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Federal EV tax credit: unnecessary, inefficient, unpopular, costly, and unfair

October 9, 2019 by 19 Comments

In April, Senator Debbie Stabenow (D-MI) introduced the Drive America Forward Act, a bill that would expand the tax credit for new plug-in electric vehicles (EVs) by allowing an additional 400,000 vehicles per manufacturer to be eligible for a credit of up to $7,000. Currently, the tax credit is worth up to$7,500 until a manufacturer sells more than 200,000 vehicles. In late September, groups that stand to benefit from the extension of the federal tax credits wrote to Senator McConnell and other leaders in Congress, encouraging them to support on the Drive America Forward Act. As IER has documented in the past, lawmakers should not extend the EV tax credit as the policy is unnecessary, inefficient, unpopular, costly, and unfair.

Unnecessary and inefficient

The EV tax credit is not necessary to support an electric vehicle market in the U.S. as one group estimates that 70 percent of EV owners would have purchased their vehicle without receiving a subsidy, which is reasonable seeing as 78 percent of credits go to households making more than $100,000 a year.  Furthermore, the federal tax credit overlaps with a number of other government privileges for EVs, including:

  • State rebates and/or other favors (reduced registration fees, carpool-lane access, etc.) in California, as well as in 44 other states and the District of Columbia.
  • Tax credits for infrastructure investment, a federal program that began in 2005 and, after six extensions, expired in 2017.
  • Federal R&D for “sustainable transportation,” mainly to reduce battery costs, averaging almost $700 million per year.
  • Credit for EV sales for automakers to meet their corporate fuel economy (CAFE) obligations.
  • Mandates in California and a dozen other states for automakers to sell Zero-Emission Vehicles—a quota in addition to subsidies.

Even if the federal tax credits were needed to support demand for EVs, the extension of the tax credit would be an absurdly inefficient means of achieving the stated goal of the policy, which is ostensibly to lower carbon emissions. The Manhattan Institute found that electric vehicles will reduce energy-related U.S. carbon dioxide emissions by less than 1 percent by 2050.

Unpopular

Lawmakers should be aware that the vast majority of people do not support subsidizing electric vehicle purchases. The American Energy Alliance recently released the results of surveys that examine the sentiments of likely voters about tax credits for electric vehicles. The surveys were administered to 800 likely voters statewide in each of three states (ME, MI and ND). The margin of error for the results in each state is 3.5 percent.

The findings include:

  • Voters don’t think they should pay for other people’s car purchases. In every state, overwhelming majorities (70 percent or more) said that while electric cars might be a good choice for some, those purchases should not be paid for by other consumers.
  • As always, few voters (less than 1/5 in all three states) trust the federal government to make decisions about what kinds of cars should be subsidized or mandated.
  • Voters’ sentiments about paying for others’ electric vehicles are especially sharp when they learn that those who purchase electric vehicles are, for the most part, wealthy and/or from California.
  • There is almost no willingness to pay for electric vehicle car purchases. When asked how much they would be willing to pay each year to support the purchase of electric vehicles by other consumers, the most popular answer in each state (by 70 percent or more) was “nothing.”

The full details of the survey can be found here.

Costly and unfair

Most importantly, an extension of the federal EV tax credit is unfair as the policy concentrates and directs benefits to wealthy individuals that are predominantly located in one geographic area, namely California. A breakdown of each state’s share of the EV tax credit is displayed in the map below:

In 2018, over 46 percent of new electric vehicle sales were made in California alone. Given that California represents only about 12 percent of the U.S. car market, this disparity means that the other 49 states are subsidizing expensive cars for Californians.  However, in order to understand the full extent of the benefits that people in California are receiving, some further explanation is in order.

When governments enact tax credit programs that favor special businesses without reducing spending, the overall impact is parallel to a direct subsidy as the costs of covering the tax liability shift to the American taxpayer or are subsumed in the national debt (future taxpayers). California offers a number of additional incentives on top of the federal tax credit for electric vehicles that are also driving demand for EVs in the state. These incentives include an additional purchase rebate of up to $7,000 through the Clean Vehicle Rebate Project, privileged access to high-occupancy vehicle lanes, and significant public spending on the infrastructure needed to support EVs. Therefore, the additional incentives that California (and other states) offer to promote EVs have broader impacts as these policies incentivize more people to make use of the federal tax credit, passing their costs on to American taxpayers. In other words, you’re not avoiding the costs of California’s EV policies by not living in California.

