Biden Administration Violates Oil and Natural Gas Provisions in Inflation Reduction Act

The Natural Gas and Oil Industry

Dear Chris,

There They Go Again: In restrictions the Biden administration wants to impose on a congressionally-mandated oil and natural gas lease sale next month, we see a familiar refrain: Support for American oil and natural gas development – but not really.

Background: In slashing the size of the lease sale and singling out industry vessels for operating restrictions – ignoring all other marine traffic – the administration is sending more mixed messages on oil and natural gas. This chills future investment in U.S. energy leadership and risks our energy security.

Reminder: The Gulf of Mexico plays a critical role in U.S. energy production and is responsible for producing some of the least carbon-intensive oil in the world. Recent analysis shows that restricting production in this region could actually lead to higher U.S. emissions, as the U.S. would become more reliant on foreign sources to meet our energy needs.

Congressional Intent: A year ago this month, Congress passed the Inflation Reduction Act (IRA) into law. One of the IRA’s provisions mandated several future offshore oil and natural gas lease sales, including Lease Sale 261, scheduled Sept. 27.

How Big? The sale, approved by Congress, was to be “region-wide” across the “Western, Central, and Eastern Gulf of Mexico” and include “unleased acreage not subject to moratorium or otherwise unavailable.”

What Happened Next: In a clear bid to mollify oil and natural gas opponents, the administration cut 6 million acres to protect endangered wildlife, while conceding the government has not identified a “reason to believe” this wildlife was at risk in this area.

And Then: Federal bureaucrats worked to impose nighttime restrictions, speed limits and staff requirements only for industry vessels navigating the area. If implemented, the restrictive rules could act as a de facto blockade of Gulf Coast ports. Check out the map below …

What It Means: Beyond contravening the congressional intent of the IRA – which reinstated Lease Sale 261 and others after the Biden administration canceled them – this jeopardizes U.S. energy security, violates the White House’s energy obligations to Americans and leaves energy developers in the lurch. Just 14 months before Election Day, it’s an odd message, given stubborn inflation and pump prices rising.

Additional Context: This is the final scheduled Gulf of Mexico lease sale because the government has not yet released the next five-year offshore leasing program, an illegal lapse that is unprecedented in the 45-year history of the program.

As If This Wasn’t Enough: The government says it will exclude approximately 6 million acres in the heart of the Central and Western Gulf of Mexico from future lease sales. Among the reasons this is bad:

Environmental Error: The Gulf of Mexico produces some of the lowest carbon intensity barrels in the world. Constrained production in this basin could be replaced by higher carbon intensity barrels from elsewhere in the world, yielding America’s strategic advantage to unreliable nations.
Reducing Revenues: Oil and gas production doubles as an economic engine along the Gulf Coast, with reverberating effects elsewhere. Actions that deter investment in such a major energy basin could devastate vessel operators, service companies, ports and beyond. By depressing offshore production, the administration also could impact support for the Land and Water Conservation Fund, perhaps the nation’s most important coastal conservation and restoration initiative, which is funded by offshore oil and gas production.
Contravening Congress: Much of the contested acreage is of commercial interest to industry and was contemplated by Congress to be available for future lease sales mandated by the IRA.

How API and Industry Responded: Joining the State of Louisiana, API and Chevron U.S.A. Inc. filed a challenge to the government’s Final Notice of Sale for Lease Sale 261, fighting back against significantly reduced acreage and severe restrictions on oil and natural gas vessel traffic.

Image with texts, ''Despite Congress' clear intention in the Inflation Reduction Act, the Biden administration has announced a 'lease sale in name only' that removes approximately 6 million acres of the Gulf of Mexico from the sale and adds new and unjustified restrictions on oil and natural gas vessels operating in this area, ignoring all other vessel traffic. Together with Louisiana and Chevron U.S.A Inc., we intend to use every legal tool at our disposal to challenge these actions,'' said Ryan Meyers, API Senior Vice President & General Counsel

How You Can Help: Tell your constituents to get involved by calling, writing letters, penning social media posts, and otherwise contacting the Bureau of Ocean Energy Management and the Department of the Interior to oppose the administration’s unlawful restrictions, lease stipulations and acreage withdrawal.

Bottom Line: The Biden administration continues a pattern that began in its earliest days: Throwing up roadblock after roadblock to U.S. energy production and prioritizing a campaign promise to stop U.S. oil and natural gas development in federal waters over their duty to meet America’s essential energy needs.

Sincerely,

Amanda Eversole

Executive Vice President and Chief Advocacy Officer

API represents all segments of America’s oil and natural gas industry. Its nearly 600 members produce, process, and distribute most of the nation’s energy. The industry supports more than 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. API was formed in 1919 as a standards-setting organization. In its first 100 years, API has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.

To learn more about API and the value of oil and natural gas, please visit API.org.

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