Keeping it All in the Ground?

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Eric Biber discusses that Federal public lands are a major source for fossil fuel extraction in the United States, extraction that contributes to greenhouse gas emissions.

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Institution: University of California Berkeley

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Eric Biber discusses that Federal public lands are a major source for fossil fuel extraction in the United States, extraction that contributes to greenhouse gas emissions.

Image courtesy of interviewee. March 14, 2024

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This video video discusses the significant ownership of land by the federal government in the U.S., particularly in the West, where much of it contains fossil fuel reserves. It explains that the government has historically leased these lands to private companies for fossil fuel production, leading to climate activists advocating against new leases under the "leave it in the ground" movement.

Recent controversies include legal challenges against oil and gas leases in Alaska under the Biden administration due to concerns about greenhouse gas emissions and climate change. This video video highlights that federal leases contribute significantly to U.S. fossil fuel production and thereby global emissions, suggesting that stopping new leases alone is insufficient; existing leases must also be addressed to quickly reduce emissions.

The authors of the study consider the legal powers of Congress and the President to cancel existing leases, examining constitutional and statutory factors affecting their decision-making. They explore onshore and offshore leasing regulations, noting how Congress has the authority to change legal structures, potentially requiring compensation for canceled leases under the Fifth Amendment.

This video video outlines arguments supporting both the Executive branch's inherent authority to terminate leases and the legal frameworks governing onshore and offshore leasing. It mentions the potential need for compensation if leases are canceled and delves into the complexities surrounding legal challenges that could arise from such actions.

Additionally, the discussion touches on the political and economic implications of reducing fossil fuel extraction, considering factors such as market reactions, leakage (importing fossil fuels to compensate for domestic reductions), and the environmental impacts of different fossil fuels, particularly coal.

The authors suggest prioritizing reductions in coal leases, highlight the importance of understanding the social cost of carbon when weighing compensation, and stress the need for thoughtful transitions for impacted communities dependent on fossil fuel production.

Overall, the document presents a comprehensive analysis of the legal, environmental, and economic dimensions of federal fossil fuel leasing and the potential for policy change aimed at addressing climate change.

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Federal government owns a lot of the United States,

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about 30%.

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Most of it's concentrated in the Western United States.

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That land has a significant amount of fossil fuels

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beneath it, oil, gas, coal.

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In addition, the federal government owns much of the land

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beneath the ocean off the coast of the United States.

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And that land also has a lot of fossil fuels.

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The federal government has for decades leased its lands,

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both onshore

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and offshore to private companies to allow

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for fossil fuel production.

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So over the past several years,

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climate activists have vociferously argued against issuing

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new fossil fuel leases by the federal government,

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what has sometimes been called the leave

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it in the ground movement.

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For instance,

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most recently environmental groups challenged the recent

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issuance of new leases

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by the Biden administration on federal lands in Northern

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Alaska for a a large scale oil and gas development project.

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And the basic argument is

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that these leases are a significant part

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of the greenhouse gas emissions of the United States.

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Uh, the United States itself is a large part

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of global emissions, given the urgency

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of addressing climate change

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and the limited global capacity for and more emissions.

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If we wanna meet targets like a maximum

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of two degrees Celsius warming, we really can't afford

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to commit to even more emissions over the next

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day from leases.

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Uh, these federal fossil fuel leases matter.

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For instance, in 2017, federal leases

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provided 13% of US gas production

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and 43% of US coal production.

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And in fact, since those the the date

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for those statistics,

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the US has seen a surge in oil and gas production.

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We're now one of the leaders in

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production of those resources.

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So this is a major part of total global production

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of fossil fuels.

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So deciding what to do about federal fossil fuel leasing has

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real implications at a global scale.

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So our study examined the next logical step.

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What if you didn't wanna just stop issuing new leases,

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but instead wanted to cancel existing leases?

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All of the production on US federal lands comes from

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existing leases, some of which were issued many years ago,

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and many of which can continue to produce for years,

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even decades to come

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quickly reducing total emissions from US Federal fossil fuel

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production would require not just stopping the issuance

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of new leases, but also ending those existing leases.

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So my co-author Jordan Diamond, who is now president

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of the Environmental Law Institute,

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and I said, well, we're legal scholars.

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Uh, one thing we can examine is what the legal power

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of Congress or the president would be

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to cancel those existing leases.

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And there's three questions that follow from that.

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One, can Congress, have the power under the constitution

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to cancel those leases?

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Two, the president's power to cancel

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onshore leases under existing law, again,

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without any congressional action.

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And three, the president's power

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to cancel offshore leases under existing law.

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And we separated the onshore and offshore analysis

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because they operate under different though related laws.

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There are two key statutes depending on whether you are

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looking at onshore or offshore leasing onshore.

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The primary statute is the Mineral Leasing Act.

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The process begins with industry nominating to the Bureau

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of Land Management BLM, which runs the program,

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specific parcels of land that it would like to lease.

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Uh, BLM can then decide whether or not to lease those lands.

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Uh, it has complete discretion as

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to whether it leases any particular parcel of federal land.

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Uh, it will make that decision

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and consultation with other federal agencies such

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as agencies like the Forest Service

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that might manage that federal land.

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Uh, decisions to lease land

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and issuance of leases, generally must comply

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with environmental statutes such

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as environmental review under the National Environmental

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Policy Act or nepa,

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and the Endangered Species Act of the ESA.

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If BLM does decide to proceed,

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it holds an auction in which it accepts bids from

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industry for lease rights.

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Those purchasers of the lease rights in turn make an upfront

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or annual payment to the federal government for the lease

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and have a set period of time, usually 10 years

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to start production of fossil fuel resources on the parcel

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if paying production of fossil fuel resources occurs.

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In other words, if the, lace holder Abe is able

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to produce oil and gas or coal

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and make money off of it, then the lease is extended as long

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as production continues

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with the lease holder paying royalties

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to the federal government

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and royalties are a share

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of the proceeds the fossil fuels extracted from the lease.

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There are additional steps, regulatory steps

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that lease holders need

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to follow when they're developing the lease.

