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1 1 (April 29, 2022)

handle is hein.crs/govefxq0001 and id is 1 raw text is: Congressional Research Service Informing the Iegitive debate since 1914 Updated April 29, 2022 Offshore Oil and Gas: Leasing Pause, Federal Leasing Review, and Current Issues Offshore oil and gas leasing has been affected by executive branch actions pertaining to energy leasing on all federal lands. On January 27, 2021, President Joe Biden issued Executive Order (E.O.) 14008, directing multiple actions to address climate change. Section 208 of the order directed the Secretary of the Interior to pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices, to the extent that such actions were consistent with applicable law. The E.O. directed that the review evaluate potential climate and other impacts associated with oil and gas leasing, as well as whether to adjust royalties paid to the federal government from onshore and offshore oil and gas production to account for climate costs. As implemented by the Department of the Interior (DOI), the leasing pause consisted of a halt on sales of new onshore and offshore oil and gas leases following issuance of the E.O. Exploration and development of existing leases were not halted. Some stakeholders contended that the pause would affect long-term prospects for oil and gas investment, production, and revenues, while others asserted it would have few such impacts, given that activities on existing leases were continuing. The leasing pause was enjoined by a court order in June 2021. Subsequently, DOI's Bureau of Ocean Energy Management (BOEM) held an offshore lease sale for the Gulf of Mexico, but the lease sale was later vacated by another court decision. Separately, the leasing program review called for in the E.O. was completed in November 2021 and recommended changes to the fiscal terms for onshore and offshore oil and gas leasing on federal lands. Issues for Congress include the impacts of the executive and judicial actions-and the implications of the proposed fiscal changes-for future offshore oil and gas leasing on the U.S. outer continental shelf. Leasing Pause Ends, But Saic Invalidated On June 15, 2021, in response to a lawsuit filed by multiple state attorneys general, the U.S. District Court for the Western District of Louisiana issued a preliminary injunction prohibiting DOI from implementing the leasing pause with respect to both onshore and offshore lease sales that the agency had halted. The court found, among other things, that DOI had acted in an arbitrary and capricious manner, in violation of the Administrative Procedure Act (5 U.S.C. §§551 et seq.), by halting the lease sales solely on the basis of the E.O. BOEM complied with the court order by resuming work on offshore lease sales that had been scheduled under the agency's five-year oil and gas leasing program for 2017- 2022. First, BOEM held Lease Sale 257 in the Gulf of Mexico (originally scheduled for March 2021) on November 17, 2021. The sale yielded $192 million in high bids on 1.7 million acres. Compared with other Gulf sales held in the 2017-2022 leasing program, this was the second- highest return in terms of bid revenues and the highest acreage bid on. However, on January 27, 2022, the U.S. District Court for the District of Columbia vacated the November lease sale, finding fault with aspects of the sale's environmental analysis concerning the greenhouse gas emissions impacts of Gulf leasing. Separately, on October 22, 2021, BOEM published a draft environmental impact statement (EIS) for another lease sale scheduled under the 2017-2022 leasing program-Lease Sale 258 in Alaska's Cook Inlet. The comment period for the draft EIS closed on December 13, 2021. DOI has not yet published a final EIS or decision regarding this sale. BOEM has made no announcements and initiated no planning regarding Lease Sales 259 and 261, the final lease sales (both in the Gulf of Mexico) scheduled for the 2017- 2022 program. Given timing considerations associated with lease sales and their environmental analysis, it appears that BOEM would not have time to plan and conduct these sales before the leasing program's June 30, 2022, expiration. DOI's Review Recomnmends C hanges for Future Lease Sales DOI completed its review of the federal oil and gas leasing program and issued a report on November 26, 2021, with recommendations concerning offshore and onshore lease sales and fiscal terms. Regarding offshore leasing, DOI recommended that BOEM consider alternatives to its current practice of area-wide leasing, under which all available (i.e., not previously leased or withdrawn) lease blocks within a given offshore planning area or broader offshore region are offered in a single lease sale. DOI cited studies finding that area-wide leasing reduced the amount of competition and the value of bids for each lease tract. Instead, DOI recommended offering smaller areas at each lease sale, narrowed through criteria related to environmental protection, subsistence uses, resource potential, and financial considerations. Some industry commentators have opposed this idea, suggesting that resource access restrictions could result in unfulfilled oil and gas demand and a greater need for energy imports. The DOI review also recommended revisions to the fiscal terms of offshore oil and gas leases, such as royalty rates, to monetarily account for the costs of carbon dioxide, methane, and nitrous oxide. DOI has discretion to regulate

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