Passage of Democrats’ Inflation Reduction Act capped off years of campaigning for major climate change legislation and breathed new life into the renewable energy sector — but not without simultaneously handing a major victory to oil and gas interests by ensuring they have a chance to bid on more federal acreage.
Alongside its hundreds of billions in credits and grants for green energy, the bill, widely branded by supporters as some version of the superlative “most significant climate bill to ever pass Congress,” contained instructions for the Interior Department to facilitate more regular mineral leasing of federal lands and waters, a provision included at the demand of centrist Democratic Sen. Joe Manchin of West Virginia. Weeks after the bill’s enactment, the department is taking its first steps to ramp up onshore and offshore leasing in compliance with the law, following nearly two years of sparse sales and legal limbo for leasing under the Biden administration.
BIDEN PRESENTED WITH TOUGH CHOICES ON OFFSHORE OIL AND GAS LEASING
The Interior Department recently reinstated the lone offshore lease sale it carried out in 2021, which had been invalidated by a federal judge, on direction from the bill.
Then, on Thursday, the department posted environmental review documents to move forward with two Gulf of Mexico offshore lease sales it canceled in May, setting it up to carry the sales out next year. It also started taking feedback on the possible auction of acreage in Wyoming and New Mexico.
The announcements are a turning point for the leasing programs and come against the wishes of many Democrats and environmental groups, who want to restrict or end the program in service to slowing climate change.
President Joe Biden sought to overhaul the leasing programs coming into office, having promised on the campaign trail to end drilling and leasing on federal property, and ordered a “pause” on all new leasing during his first week in office pending a comprehensive review of the program.
Interior Secretary Deb Haaland was directed to oversee the review and “reconsideration of federal oil and gas permitting and leasing practices” in light of her responsibilities over the public lands and in offshore waters, “including potential climate and other impacts associated with oil and gas activities on public lands or in offshore waters.”
The order, which led to an immediate halt to new leasing, was eventually successfully challenged in court, but the legal process took time to play out.
No new offshore leasing occurred until November 2021, after a judge ruled against the administration’s leasing pause, and the first onshore lease sales of Biden’s tenure, which historically have been carried out quarterly, were scheduled in April 2022.
Oil and gas interests have argued the lack of regular leasing makes it more difficult to replace diminishing wells, as well as to justify longer-term investments where there is little certainty that companies will have access to new acreage.
The inflation bill’s leasing provisions, which were necessary to secure the support of Manchin, who, unlike many of his Democratic colleagues, supports more domestic oil and gas development, were designed to counteract the irregular leasing.
“It is truly all of the above, which means this bill does not arbitrarily shut off our abundant fossil fuel,” Manchin said when the bill was announced.
The law ordered the Interior Department to reinstate Lease Sale 257, which environmental groups successfully challenged in court, within 30 days of passage. The department did so on Sep. 14, accepting the 307 highest valid bids for tracts in the Gulf of Mexico auctioned for a total of $189,888,271 in November.
The inflation bill also ordered the Interior Department to carry out Lease Sales 258, 259, and 261 — three offshore lease sales that the department canceled in May. All three were crafted under the 2017-2022 five-year offshore program and would not have otherwise been offered.
The department took steps to revive two of the sales on Thursday, announcing the completion of draft supplemental environmental impact statements for 259 and 261, both of them Gulf sales. Lease Sale 259 must be held by the end of March 2023, and 261 must be held by the end of next September, the law mandates.
Lease Sale 258 covers acreage in Alaska’s Cook Inlet and must be carried out no later than Dec. 31 of this year.
Industry groups have praised the developments, saying the United States needs more oil and gas production to lower energy prices
The developments mean it’s “back to business as usual,” at least for this year and next, one industry source told the Washington Examiner.
Instructions to carry out the specific sales are one of two methods that Congress used to reinvigorate the leasing program. The inflation bill also prohibits the issuance of an offshore wind lease, a major Biden administration priority, unless the Interior Department carries out an offshore oil and gas lease sale during the prior year.
It puts similar strictures on the issuance of rights of way for wind and solar developments on federal lands. The Interior Department must move forward with quarterly onshore oil and gas lease sales to do so.
The requirements have spurred the department to move forward on the next round of oil and gas lease sales. The department’s Bureau of Land Management initiated a scoping period on Thursday to take input on a lease sale each in Wyoming and New Mexico for what would be the second series of onshore lease sales to be contemplated since Biden took office.
The bureau is moving ahead with these lease sales “in accordance with congressional direction in the Inflation Reduction Act,” it said in its announcement.
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For some Democrats, including Manchin, additional oil and gas leasing and continuing strong domestic production more broadly serves the U.S.’s goals of reducing greenhouse gas emissions insofar as it displaces relatively more emissions-intensive oil and gas on the global market.
But environmental groups, many of which got behind the Inflation Reduction Act for its spending on green energy, consider the leasing language and more production to undercut the very goal of the law.
The bill “represents a historic step forward in achieving our nation’s climate goals,” Athan Manuel, director of the Sierra Club’s Lands Protection Program, said Thursday in response to the leasing developments.
But, Manuel said, “selling our lands and waters to fossil fuel extraction is inherently incompatible with reaching our goal of limiting global warming to 1.5 degrees Celsius and preserving a livable planet.”
Nicole Ghio, senior fossil fuels program manager for environmental NGO Friends of the Earth, said the group is “combing through our legal strategy and watchdogging every move the administration makes here to ensure they are upholding our bedrock environmental law.”
Friends of the Earth was the lead plaintiff against Lease Sale 257.
