Monday, September 26

Climate Activists Plot Way Out of Manchin’s Oil Lease Mandate


Climate activists have developed plans to foil a provision Senator Joe Manchin wedged into the new climate law that ties renewable energy projects to more oil and gas drilling.

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(Bloomberg) — Climate activists have developed plans to foil a provision Senator Joe Manchin wedged into the new climate law that ties renewable energy projects to more oil and gas drilling.

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Under the Inflation Reduction Act, new wind and solar leases on federal lands and waters are contingent upon the sale of drilling rights in the same territory within a specific timeframe. Environmentalists initially dubbed it a “climate suicide pact” and warned the requirement would hold green projects hostage to fossil fuel development.

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Now climate, activists, and even some proponents of oil exploration, say they there is enough ambiguity in the law that it may still allow the federal government to keep new drilling in check.

“There are lots of things the administration can do to not turn this into a headlong rush into oil and gas development,” said Drew Caputo, vice president of litigation at the environmental advocacy group Earthjustice.

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The provision was a concession to Manchin, the Democrat from coal-and-gas rich West Virgina whose support was essential to pass the climate measure in the evenly split Senate. The law dedicates a historic $369 billion to advancing clean energy and fighting global warming but it comes at a cost that some environmentalists find too high to bear — more oil and gas lease sales on federal property.

Interior Department officials are still developing strategies for implementing the leasing requirements embedded in the law President Joe Biden signed last week. “We are committed to implementing the law, including direction regarding the federal oil and gas program,” Interior spokeswoman Melissa Schwartz said by email .

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Some options under discussion include speeding up an auction of wind rights along the US West Coast to make sure it occurs in the next three months and delaying the issuance of any purchased leases until new oil-leasing requirements are met, according to two people familiar with the matter who asked not to be named because the deliberations are private.

The new law mandates three sales of offshore oil and gas leases — one this year in Alaska’s Cook Inlet and two next year in the Gulf of Mexico. The Interior Department is also required to reinstate a $192 million auction of Gulf drilling rights held last November that was voided by a federal judge.

To issue onshore renewable rights over the next decade, an oil or gas lease sale will have to have been held in the previous four months. The window stretches to one year for offshore wind projects. The law also lays out minimum acreage requirements.

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After studying the law’s more than 700 pages, environmentalists think they have found a catch: It doesn’t require lease sales to actually result in new barrels of oil, or even leases.

“Nothing in the provision says the lease sales have to be successful,” observed Brett Hartl, government affairs director at the Center for Biological Diversity. That requirement is filled “even if no one bought them,” says Hartl.

Some activists and lawmakers are encouraging the Interior Department to satisfy the mandate by only putting unwanted acreage on the auction block and packing leases with so many onerous stipulations even the most committed oil companies won’t want to buy them.

“There is a way to technically comply with these provisions without changing very much about the amount of oil and gas that gets developed,” said Representative Jared Huffman, a Democrat from California.

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Even some oil advocates are nervous.

“You could drive a truck through some of the holes in that language,” said Kathleen Sgamma, president of the Western Energy Alliance.

However, industry leaders insist doing so would violate Congress’ intent.

“Congress is clear in its intent in the Inflation Reduction Act that the Department of the Interior needs to hold federal lease sales that allow for oil and gas development,” said Frank Macchiarola, an American Petroleum Institute senior vice president.

Environmental lawyers say there may be little recourse for aggrieved oil companies to challenge stalled or inadequate sales in federal court. They would have to show they are harmed by the government’s failure to hold an oil auction — a legal threshold that may be tough to overcome. Furthermore, proving Congress intended for leases to be issued may be difficult since the provision was included at the last minute, without hearings or congressional debate.

Still, the provision has cast a pall over the Interior Department’s proposal to sell wind leases off the central and northern California coast. Schwartz, the Interior spokeswoman, said the agency still expects to hold the sale this year. But it’s not clear if new leases would be issued before Nov. 17 — the one-year anniversary of the government’s last offshore oil lease sale.

Renewable developers are concerned, said John Begala, vice president of federal and state policy at the Business Network for Offshore Wind. “Ultimately we’re just hoping this doesn’t slow the process down.”

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