A judge recently decided to invalidate the largest offshore oil and gas lease sale in the nation’s history, on grounds that the government had failed to take climate change into consideration. Judge Rudolph Contreras of the United States District Court for the District of Columbia ruled that the Biden administration had acted “arbitrarily and capriciously” when it conducted an auction of more than 80 million acres in the Gulf of Mexico because the Interior Department failed to fully analyze the climate effects of the oil and gas consumption that would result from the lease sale. A coalition of environmental groups including the Center for Biological Diversity and the Healthy Gulf and Friends of the Earth sued the Biden administration to stop the November lease sale, which cancels 1.7 million acres of oil and gas leases made at that sale. Because none of the sales were effective yet, Contreras wrote in his opinion, the Bureau of Ocean Energy Management does not need to undo the leases—it just must not execute them.
Background
On January 27, 2021, a mere week into his presidency, President Biden signed an executive order that paused new permits and directed the Department of the Interior to launch a “rigorous review” of existing programs related to fossil fuel development. In March, 13 states filed a lawsuit against the “pause” because the states established they would suffer injury from the pause on new oil and gas leases and noted that federal laws required the lease sales. A federal court in Louisiana ruled against Biden’s pause and ordered that the lease sales that had already been scheduled by the Trump administration go forward. Shell, BP, Chevron and Exxon Mobil offered $192 million for the rights to drill in the Gulf in the November 17 lease sale.
According to the Interior Department, the Louisiana ruling “compelled” the department to hold the lease sale using the Trump administration’s analysis. Contreras’ decision found the Biden administration had used outdated modeling when assessing the climate-warming impact of the lease sale, relying on modeling from the Trump administration that concluded the greenhouse gas impacts of not drilling in the gulf would be worse than holding the lease sale—due to increased reliance on foreign oil and gas supplies which produce higher emissions because of transport and method of production.
The Judge ordered a new study under the National Environmental Policy Act (NEPA), which requires the government to consider ecological damage when deciding whether to permit drilling and construction projects. The ruling requires the Interior Department to redo its environmental analysis, after which it will need to decide whether to move forward with a new lease sale.
It is likely that the oil companies that purchased leases, the trade groups representing them, or the states suing the Biden administration’s effort to block new leases would have grounds to appeal the ruling.
Impact of Decision
Restricting development of oil and gas drilling on federal lands and waters is nothing more than an “import more oil” policy, which benefits OPEC and Russia, not American families. The Biden administration actions and this court decision is leading the United States toward 1) more reliance on foreign energy from countries with lower environmental standards, 2) hundreds of thousands of good-paying job losses, 3) billions in reduction in government revenue for education and conservation programs, and 4) higher energy prices for Americans. In fact, the Biden administration begged OPEC to produce more oil in August because of high gasoline prices that increased more than a $1 a gallon since he took over the Presidency. During the Trump administration, the United States reached energy independence, which had been a goal of the country and past Presidents for fifty years. Due to Trump’s energy dominance policy, the United States was the world’s largest producer of oil and natural gas. That has all gone by the wayside due to Biden’s anti-oil and gas policies.
An analysis of the impact of a ban on natural gas development on Federal lands and waters projects that a ban would shift the United States to foreign energy sources, cost nearly one million American jobs, increase carbon dioxide emissions and reduce revenue that funds education and key conservation programs. U.S. GDP would decline by a cumulative $700 billion through 2030. Over $9 billion in government revenue, including funding for state education and conservation programs would be lost. Nearly one million jobs would be lost by 2022, with top production-states suffering significant losses:
- Texas would lose nearly 120,000 jobs.
- New Mexico would lose over 62,000 jobs.
- Wyoming would lose over 33,000 jobs.
The U.S. oil and gas industry supports 10.3 million jobs, with workers making an average salary of $101,181. Workers in the solar and wind industry, on average, make half that amount.
By 2030, offshore production for natural gas would decrease by 68 percent and for oil by 44 percent. U.S. oil imports from foreign sources would increase by 2 million barrels a day. The United States would spend $500 billion more on energy from foreign suppliers through 2030. Coal use would increase by 15 percent by 2030 and carbon dioxide emissions would increase by an average of 58 million metric tons to represent a 5.5 percent increase in the power sector by 2030. This effort thus appears to be all pain, with no gain, despite claims by the Biden administration to the contrary.
Conclusion
A District of Columbia judge invalidated a lease sale in the Gulf of Mexico that occurred in November and told the Department of Interior not to honor the leases. As a result of less domestic oil and gas production, the United States will become more dependent on foreign sources of oil and natural gas, which is exactly what the Biden administration wants as can be seen by President Biden asking OPEC to produce more oil, rejecting its efficient production and transport from North American sources. Oil prices are now at $90 a barrel and gasoline prices are averaging $3.37 a gallon nationally, about a dollar more than a year ago, according to AAA. Gasoline prices started escalating when President Biden started issuing his anti-oil and gas executive orders, which began his first day in office. Americans need to be aware that the United States has an abundant amount of oil and natural gas and if allowed to develop those resources, prices will come down as they did when the United States undertook the shale oil and gas renaissance. Cutting off America’s own energy resources only exacerbates growing energy, economic and national security challenges now being experienced by the United States and our allies.