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They can't just go in and drill.

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For instance, if you wanted to drill on your lease,

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you need an approval of an application for a permit to drill

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or a PD, that's issued by BLM,

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and that might trigger additional environmental

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review requirements.

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The offshore process is quite similar.

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Uh, the Department of Interior, the Interior,

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which is the same agency that includes BLM,

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develops a leasing program

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that identifies which offshore areas should be open

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to leasing and then holds auctions at which leases are sold.

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Leases again are for a set period extended

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of production occurs.

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As with the onshore context,

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lease holders must receive additional approvals from

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agencies to drill on their leases,

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and that might trigger additional

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environmental requirements.

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Congress can always pass laws

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and change the current legal structure

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within constitutional limits.

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So it could pass laws that would eliminate existing leases,

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but it probably would have to pay compensation

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for the leases it canceled.

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So that's because in general, the government has

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to pay compensation when it breaks a contract

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the government has entered into.

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And the government also generally has

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to pay compensation when it takes a property interest

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from a private party.

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Uh, and that requirement comes from the takings clause

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of the Fifth Amendment of the US Constitution.

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So it's a constitutional limit.

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Leases for land are both contract

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and property, so they could trigger both requirements,

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both compensation for breach of contract as well

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as compensation for taking of property.

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Courts generally have, treated these kinds

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of situations primarily as a breach of contract Question.

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Uh, there are some defenses

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to paying compensation here by the government.

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The most important one

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for our purposes would be the Sovereign Acts defense,

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which says that the government does not need

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to pay compensation when it passes a general law

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that affects a range of contracts since

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that is a core sovereign power of the government.

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So imagine if the federal government changes the rules

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around, workplace conditions

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or something like that, that would affect contracts

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including the federal government's own contracts.

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If it had to pay compensation every time it changed the

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rules that affected all contracts,

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it would be very expensive and difficult to do legislation.

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On the other hand, the more

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that a law is focused on a particular contract

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or party

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or con particular contract the government is entered into,

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and the less the law can be justified on general public

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purposes, the more likely it is compensation be required.

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So imagine Congress passes law saying, we're not going to,

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comply with this particular contract we entered into

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with this party that would seem to be targeting

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that contract and con compensation would be owed.

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So whether this would apply in the context

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of canceling fossil fuel leases would depend a lot

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on the specific kind of law enacted.

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So a law that specifically said,

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we are canceling these 15 leases,

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very likely would require compensation.

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A broader law is saying all contracts on public

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and private land for fossil fuel leases are prohibited

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'cause we're banning extraction of oil

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and gas from the ground

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or climate change leases reasons might be less likely

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to trigger compensation requirements.

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There are plausible arguments that the executive branch,

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so the president and the agencies he supervises,

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like the Department of the Interior could terminate

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existing onshore and offshore fossil fuel leases.

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I'll start with onshore and then talk about offshore.

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There are different statutory systems.

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So for onshore leases, there are some arguments

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that the president has inherent authority.

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So even without any specific grant of power from Congress

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through a law, to terminate contracts,

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unless Congress has specifically prohibited the President,

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from doing so.

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So the basic question is,

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if the statutes in question are silent

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on whether the president has the power

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to terminate these contracts in general,

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what's the default rule?

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Can the President act or can the president not act?

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The Mineral Leasing Act, which is the primary law

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for onshore leasing, does not specifically prohibit

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the president from terminating leases beyond

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what is provided for in the act.

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So the act has some provision saying you can terminate

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leases in these situations, but it doesn't say beyond that.

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You can't. So what does that mean?

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Well, there is some Supreme Court case law

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that could be read as finding that the president has sort

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of this broad inherent power to terminate contracts

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unless congress specifically prohibits them from doing so.

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So for instance, after the Civil War, the Supreme Court held

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that the president had the inherent authority

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to cancel a weapons contract even if Congress had not

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specifically authorized doing so.

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The idea here is that the president

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as chief executive needs leeway

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to make day-to-Day decisions about how

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to manage the government such as the military

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or in this case the public lands.

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Even if Congress has not specifically granted

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particular powers.

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There's counterarguments here as well.

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Um, you can look at the text

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of the property clause in the Constitution.

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That's the provision that gives Congress the power

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to manage and control the lands zoned

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by the federal government.

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And it mentions Congress not the President.

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So maybe Congress is primary authority here

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and we wouldn't find presidential power.

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You might also think that the way

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that the Mineral Leasing Act is written, it's so detailed

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with all these provisions for termination

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by the president in specific circumstances

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with procedural protections and requirements

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and compensation requirements, that sort of implicitly says

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that's what Congress had in mind,

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and they didn't really have in mind any other ways

245
00:11:02.395 --> 00:11:04.335
for the President to cancel leases.

246
00:11:05.475 --> 00:11:06.695
So the argument here

247
00:11:06.695 --> 00:11:09.375
that the President could do this without express

248
00:11:09.895 --> 00:11:12.415
congressional authorization, I think is,

249
00:11:12.755 --> 00:11:13.855
we think is plausible.

250
00:11:14.615 --> 00:11:16.335
I we do think it's more likely

251
00:11:16.475 --> 00:11:19.575
to succeed if the agencies compensated lease

252
00:11:19.695 --> 00:11:20.855
holders for the value of the lease.

253
00:11:21.235 --> 00:11:22.695
So I think that would make the courts think

254
00:11:22.695 --> 00:11:24.575
that this is less arbitrary and

255
00:11:24.675 --> 00:11:27.095
and harmful to the lease holders and

256
00:11:27.375 --> 00:11:30.375
provided a process by which lease holders could contest the

257
00:11:30.375 --> 00:11:33.255
cancellation of the lease through an administrative process

258
00:11:33.475 --> 00:11:36.495
of, you know, certain criteria were met or not met.

259
00:11:38.175 --> 00:11:41.995
The other possibility for onshore leasing is that the Bureau

260
00:11:41.995 --> 00:11:43.435
of Land Management, right?

