Democrats’ Big Spending Bill Would Kick Oil Companies Out of the Arctic Refuge

Ending a mandate to develop the refuge is a small but critical piece of what would be the country’s biggest-ever investments in climate protections.

Buried in the dense, 2,135-page spending bill lurching toward a vote on Capitol Hill is a single sentence with profound significance for one of the world’s wildest places: a provision that would end a program to drill for oil and gas in the Arctic National Wildlife Refuge.

The refuge’s 1.5 million-acre coastal plain is the summer home for migratory birds from six continents, calving grounds for the Porcupine caribou herd, and winter nursery for denning polar bears. The Indigenous Gwich’in, whose culture and traditions are bound up with the caribou, call it The Sacred Place Where Life Begins

This region between the Brooks Range and the Beaufort Sea is also believed to sit on top of an enormous, untapped oil and gas reservoir. The U.S. Geological Survey has estimated that 7.7 billion barrels of recoverable oil rest beneath its rolling tundra. All that untapped crude has been a powerful lure for politicians in a state whose finances depend heavily upon oil revenue.

Since 1980, when the coastal plain was designated for possible drilling, the Arctic Refuge has been at the center of a tug-of-war between those who seek the region’s petroleum riches and those who prioritize preservation of its habitat. The pro-drilling faction appeared to get its wish in 2017 when Republicans in Congress and the Trump administration mandated lease sales in the refuge, the first of which was held early this year. Now a different Congress and president are poised to scrap that mandate, providing the refuge a reprieve, at least temporarily, and limiting future global warming by keeping the oil in the ground.

For conservationists and Indigenous people who have beaten back efforts to drill for decades—and who in the past four years watched the refuge come closer than ever to being developed—the measure’s passage would bring immense relief. “Getting this over the finish line will just be incredibly important for the Gwich’in people with whom we have walked in this fight for decades,” says Kristen Miller, acting director of the Alaska Wilderness League. “To see Congress take the first step toward restoring legislative protections is fantastic.”

The Democrats’ tactic for protecting the Alaskan refuge mirrors the one the Trump administration used to authorize leasing there in 2017. Tucked away in a massive tax bill, passed when the GOP held majorities in both the House and the Senate, was a requirement that the Department of the Interior hold two or more lease sales, divvying up drilling rights on the coastal plain to be sold to the highest bidder. Those sales were supposed to raise $2.2 billion over a decade, to be split evenly between Alaska and the federal treasury, the Congressional Budget Office (CBO) estimated. Supporters of the bill touted that projection as a way to pay for its tax cuts, which favored corporations and the wealthy. A later CBO estimate cut that expected revenue to $1.8 billion.

Two weeks before leaving office, Trump officials held a lease sale—the first ever in the refuge—with underwhelming results: Just three entities participated, leasing only half of the 22 parcels on offer, a total of 553,000 acres. Concerned that major companies would sit out the sale amid low oil prices, the State of Alaska itself snapped up nine leases for $12 million. Two small companies leased one parcel each. The sale raised less than 1 percent of what the CBO and Alaska’s pro-drilling politicians advertised.

Now, Democrats have slipped their own provision to cancel the refuge leasing program in another massive bill. The move follows the Biden administration’s lead: In June the president suspended the January leases and all oil and gas activities in the refuge pending a new environmental review. Wildlife advocates applauded the decision but said the coastal plain remained at risk until Congress repeals the 2017 measure that launched the leasing program. The new spending bill does just that, and directs the government to cancel and return payment for the January leases.

But first it will have to pass. Lawmakers have spent months negotiating the bill, the vehicle for President Biden’s “Build Back Better” agenda to address climate change and expand the nation’s social safety net. After a series of false starts, the House is expected to vote next week on the package, which is projected to cost roughly $1.75 trillion over 10 years. The bill will then have to clear the Senate, where Democrats hold only the narrowest possible majority.

Two of the party’s more conservative members, Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, have frustrated progressives by refusing to support earlier versions of the legislation with more ambitious national programs to address global warming. Objections specifically from Manchin, a must-have vote who represents a coal-rich state and has financial ties to the industry, killed the Clean Electricity Performance Program, a pillar of Biden’s initial proposal to curb emissions that would create incentives for electric utilities to invest in clean energy—and penalties for failing to do so. Still, even without that program, the bill’s current form marks what would be the country’s boldest step to date to rein in emissions, experts say. 

“While I think it’s understandable that many will be disappointed with the size and scope of the final bill, I think it’s important to recognize that this will still be the most significant climate legislation ever to pass in the United States,” says Michael Obeiter, senior director of federal climate strategy at the National Audubon Society. The bill alone doesn’t go far enough to fulfill the pledge Biden reaffirmed at the ongoing international climate summit to slash U.S. emissions by 50 percent by the end of the decade, Obeiter says, but it is “a critical part of ensuring we can get there.”

On top of scuttling plans for oil drilling in the refuge, the bill also permanently bans new offshore drilling along the entire Atlantic and Pacific coasts and in the eastern Gulf of Mexico. Those measures are part of the bill’s climate protections—keeping oil and gas in the ground means preventing future greenhouse gas emissions—but they’re only a sliver of the climate action laid out in the spending package. All told, the bill allocates $550 billion to confront the climate crisis on several fronts, including $300 billion in tax credits to fund clean energy development, $110 billion for clean energy manufacturing, and $105 billion in a variety of initiatives to increase resilience to climate change.

The bill also includes reforms to the federal fossil fuel-leasing program that environmental advocates have long sought. The federal government charges companies so little to extract natural resources from public lands—the current royalty rate for oil, gas, and coal hasn’t been updated since 1920—that it in effect subsidizes fossil fuel production, critics argue. Under the new legislation, the royalty rate would increase to 18.75 percent from 12.5 percent, and the minimum per-acre bid for oil and gas leases would rise to $10 from the current $2. “It’s very encouraging that that is still in play right now,” says Aaron Weiss, deputy director at the Center for Western Priorities, a nonprofit organization focused on public land protections. “Those are common-sense reforms. There is no reason to oppose them.”

Biden and supporters say the legislation pays for its spending with increased taxes on the wealthy, beefed-up tax enforcement, and other revenues. Some House Democrats delayed a vote by saying they won’t approve the bill until it receives a score from the CBO, but a nonpartisan analysis last week showed that its tax increases alone would raise $1.5 trillion. 

The House may have delayed its vote on the spending package, but on Friday it passed a massive $1.2 trillion infrastructure bill, which itself advances climate change priorities. Along with significant investments in roads and bridges, transit, and broadband, the bill provides $65 billion to modernize the electric grid, the White House says, along with $50 billion to make communities more resilient amid worsening storms, droughts, and wildfires; $21 billion to clean up pollution hotspots and cap orphaned oil and gas wells that leak greenhouse gases; and $7.5 billion to expand electric vehicle charging, among other environmental projects. 

If both bills pass, they will leave virtually no part of the country or facet of the economy untouched, but they could keep the Arctic refuge unmarred by oil and gas rigs. Longtime defenders of the Far North say scrapping the Trump-era leasing program isn’t the end of the fight, however. The next step will be to work with Gwich’in and Iñupiat communities to figure out how best to respect their cultures and traditions while passing legislation to keep drillers away from the coastal plain for good. “We will look to something that can solidify durable, long-term protections for the refuge,” Miller says, “so we don’t have to have this fight perennially into the future.”