This problem is made even worse when we consider the impact of zero-emission vehicle (ZEV) regulations, which require manufacturers to offer for sale specific numbers of zero-emission vehicles. As recently as 2017, auto producers have been producing EVs at a loss in order to meet these standards, and they have been passing the costs on to their other consumers. This was made apparent in 2015 by Bob Lutz, the former Executive Vice President of Chrysler and former Vice-Chairman of GM, said:

“I don’t know if anybody noticed, but full-size sport-utilities used to be — just a few years ago used to be $42,000, all in, fully equipped. You can’t touch a Chevy Tahoe for under about $65,000 now. Yukons are in the $70,000. The Escalade comfortably hits $100,000. Three or four years ago they were about $60,000. What this is, is companies trying to recover what they’re losing at the other end with what I call compliance vehicles, which are Chevy Volts, Bolts, plug-in Cadillacs and fuel cell vehicles.”

Fiat Chrysler paid $600 million for ZEV compliance credits in 2015 (plus an unknown amount of losses on their EV sales), and sold 2.2 million vehicles, indicating Fiat Chrysler internal combustion engine (ICE) buyers paid a hidden tax of approximately $272 per vehicle to subsidize wealthy EV byers. ICE buyers were 99.3 percent of U.S. vehicle purchases in 2015. So, even if half the credits purchased were for hybrids, each EV sold in 2015 was subsidized by more than $13,000 in ZEV credit sales, in addition to all of the other federal, state, and local subsidies.

As is typical with most policies that benefit a politically privileged group, the plan to extend the federal tax credit program comes with tremendous costs, which are likely being compounded by people abusing the policy.  One estimate found that the overall costs of the Drive America Forward Act would be roughly $15.7 billion over 10 years and would range from $23,000 to $33,900 for each additional EV purchase under the expanded tax credit. Seeing as the costs of monitoring and enforcing the eligibility requirements of the EV tax credit program are not zero, it should surprise no one that the program has been abused as it has recently come to light that thousands of auto buyers may have improperly claimed more than $70 million in tax credits for purchases of new plug-in EVs. Finally, additional concerns arise over the equity of the federal EV tax credit due to the fact that half of EV tax credits are claimed by corporations, not individuals. 

End this charade

When the tax credit was first adopted, politicians assured us that the purpose of the program was to help launch the EV market in the U.S. and that the tax credit would remain capped at the current limit of 200,000 vehicles. At that time, we warned that once this program was in place, politicians would continue to extend the cap in order to appease the demands of manufacturers and other political constituencies that were created by the program. A decade later, we find ourselves in that exact situation. At this point, it should be clear that Congress should not expand the federal EV tax credit as the program is nothing more than an extension of special privileges to wealthy individuals and corporations that are mostly located in California. If Congress can’t find the courage to put an end to such an unfair and inefficient policy, President Trump should not hesitate to veto any legislation that extends the federal EV tax credit, as doing so would be consistent with his approach to other energy issues such as CAFE reform.

Filed Under: Blog, Electric Vehicles Tagged With: , , , , , , , ,

AEA to Senate: Highway Bill is Highway Robbery

July 30, 2019 by Leave a Comment

WASHINGTON DC (July 30, 2019) – Today, Thomas Pyle, President of the American Energy Alliance, issued a letter to Senate Environment and Public Works Committee Chairman John Barrasso highlighting concerns about the recently introduced America’s Transportation Infrastructure Act. Included in the legislation is an unjustified, $1 billion handout to special interests in the form of charging stations for electric vehicles.  AEA maintains that provisions like this are nearly impossible to reverse in the future and create a regressive, unnecessary, and duplicative giveaway program to the wealthiest vehicle owners in the United States. 
 
Read the text of the letter below:
 

Chairman Barrasso,

The Senate Committee on Environment and Public Works is scheduled to consider the reauthorization of the highway bill and the Highway Trust Fund today.  At least some part of this consideration will include provisions that provide for $1 billion in federal grants for electric vehicle charging infrastructure.  This is among $10 billion in new spending included in a “climate change” subtitle.  All of this new spending is to be siphoned away from the Highway Trust Fund (HTF), meant to provide funding for the construction and maintenance of our nation’s roads and bridges.  The HTF already consistently runs out of money, a situation that will only be exacerbated by these new spending programs.

