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Biden pauses new oil and gas leases amid legal battle over cost of climate change

An oil pumpjack (L) operates as another (R) stands idle in the Inglewood Oil Field on January 28, 2022 in Los Angeles, California.
Mario Tama | Getty Images

The Biden administration is delaying decisions on new oil and gas leases and permits after a Louisiana federal judge blocked officials from using higher cost estimates of climate change when making rules for polluting industries.

The leasing pause is an unintended result of the Feb. 11 decision by U.S. District Judge James Cain, who sided with a group GOP-led states and argued that the Biden administration’s attempt to raise the real cost of climate change would hike energy costs and hurt state revenues from energy production.

The ruling has prompted delays and uncertainty across at least four federal agencies that were using higher cost estimates of greenhouse gas emissions in decisions, including plans to restrict methane emissions from natural gas drilling and a grant program for transit projects. It also continues a contentious legal battle that has hampered Biden’s plans to address climate change.

One of the most significant and unintended outcomes of the ruling is the government’s pause on new oil and gas leases and permits to drill on federal lands and waters. Lease sales in states across the U.S. West, including Montana and Wyoming, are now delayed.

“Agencies are experiencing significant delays and wastes of resources as they scramble to rehash economic and environmental analyses prepared in connection with a broad array of government actions,” the Department of Justice wrote in a legal filing on Saturday.

“Work surrounding public-facing rules, grants, leases, permits, and other projects has been delayed or stopped altogether so that agencies can assess whether and how they can proceed,” the department wrote.

A pause on new leases and permits

On his first day in office, Biden restored the climate cost estimate to roughly $51 per ton of carbon dioxide emissions, following the Trump administration decision to cut the number to roughly $7 or less per ton and account only for the impacts in the U.S. rather than across the world.

The “social cost of carbon” estimate accounts for effects of events like droughts, wildfires, and storms that have grown more frequent and intense with climate change.

In his order, Cain wrote that using such a metric in oil and gas lease reviews would “artificially increase the cost estimates of lease sales,” which would directly impact states receiving bids and production royalties through energy production.

The judge also wrote that the president didn’t have the authority to make a change to the figure through executive order and violated federal law by implementing new rules without getting public comment.

“The President lacks power to promulgate fundamentally transformative legislative rules in areas of vast political, social, and economic importance,” Cain wrote in the injunction.

Max Sarinsky, a senior attorney at the Institute for Policy Integrity at New York University School of Law, called Cain’s ruling “legally incoherent,” arguing that it’s put federal agencies in a Catch-22 as they attempt to assess the cost of climate change in major decisions.

“There’s a fair amount of legal precedent for these agencies to consider climate science,” Sarinsky said. “And this injunction prevents them from using these climate estimates.”

Michael Freeman, a senior attorney at Earthjustice, said Cain’s ruling was “deeply flawed and contained numerous legal and factual errors,” and that the government’s decision to delay new leases was unintended fallout.

“Louisiana, and the oil and gas industry, have tripped over their own feet in trying to force the federal government to rush full speed ahead with irresponsible oil and gas development,” Freeman said.

“Ultimately, what Louisiana and the industry really want is for the federal government to just ignore climate change,” Freeman said. “But the law doesn’t let the government do that.”

Dominic Mancini, deputy administrator of the Office of Information and Regulatory Affairs of the Office of Management and Budget, said that several agencies are experiencing delays in plans due to the ruling.

Transportation Department officials, for instance, are worried about a delay to a federal grant program for rail and transit projects that could last for months.

The order will also delay the Energy Department’s court-ordered plan to issue energy conservation standards for manufactured housing, Mancini said, as well as a Bureau of Land Management plan to reduce natural gas waste on federal lands.

Environmentalists and legal experts have sharply condemned Cain’s ruling on the real cost of climate change and pointed to the irony of the delayed fossil fuel extraction as a result of the order.

Brett Hartl, the government affairs director of the Center for Biological Diversity, said the leasing delay will likely last no more than two month,s and that new drilling permits were unnecessary, excessive and incompatible with the country’s goals to mitigate climate change.

“The sliver of unintended consequence that’s somewhat ironic doesn’t outweigh the reality that this judge’s decision is undermining dozens of important regulations across the government and efforts to address the climate crisis,” Hartl said.

Drilling on public lands generates billions of dollars in revenue and contributes to about a quarter of U.S. greenhouse gas emissions. Despite a campaign vow to stop drilling, Biden has approved more drilling permits on public lands per month than the Trump administration did during Donald Trump’s first three years in office.

Early in his presidency, Biden signed an executive order directing the Interior secretary to halt new leases and begin a thorough review of existing permits for fossil fuel development. But 13 GOP state attorneys general sued and a federal judge in Louisiana blocked the order.

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