Recent Developments

 

Federal Oil and Gas under the Biden Administration

The Biden administration, as expected, already has made a great many policy changes affecting the federal oil and gas program; and further changes are likely.  Here are some highlights:

Executive Order 13990 of January 20. On the day he took office, President Biden issued an “Executive Order on Protecting the Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” This order targeted “the promulgation of Federal regulations and other actions during the last 4 years that conflict” with the new administration’s objectives, specifically including an Environmental Protection Agency regulation on methane emissions from oil and gas operations. The order, among other things, also directed a temporary moratorium on federal activities relating to oil and gas leasing in the Arctic National Wildlife Refuge, pending a further environmental analysis; it reinstated the Obama administration’s withdrawal of certain areas in the Arctic outer continental shelf and the Bering Sea from oil and gas drilling; it revoked the permit for the Keystone XL Pipeline; it revoked a number of executive orders issued under the Trump administration (including orders on waters of the United States, and on promoting energy independence); and it directed the Council on Environmental Quality to rescind its 2019 draft guidance on consideration of greenhouse gas emissions.

Secretarial Order No. 3395 of January 20. On that same day, the Acting Secretary of the Interior issued an order temporarily suspending the authority of Interior Department bureaus and offices to take certain actions for a period of 60 days, and requiring any such actions during that time to instead be approved at the level of the Assistant Secretary or above. Among the affected actions were the publication of Federal Register notices; the issuance or revision of resource management plans; the granting of rights-of-way, easements, or conveyances of property interests; and most significantly, the issuance of “any onshore or offshore fossil fuel authorization, including but not limited to a lease, amendment to a lease, affirmative extension of a lease, contract, or other agreement, or permit to drill,” although with a note that this “does not limit existing operations under valid leases.” The Bureau of Land Management (and other bureaus) continued to be able to process these actions during the 60 days, but were required to submit them to the Assistant Secretary for review and approval. Prior to the expiration of the Secretarial order, the Principal Deputy Assistant Secretary for Land and Minerals Management issued a memorandum, on March 19, indefinitely extending the requirement for review by the Assistant Secretary as to certain actions, including resource management plans; records of decision; lease sale notices; reinstatement of terminated oil and gas leases; extension of applications for permit to drill; lease suspensions; and applications for royalty relief.

Executive Order 14008 of January 27. The President, a week later, issued an “Executive Order on Tackling the Climate Crisis at Home and Abroad.” Most importantly, among the numerous actions directed by that order, the Secretary of the Interior, to the extent consistent with applicable law, is 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,” and to “consider whether to adjust royalties associated with coal, oil, and gas resources extracted from public lands and offshore waters, or take other appropriate action, to account for corresponding climate costs.” Also noteworthy, the order seeks “to eliminate fossil fuel subsidies” that may be provided by federal agencies; to “promote ending international financing of carbon-intensive fossil fuel-based energy;” and to embrace a policy of “conserving at least 30 percent of our lands and waters by 2030.” As part of the review of the federal oil and gas program that was directed by this executive order, the Interior Department, on March 25, held an online forum with representatives from the Department, Native American groups, industry, the environmental community, labor groups, environmental justice advocates, and the academic community. (The initial press release announcing the forum, on March 9, had a distinctly adversarial tone, comprising a litany of criticisms of the federal oil and gas program, with a declaration by the Principal Deputy Assistant Secretary that that program “is not serving the American public well.”) Members of the public were invited to submit written comments (to which I contributed my own two cents); and the Department said that members of Congress, governors and other state and local officials, and Tribes would be consulted as well. The Department announced that the review of the federal oil and gas program would lead to issuance of an interim report in early summer; but so far, no such report has been forthcoming.

Meanwhile, litigation has been filed in response to the “pause,” including cases in the U.S. District Court for the District of Wyoming, Western Energy Alliance v. Biden, and State of Wyoming v. U.S. Department of the Interior (which has been consolidated with the Western Energy Alliance case); and in the U.S. District Court for the Western District of Louisiana, State of Louisiana v. Biden, and most recently, American Petroleum Institute v. U.S. Department of the Interior. On June 15, the court in the State of Louisiana case granted a nationwide preliminary injunction against implementation of the leasing pause. The Interior Department has now appealed the preliminary injunction to the U.S. Court of Appeals for the 5th Circuit; but the Department — which until then had given no indication whatsoever as to whether, or when, the “pause” on new leasing might be lifted — stated that it would comply with the court’s directive and resume leasing while the appeal is pending.

It remains to be seen, however, whether the Department’s declared intent to comply with the court order will translate into the actual conduct of lease sales, let alone the issuance of leases.  That intent was proclaimed by means of an August 16 press release — coinciding with the filing not only of the Department’s appeal but also of the American Petroleum Institute case in Louisiana — in which the Department presented a wholesale condemnation of its own oil and gas leasing program (and in so doing, implicitly maligned all of the Departmental staff, to say nothing of all of the responsible industry representatives, who have worked diligently throughout the years to ensure that program’s proper operation).  The press release, leaving very little room for doubt that the outcome of the Department’s review of its leasing program under the executive order is predetermined, enumerated every conceivable accusation that might be made against the program by advocacy groups, and indiscriminately accepted all of those accusations, however unfounded or inconsequential many of them may be.  And then, for good measure, the release declared, “In complying with the district court’s mandate, Interior will continue to exercise the authority and discretion provided under the law to conduct leasing in a manner that takes into account the program’s many deficiencies” — laying the groundwork for a potential collision between the court’s order and a Departmental determination that “the program’s many deficiencies” preclude Interior, within a timeframe anticipated by the court, from conducting any further leasing at all.