We oppose this new federal program for EV infrastructure for a number of reasons, including, but not limited to the following:

  • The grant program, once established in the HTF, will never be removed.  Our experience with other, non-highway spending in the trust fund (transit, bicycles, etc.) is that once it is given access to the trust fund, the access is never revoked.  Our nation’s highway infrastructure already rates poorly in significant part due to the diversion of highway funds to non-highway spending.
  • As we have noted elsewhere, federal support for electric vehicles provides economic advantages to upper income individuals at the expense of those in middle and lower income quintiles.  This grant program would exacerbate that problem.
  • This program will result in taxpayers in States with few electric vehicles or little desire for electric vehicles having their tax dollars redirected from the roads they actually use to subsidize electric vehicle owners in States like California and New York.
  • This program is duplicative.  There is already a loan program within DOE that allows companies and States to get taxpayer dollars to subsidize wealthy electric vehicle owners.

For these and other reasons, we oppose the provisions that would create a regressive, unnecessary, and duplicative giveaway program to wealthy, mostly coastal electric vehicle owners.  This giveaway not only redirects taxpayer money from the many States to the few, in looting the Highway Trust Fund it also leaves those many States, including Wyoming, with less money to maintain their own extensive road networks.


Sincerely,

Thomas J. Pyle

Filed Under: Press Releases Tagged With: , , , , , , ,

AEA Applauds Day One Agenda

January 20, 2025 by Leave a Comment

WASHINGTON DC (1/20/25) – On his first day in office, President Trump began the long process of reversing the Biden administration’s war on American energy by issuing several executive orders and directives related to energy. President Trump’s “Day One” agenda includes withdrawing from the Paris Agreement under the United Nations Framework Convention on Climate Change and revoking the U.S. International Climate Finance Plan. He also rescinded several Biden-era executive orders, many of which limited energy development in the United States.

American Energy Alliance President Tom Pyle issued the following statement:

“Unburdened by what has been, President Trump is making good on his promise to immediately begin unwinding the reckless energy policies of the Biden-Harris administration. America is the richest energy nation in the world, and we produce it more efficiently, safely, and cleanly than anybody else. When it comes to access and opportunity to utilize our vast natural resources, the Biden administration has had a policy of restriction. President Trump has promised a policy of abundance. Today, he made a down payment on that promise.

“Unfortunately, there is much more work to be done. The American Energy Alliance cataloged over 250 actions that former President Biden and his team took to make the production of American energy harder and more expensive. We look forward to working with the Trump administration and the new Congress to unleash our energy potential and lower energy prices for all Americans.” 

AEA Experts Available For Interview On This Topic:

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The Unregulated Podcast #213: Sticking it to the Mann

January 17, 2025 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the final moves of Team Biden, Trump’s confirmation hearings, the headlines of the week, and dissect what may very well be the last clip of Joe Biden to ever grace the show.

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How Will Congressman Lee Zeldin Help President Trump Make American Energy Great Again?

January 15, 2025 by Leave a Comment

WASHINGTON DC (1/15/24) – Former Congressman Lee Zeldin will appear before the U.S. Senate Committee on Environment and Public Works this week to consider his nomination for EPA Administrator. This role will be critical in helping President Trump reshape U.S. energy policy and ending President Biden’s EV mandates. We offer these seven suggested questions for Senators to consider asking Congressman Zeldin during his confirmation hearing:

  1. A repeated theme in environmental policy has been the inability to effectively review and revise harmful regulations. When rules are revised, the process is often held up in the courts.  How will you ensure pro-growth reforms stick? 
  2. The EPA has been repeatedly criticized for using unrealistic and extreme inputs in its economic and climate models to exaggerate the benefits of the agency’s proposed rules and regulations. Will you commit to reviewing the use of RCP 8.5 for the agency’s climate modeling? Will you commit to reviewing the discount rate used to calculate the agency’s social cost of carbon?
  3. At one of his campaign rallies, President Trump declared that he would end the Biden-Harris administration’s EV mandate on day one. Will you commit to ensuring that the EPA will review all rulemakings that attempt to direct the makeup of the automobile market to achieve particular political outcomes?
  4. Did the Supreme Court err in its ruling in the case Massachusetts v. EPA? What is your interpretation of the ruling and how will that interpretation shape public administration at the EPA under your leadership?
  5. Biden’s EPA initially proposed a phase-out of the ENERGY STAR certification for natural gas furnaces and other gas appliances, but after significant pushback opted to instead update the efficiency standards. High-efficiency natural gas appliances are often the most cost-effective and lowest emissions option for consumers. Will you commit to affirming the role of natural gas for appliances and ensuring that consumer choice is the guiding principle for determining what is efficient?
  6. You received 100% on the American Energy Alliance’s 2022 American Energy Scorecard, meaning that your voting record was consistent with policies that prioritized affordable and reliable energy and consumer choice in energy markets. Can you explain your view on the role of energy in the economy and how that view will project onto your leadership at the EPA?
  7. However, your American Energy Scorecard results varied in prior Congresses, dipping as low as 68%. This was largely due to votes such as those in favor of extending the wind Production Tax Credit (PTC) and the solar Investment Tax Credit (ITC) and votes that hindered the development of our domestic energy resources offshore. Do you still support those positions, and more broadly, should the federal government be in the business of subsidizing specific technologies and generating sources?

