Balancing Economics and Climate, Today and Tomorrow: Key Takeaways from the Interior Department’s Forum on the Federal Oil and Gas Program

Akin Gump Strauss Hauer & Feld LLP

Yesterday, the United States Department of the Interior (DOI) held a public forum at which stakeholders from government, industry, non-profit groups and academia discussed their visions for the future of the federal oil and gas program. Intended to kick-start public discussion following President Biden’s January executive order that paused the issuance of new oil and gas leases on public lands and waters, the forum signaled some of the Biden-Harris administration’s priorities and requested input on the process through which those priorities will become policies.

The forum began with remarks from newly confirmed Secretary Deb Haaland, who recognized the role fossil fuels play in powering the U.S. but also highlighted their impacts on climate, workers, Tribal Nations, and local communities and governments. Haaland then reminded attendees that DOI’s leasing moratorium affects only the issuance of new leases on federal (non-Tribal) land and does not impact existing development or new permits. While noting that “[f]ossil fuels will continue to play a major role in America for years to come,” Haaland encouraged the forum’s attendees to adopt a future-oriented mindset when evaluating how best to adapt the federal program to the challenge of climate change.

From there, the heads of the bureaus in charge of administering much of the federal oil and gas program—the Bureau of Land Management (BLM) and the Bureau of Ocean Energy Management (BOEM)—provided an overview of their respective leasing and permitting programs, noting that both programs continue to approve new permit applications for lands and waters leased prior to the issuance of the President’s executive order.

Presentations by six stakeholder groups followed. Panelists representing industry and labor groups—which included executives from the American Exploration and Production Council (AXPC), National Ocean Industries Association (NOIA), American Petroleum Institute (API), and labor unions—unanimously supported the continued leasing of federal lands for oil and gas activities. They embraced a “diversified,” mixed energy strategy through which oil and gas play a role in reducing the United States’ greenhouse gas emissions while maintaining economic sustainability and energy independence. Notably, Frank Macchiarola, API’s senior vice president of Policy, Economics, and Regulatory Affairs, reiterated his organization’s support for a carbon pricing mechanism and enhanced climate reporting. With respect to the former, the forum’s academic experts addressed the potential climate benefits of carbon pricing, which could materialize in the form of an increased royalty rate.

The academic panelists and DOI officials also noted the potential for abandoned oil and gas infrastructure to create job opportunities for displaced workers. The industry panelists expressed less optimism, suggesting that retiring and plugging abandoned wells would be an insufficient substitute for the job losses that could result from a permanent leasing ban. Likewise, the labor panelists argued for targeted solutions to manage emissions, such as the use of carbon capture, utilization and storage technology.

While many in industry view carbon pricing and capture as realistic approaches that strike a fair balance between the status quo and aggressive environmental regulation, the forum’s non-profit environmental and equity experts advocated for more forceful measures. Representatives from Earthworks, the Ocean Conservancy, and the Natural Resources Defense Council (NRDC) recommended stringent restrictions on the leasing of federal lands for fossil fuel activities, if not an outright ban. They, like the forum’s equity and indigenous experts, emphasized the impact of pollution on communities and Tribes located near oil and gas operations. Although the indigenous experts differed in their ideal approach to managing the federal program in a sustainable manner, both they and the equity experts urged decision makers to listen to and work collaboratively with those communities that oftentimes bear the brunt of polluting activities.

Next Steps & Litigation

The forum did not conclude with a clear sense of the future of the federal oil and gas program. Its presentations did, however, reaffirm some of the likely initiatives the administration might pursue, and Secretary Haaland’s rebuke of what she called the prior administration’s “act now, think later” approach all but guarantees a starkly different regulatory landscape. Accordingly, we expect to see regulations meant to curb emissions, particularly of methane (and potentially, as one panelist offered, volatile organic compounds). We also expect DOI to incorporate climate and environmental justice considerations into future leasing and permitting decisions. Moreover, the Biden-Harris administration is likely to continue to look for opportunities to shift energy production to renewable resources, especially on- and off-shore wind power, whenever practical.

It remains to be seen whether the Biden-Harris administration will live up to its ambitious campaign pledge of “banning new oil and gas permitting on public lands and waters.” DOI might not even have the authority to do so under the current statutory and regulatory landscape.1 Indeed, industry and energy-producing states already sued the federal government over the leasing moratorium, arguing that several statutes—the Outer Continental Shelf Lands Act, Mineral Leasing Act, and Administrative Procedure Act—foreclose the President from establishing “an energy-development moratorium by fiat.” There may be some merit to these claims, particularly on the procedural front, but the moratorium is not unprecedented: the Nixon, George H.W. Bush, and Obama administrations issued similar moratoria, only one of which a court later blocked.2 Importantly, the leasing pause appears to be tailored narrowly for the purpose of withstanding judicial scrutiny, especially if it remains temporary.

Absent a court ruling to the contrary, this uncertainty will not impede the administration’s efforts to reevaluate the federal oil and gas program. Over the coming weeks, DOI will continue to seek input from Congress, governors, Tribal leaders and local leaders. The Department also will accept input from the public through April 15, 2021, culminating in the publication of a report in “early summer” that will outline the Department’s plans and recommendations to Congress.

1 See, e.g., 43 U.S.C. § 1351(h)(1) (“After reviewing the record of any public hearing held with respect to the approval of a plan pursuant to [NEPA] or the comments and recommendations submitted under. . .this section, the Secretary, shall. . .approve, disapprove, or require modifications of the plan”) (emphasis added); 30 C.F.R. § 550.233 (“The Regional Supervisor [of BOEM] will take one of the actions. . . within 30 calendar days after the Regional Supervisor deems your [Exploration Plan] submitted…”) (emphasis added); 30 C.F.R. § 550.266 (“Within 25 working days after receiving your proposed DPP or DOCD and its accompanying information, the Regional Supervisor will deem your DPP or DOCD submitted…”).

2 Hornbeck Offshore Servs., L.L.C. v. Salazar, 696 F. Supp. 2d 627, 638 (E.D. La. 2010) (enjoining the enforcement of Obama-era moratorium on deepwater drilling leasing and permitting following the Deepwater Horizon incident).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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