Professor's Research Raises Questions Concerning Impact of Offshore Drilling Plan

Michael Livermore

Professor Michael Livermore is an expert on using cost-benefit analysis in environmental and administrative policymaking.

February 2, 2015

University of Virginia School of Law professor Michael Livermore's work raises questions about the Obama administration's new draft plan for the U.S. offshore leasing program.

The administration released the draft five-year leasing program for 2017-22 last week, but Livermore said there are serious risks involved with the plan that aren't well known.

"There is a great deal of uncertainty about the environmental and social costs of drilling in the Atlantic, because you could have a spill event, and it could have a very severe and sustained economic impact," Livermore said. "The uncertainty around those effects ought to be quantified and taken into consideration by the agency."

Livermore, an expert on using cost-benefit analysis in environmental and administrative policymaking, is the co-author, with New York University law professor Richard Revesz, of "Retaking Rationality: How Cost-Benefit Analysis Can Better Protect the Environment and Our Health." His article on offshore drilling and cost-benefit analysis," Patience is an Economic Virtue: Real Options, Natural Resources, and Offshore Oil," was published by the University of Colorado Law Review in 2013. (Related Video)

Livermore also litigated this issue in 2014 before the U.S. Court of Appeals for the D.C. Circuit, in Center for Sustainable Economy v. Jewell, which focused on the current leasing plan for the Gulf of Mexico and the Alaskan coast.

In that case, Livermore argued that the U.S. government was failing to take into account the value of not moving forward with leasing until environmental and social economic impact risks were accounted for. This "option value" — the value associated with delaying a decision in order to discover more information about an uncertain outcome — has never been litigated before, he said.

The pending decision in that case will affect what legal requirements will need to be in place moving forward. Livermore said the 2017-22 plan takes a step toward addressing the "option value," but still does not examine the risks in a quantitative manner.

Livermore said that in order to conduct a full quantitative analysis, agencies would have to address how environmental uncertainty might affect the plan's costs and the benefits — specifically, how much it would cost to extract the oil, and the social and environmental harms associated with the drilling. The current draft plan takes a qualitative approach to analyzing these uncertainties instead.

The draft plan is currently open for public comment.

"This is an opportunity for advocacy groups to show it's possible to attach a dollar figure to those questions of uncertainty," Livermore said.

Given the nature of the drilling proposal that the department is moving forward with, the public might see a sustained discussion of these issues, he said.


Founded in 1819, the University of Virginia School of Law is the second-oldest continuously operating law school in the nation. Consistently ranked among the top law schools, Virginia is a world-renowned training ground for distinguished lawyers and public servants, instilling in them a commitment to leadership, integrity and community service.

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