The American Energy Alliance will be scoring Congressman Zeldin’s confirmation vote on the Senate floor for our American Energy Scorecard.

AEA Experts Available For Interview On This Topic:

Additional Background Resources From AEA:

For media inquiries please contact: 

[email protected]

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How Will Chris Wright Work to Make American Energy Great Again?

January 14, 2025 by Leave a Comment

WASHINGTON DC (1/4/24) Liberty Energy CEO Chris Wright will appear before the U.S. Senate Energy and Natural Resources Committee this week to consider his nomination for Energy Secretary. Mr. Wright will play a critical role in helping President Trump reshape U.S. energy policy, especially in cleaning up the mess being left behind by the Biden administration at the Department of Energy. Here are a few questions Senators may want to consider asking Mr. Wright during his upcoming hearing:

  1. The Biden administration’s Office of Fossil Energy and Carbon Management released its Strategic Vision in 2022, in which they wrote, “The Office of Fossil Energy and Carbon Management’s (FECM) core mission is to address the climate crisis.” They had previously released a statement saying, “Moving forward, a central ethic of our office is that if a non-fossil energy option exists today, it should always be preferred to the use of fossil energy.” We cannot find statutory support for these claims. Rather, the U.S. Code requires the office to work on increasing the energy conversion efficiency of all forms of fossil energy through improved technologies; decreasing the cost of all fossil energy production, generation, and delivery; promoting diversity of energy supply; decreasing the dependence of the United States on foreign energy supplies; improving United States energy security and other important considerations. See 42 U.S.C. 16291. Will you follow the statutory mandates to improve fossil energy? 
  2. The first Trump administration took important actions to update DOE’s “Process Rule” to ensure that the law is followed when implementing appliance standards. The Biden administration eviscerated this regulation as part of its whole-of-government effort to impose regulations to reduce greenhouse gas emissions. Will you review the Process Rule and the appliance standards program to ensure that they follow the law?
  3. Just before Christmas, the Biden administration banned certain non-condensing water heaters. The distinction between condensing and non-condensing water heaters (and furnaces) seems like a feature that is protected by the Energy Policy and Conservation Act. Will you protect important features like non-condensing equipment?  
  4. The Biden administration required “Community Benefits Plans” for the billions of dollars of awards it issued. These plans could require invidious discrimination and other actions of dubious legality. Will you review the requirements DOE has imposed in recent years and included in its awards to ensure the federal government is not funding or requiring actions that could result in invidious discrimination?   
  5. On January 20, 2021, Biden signed an executive order telling DOE officials to make ‘major revisions’ to current appliance regulation standards. These efficiency regulations can reduce the effectiveness of appliances, increase upfront costs, and increase the precious time it takes for each washing or drying cycle. How high of a priority will it be for you to undo these burdensome regulations? 
  6. The Biden administration made changes to the Petroleum-Equivalent Fuel Economy Calculation which may give electric vehicles too much credit. Will you review this regulation to ensure the Biden administration followed the law and the science?   

The American Energy Alliance will be scoring the Wright nomination on the Senate floor for our American Energy Scorecard.

AEA Experts Available For Interview On This Topic:

Additional Background Resources From AEA:

For media inquiries please contact: 

[email protected]

Filed Under: Press Releases Tagged With: , , , , ,

How Will Governor Doug Burgum Help Make American Energy Great Again?

January 13, 2025 by Leave a Comment

WASHINGTON DC (1/13/25) – North Dakota Governor Doug Burgum will appear before the U.S. Senate Energy and Natural Resources Committee tomorrow to consider his nomination for Secretary of the Department of the Interior. Given the critical role this position will have as part of President Trump’s energy team, and in shaping U.S. energy policy, we have prepared some suggested questions for his nomination hearing.

