Throughout Joe Biden’s campaign, he made clear that climate change, the environment, and “Clean Energy” were going to be anchors of his Presidential platform. What was less clear was how his administration would treat oil and gas beyond the expected counterbalance to the Trump Administration’s regulatory rollbacks – especially with respect to GHG emissions. On the big ticket items – drilling, fracking, leasing on federal lands, etc. – the campaign messages were mixed. Between Biden’s election and his inauguration, the speculation only increased about how moderate or progressive his approach would be on the industry.
On Inauguration day (Jan. 20), President Biden signed nine (9) Executive Orders addressing a wide range of policies. Most notably for the oil and gas industry was EO 13990, which among other things revoked the permit issued by President Trump for the Keystone XL Pipeline that had already been under construction for several years, and which was fully endorsed by Canada where it originated. That EO also imposed a moratorium on all activities related to the implementation of the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge and reinstated President Obama’s drilling moratorium in Arctic waters and the Bering Sea. As expected, the EO directed the EPA to propose new regulations to establish comprehensive standards of performance and emission guidelines for methane and VOC emissions from existing operations in the oil and gas sector, including exploration and production, transmission, processing, and storage segments by September 2021. Further, the EO revoked many of the Trump EO’s designed to create a more efficient and expedited federal permitting processes for infrastructure projects, including EO 13087 – One Federal Decision.
The following day, Acting Department of Interior Secretary Scott de la Vega issued Order No. 3395 that temporarily suspended delegated authority held by DOI regional staff for 60-days for specific actions. Most notably, Order 3395 “suspended” the issuance of all leases, permits, land sales, rights of way, and notices to proceed under previous surface use authorizations that will authorize ground-disturbing activities for fossil fuel development on federal lands both onshore and offshore without agency or bureau level approval.
On Wednesday, January 27, President Biden signed an EO entitled “Tackling the Climate Crisis at Home and Abroad”, which solidified the Administration’s commitment to the consideration of climate in all facets of governmental action. Section 208 of the EO ordered Secretary de la Vega to “pause all new oil and natural gas leases on public lands or in offshore waters pending a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices…” Then in Section 209, President Biden ordered all heads of agencies to report to OMB and his National Climate Advisor if and how they are subsidizing fossil fuels and ordered OMB to seek to eliminate all fossil fuel subsidies for Fiscal Year 2022. The Biden Administration insists that this is not a full ban on new leases, but merely a “pause” that will allow them sufficient time to revaluate how they will issue new leases going forward. Yet, while such an indefinite “pause” in federal land leases and sales still poses economic burdens for oil and gas developers, it is the anticipated follow up legislation or regulations that are most concerning for the future of the industry and economic wellbeing of many States that rely heavily on the production of oil and gas.
The industry response has already been swift. On January 27, Western Energy Alliance filed a Petition for Review of President Biden’s EO in Federal Court in Wyoming. On January 28, Texas Governor Greg Abbott issued his own EO GA-33 entitled Protecting Energy Industry from Federal Overreach. While Texas has practically no federal lands, Texas is home to many of the country’s major fossil fuel companies and workforce. Governor Abbott’s EO directed all of his state agencies to use all lawful powers and tools to challenge any federal action that threatens the continued strength, vitality, and independence of the energy industry. Then on January 28, U.S. Senator Cynthia Lummis (R-WY) and 24 other Senate Republicans from key energy states introduced the POWER Act which seeks to require Congressional approval to ban fossil fuel development. A companion House bill was also submitted.
In a conference call with industry groups on January 29, the Gulf of Mexico Region offices of BOEM and BSEE advised that they were awaiting instruction from the Department and Agency levels as to what authority they would retain with respect to the review, approval, and renewal of offshore leases and permits. They confirmed on the call that Order 3395 and Biden’s January 27 EO had no effect on existing leases or permits, but recent reports have come out that DOI has revoked 70 previously-approved drilling permits in the past few days.
The fossil fuel industry was always going to be a battleground for the Biden Administration; it was the scope and severity of that conflict that hard to predict. To be sure, any restrictions imposed on the industry will have to survive challenges from within the federal government and from outside lawsuits. This story is only starting to unfold and it’s one we will continue to monitor and report on.