Biden halts new oil and gas leases amid ongoing court fight over climate change costs

• Officials from the Biden administration are postponing decisions on new oil and gas leases and permits following a Louisiana federal judge's ruling that they cannot utilize higher cost estimates of climate change.
• The unintended result of Judge James Cain's Feb. 11 decision is the leasing pause, as he argued that the administration's attempt to increase the real cost of climate change would lead to higher energy costs.
• At least four federal agencies have experienced delays and uncertainty due to a ruling that required them to use lower cost estimates of greenhouse gas emissions in their decision-making process.

Officials from the Biden administration are postponing decisions on granting new leases and permits for oil and gas projects following a Louisiana federal judge's ruling that they cannot utilize higher cost estimates of climate change when formulating regulations for polluting industries.

The unintended result of Judge James Cain's Feb. 11 decision, which supported a group of GOP-led states, is the leasing pause in the Biden administration's attempt to combat climate change by raising energy costs and negatively impacting state revenues from energy production.

The decision to use lower cost estimates of greenhouse gas emissions has caused delays and uncertainty across four federal agencies, including those involved in plans to limit methane emissions from natural gas drilling and a grant program for transit projects. This ruling also continues a legal dispute that has hindered Biden's efforts to combat climate change.

The government's pause on new oil and gas leases and permits to drill on federal lands and waters has resulted in a significant and unintended outcome: lease sales in states across the U.S. West, including Montana and Wyoming, are now delayed.

The Department of Justice stated in a legal filing on Saturday that agencies are facing significant delays and resource wastage as they reevaluate economic and environmental analyses related to various government actions.

The department has halted work on public-facing rules, grants, leases, permits, and other projects to evaluate their feasibility and proceed accordingly.

A pause on new leases and permits

Biden restored the climate cost estimate on his first day in office to approximately $51 per ton of carbon dioxide emissions, which is similar to the Trump administration's original estimate of roughly $7 or less per ton, but accounts for global impacts instead of just those in the U.S.

The estimate of the "social cost of carbon" takes into account the increased frequency and intensity of events such as droughts, wildfires, and storms that are linked to climate change.

Cain argued that using such a metric in oil and gas lease reviews would inflate the cost estimates of lease sales, which would indirectly affect states receiving bids and production royalties through energy production.

The judge ruled that the president lacked the authority to alter the figure through an executive order and violated federal law by introducing new rules without obtaining public comment.

In the injunction, Cain stated that the President does not have the authority to establish significantly transformative legal regulations in significant political, social, and economic domains.

Max Sarinsky, a senior attorney at the Institute for Policy Integrity at New York University School of Law, stated that Cain's ruling was legally incoherent, arguing that it has put federal agencies in a Catch-22 as they try to evaluate the cost of climate change in major decisions.

Sarinsky stated that there is a substantial body of legal precedent that these agencies should take into account climate science. However, this injunction prohibits them from utilizing these climate projections.

Earthjustice's senior attorney, Michael Freeman, stated that Cain's ruling was deeply flawed and contained numerous legal and factual errors. He also pointed out that the government's decision to delay new leases was unintended fallout.

The oil and gas industry in Louisiana has stumbled in its efforts to push the federal government to hasten reckless oil and gas development, according to Freeman.

According to Freeman, Louisiana and the industry desire for the federal government to disregard climate change, but the law prohibits this action.

The Office of Management and Budget's Office of Information and Regulatory Affairs deputy administrator, Dominic Mancini, stated that several agencies are facing delays in their plans due to the ruling.

Officials from the Transportation Department are concerned about a potential delay to a federal grant program for rail and transit projects, which could last several months.

The Energy Department's court-ordered plan to issue energy conservation standards for manufactured housing and the Bureau of Land Management's plan to reduce natural gas waste on federal lands will be delayed, according to Mancini.

Cain's ruling on the real cost of climate change has been criticized by environmentalists and legal experts, who have highlighted the irony of the delayed fossil fuel extraction resulting from the order.

The Center for Biological Diversity's government affairs director, Brett Hartl, stated that the leasing delay will likely last no more than two months and that new drilling permits are unnecessary, excessive, and incompatible with the country's goals to reduce climate change.

Hartl stated that while the unintended consequence of the judge's decision is somewhat ironic, it does not outweigh the reality that it is undermining numerous important regulations across the government and efforts to tackle the climate crisis.

Although Biden promised to halt drilling on public lands, he has granted more drilling permits per month than Trump did in his first three years.

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