  1. The Biden-Harris administration was much more extreme than even the Obama administration in trying to kill domestic oil and gas production on federal lands. In FY 2023, the Biden-Harris administration issued 93% fewer leases than the Obama administration issued in FY 2009. Will you commit to leasing onshore oil and gas tracts at a level that meets or exceeds the average set during President Bush’s administration?   
  2. In 2024, global coal use hit an all-time high. The United States has the largest proven coal reserves in the world. Given this continuing global demand, will you commit to continue coal leasing to help the world meet its steel and energy needs?  
  3. The Federal Land Policy and Management Act (FLPMA) requires that BLM manage lands to maximize “multiple use” and “sustained yield.” Despite this requirement, currently only 3.3% of lands onshore are leased for oil and gas production and 0.5% of the OCS is leased. Is leasing only 1.2% of the federal estate consistent with multiple use under the Federal Land Policy and Management Act? (Onshore: 3.3% of federal lands leased: 23.2 million acres leased of 700 million acres. Offshore: 0.5% of OCS leased for oil and gas production. As of 2021, 12.1 million acres were leased and, according to the Biden administration, the OCS is 2.3 billion acres).
  4. In yet another effort to shut down oil and gas production on federal lands, the Biden administration made it substantially more expensive to operate, increasing royalty rates and disproportionately hurting America’s smaller, independently owned companies (those who employ an average of 15 people). Will you commit to jettisoning the Biden royalty rate increases as a way to encourage more American energy production and make it possible for small and start-up businesses to participate once again?
  5. It has recently come to light that the Endangered Species Act (ESA) was deliberately abused in an effort to halt the construction of the Tellico Dam by the Tennessee Valley Authority. We should also not forget how the ESA was infamously used to kill the timber industry by way of the spotted owl, and, along with it,  tens of thousands of jobs in the Pacific Northwest. The egregious exploitation of the ESA has been used countless times to stop American progress. What will you do to stop the abuse of the ESA?
  6. Last year the Biden administration finalized their “Public Lands Rule.” This was designed to eviscerate the multi-use requirements of the Federal Land Policy and Management Act (FLPMA). Will you review this regulation and take appropriate steps to promote the requirements of the Federal Land Policy and Management Act (FLPMA)?     
  7. A poll found that 88% of voters believe it is important to produce natural gas and oil in the United States; 90% believe producing natural gas and oil strengthens the U.S. economy; and 85% believe that producing natural gas and oil in the United States helps make it more secure against actions by countries such as China and Russia. What concrete steps can you take to ensure the will of the American people is followed and federal lands continue to be used for energy production?

The American Energy Alliance will be scoring the vote for his nomination on the Senate floor for our American Energy Scorecard. 

AEA Experts Available For Interview On This Topic:

Additional Background Resources From AEA:

For media inquiries please contact: 

[email protected]

Filed Under: Press Releases Tagged With: , , , , ,

The Unregulated Podcast #212: Smells Like Victory

January 9, 2025 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the first big stories of 2025 and outline Trump’s first moves as inauguration day creeps closer.

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Biden Bans Popular Water Heaters Over Christmas

January 7, 2025 by Leave a Comment

The Biden administration has a new ban on certain gas-fueled hot water heaters, impacting roughly 40% of new tankless water heaters and forcing consumers to pay an extra $450 for alternatives. The ban goes into effect on March 11, 2025, for sales beginning in 2029. The ban severely limits consumers’ choices regarding their water heater purchases, often forcing Americans to ostensibly pay more for inferior products to help fulfill Biden’s climate agenda. Biden’s Department of Energy (DOE) finalized the rule the day after Christmas, hoping people would be too distracted by the holidays to pay attention to the impact of the new ban.

The new rule stipulates that new tankless gas water heaters must rely on 13% less energy than the least efficient comparable model on the market today. While the restrictions do not outright ban non-condensing models, only condensing models have been able to meet the new energy efficiency requirements, according to the Washington Free Beacon. Biden’s DOE also opted not to send out a press release or any other form of a public announcement as they have in the past with similar “climate oriented” appliance bans.  The agency apparently sought to keep people in the dark about its new rule.

