Biden administration halts new drilling in legal fight over climate costs

The Petroleum Association of Wyoming accused the Biden administration of "a dereliction of duty". PHOTO: NYTIMES

WASHINGTON (NYTIMES) - The Biden administration is indefinitely freezing decisions about new federal oil and gas drilling as part of a legal brawl with Republican-led states that could significantly impact President Joe Biden's plans to tackle climate change.

The move, which came Saturday (Feb 19), was a response to a recent federal ruling that blocked the way the Biden administration was calculating the real cost of climate change, a figure that guides a range of government decisions, from pollution regulation to whether to permit new oil, gas or coal extraction on public lands and in federal waters.

Under President Barack Obama, the government estimated that the damage from wildfires, floods and rising sea levels was US$51 (S$68.68) for every ton of carbon dioxide generated by burning fossil fuels.

President Donald Trump lowered that number considerably, setting it at US$7 or less per ton. Upon taking office, Mr Biden revived the US$51 level and set about updating it further - work that is underway.

Known as the "social cost of carbon," the metric is designed to underline the potential economic threats from greenhouse gas emissions so they can be compared to the economic benefits from acts like oil drilling.

Economists and climate scientists say it is needed because climate-fuelled heat waves, storms, wildfires and flooding cost the United States billions of dollars annually but those costs are often not taken into account by policymakers. Factoring in those costs could make it harder for fossil fuel projects to win federal approval.

But 10 Republican-led states sued the government, and on Feb 11, Judge James Cain Jr. of the US District Court for the Western District of Louisiana found that the Biden administration's calculations "artificially increase the cost estimates" of oil and gas drilling.

Mr Cain, a Mr Trump appointee, said using the social cost of carbon in decision-making would harm his native Louisiana and other energy producing states. He issued an injunction preventing the administration from considering the metric. The Justice Department said it intends to appeal.

In a twist, the fallout from the judge's ruling - at least initially - is that the federal government has stopped work on new oil and gas leases, as well as permits to drill on federal lands and waters.

"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 Justice Department wrote in a legal filing late Saturday asking the court to stay the injunction against using a climate metric.

Ms Melissa Schwartz, a spokesperson for the Interior Department, added in a statement that "delays are expected in permitting and leasing for the oil and gas programmes."

She said the agency "is committed to ensuring its programmes account for climate impacts." That has angered states with significant oil and gas drilling on federal land.

Most immediately, it means a lease sale for drilling across 179,001 acres in Wyoming will not happen any time soon. The Bureau of Land Management missed a deadline last week for announcing that sale. The environmental assessment for the lease sale had incorporated the social cost of carbon metric.

The Petroleum Association of Wyoming accused the Biden administration of "a dereliction of duty" by delaying a sale that could be worth millions of dollars in revenue to the state.

Senator Cynthia Lummis, called the missed deadline "a conscious decision to continue to attack Wyoming and our domestic energy industry in favour of progressive, unrealistic climate policies."

Ms Lummis said in a statement that Mr Biden "has prioritised the agenda of radical environmentalists in his administration over the needs of people in Wyoming and the rest of the country."

Neither the Petroleum Association Wyoming nor the American Petroleum Institute responded to a request for comment.

Mr Biden has vowed to cut US greenhouse gas emissions by at least 50 per cent from 2005 levels by the end of this decade.

Fossil fuel extraction on public land and in federal waters accounts for 25 per cent of the greenhouse gases generated by the United States. Global emissions must be cut in half by 2030 to avoid catastrophic impacts from a warming planet, scientists say.

Environmental activists said they were pleased by the pause in new leases and permits but worried that Mr Cain's ruling would ultimately weaken the administration's ability to issue aggressive climate policies.

"It's a mixed bag," said Mr Brett Hartl, director of government affairs for the nonprofit Centre for Biological Diversity. "They will have to issue the leases at some point, and they won't be able to use the social cost of carbon."

The Louisiana Attorney-General, Mr Jeff Landry, who has called the social cost of carbon "voodoo economics," argued that Mr Biden exceeded his authority by applying the social cost of carbon to decision-making.

He was joined by the Attorneys-General of Alabama, Florida, Georgia, Kentucky, Mississippi, South Dakota, Texas, West Virginia and Wyoming.

Mr Cain sided with the Republican Attorneys-General, arguing that using a social cost of carbon is unconstitutional because Congress never passed legislation authorising it.

Yet Congress has passed virtually no legislation addressing how an administration should conduct economic analyses, something it has done for decades. In a statement mocked by some legal experts, the judge cited a "separation of powers clause" in the Constitution. There is no such clause.

"That term in the opinion is one of the most embarrassing parts of a highly embarrassing opinion," said Mr Amit Narang, an expert on federal regulatory issues with the government watchdog group Public Citizen. He called the judge's opinion "a partisan political hit job dressed up as a legal opinion."

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