AXPC senior vice president of policy.
The need for staff to ensure smooth permitting was echoed at the CERAWeek energy conference in Houston this week.
Matt Schatzman, CEO of LNG developer NextDecade, whose projects depend on approvals from the Department of Energy and the Federal Energy Regulatory Commission, said he was in favor of cutting wasteful federal spending, but cautioned against indiscriminate job cuts in permitting agencies.
“We need to make sure that those agencies are properly staffed. I cannot emphasize this point enough,” he said.
‘WE CAN’T PERMIT PROJECTS’
Nationwide, the United States had already been dealing with a growing backlog of drilling permit applications. Pending permits at the BLM rose from 2,552 in 2017 to an estimated 5,500 by 2025, according to an Interior Department budget document published in March 2024.
The country also struggles with massive queues for approving energy infrastructure projects like transmission lines, new critical minerals mining projects and transmission lines, which has led to both political parties calling for permitting reform in Congress. The Biden administration used money appropriated through the Inflation Reduction Act and bipartisan infrastructure bill to hire more staff at BLM to work on permitting given the backlog.
“We were really pushing to follow Congress’ direction and staff-up for energy-related permitting,” said Laura Daniel-Davis, former acting deputy secretary of the Interior under Biden.
Officials from oil producing states say DOGE’s job cuts are already slowing permitting further.
“We can’t realize our potential for responsible energy and mineral development if we can’t permit projects,” Alaska’s Republican Senator Lisa Murkowski said in a Facebook post last month, adding that 60% of Alaska is composed of federal land.
Murkowski spokesperson Joe Plesha told Reuters that the workforce disruption is affecting energy projects awaiting permitting, but declined to give specifics.
The American Federation of Government Employees, a labor union that represents federal workers, said there were nearly 1,300 probationary federal employees that may have been fired in Alaska alone, including nearly 300 workers at the Interior Department, the parent agency of BLM and BOEM.
New Mexico’s BLM offices, which administer drilling permits on the state’s portion of the huge Permian Basin – the main driver of record U.S. oil and gas production – have also been hit, according to a letter sent by the state’s Congressional delegation to Trump. Revenue from drilling on federal land in New Mexico accounts for more than one-third of the state’s general fund.
“Any cuts to BLM’s workforce would risk the agency’s efforts to managing our public lands, including their role in safely and responsibly managing oil and gas production,” said New Mexico Dem. Senator Ben Ray Luján.
Permitting and preparation for new lease sales have already slowed, according to Lauren Leib, a land law examiner reviewing oil and gas applications for the BLM in New Mexico and president of a National Treasury Employees Union chapter representing New Mexico BLM employees.
She said after layoffs and buyouts, the agency will struggle to hire people to carry out its mandate to process applications for permits to drill, carry out lease sales and ensure environmental protections.
“In New Mexico, so much of our economy does rely on oil and gas development so a slowdown does have a ripple effect on our local economies,” she said.
Tribal lands are also being affected.
The Osage Minerals Council, which governs the mineral affairs for Oklahoma’s oil-producing Osage tribe, said that DOGE’s plan to close the Bureau of Indian Affairs Osage Agency Office and terminate its administrator threatened to bring its oil and gas permitting to a standstill. Osage lands hold anywhere between 1.5 to 13 billion barrels of crude oil reserves, with production running at around 1,000 barrels per day in 2020, according to BIA figures.
“We will insist that the Secretary of the Interior explain how closing our Agency and displacing BIA employees will improve oil and gas permitting,” the council said in a statement this week.
(Reporting by Valerie Volcovici and Nichola Groom, additional reporting by Georgina McCartney: Editing by Richard Valdmanis and Anna Driver)
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