The proposed ban could significantly drive up costs for low-income individuals and the elderly, as tankless water heaters are commonly used in smaller homes and apartments where these groups tend to live. The ban would force consumers to choose between pricier models or traditional storage tank water heaters, which are typically more affordable but less energy-efficient than their tankless counterparts. For instance, a non-condensing Rinnai tankless natural gas water heater is priced around $1,000 at Home Depot, whereas a similar condensing tank model costs roughly $1,800. Additionally, Rinnai recently completed a $70 million facility in Georgia to manufacture non-condensing gas water heaters domestically.

According to Matthew Agen, the American Gas Association’s chief counsel for energy, “The final rule is a violation of the Energy Policy and Conservation Act (EPCA), which prohibits DOE from promulgating a standard that renders a product with a distinct performance characteristic unavailable.” Some courts have agreed. In its rebuke of the Biden clothes and dishwasher rules last January, the Fifth Circuit Court of Appeals concluded Congress never granted the DOE powers “to regulate water use for energy-using appliances.”

From targeting ceiling fans to attempting to enforce a federal ban on gas-powered vehicles, the Biden administration has been limiting Americans’ ability to choose the products that best suit their needs and manage their own spending. The government’s growing reach has increasingly sought to control various aspects of daily life. These restrictive policies have burdened consumers with significant costs, contributing to rising inflation. Throughout Biden’s presidency, regulations from the Department of Energy aimed at making appliances more “eco-friendly” are estimated to have added $9,000 to the expenses of the average American family.

President-elect Trump is considering an executive order to protect gas stoves and heaters, among other executive orders to reverse Biden administration actions. Trump has tapped Liberty Energy CEO Chris Wright to serve as his secretary of energy, and once confirmed, he will be tackling Biden’s lame-duck prohibitions on affordable energy, micromanagement of American families, and its decision-making about the appliances the agency chooses to fit their needs and budget best, among other onerous anti-fossil fuel policies by the Biden administration.

Conclusion

The Biden DOE has issued over 100 energy efficiency rules on appliances and household equipment, which they claim will fight climate change and save consumers money. If that were true, market forces would have achieved the same goals without the federal government’s enforcement. Most recently, Biden’s DOE finalized a rule that would ban about 40% of new tankless hot water heaters, raising costs and impacting low-income and elderly Americans more heavily as they live in smaller residences and rely on smaller appliances.

Historically, the appliances the DOE reviewed performed worse and cost more. DOE rulemaking, combined with state and local efforts to ban natural gas hook-ups in new homes and buildings, is how the Biden administration and environmentalists intend to take gas appliances away from consumers despite their affordability, reliability, and comfort factor. This is part of the Biden administration’s comprehensive effort to “end fossil fuels.”

President-elect Donald Trump and his administration plan to undo Biden’s absurd bans as early as day 1, but that may be more easily said than done, with opponents taking the reversals to court to keep Biden’s policies and regulations in place, as they did during Trump’s first term when he attempted to undo many Obama-Biden Administration policies.

*This article was adapted from content originally published by the Institute for Energy Research.

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Biden Expands Drilling Ban To Federal Waters

January 7, 2025 by Leave a Comment

President Joe Biden is reportedly preparing an executive order to permanently ban new oil and natural gas leasing in parts of the outer continental shelf using a 72-year-old law that would exclude areas from any exploration or possible development. In the 1953 Outer Continental Shelf Lands Act (OCSLA), which governs offshore oil and gas development, Congress included a provision giving presidents wide discretion to exclude specific waters from leasing permanently. According to supporters of the action, it did not explicitly grant the authority for a future president to undo those designations. Biden has already taken actions against offshore oil and gas drilling, producing a 5-year lease plan with only three scheduled lease sales—the fewest in history—and even considering the option of no lease sales. The three sales announced are the minimum required by law. Biden has been leasing fewer federal acres for oil and gas than any president since World War II, before the OCSLA was enacted.

Biden’s ban is expected to include waters anti-fossil fuel groups claim are critical to coastal resilience across 625 million acres of U.S. coastal territory, ruling out the sale of drilling rights in Atlantic and Pacific waters and the eastern Gulf of Mexico. Congressional Democrats and many environmental groups urged Biden to make a sweeping declaration. Still, most recent talks focused on parts of the Pacific Ocean near California and the eastern Gulf of Mexico waters by Florida. The declaration is not expected to affect drilling and other activity on existing leases as those would represent takings requiring compensation. The ban will not have an immediate effect on U.S. production since it typically takes 6-8 years for these offshore projects to come online. It will, however, deny Americans access to future energy supplies and the huge revenues they generate for the treasury while forcing U.S. explorers to foreign shores where environmental and safety standards do not meet those of the United States.

