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Crowley tugs tow Chevron's Jack & St. Malo in the U.S. Gulf of Mexico. Photo courtesy Crowley Maritime Corp.

Biden To Resume Selling Offshore Drilling Rights as Appeal Unfolds

Bloomberg
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August 18, 2021

By Jennifer A. Dlouhy (Bloomberg) The Biden administration is appealing a federal judge’s ruling against its oil leasing moratorium and deepening government scrutiny of the activity it blames for fanning climate change, even as it promises to resume auctions.

The moves, announced by the Interior Department in an emailed statement Monday, mark the beginning of an open-ended analysis of the federal oil, gas and coal leasing programs that could span years — and lead to higher fees as well as new limits on development in sensitive areas.

The agency said it would continue onshore and offshore oil and gas leasing as required by Louisiana-based U.S. District Judge Terry Doughty in June, while it challenges the decision before the 5th Circuit Court of Appeals. “Interior will continue to exercise the authority and discretion provided under the law to conduct leasing in a manner that takes into account the program’s many deficiencies.”

The announcement comes ahead of a court deadline for the administration to explain how it was complying with the judge’s June 15 order that leasing should resume. The Interior Department has not yet issued public plans for new or rescheduled lease sales, amid mounting pressure from Congress and the oil industry.

Administration officials were concerned that without taking action, top Interior officials could be held in contempt over the prolonged leasing pause, according to two people familiar with the plans who asked for anonymity to discuss internal deliberations.

The move is a blow to environmental activists who had pressed Biden to permanently block oil and gas leasing on federal lands and waters, arguing that a warming world can’t afford to burn the fossil fuels they contain.

Sierra Club Setback

“This is a setback in our work to #ActOnClimate,” the Sierra Club said on Twitter. “Fossil fuel extraction on public lands and waters make up a quarter of our domestic greenhouse gas emissions — at a time we must urgently move to cut emissions by at least half.”

Still, Interior’s announcement did little to assuage oil and gas industry leaders who have accused the administration of dragging its feet in rescheduling a series of auctions postponed earlier this year. Advocates of offshore oil development have lobbied the administration to reschedule a planned March sale of drilling rights in the Gulf of Mexico, arguing that fewer greenhouse gases are emitted in the extraction of crude from U.S. waters.

“It is past time for U.S. offshore leasing to resume,” said Erik Milito, head of the National Ocean Industries Association. “The administration should follow the plain letter of the law, and support high-paying jobs and climate and emissions progress.”

Federal lands and waters provide about a quarter of the nation’s crude production. But the oil, gas, and coal extracted from that terrain is also responsible for about 24% of U.S. carbon dioxide emissions, according to a U.S. Geological Survey report.

Even as the Interior Department said it was resuming leasing, the agency made clear it will pursue deep changes.

“Federal onshore and offshore oil and gas leasing programs are responsible for significant greenhouse gas emissions and growing climate and community impacts,” the agency said. “Yet the current programs fail to adequately incorporate consideration of climate impacts into leasing decisions or reflect the social costs of greenhouse gas emissions, including, for example, in royalty rates.”

And Representative Raul Grijalva, a Democrat from Arizona who heads the House Natural Resources Committee, said he would push leasing reforms as part of the Democrats’ $3.5 trillion tax-and-spending plan. “Holding more lease sales under today’s outdated standards is economically wasteful and environmentally destructive, and everyone not sitting in a fossil fuel boardroom knows it.”

President Joe Biden ordered the leasing pause on Jan. 27, so Interior could conduct a “comprehensive review.” Now, the agency is embarking on a broader programmatic analysis of oil, gas and coal leasing it says is critical to address what changes “may be necessary to meet the president’s targets of cutting greenhouse gas emissions in half by 2030 and achieving net-zero greenhouse gas emissions by 2050.”

The move takes a cue from the Obama administration, which in 2016 initiated a broad environmental analysis of federal coal leasing, and halted the sale of new mining rights in the meantime.

But the Biden administration has been under withering pressure to restart sales after the June 15 court order. A coalition of Louisiana and a dozen other states last week asked Doughty to compel the Biden administration to explain why it shouldn’t be held in contempt for violating his preliminary injunction against the moratorium since no new sales had been scheduled, and Interior Secretary Deb Haaland told Congress last month the pause was “technically” still in place.

A dozen oil industry trade groups, led by the American Petroleum Institute, on Monday filed a new lawsuit challenging the leasing pause, joining at least three other related cases proceeding in federal courts.

By Jennifer A. Dlouhy © 2021 Bloomberg L.P.

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