261
00:11:43.435 --> 00:11:45.395
The agency in charge of running this program

262
00:11:46.465 --> 00:11:49.435
uses its existing power under the Meau Leasing Act,

263
00:11:49.775 --> 00:11:52.595
the implementing regulations that the agency has issued,

264
00:11:53.185 --> 00:11:56.005
and the leases themselves, the leases are contracts.

265
00:11:56.005 --> 00:11:57.485
So they're written documents with terms

266
00:11:57.545 --> 00:12:01.285
and provisions relies on its power under those provisions,

267
00:12:01.345 --> 00:12:02.805
the statutes, the regulations,

268
00:12:02.805 --> 00:12:04.725
and the leases to end the leases.

269
00:12:05.445 --> 00:12:07.265
Now, the leases and the regulations

270
00:12:07.525 --> 00:12:11.185
and the ACT do have provisions that allow for terminations

271
00:12:11.245 --> 00:12:13.705
of, of leases in certain circumstances.

272
00:12:14.695 --> 00:12:17.585
Most relevant here, there is a provision that if there are

273
00:12:18.185 --> 00:12:20.585
specific non-discretionary statutes

274
00:12:21.055 --> 00:12:23.945
that pro protect environmental resources

275
00:12:24.485 --> 00:12:26.505
and would require the termination of the lease

276
00:12:26.505 --> 00:12:28.025
to protect those resources,

277
00:12:28.565 --> 00:12:30.185
the government can terminate the lease.

278
00:12:30.935 --> 00:12:33.515
We think there's really two possible laws here

279
00:12:33.515 --> 00:12:34.555
that might apply.

280
00:12:35.215 --> 00:12:37.395
The first is the Endangered Species Act

281
00:12:37.495 --> 00:12:40.395
or ESA as I mentioned briefly before.

282
00:12:41.215 --> 00:12:43.595
So the idea would be here that the ESA

283
00:12:44.275 --> 00:12:46.795
requires the government to terminate the lease

284
00:12:46.855 --> 00:12:48.715
to protect endangered species.

285
00:12:49.615 --> 00:12:51.675
And because that's in the provision of the lease,

286
00:12:51.815 --> 00:12:53.955
the government could therefore go ahead and do so.

287
00:12:54.935 --> 00:12:55.995
How this might work?

288
00:12:56.065 --> 00:12:57.635
Well, the ESA,

289
00:12:57.955 --> 00:13:00.635
prohibits the federal government from taking any action

290
00:13:00.905 --> 00:13:03.235
that would cause jeopardy to an endangered species

291
00:13:03.735 --> 00:13:06.835
or would harm an individual member of an endangered species.

292
00:13:07.575 --> 00:13:08.675
And the argument would be

293
00:13:08.675 --> 00:13:11.515
that the greenhouse gas emissions from the fossil fuel lease

294
00:13:11.885 --> 00:13:14.435
would cause jeopardy or take for endangered species,

295
00:13:14.565 --> 00:13:17.555
think polar bears, and,

296
00:13:17.555 --> 00:13:18.915
therefore the lease should be ended.

297
00:13:19.885 --> 00:13:21.635
There are complications with this argument.

298
00:13:22.005 --> 00:13:23.275
First, it's not clear

299
00:13:23.275 --> 00:13:26.235
that the lease itself is an action under the ESA.

300
00:13:26.235 --> 00:13:29.835
It's already happened, although you do have subsequent steps

301
00:13:29.905 --> 00:13:32.835
that would happen under the lease, like issuance of APDs.

302
00:13:33.595 --> 00:13:35.815
And second, it might be hard to show

303
00:13:35.815 --> 00:13:38.015
that the emissions from one individual lease

304
00:13:38.625 --> 00:13:40.735
contribute enough to global emissions

305
00:13:40.735 --> 00:13:42.015
that they're causing jeopardy

306
00:13:42.155 --> 00:13:44.015
or take for individual species, right?

307
00:13:44.755 --> 00:13:45.975
The species is in trouble

308
00:13:45.975 --> 00:13:48.975
because of climate change, which is the result of lots

309
00:13:48.975 --> 00:13:51.735
of emissions from lots of people over lots of time.

310
00:13:52.155 --> 00:13:54.335
And this is just one additional component of that.

311
00:13:54.835 --> 00:13:57.215
On the other hand, at a pro program level,

312
00:13:57.215 --> 00:13:59.335
like the entire coal leasing program for the us,

313
00:13:59.725 --> 00:14:02.575
that is a pretty large amount of global emissions.

314
00:14:02.575 --> 00:14:04.175
Maybe that's enough to count.

315
00:14:05.715 --> 00:14:08.135
The other statute would be the Federal Lands Policy

316
00:14:08.195 --> 00:14:10.015
and Management Act, or flip a,

317
00:14:10.245 --> 00:14:11.855
there's a lot of acronyms here.

318
00:14:12.925 --> 00:14:15.175
This is the law that created the BLM

319
00:14:15.475 --> 00:14:17.615
and it governs what the BLM does.

320
00:14:18.375 --> 00:14:22.185
Flip A requires the BLM to prevent unnecessary

321
00:14:22.525 --> 00:14:24.945
or undue degradation of the public lands.

322
00:14:25.285 --> 00:14:27.305
And the argument here would be that the impacts

323
00:14:27.305 --> 00:14:30.905
of greenhouse gas emissions are causing undue degradation

324
00:14:30.925 --> 00:14:31.945
of public lands,

325
00:14:32.785 --> 00:14:34.935
given the environmental impacts of climate change.

326
00:14:35.315 --> 00:14:37.255
For instance, the harm that climate change has done

327
00:14:37.255 --> 00:14:39.895
to forests and other ecosystems.

328
00:14:40.005 --> 00:14:41.615
This is a plausible argument.

329
00:14:42.655 --> 00:14:43.955
And, one other thing,

330
00:14:43.955 --> 00:14:47.035
this provision doesn't require the agency to be about

331
00:14:47.035 --> 00:14:48.235
to take a specific action.

332
00:14:48.255 --> 00:14:51.405
So it might apply to the ongoing presence of the leases.

