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Updated September 9, 2021
Offshore Oil and Gas: The Biden Administration's Leasing
Pause and Subsequent Actions
On January 27, 2021, President Joe Biden issued Executive
Order (E.O.) 14008, directing multiple administrative
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 are
consistent with applicable law. The E.O. stated that the
review must 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 has consisted of a halt on sales of new
onshore and offshore oil and gas leases since the date of the
E.O. During this period, exploration and development of
existing leases have continued. Some stakeholders have
asserted that the pause has significantly affected long-term
prospects for oil and gas investment, production, and
revenues, while others have asserted that it has had few
such impacts, given that activities on existing leases are
continuing.
Status of Leasing Pause and Review
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 (-F. Supp. 3d-, 2021 WL 2446010 [W.D. La.
June 15, 2021]) prohibiting DOI from implementing the
leasing pause with respect to both onshore and offshore
lease sales that the agency had temporarily 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.
On August 16 and 24, 2021, DOI issued press releases
announcing an appeal of the preliminary injunction and
stating that the department would proceed with leasing
consistent with the district court's injunction during the
appeal. DOI stated that it would conduct such leasing in a
manner that takes into account the program's many
deficiencies. DOI's announced actions include steps to
move forward with two previously scheduled offshore lease
sales (see below).
Although DOI is enjoined from effectuating the leasing
pause directed by the E.O., it has initiated the policy review
also mandated by the order. With regard to the review, the
court decision stated that there is certainly nothing wrong
with performing a comprehensive review, although there
is a problem in ignoring acts of Congress while the review
is being completed. On March 25, 2021, the department
held an online forum to gather oral feedback to inform the
review. DOI also solicited written feedback, and
departmental officials stated in May that they had received
more than 100,000 written comments. DOI had announced
that an interim report was due to be completed in summer
2021. On August 16 and 24, 2021, DOI announced that it
was continuing to review the program, including preparing
a report.
Offshore Lease Sales Affected by the
Pause
Pursuant to the E.O., DOI's Bureau of Ocean Energy
Management (BOEM) had postponed two lease sales that
were scheduled for 2021 under the agency's five-year oil
and gas leasing program for 2017-2022. BOEM had paused
Lease Sale 257 in the Gulf of Mexico, originally scheduled
for March 17, 2021, and had paused its early planning work
for Lease Sale 258 in Alaska's Cook Inlet. Also, BOEM
made no announcements and initiated no planning
regarding Lease Sale 259, a second lease sale planned for
the Gulf of Mexico later in 2021.
DOI subsequently resumed some lease sale work to comply
with the legal injunction on implementing the pause. DOI
submitted a record of decision for Lease Sale 257 in the
Gulf of Mexico on August 31, 2021, and announced in
press releases that a notice of sale is expected in September.
Additionally, DOI announced that BOEM would issue and
take comments on a draft environmental impact statement
for the lease sale in Alaska's Cook Inlet.
How the E.O.'s required review may affect future lease
sales is unknown. For example, the review might or might
not lead to changes in lease terms such as rental and royalty
rates for future sales. BOEM has discretion to regulate lease
terms under the Outer Continental Shelf Lands Act
(OCSLA; 43 U.S.C. §§1331-1356b) and other authorities.
BOEM also has, in the past, canceled some lease sales that
were scheduled in five-year programs based on
environmental reviews of those prospective sales under the
National Environmental Policy Act (NEPA; 42 U.S.C.
§§4321 et seq.).
New Fiv-Year Leasing Program
BOEM's current five-year offshore oil and gas leasing
program ends in June 2022. Typically, preparation of a new
program takes two to three years. During the Trump
Administration, BOEM released a draft of a new five-year
program and sought public comment. The Biden](ViewImageLocal?handle=hein.crs/govefxs0001&div=1&collection=&method=preview&ext=.png&size=3)