On August 24, the Department issued a further press release, stating that it had advised the court in the State of Louisiana case of a “schedule demonstrating compliance with the district court’s injunction:” the publication in September of a sale notice for a Gulf of Mexico lease sale, along with the issuance sometime in the fall of a draft environmental impact statement for a lease sale in Cook Inlet; and the commencement by the end of August of a 30-day scoping period for comments on onshore parcels that BLM originally had expected to offer for competitive leasing in the first and second quarters of 2021, followed by environmental reviews of those parcels, leading to the posting of lease sale notices later in the year for those parcels that were found to be eligible.  Keeping in character with its previous press releases, the Department reiterated that its conduct of further leasing would “take into account the [leasing] programs’ many deficiencies.”

Several BLM State Offices, by way of fulfilling the Department’s announced schedule, posted notices on August 31 identifying limited numbers of parcels that were under consideration for inclusion in upcoming lease sales.  BLM’s website expressly stated that the reviews of the parcels would be conducted in accordance with Instruction Memorandum 2021-027.  (See below.)  Not stated was whether the findings from BLM’s prior reviews of the parcels would be taken into consideration, or whether all steps in the review process would be re-initiated from scratch.  (But three bites at the apple for leasing opponents: the 30-day scoping comment period in the schedule that the Department presented to the court; a 30-day comment period following environmental review of the parcels under the IM; and a 30-day protest period upon publication of the sale notice.)  According to the BLM website, any sale notices resulting from the review process were to be published by December — implying a resumption of leasing in the first quarter of 2022.

(In the Wyoming litigation, meanwhile, the court on June 30 dismissed, without prejudice, that case’s motion for a preliminary injunction, as being mooted by issuance of the nationwide preliminary injunction in the Louisiana litigation.  The Wyoming court stated that the motion may be renewed if the preliminary injunction in Louisiana “is vacated, withdrawn, or otherwise altered in a material manner;” and that that court will proceed to consider the merits of the case.)


Instruction Memorandum on Land Use Planning and Lease Parcel Reviews

The Bureau of Land Management, on April 20, 2021, issued Instruction Memorandum No. 2021-027, updating its policies for the review of parcels for inclusion in competitive oil and gas lease sales. The Trump administration, in 2018, had issued IM No. 2018-034 to streamline the parcel review process, which set a target for parcels to be offered for competitive bidding within six months from when the lands were nominated. That target (a worthy goal, though seldom if ever met) was a response to the extensive delays that had developed in the preceding years, due partly to prior administrations’ parcel review policies, but also to the chronic staff shortages suffered by BLM offices. Among the changes made by IM No. 2018-034, as a way of expediting the review process, was a reduction in the times for public participation; but in the specific context of parcels within sage-grouse habitat management areas, those reduced times were found by courts to be inadequate. IM No. 2018-034 is superseded by the new Biden administration IM, which establishes 30-day public review and comment periods for either a Determination of NEPA Adequacy or an environmental assessment during the parcel review, as well as a 30-day protest period from the posting of a lease sale notice. (With regard to protests, IM No. 2021-027 specifies that an unresolved protest will not defer the offering of a parcel in a lease sale; but a lease may not issue for that parcel unless and until the protest is denied.) The new IM – which is applicable to federal minerals except under lands managed by other surface management agencies (but which is applicable to federal minerals under private surface within National Forests, for which the IM encourages either a joint environmental review by BLM and the Forest Service or an environmental review by the Forest Service that is then adopted by BLM) – finds a middle ground between the Trump administration process and the more-burdensome process that was developed under the Obama administration, expressly declining to reinstate the use of Master Leasing Plans as an added layer of the process. The new IM also directs that BLM’s lease parcel reviews are to be conducted simultaneously with environmental reviews, rather than having one await the completion of the other; it affirms that BLM will not routinely defer leasing while awaiting an amendment to a resource management plan; and it disfavors site visits as an extra step in the review process. Perhaps the most encouraging thing about this IM is that it was issued at all, which implies that the Interior Department does not expect that the leasing “pause” which was imposed by President Biden’s January 27 executive order is going to be permanent.


New BLM Eastern States Director

Mitchell Leverette has been serving, since July 2020, as the BLM State Director for the Eastern States Office.  He came to the Eastern States Office from a position as BLM’s Acting Deputy Assistant Director for Energy, Minerals and Realty Management; and his past service with BLM includes a previous stint at the Eastern States Office.  BLM’s Eastern States Office has jurisdiction over 39 million subsurface acres in the 31 States east of and bordering on the Mississippi River.


 

For notable recent court opinions, decisions by the Interior Board of Land Appeals, federal regulations, and BLM lease sale information, click the following links:

Court Opinions

Interior Board of Land Appeals

Regulations

BLM Lease Sales