333
00:14:52.505 --> 00:14:56.085
If either of these laws allow BLM to cancel a lease,

334
00:14:56.865 --> 00:14:59.405
it wouldn't have to pay compensation to the lease holder

335
00:14:59.405 --> 00:15:00.605
because these are already

336
00:15:00.925 --> 00:15:02.525
provided for in the lease what the lease holder

337
00:15:02.555 --> 00:15:03.565
paid for to begin with.

338
00:15:03.785 --> 00:15:06.845
So this is different than the inherent authority argument I

339
00:15:06.845 --> 00:15:09.925
gave earlier, or compensation might well be required.

340
00:15:10.465 --> 00:15:12.965
In other words, the government isn't reaching a contract

341
00:15:12.965 --> 00:15:14.405
here when it terminates the lease.

342
00:15:14.715 --> 00:15:16.405
It's just exercising its rights

343
00:15:16.405 --> 00:15:18.285
that it already has under the lease.

344
00:15:19.725 --> 00:15:21.925
Offshore leasing is actually more straightforward.

345
00:15:22.115 --> 00:15:23.205
There's a different statute,

346
00:15:23.345 --> 00:15:25.325
the Outer Continental Shelf Leasing Act,

347
00:15:25.675 --> 00:15:27.325
sometimes called sla,

348
00:15:27.905 --> 00:15:31.525
and this explicitly provides for cancellation of leases

349
00:15:31.545 --> 00:15:33.525
to protect environmental resources.

350
00:15:34.345 --> 00:15:37.045
Um, the provisions here are quite broad.

351
00:15:37.385 --> 00:15:39.605
Uh, it allows cancellation of leases

352
00:15:39.605 --> 00:15:41.445
where there is serious harm

353
00:15:41.465 --> 00:15:44.765
or damage to life, including fish and other aquatic life

354
00:15:45.145 --> 00:15:47.285
or the marine coastal or human environment.

355
00:15:48.095 --> 00:15:50.835
If you cancel under this provision, you do owe compensation

356
00:15:50.835 --> 00:15:53.325
to the leaseholder and it's plausible.

357
00:15:53.325 --> 00:15:55.565
Climate change might qualify under these provisions.

358
00:15:56.835 --> 00:15:59.935
The arguments here, I think on the one hand you might say

359
00:16:00.225 --> 00:16:03.055
these provisions were added in the late 1970s,

360
00:16:03.735 --> 00:16:06.655
Congress might have been more thinking about harm

361
00:16:06.675 --> 00:16:08.695
to the environment directly from, say,

362
00:16:08.695 --> 00:16:12.135
an oil spill from an offshore oil rig, rather than

363
00:16:12.715 --> 00:16:15.775
the indirect impacts of emissions from the combustion

364
00:16:16.235 --> 00:16:18.575
of the fossil fuels after they're extracted.

365
00:16:19.655 --> 00:16:21.225
Unclear how that would play out.

366
00:16:21.445 --> 00:16:23.425
Uh, but at least it's a plausible argument.

367
00:16:23.445 --> 00:16:25.585
We think lease holders that are unhappy

368
00:16:25.585 --> 00:16:28.025
with the government's cancellation of a lease could go

369
00:16:28.025 --> 00:16:29.585
to court to challenge the decision.

370
00:16:30.445 --> 00:16:33.785
And in general, there are two possible remedies a court can

371
00:16:33.785 --> 00:16:36.865
give to a le to a plaintiff who comes to the court

372
00:16:37.175 --> 00:16:39.665
with a lawsuit, including lease holders challenging a

373
00:16:39.665 --> 00:16:43.305
cancellation of their lease injunctions or damages.

374
00:16:43.915 --> 00:16:46.745
Injunctive relief is the court ordering the government

375
00:16:47.445 --> 00:16:49.425
to do something or not do something.

376
00:16:49.445 --> 00:16:51.985
In this case, it would be the court ordering the government

377
00:16:52.005 --> 00:16:56.265
to restore the lease damages would allow the lease

378
00:16:56.265 --> 00:16:59.985
to be terminated, but require compensation by the government

379
00:17:00.565 --> 00:17:02.065
for that termination of the lease.

380
00:17:03.255 --> 00:17:06.955
The basic analysis here is if the lease holders are only

381
00:17:07.235 --> 00:17:09.075
claiming a violation of the lease provisions,

382
00:17:09.615 --> 00:17:12.315
the government had the power to terminate the lease,

383
00:17:12.535 --> 00:17:15.595
but it didn't actually properly invoke the lease provisions

384
00:17:15.735 --> 00:17:18.515
in question, the lease conditions, for instance,

385
00:17:18.575 --> 00:17:20.235
aren't met,

386
00:17:20.545 --> 00:17:23.835
then the courts probably would only provide compensation.

387
00:17:25.355 --> 00:17:27.525
It's only if the co lease holder could show

388
00:17:27.525 --> 00:17:30.525
that the agency violated a constitutional statutory

389
00:17:30.525 --> 00:17:31.845
or regulatory provision

390
00:17:32.275 --> 00:17:34.685
that the lease holder can get injunctive relief.

391
00:17:34.825 --> 00:17:36.125
So if the government has the power

392
00:17:36.125 --> 00:17:37.365
to end the lease in general,

393
00:17:38.145 --> 00:17:40.805
and the only claim is that the ending of the lease breached,

394
00:17:40.805 --> 00:17:42.165
the lease broke, the contract

395
00:17:42.165 --> 00:17:43.765
compensation is all that is owed.

396
00:17:44.225 --> 00:17:47.125
So does the government have the power to break contracts?

397
00:17:47.745 --> 00:17:50.685
If the president or the agencies have that power to do so,

398
00:17:51.305 --> 00:17:54.165
then they can proceed and pay compensation.

399
00:17:54.265 --> 00:17:55.325
If they don't have the power,

400
00:17:55.325 --> 00:17:57.125
then the court can prevent it from occurring.

