Late yesterday, Leader Schumer announced a tentative deal for Senate Democrats to pass a bill called the “Inflation Reduction Act,” a long-awaited bill with important climate, energy, and environmental implications.
The legislation would make substantial investments in climate action and clean energy. However, the legislation also holds wind and solar development on public lands hostage to further oil and gas leasing and infrastructure investment on those very same lands, which is incompatible with U.S. climate goals. Fortunately, WELC and partners have provided the administration with a roadmap to use long-dormant authority and legal obligations to rein in the oil and gas industry’s adverse climate and public lands impacts, which would temper these climate-damaging aspects of the Inflation Reduction Act.
“The deal provides critical investments in clean energy, but it also props up the oil and gas industry. While we’re cognizant of DC political dynamics, this fact should light a fire under the Biden administration to immediately leverage its well-established legal authorities to avoid, minimize, and compensate for ongoing exploitation of the country’s shared public lands for fossil fuels,” said Erik Schlenker-Goodrich, executive director of the Western Environmental Law Center. “The overwhelming scientific consensus demands that we immediately stop extracting and burning fossil fuels from public lands. The deal’s oil and gas provisions work against that consensus. The administration must therefore act, and we’ve provided it with a roadmap to do just that. If they don’t, they should be prepared for fierce resistance.”
Several other elements of the bill pertaining to oil and gas are worth noting:
- The bill would end non-competitive oil and gas leasing, which is a clear win for taxpayers and public lands.
- The bill provides an infusion of funding into agencies representing the most serious investment in carbon reduction the federal government has ever made. For example, it provides $1.58 billion to the Environmental Protection Agency for oil and gas emissions measurement, reporting, mitigation, and other considerations. Methane is a climate pollutant 87 times more potent than carbon dioxide over its 20-year lifespan in the atmosphere.
- The bill includes fiscal reform measures such as a fee for methane waste emissions from oil and gas companies. While good for taxpayers, experience in New Mexico shows that this may not prove sufficient to induce the industry to eliminate methane waste and pollution, in particular because so many oil and gas facilities (those that report less than 25,000 metric tons carbon dioxide equivalent of emissions to EPA annually) would be exempt. The bill also neglects to impose a comparable fee on idle wells, allowing the industry to continue its practice of indefinitely deferring plugging and cleanup infrastructure once production ends.
- The bill would raise the bonding amount for individual wells to $150,000, which is a positive change. However, the increase in the maximum total “blanket” bonding amount, covering all of an operator’s business in a given state, to $500,000 is still divorced from reality. Some operators have thousands of wells in a single state and blanket bonds should be eliminated entirely. Moreover, work must be done to put the duty to expeditiously reclaim oil and gas wells squarely on the shoulders of operators, not the public.
- The bill would raise minimum bids for oil and gas leases from $2 to $10 per acre and land rental fees from $1.50 to $3 per acre rising over time to $15 per acre. These moves are welcome, but have negligible climate and environmental benefits.
- The bill also increases oil and gas royalty rates from 12.5% to 16.67%. These provisions would increase state revenue and dependency on oil and gas production, further entrenching the political power of the fossil fuel industry over state policies. That can be countered by economic or revenue diversification, which will prove difficult but absolutely essential in the coming years to address the climate crisis and to support frontline communities and workers in a just and equitable transition.
- The bill would provide $5 billion for Tribal and state-level climate pollution planning and implementation. These funds should spark considerable opportunity to complement federal-level action.
- The bill includes $60 billion to advance Environmental Justice priorities and investments in frontline and disadvantaged communities. Such funds are welcome and essential.
The bill also includes significant increases in funding for federal agencies to comply with the National Environmental Policy Act, the nation’s bedrock environmental law and a key tool to ensuring that on-the-ground actions are properly designed and vetted with communities. But that may come at too high a cost. While not in the bill, the senator from West Virginia mentions in his statement that part of this agreement includes “advancing a suite of commonsense permitting reforms this fall.” This is code for a plan to undermine NEPA—and possibly the Endangered Species Act and Clean Water Act—to an unknown degree.
“Providing federal agencies the resources they need to maximize their service to the public is a great thing that we will always support,” said Schlenker-Goodrich. “But if it’s a ‘devil’s bargain’ that weakens bedrock environmental laws, that is an entirely different story. WELC will fiercely defend the National Environmental Policy Act, Clean Water Act, and Endangered Species Act from all attacks, whether from Democrats or Republicans.”
“The bottom line is there’s much to like in the Inflation Reduction Act, especially in terms of positioning the U.S. as a global clean energy leader,” said Schlenker-Goodrich. “But it also underscores the vast amount of work that remains to be done to build political power for climate action, counter the power of the fossil fuel industry, and not just boost clean energy development, but actively wind down our country’s disastrous overdependence on extracting and burning oil and gas while supporting a community-led energy transition.”