President-elect Donald Trump is expected to immediately reverse the protections as he has indicated his energy agenda would involve more oil and gas drilling alongside new leasing. However, during his first term, Trump sought to revoke former President Obama’s order to lock up more than 125 million acres of the Arctic and Atlantic Oceans. However, he was rejected by a federal district court in 2019. The judge ruled only Congress would be able to revoke the ban. Trump has used the same statute in 2020 to block oil and gas leasing in waters near Florida and along the Southeast United States.

Other presidents have also used this statute to protect critical marine areas, including walrus feeding grounds, U.S. Arctic waters, and marine ecosystems. In 1960, President Dwight Eisenhower established the Key Largo Coral Reef Preserve, which remains under protection today. Similarly, President George H.W. Bush invoked the same provision to block oil leasing off the West Coast, in the Northeast, and around southern Florida for a period of ten years.

Despite decades of heavy investments and mandates promoting renewable energy, the world still derives about 80% of its energy from fossil fuels. The United States, rich in oil and gas resources, is a leader in producing these energy sources with higher environmental standards than many other nations. Nearly a century after its first exploration, the Gulf of Mexico remains a vital source of U.S. oil and gas, supplying roughly 14% of domestic production—placing it among the world’s top 12 oil-producing regions.

Conclusion

President Biden plans to permanently ban new oil and gas drilling in large sections of the Atlantic and Pacific oceans and other federal waters through executive action using a 72-year-old law. President-elect Donald Trump will reverse the ban, but similar actions by his predecessor during his first term were blocked by a federal district court. Biden has been actively blocking more U.S. lands and waters from energy development than any other president, despite legislation that indicates that U.S. land is to be used for multiple purposes to benefit the country’s citizens. The Biden administration has recently rushed to finalize billions of dollars in funding for clean energy and renewable projects and billions more for green public interest groups with which it is politically aligned. Furthermore, Biden has issued final guidelines for green tax credits and applied to withdraw 264,000 acres of federal lands in northeastern Nevada’s Ruby Mountains from oil, gas, and geothermal leasing for 20 years.

Considering the enormous amount of land that has been set aside unilaterally by presidents using the 72-year-old OCSLA and little judicial review except a judge stipulating that only Congress can overturn it, the time may be ripe for Congress to consider this as a revenue-raising provision in the upcoming Budget Reconciliation package, which must be accomplished this year. Also, an appeal could be sought for the judge’s decision since the OCSLA provision anticipated presidential authority to be specific and targeted rather than regional and comprehensive, as was the case for the Obama withdrawals.

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Biden Plots 20-Year Ban On Energy Production for Nevada

January 3, 2025 by Leave a Comment

The Biden administration has moved to prevent oil, gas, and geothermal leasing for 20 years on 264,000 acres in Nevada’s Ruby Mountains, responding to requests from Native American tribes and environmentalists. The ban, which would still allow mining, starts a 90-day public comment period, which will stretch into the first months of President Trump’s second term. The application, however, prevents oil, gas, and geothermal exploration, development, and production on that land for two years during the implementation process. In 2019, the U.S. Forest Service concluded oil and gas leasing was not suitable in the Ruby Mountains. The mountain range is popular with hunters, fishermen, and conservationists and has no known oil reserves. However,  developers have not explored the range, that leasing would allow.

According to the Forest Service, interest in a lease covering more than 137 square miles within the Humboldt-Toiyabe National Forest was submitted anonymously through the Bureau of Land Management, which holds mineral rights under public land, in 2019. Filings are anonymous until a lease sale occurs. It is the second time a lease has been sought in the Ruby range. The prior request covered more than 78 square miles between Harrison Pass and Lamoille Canyon in Elko County and was met with thousands of letters of objection from the public with little support. The Forest Service rejected this request, citing widespread public opposition.

The Humboldt-Toiyabe National Forest spans nearly 10,000 square miles, stretching from the far northeastern corner of Nevada near Jarbidge to the southern reaches near Las Vegas. Statewide, approximately 260 employees, including 40 based in the Mountain City Ranger District in the northeast, assess various proposals related to activities such as hard rock mining, grazing, and recreation. Despite the federal government owning more than 80% of Nevada’s land, there has been limited leasing for oil and gas exploration, and few wells have been drilled to evaluate the state’s hydrocarbon potential.