401
00:17:57.505 --> 00:17:59.605
And of course, as I said, if the court concluded

402
00:17:59.605 --> 00:18:00.805
that the government had the power

403
00:18:00.805 --> 00:18:02.125
to end the lease under the lease,

404
00:18:02.515 --> 00:18:04.325
then no compensation would be owed at all.

405
00:18:05.145 --> 00:18:06.885
We generally think that means if the court

406
00:18:07.545 --> 00:18:09.685
ha concludes an agency has the discretion

407
00:18:09.685 --> 00:18:11.605
to terminate the lease, the only remedy

408
00:18:11.745 --> 00:18:12.805
is going to be damages.

409
00:18:12.935 --> 00:18:14.285
There are plausible arguments,

410
00:18:14.305 --> 00:18:16.685
the executive branch might be able

411
00:18:16.685 --> 00:18:18.765
to terminate existing fossil fuel leases

412
00:18:18.785 --> 00:18:20.365
and certainly Congress could do so,

413
00:18:21.145 --> 00:18:24.285
and, we think it's plausible compensation would be owed.

414
00:18:24.385 --> 00:18:27.325
But whether the power exists is a separate question

415
00:18:27.325 --> 00:18:29.285
of whether you should do anything about it.

416
00:18:29.985 --> 00:18:32.885
So scholars who work in climate policy often distinguish

417
00:18:32.915 --> 00:18:34.565
between supply side

418
00:18:34.625 --> 00:18:37.405
and demand side approaches to address climate change

419
00:18:37.545 --> 00:18:39.245
and reduce greenhouse gas emissions.

420
00:18:39.745 --> 00:18:42.005
Demand side approaches mean reducing the demand

421
00:18:42.105 --> 00:18:43.725
for greenhouse gas emissions.

422
00:18:43.945 --> 00:18:46.685
So for instance, replacing coal power plants

423
00:18:46.685 --> 00:18:49.605
with solar farms or replacing gas cars with electric cars.

424
00:18:50.305 --> 00:18:52.365
Supply side approaches mean restricting

425
00:18:52.365 --> 00:18:55.965
and reducing the extraction of fossil fuels from the ground.

426
00:18:56.145 --> 00:18:57.405
And they tend to have gotten less

427
00:18:57.405 --> 00:18:58.725
attention in the discussions.

428
00:18:59.305 --> 00:19:01.805
Uh, they may have some advantages, they might be easier

429
00:19:01.825 --> 00:19:03.245
to enforce, right?

430
00:19:03.465 --> 00:19:06.165
You can stop the extraction of the onsite.

431
00:19:06.595 --> 00:19:09.565
They might help reduce the cost of addressing climate change

432
00:19:09.585 --> 00:19:12.325
of done in partnership with demand side approaches.

433
00:19:12.825 --> 00:19:15.245
And there are some voters who are focused on climate change

434
00:19:15.265 --> 00:19:18.365
who might see the appeal of a direct action against climate

435
00:19:18.365 --> 00:19:20.565
change their downsides as well.

436
00:19:20.615 --> 00:19:23.805
First, these approaches might be quite politically

437
00:19:23.805 --> 00:19:27.125
controversial, especially when voters are very sensitive

438
00:19:27.185 --> 00:19:28.965
to things like gasoline prices.

439
00:19:29.745 --> 00:19:31.645
Second, they're also susceptible to

440
00:19:31.645 --> 00:19:33.005
what scholars call leakage.

441
00:19:33.505 --> 00:19:36.125
If you reduce fossil fuel extraction from the United States,

442
00:19:36.495 --> 00:19:40.005
might we just then import more fossil fuels from other

443
00:19:40.245 --> 00:19:41.645
countries to make up the difference.

444
00:19:42.885 --> 00:19:46.425
So leakage is a real risk, but it's not guaranteed to occur.

445
00:19:47.005 --> 00:19:48.985
For instance, some markets like cola

446
00:19:49.085 --> 00:19:52.145
or gas are less connected internationally than

447
00:19:52.145 --> 00:19:53.185
others like oil.

448
00:19:53.685 --> 00:19:55.505
So if you reduce your production

449
00:19:55.505 --> 00:19:59.105
of less connected fossil fuels, it's harder

450
00:19:59.205 --> 00:20:02.545
to substitute other, other production from other markets.

451
00:20:03.395 --> 00:20:07.335
And it's also true that some resources like coal have more

452
00:20:07.565 --> 00:20:09.855
substitutes from other fossil fuels.

453
00:20:10.235 --> 00:20:12.895
So for instance, coal for electricity, you can substitute

454
00:20:12.925 --> 00:20:15.055
with natural gas or renewable energy

455
00:20:16.565 --> 00:20:20.425
and those substitutes might indeed have less emissions.

456
00:20:20.425 --> 00:20:22.745
And so we might be better off even with the leakage.

457
00:20:23.325 --> 00:20:24.895
Finally, you might also want

458
00:20:24.895 --> 00:20:26.615
to consider the relative emission levels

459
00:20:26.755 --> 00:20:28.015
of different fossil fuels.

460
00:20:28.015 --> 00:20:29.615
Coal is far dirtier than oil

461
00:20:29.635 --> 00:20:32.535
or gas in terms of both greenhouse gas emissions

462
00:20:32.915 --> 00:20:34.455
and conventional pollutants.

463
00:20:35.505 --> 00:20:36.605
So given these factors,

464
00:20:37.225 --> 00:20:40.685
you might wanna focus primarily on reducing coal leases.

465
00:20:40.685 --> 00:20:42.365
There's less likely to be leakage.

466
00:20:42.365 --> 00:20:44.725
They're not as well connected in international markets.

467
00:20:45.475 --> 00:20:46.485
It's that most

468
00:20:46.835 --> 00:20:49.365
Important in terms of greenhouse gas emissions.

469
00:20:49.785 --> 00:20:52.205
And it's likely that they, there is substitution,

470
00:20:52.265 --> 00:20:55.205
it would be with potentially with natural gas

471
00:20:55.465 --> 00:20:56.885
or with renewable energy.

472
00:20:57.425 --> 00:20:59.805
Oil and gas leases might be less of a priority,

473
00:21:00.105 --> 00:21:01.165
for those reasons.

