Last week, the Trump administration took another step in opening up formerly protected parts of the Arctic, in the Arctic National Wildlife Refuge, to drilling for oil and natural gas. On November 17th, the Bureau of Land Management (BLM) began the process of allowing oil and gas companies to pick which areas should be auctioned off in the Refuge, formally referred to as a “call for nominations.”
Though President Trump’s close relationship with the oil and gas industry is no secret, it is the timing that is drawing much attention. Since the call for nominations is open to submissions for 30 days, followed by another 30-day notice of sale before the actual sale, the BLM could begin auctioning off the land just a few days before January 20th, which is when the term of the current President would end.
Indeed, given that it seems increasingly likely that Joe Biden will be inaugurated as the 46th President of the United States, Trump is facing a tight schedule to follow through with the promises he made to the oil and gas industry when he took office.
The Arctic National Wildlife Refuge has been a contentious area since the 1980s but was opened to oil development through a 2017 tax bill. This bill requires one lease sale by 2021 and at least a total of two by 2027. The proponents of opening up the Refuge to development, or drilling, argue that it is long overdue and an important step for American ‘energy independence’. Its opponents point out environmental concerns regarding the impacts of drilling both on the local ecosystems as well as more broadly on climate change.
While certain areas of the Refuge have now been opened to drilling in theory, it remains to be seen whether oil and gas companies will actually wish to pursue such activities in the region. The issue of environmental concerns could especially pose a problem for bigger companies that have much more public name recognition and could face public backlash, especially as many are trying to establish a new and more sustainability-focused image. Though the risk of facing even more legal action over environmental concerns may put off a number of companies, it is not the only obstacle in the way of actual drilling to take place.
Indeed, drilling in an environment as remote as the Refuge, where infrastructure and roads have purposefully not been constructed, comes with quite a hefty price tag. These expenses may perhaps have been seen as worth it when oil prices were high, but with the current prices at a historic low, it becomes even more difficult to justify investing in such expensive projects, especially when cheaper alternatives are present, for instance in West Texas.
There is the additional challenge of approximately two dozen major banks, including Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, and Wells Fargo, having said that they will no longer provide funding for fossil fuel development in the Arctic Refuge.
Last, but certainly not least, there is the looming change in administration that is looking more and more likely by the day. With Biden having campaigned on protecting such lands from drilling and promising to “permanently protect” the Refuge, it would not be difficult to assume that this could add on to the aforementioned challenges to make the prospect of drilling in the Refuge less appealing than one might initially think.
Nonetheless, though Biden has taken a firm stance against drilling in the area, what he can actually do will change depending on how far the process of issuing leases has progressed by the time he takes office on January 20th. According to Erik Grafe, a lawyer with the non-profit Earthjustice, if the auction takes place by January 17th but there has not been any actual issuing of leases, the Biden administration may be able to simply not issue them. However, it becomes more difficult to take back the leases if they are actually issued by the Trump administration, though according to Grafe, “the Biden administration could seek to withdraw the leases if it concludes they were unlawfully issued or pose too great a threat to the environment.”
In either scenario though, Biden would run into the issue of the federal law necessitating at the very least one lease sale by the end of 2021. Nonetheless, the new administration could make the process of obtaining the necessary permits difficult and time-consuming enough that, especially in combination with the aforementioned challenges, the companies involved would themselves come to the conclusion that the effort is not worth it.
It remains to be seen how this latest move by the Trump administration will play out in the long-term and how exactly Biden will react if he is indeed the one sworn into office on January 20th.