In addition to the Ruby Mountain ban, the U.S. Department of the Interior has announced permanent protections in Grand Teton National Park and facilitated a $100 million acquisition of a 640-acre parcel of land from Wyoming. Before this transaction, the land was the largest unprotected area within the park. This property serves as a crucial migration corridor for the pronghorn, an antelope-like species that roams from Canada to parts of Texas.

These actions by President Biden directly contrast with the energy policies proposed by President-elect Donald Trump, who has promised to expand oil and gas production and move away from Biden’s emphasis on climate change and “clean energy.” Trump’s energy policies for federal lands will be overseen by Doug Burgum, his nominee for Secretary of the Interior, who will also head Trump’s National Energy Council.

This is not the first instance of Biden taking steps to limit fossil fuel extraction on federal lands. His administration has imposed a ban on new coal leases in the Powder River Basin, halting coal production there after 2041. The Powder River Basin is the largest coal-producing region in the U.S., covering much of northeast Wyoming and parts of southeast Montana. It produces subbituminous coal, which fuels electric generators and accounts for 40% of the nation’s thermal coal output. The ban on new leases will prevent the extraction of 48.12 billion short tons of coal across 413,250 acres in the basin.

The Biden administration has also proposed stricter regulations for oil and gas drilling on over 6,500 square miles of federal land in the West, citing the need to protect the declining Greater Sage Grouse—a chicken-sized bird known for its intricate mating rituals. The Interior Department’s plan aims to strengthen protections established during the Obama-Biden era in 2015, which already limited energy development across 226,000 square miles of grouse habitat in 11 states. The new measures would close “loopholes” that previously allowed energy exploration in areas deemed crucial to the bird’s survival. Under the proposal, drilling would only be permitted on sites located outside of designated protected areas, preserving four million acres from surface-level development to safeguard the sage grouse population, which are hunted in seven states. State officials argue that the bird’s management would be more effective if handled by local wildlife agencies rather than imposed from Washington, D.C.

The Biden administration has also scaled back leasing in the Arctic National Wildlife Refuge (ANWR), reducing the available land to the smallest allowable under federal law—400,000 acres—and imposed stringent regulations that discourage potential bidders. A provision in the 2017 Tax Cuts and Jobs Act mandates a lease sale in ANWR before Biden’s term ends. The Inupiat Eskimo people of Alaska’s North Slope rely on this lease sale for jobs and economic stability. However, the Biden administration’s heavy-handed regulations have made the sale less appealing to energy companies, a move that critics argue benefits environmentalist groups opposed to U.S. oil production. The January 2021 ANWR lease sale, for example, was largely unsuccessful, leading some to claim that the potential oil resources in the region, which could rival those of nearby Prudhoe Bay, hold little appeal.

Additionally, the administration has removed 13 million acres from the National Petroleum Reserve in Alaska, reduced the area available for leasing in a New Mexico auction by more than 3,000 acres, and has conducted the fewest offshore oil and gas lease sales in the history of the program. These policies have led to fewer acres being leased for oil and gas exploration than under any president since World War II. Critics argue that these actions jeopardize national security, lead to job losses, and contribute to higher oil and gasoline prices for American consumers.

Conclusion

The Biden administration is at it again, limiting federal land for oil and gas exploration, despite President-elect Trump’s plan to make the United States energy dominant. Biden is banning oil, gas, and geothermal development in the Ruby Mountain area of Nevada for 20 years and has announced permanent protections in Grand Teton National Park and the $100 million purchase of a 640-acre parcel of land from Wyoming. The ban for the Ruby Mountain area will have a 90-day public solicitation that will run into the first few months of President Trump’s next term. President Biden has been on the warpath—limiting the use of federal land for fossil energy purposes and making it harder for the Trump administration to increase production by having it deal with regulatory red tape. Cutting off energy opportunities to deny Americans access may have intellectual appeal to those who are comfortably wealthy, but for those who read utility bills, watch their grocery bill, and worry about future opportunities for their children, it is needlessly cruel.

*This article was adapted from content originally published by the Institute for Energy Research.

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On The Unregulated Podcast #211: From the Bottom of My Black Heart

December 23, 2024 by Leave a Comment

On the last episode of The Unregulated Podcast for 2024, Tom Pyle and Mike McKenna discuss the tumultuous CR battle, Biden’s fade out of office, and the final headlines of the year.

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