474
00:21:01.345 --> 00:21:02.925
Oil markets are more international

475
00:21:03.185 --> 00:21:06.685
and natural gas has got the least greenhouse gas emissions

476
00:21:06.685 --> 00:21:08.485
of these three fossil fuel options.

477
00:21:09.315 --> 00:21:11.305
There are other factors to consider as well.

478
00:21:11.605 --> 00:21:14.185
Um, if you're paying compensation to lease holders

479
00:21:14.325 --> 00:21:17.345
to stop the extraction of fossil fuels, you want

480
00:21:17.345 --> 00:21:20.225
to make sure that the compensation you're paying is less

481
00:21:20.655 --> 00:21:22.265
than the harm that would be produced

482
00:21:22.265 --> 00:21:24.985
by the green fossil fuels if they were extracted

483
00:21:24.985 --> 00:21:27.625
and combusted basically the social cost of carbon.

484
00:21:27.845 --> 00:21:30.465
So is the compensation you're paying worth it given

485
00:21:30.485 --> 00:21:31.665
the social cost of carbon?

486
00:21:32.295 --> 00:21:33.945
That seems plausible to us

487
00:21:33.965 --> 00:21:37.265
or likely to us, given the high costs from fossil fuel

488
00:21:37.465 --> 00:21:38.865
emissions as we as climate change

489
00:21:39.095 --> 00:21:40.225
exacerbates and gets worse.

490
00:21:40.965 --> 00:21:44.465
You might also wanna consider other pollutant impacts from

491
00:21:44.465 --> 00:21:46.865
the fossil fuels when they're extracted and combusted.

492
00:21:47.165 --> 00:21:49.225
So for instance, coal produces a lot

493
00:21:49.225 --> 00:21:51.745
of conventional non greenhouse gas pollution

494
00:21:51.975 --> 00:21:54.425
that could be quite damaging and harmful to people

495
00:21:54.565 --> 00:21:56.985
and actually affects kilos, tens of thousands

496
00:21:56.985 --> 00:21:58.465
of people annually, globally.

497
00:21:59.045 --> 00:22:02.905
So those are benefits you would get from reducing,

498
00:22:03.135 --> 00:22:04.505
coal leasing for instance.

499
00:22:05.165 --> 00:22:06.705
And lastly, you want

500
00:22:06.705 --> 00:22:09.265
to seriously consider the impacts in the communities

501
00:22:09.535 --> 00:22:13.145
that depend on this leasing for jobs in their local economy,

502
00:22:13.415 --> 00:22:15.105
what people call just transitions.

503
00:22:15.565 --> 00:22:17.905
And so I, you really can't just go about starting

504
00:22:17.905 --> 00:22:21.105
to cancel these leases without thinking hard about

505
00:22:21.105 --> 00:22:22.825
how you're going to mitigate those impacts

506
00:22:22.885 --> 00:22:23.865
for those communities.

Federal Fossil Fuel Leases and Climate Change

00:00:00 - Federal government owns a lot of the United States, about 30%. Most of it's concentrated in the Western United States. That land has a significant amount of fossil fuels beneath it, oil, gas, coal. In addition, the federal government owns much of the land beneath the ocean off the coast of the United States. And that land also has a lot of fossil fuels. The federal government has for decades leased its lands, both onshore and offshore to private companies to allow for fossil fuel production. So over the past several years, climate activists have vociferously argued against issuing
00:00:39 - what has sometimes been called the leave it in the ground movement. For instance, most recently environmental groups challenged the recent issuance of new leases by the Biden administration on federal lands in Northern Alaska for a a large scale oil and gas development project. And the basic argument is that these leases are a significant part of the greenhouse gas emissions of the United States. the United States itself is a large part
00:01:10 - of addressing climate change and the limited global capacity for and more emissions. If we wanna meet targets like a maximum of two degrees Celsius warming, we really can't afford to commit to even more emissions over the next day from leases. these federal fossil fuel leases matter. For instance, in 2017, federal leases provided 13% of US gas production and 43% of US coal production.
00:01:42 - for those statistics, the US has seen a surge in oil and gas production. We're now one of the leaders in production of those resources. So this is a major part of total global production of fossil fuels. So deciding what to do about federal fossil fuel leasing has real implications at a global scale. So our study examined the next logical step. What if you didn't wanna just stop issuing new leases, but instead wanted to cancel existing leases?
00:02:15 - existing leases, some of which were issued many years ago, and many of which can continue to produce for years, even decades to come quickly reducing total emissions from US Federal fossil fuel production would require not just stopping the issuance of new leases, but also ending those existing leases. So my co-author Jordan Diamond, who is now president of the Environmental Law Institute, and I said, well, we're legal scholars.
00:02:47 - of Congress or the president would be to cancel those existing leases. And there's three questions that follow from that. One, can Congress, have the power under the constitution to cancel those leases? Two, the president's power to cancel onshore leases under existing law, again, without any congressional action. And three, the president's power to cancel offshore leases under existing law. And we separated the onshore and offshore analysis

