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The breakthrough spending deal reached by Senators Joe Manchin and Chuck Schumer requires holding oil and gas lease sales in the Gulf of Mexico and Alaska, potentially undercutting the package’s focus on climate-friendly clean energy.
In addition to some $370 billion to fight climate change, the legislation would require the Interior Department to hold previously planned -- and canceled -- lease sales in the Gulf of Mexico, including one that was slated to happen in March, according to the 725-page bill released Wednesday.
The measure would also effectively reinstate an auction of Gulf leases that was held in November 2021 but later invalidated by a federal judge after finding that the government didn’t sufficiently examine the climate consequences of the move. Under the legislation, the Interior secretary would be required to accept within 30 days the highest valid bids lodged in that sale, which was set to bring in $191.7 million.
The Interior Department had said in May that it was scrapping all three auctions, citing a "lack of industry interest” for the sale of tracts in Alaska’s Cook Inlet and "conflicting court rulings” for the decision to nix two Gulf auctions.
The potential requirement comes on the heels of a Biden administration proposal for a five-year oil and gas leasing plan that included an option for no new offshore sales between 2023 and 2028.
The provisions appear to be a concession to Manchin, a West Virginia Democrat who has complained the Biden administration is "blocking increased energy production at home” while encouraging more oil flows from Venezuela and OPEC producers.
"It appears to offer a serious path forward that lifts offshore energy of all types, to the betterment of our nation. We applaud Senator Manchin’s leadership on an issue of national -- and global -- consequence,” National Ocean Industries Association President Erik Milito said in a statement.
In addition, the deal would impose long-sought reforms for the oil and gas industry, with new and higher fees for developments on public land and water. That includes requiring energy companies to pay royalties on all of the oil and gas produced on federal lands, including the methane that is vented, flared or otherwise escapes into the atmosphere.
It remains to be seen whether the underlying legislation, which also includes a slew of new and extended tax credits for clean energy and electric vehicles, will be backed by the full Democratic caucus in the 50-50 Senate. It would also have to pass the House, where progressives sought a much more expansive plan.
