Climate Law Could Clarify Uncertain Fossil Fuel Leasing Picture

The Inflation Reduction Act mandates that millions of acres of public lands be made available to oil and gas companies before the government can offer land for renewables.


BY RAMENDA CYRUS
AUGUST 26, 2022

GERALD HERBERT/AP PHOTO
A rig and supply vessel in the Gulf of Mexico

While praise for the Inflation Reduction Act has been vast from the environmental community, criticism has arisen from climate activists over the law’s allowances for the same oil and gas–based energy structures the country has always known

Perhaps the most troubling aspects are the provisions regarding leasing for federal land development. The bill requires that a threshold amount of federal land be offered up for oil and gas leases before any land is granted for wind and solar leases. This limits the impact that the government can have when making land available for renewable deployment. The law also pushes the sale of certain controversial leases through, despite the ongoing back-and-forth in the courts. This complicates the landscape in which activists and climate-forward administrations can block oil and gas leases.

Oil and gas leases have been under scrutiny since President Biden signed Executive Order 14008 in January last year. The presidential action ordered the Department of the Interior (DOI) to pause further lease sales “pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices.” Biden had campaigned on the promise to halt new oil and gas leases.

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Thirteen states reliant on gas and oil revenue soon sued the administration over the order, asking whether Biden had the authority to effectively cancel the leases that Congress authorized. U.S. District Court Judge Terry Doughty of Louisiana issued a preliminary injunction in favor of the states in June of 2021. Sales resumed soon after. Last week, the Fifth Circuit Court of Appeals vacated this injunction, calling it “unclear.”

It was sent back to Judge Doughty, a Trump appointee, who found a mere two days later that “there was an unwritten policy to ‘stop’ the onshore and offshore leasing process by calling the stopping a ‘pause.’” Judge Doughty issued a permanent injunction against the moratorium that applies to suing states.

“It is saying that [DOI] cannot use President Biden’s executive order that directs for a pause as a basis for either canceling or delaying lease sales,” Chris Eaton, senior attorney at Earthjustice, told me. But, as Eaton noted, “it says nothing about any other basis or any other rationale that Interior can use for pausing or delaying or canceling lease sales.”

The IRA nearly made these rulings moot by explicitly reinstating multiple federal land leases, such as the Gulf of Mexico Lease Sale 257. As the Institute for Energy Research pointed out, “Shell, BP, Chevron and Exxon Mobil offered $192 million for the rights to drill in the Gulf of Mexico in the November 17, 2021 lease sale—the largest offshore oil and gas lease sale in the nation’s history.”

As many have reported, the IRA also mandates that the Interior Department periodically allow gas and lease sales, as well as “offer at least 60 million acres of offshore parcels and 2 million acres onshore during the prior year before it can approve any renewable energy leases.”

Now, there are few avenues that climate activists can take to upend gas and oil lease sales. But they do still have a path. The DOI is in the midst of reassessing a five-year program for offshore leasing. While the DOI has proposed a reduced area of land availability in the Gulf of Mexico, Earthjustice lawyers see an opportunity to take the area off the table completely.

“Earthjustice and its partners are strongly urging the government to adopt a federal program that proposes zero lease sales anywhere in the Gulf of Mexico,” Eaton told me.

This would mean that already approved sales would still be implemented, but no new sales could be approved within the DOI’s 2023-2029 timeline. The rulings further constraining the administration are all the more of a reason to put a stop to new leases. (The DOI is accepting public comment on the proposal.)

Stalling approved leases, outside of what’s explicitly approved in the law, wouldn’t be impossible under the IRA. It would just mean that public land couldn’t be made available for renewable development. There may be work-arounds that would allow for some renewable deployment. But the IRA also places a considerable time constraint on when these leases can be offered—within a year for offshore development.

Most renewables are currently sited on private land, and the most attractive federal sites for offshore wind, for example, are already cluttered up with oil rigs and platforms. States are unaffected by the law to offer their land for solar and wind projects. And the rest of the IRA offers considerable support for power companies and other energy producers to green their output. The impact of that is estimated to far outstrip any oil and gas development that the law facilitates.

But for frontline communities in the shadow of oil rigs and fracking sites, that calculation is cold comfort. They’d prefer that the Biden administration do everything in its power to prevent more pollution in their homes and streets.