Regulations and Processes of Federal Lease Management

00:03:20 - There are two key statutes depending on whether you are looking at onshore or offshore leasing onshore. The primary statute is the Mineral Leasing Act. The process begins with industry nominating to the Bureau of Land Management BLM, which runs the program, specific parcels of land that it would like to lease. BLM can then decide whether or not to lease those lands. it has complete discretion as
00:03:50 - it will make that decision and consultation with other federal agencies such as agencies like the Forest Service that might manage that federal land. decisions to lease land and issuance of leases, generally must comply with environmental statutes such as environmental review under the National Environmental Policy Act or nepa, and the Endangered Species Act of the ESA. If BLM does decide to proceed, it holds an auction in which it accepts bids from
00:04:20 - Those purchasers of the lease rights in turn make an upfront or annual payment to the federal government for the lease and have a set period of time, usually 10 years to start production of fossil fuel resources on the parcel if paying production of fossil fuel resources occurs. In other words, if the, lace holder Abe is able to produce oil and gas or coal and make money off of it, then the lease is extended as long as production continues
00:04:52 - to the federal government and royalties are a share of the proceeds the fossil fuels extracted from the lease. There are additional steps, regulatory steps that lease holders need to follow when they're developing the lease. They can't just go in and drill. For instance, if you wanted to drill on your lease, you need an approval of an application for a permit to drill or a PD, that's issued by BLM, and that might trigger additional environmental review requirements.
00:05:22 - the Department of Interior, the Interior, which is the same agency that includes BLM, develops a leasing program that identifies which offshore areas should be open to leasing and then holds auctions at which leases are sold. Leases again are for a set period extended of production occurs. As with the onshore context, lease holders must receive additional approvals from agencies to drill on their leases, and that might trigger additional environmental requirements.
00:05:53 - and change the current legal structure within constitutional limits. So it could pass laws that would eliminate existing leases, but it probably would have to pay compensation for the leases it canceled. So that's because in general, the government has to pay compensation when it breaks a contract the government has entered into. And the government also generally has to pay compensation when it takes a property interest from a private party. and that requirement comes from the takings clause

Constitutional Limits on Lease Termination Compensation

00:06:26 - So it's a constitutional limit. Leases for land are both contract and property, so they could trigger both requirements, both compensation for breach of contract as well as compensation for taking of property. Courts generally have, treated these kinds of situations primarily as a breach of contract Question. there are some defenses to paying compensation here by the government.
00:06:56 - for our purposes would be the Sovereign Acts defense, which says that the government does not need to pay compensation when it passes a general law that affects a range of contracts since that is a core sovereign power of the government. So imagine if the federal government changes the rules around, workplace conditions or something like that, that would affect contracts including the federal government's own contracts. If it had to pay compensation every time it changed the rules that affected all contracts, it would be very expensive and difficult to do legislation.
00:07:28 - that a law is focused on a particular contract or party or con particular contract the government is entered into, and the less the law can be justified on general public purposes, the more likely it is compensation be required. So imagine Congress passes law saying, we're not going to, comply with this particular contract we entered into with this party that would seem to be targeting that contract and con compensation would be owed. So whether this would apply in the context
00:08:01 - on the specific kind of law enacted. So a law that specifically said, we are canceling these 15 leases, very likely would require compensation. A broader law is saying all contracts on public and private land for fossil fuel leases are prohibited 'cause we're banning extraction of oil and gas from the ground or climate change leases reasons might be less likely to trigger compensation requirements. There are plausible arguments that the executive branch,
00:08:32 - like the Department of the Interior could terminate existing onshore and offshore fossil fuel leases. I'll start with onshore and then talk about offshore. There are different statutory systems. So for onshore leases, there are some arguments that the president has inherent authority. So even without any specific grant of power from Congress through a law, to terminate contracts, unless Congress has specifically prohibited the President,
00:09:04 - So the basic question is, if the statutes in question are silent on whether the president has the power to terminate these contracts in general, what's the default rule? Can the President act or can the president not act? The Mineral Leasing Act, which is the primary law for onshore leasing, does not specifically prohibit the president from terminating leases beyond what is provided for in the act. So the act has some provision saying you can terminate leases in these situations, but it doesn't say beyond that.

Presidential Powers in Lease Termination Cases

00:09:37 - Well, there is some Supreme Court case law that could be read as finding that the president has sort of this broad inherent power to terminate contracts unless congress specifically prohibits them from doing so. So for instance, after the Civil War, the Supreme Court held that the president had the inherent authority to cancel a weapons contract even if Congress had not specifically authorized doing so. The idea here is that the president
00:10:08 - to make day-to-Day decisions about how to manage the government such as the military or in this case the public lands. Even if Congress has not specifically granted particular powers. There's counterarguments here as well. you can look at the text of the property clause in the Constitution. That's the provision that gives Congress the power to manage and control the lands zoned by the federal government. And it mentions Congress not the President. So maybe Congress is primary authority here
00:10:41 - You might also think that the way that the Mineral Leasing Act is written, it's so detailed with all these provisions for termination by the president in specific circumstances with procedural protections and requirements and compensation requirements, that sort of implicitly says that's what Congress had in mind, and they didn't really have in mind any other ways for the President to cancel leases. So the argument here that the President could do this without express
00:11:12 - we think is plausible. I we do think it's more likely to succeed if the agencies compensated lease holders for the value of the lease. So I think that would make the courts think that this is less arbitrary and and harmful to the lease holders and provided a process by which lease holders could contest the cancellation of the lease through an administrative process of, you know, certain criteria were met or not met. The other possibility for onshore leasing is that the Bureau
00:11:43 - The agency in charge of running this program uses its existing power under the Meau Leasing Act, the implementing regulations that the agency has issued, and the leases themselves, the leases are contracts. So they're written documents with terms and provisions relies on its power under those provisions, the statutes, the regulations, and the leases to end the leases. Now, the leases and the regulations and the ACT do have provisions that allow for terminations of, of leases in certain circumstances.
00:12:18 - specific non-discretionary statutes that pro protect environmental resources and would require the termination of the lease to protect those resources, the government can terminate the lease. We think there's really two possible laws here that might apply. The first is the Endangered Species Act or ESA as I mentioned briefly before. So the idea would be here that the ESA requires the government to terminate the lease

Impacts of Fossil Fuels on Endangered Species

00:12:49 - And because that's in the provision of the lease, the government could therefore go ahead and do so. How this might work? Well, the ESA, prohibits the federal government from taking any action that would cause jeopardy to an endangered species or would harm an individual member of an endangered species. And the argument would be that the greenhouse gas emissions from the fossil fuel lease would cause jeopardy or take for endangered species, think polar bears, and,
00:13:19 - There are complications with this argument. First, it's not clear that the lease itself is an action under the ESA. It's already happened, although you do have subsequent steps that would happen under the lease, like issuance of APDs. And second, it might be hard to show that the emissions from one individual lease contribute enough to global emissions that they're causing jeopardy or take for individual species, right? The species is in trouble because of climate change, which is the result of lots
00:13:52 - And this is just one additional component of that. On the other hand, at a pro program level, like the entire coal leasing program for the us, that is a pretty large amount of global emissions. Maybe that's enough to count. The other statute would be the Federal Lands Policy and Management Act, or flip a, there's a lot of acronyms here. This is the law that created the BLM and it governs what the BLM does. Flip A requires the BLM to prevent unnecessary
00:14:25 - And the argument here would be that the impacts of greenhouse gas emissions are causing undue degradation of public lands, given the environmental impacts of climate change. For instance, the harm that climate change has done to forests and other ecosystems. This is a plausible argument. And, one other thing, this provision doesn't require the agency to be about to take a specific action. So it might apply to the ongoing presence of the leases. If either of these laws allow BLM to cancel a lease,
00:14:59 - because these are already provided for in the lease what the lease holder paid for to begin with. So this is different than the inherent authority argument I gave earlier, or compensation might well be required. In other words, the government isn't reaching a contract here when it terminates the lease. It's just exercising its rights that it already has under the lease. Offshore leasing is actually more straightforward. There's a different statute, the Outer Continental Shelf Leasing Act, sometimes called sla,
00:15:31 - to protect environmental resources. the provisions here are quite broad. it allows cancellation of leases where there is serious harm or damage to life, including fish and other aquatic life or the marine coastal or human environment. If you cancel under this provision, you do owe compensation to the leaseholder and it's plausible. Climate change might qualify under these provisions. The arguments here, I think on the one hand you might say

Legal Challenges to Lease Cancellations Explained

00:16:03 - Congress might have been more thinking about harm to the environment directly from, say, an oil spill from an offshore oil rig, rather than the indirect impacts of emissions from the combustion of the fossil fuels after they're extracted. Unclear how that would play out. but at least it's a plausible argument. We think lease holders that are unhappy with the government's cancellation of a lease could go to court to challenge the decision.
00:16:33 - give to a le to a plaintiff who comes to the court with a lawsuit, including lease holders challenging a cancellation of their lease injunctions or damages. Injunctive relief is the court ordering the government to do something or not do something. In this case, it would be the court ordering the government to restore the lease damages would allow the lease to be terminated, but require compensation by the government
00:17:03 - The basic analysis here is if the lease holders are only claiming a violation of the lease provisions, the government had the power to terminate the lease, but it didn't actually properly invoke the lease provisions in question, the lease conditions, for instance, aren't met, then the courts probably would only provide compensation. It's only if the co lease holder could show that the agency violated a constitutional statutory or regulatory provision
00:17:34 - So if the government has the power to end the lease in general, and the only claim is that the ending of the lease breached, the lease broke, the contract compensation is all that is owed. So does the government have the power to break contracts? If the president or the agencies have that power to do so, then they can proceed and pay compensation. If they don't have the power, then the court can prevent it from occurring. And of course, as I said, if the court concluded that the government had the power to end the lease under the lease,
00:18:05 - We generally think that means if the court ha concludes an agency has the discretion to terminate the lease, the only remedy is going to be damages. There are plausible arguments, the executive branch might be able to terminate existing fossil fuel leases and certainly Congress could do so, and, we think it's plausible compensation would be owed. But whether the power exists is a separate question of whether you should do anything about it. So scholars who work in climate policy often distinguish
00:18:34 - and demand side approaches to address climate change and reduce greenhouse gas emissions. Demand side approaches mean reducing the demand for greenhouse gas emissions. So for instance, replacing coal power plants with solar farms or replacing gas cars with electric cars. Supply side approaches mean restricting and reducing the extraction of fossil fuels from the ground. And they tend to have gotten less attention in the discussions. they may have some advantages, they might be easier to enforce, right?

Reducing Coal Leasing: Costs, Benefits, and Challenges

00:19:06 - They might help reduce the cost of addressing climate change of done in partnership with demand side approaches. And there are some voters who are focused on climate change who might see the appeal of a direct action against climate change their downsides as well. First, these approaches might be quite politically controversial, especially when voters are very sensitive to things like gasoline prices. Second, they're also susceptible to what scholars call leakage.
00:19:36 - might we just then import more fossil fuels from other countries to make up the difference. So leakage is a real risk, but it's not guaranteed to occur. For instance, some markets like cola or gas are less connected internationally than others like oil. So if you reduce your production of less connected fossil fuels, it's harder to substitute other, other production from other markets. And it's also true that some resources like coal have more
00:20:10 - So for instance, coal for electricity, you can substitute with natural gas or renewable energy and those substitutes might indeed have less emissions. And so we might be better off even with the leakage. Finally, you might also want to consider the relative emission levels of different fossil fuels. Coal is far dirtier than oil or gas in terms of both greenhouse gas emissions and conventional pollutants. So given these factors, you might wanna focus primarily on reducing coal leases.
00:20:42 - They're not as well connected in international markets. It's that most Important in terms of greenhouse gas emissions. And it's likely that they, there is substitution, it would be with potentially with natural gas or with renewable energy. Oil and gas leases might be less of a priority, for those reasons. Oil markets are more international and natural gas has got the least greenhouse gas emissions of these three fossil fuel options. There are other factors to consider as well.
00:21:14 - to stop the extraction of fossil fuels, you want to make sure that the compensation you're paying is less than the harm that would be produced by the green fossil fuels if they were extracted and combusted basically the social cost of carbon. So is the compensation you're paying worth it given the social cost of carbon? That seems plausible to us or likely to us, given the high costs from fossil fuel emissions as we as climate change exacerbates and gets worse. You might also wanna consider other pollutant impacts from
00:21:47 - So for instance, coal produces a lot of conventional non greenhouse gas pollution that could be quite damaging and harmful to people and actually affects kilos, tens of thousands of people annually, globally. So those are benefits you would get from reducing, coal leasing for instance. And lastly, you want to seriously consider the impacts in the communities that depend on this leasing for jobs in their local economy, what people call just transitions.

Consider Community Impacts Before Lease Cancellations

00:22:22 - to cancel these leases without thinking hard about how you're going to mitigate those impacts for those communities.

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