Biden Administration Announces Moratorium on New Federal Oil and Gas Leases
The Biden administration's Executive Order on Tackling the Climate Crisis at Home and Abroad ("Executive Order") expands upon the Department of the Interior's Secretarial Order No. 3395 and indefinitely suspends the federal oil and gas leasing program.
Note: This text was updated on January 29, 2021, to reflect recent developments.
As part of a suite of actions that public statements claim are aimed at reducing greenhouse gas emissions and prioritizing land conservation, the Biden administration issued the Executive Order, halting any new oil and gas auctions on federal land and water, to the extent consistent with applicable law, as the President's administration reviews the program. The Executive Order is not expected to affect existing oil and gas operations under previously authorized federal oil and gas leases. The Executive Order was announced on January 27, 2021. Several other executive orders designed to combat climate change also were announced, including directions to: (i) identify steps that can be taken to double renewable energy production from offshore wind by 2030; (ii) protect 30% of federal land and water by 2030; (iii) create a task force to create a government-wide plan for reducing greenhouse emissions; and (iv) elevate climate change to a national security priority.
The moratorium represents a step further than Secretarial Order No. 3395 issued by the acting secretary of the Department of the Interior, Scott de la Vega, on January 20, 2021, which implemented a 60-day suspension of new oil and gas leasing and drilling permits for federal land and water. The moratorium will extend the duration of the temporary suspension of new federal oil and gas leasing activity by an unknown amount of time.
The administration's review of the federal oil and gas leasing program will be conducted in consultation with the Secretary of Agriculture, the Secretary of Commerce, through the National Oceanic and Atmospheric Administration, and the Secretary of Energy. It will consider the potential climate or other impacts of current federal oil and gas permitting and leasing practices and whether to adjust royalties associated with the federal oil and gas leasing program or take other appropriate action, to account for corresponding climate costs.
The impact of the leasing moratorium on the energy industry remains unclear. Approximately 22% of U.S. oil production and 12% of natural gas production occurs on federal land and water. In addition to the expectation that existing oil and gas operations will not be suspended, oil and gas producers also have a large number of previously approved but unused applications to drill (only half of approximately 20,000 applications to drill approved between 2014 and 2019 are in use) or nonproducing leases (more than 13 million acres of federal land leased for oil and gas were not producing during fiscal year 2019). The future use of these unused drilling permits and existing, nonproducing lease acreage is not anticipated to be banned under the moratorium.
In addition, the source of legal authority for the leasing moratorium was not specified in the Executive Order. As such, it appears that the Department of Interior may be able to draw on several federal statutes for authority to pause federal onshore and offshore leasing, including the Mineral Leasing Act, the Federal Land Policy and Management Act, the Outer Continental Shelf Lands Act, or the National Environmental Policy Act.
Industry participants have already taken action to challenge the Executive Order, including a lawsuit filed by the Western Energy Alliance ("WEA") on January 27, 2021, in the U.S. District Court for the District of Wyoming. In its complaint, WEA requested review of the Executive Order under the Administrative Procedure Act and has stated publicly that the Executive Order exceeds presidential authority and constitutes a violation of the Mineral Leasing Act, National Environmental Policy Act, and the Federal Lands Policy and Management Act.
For additional information, visit:
U.S. Department of the Interior, ORDER NO. 3395: Temporary Suspension of Delegated Authority
U.S. Department of the Interior, FACT SHEET: Interior Department Welcomes Day One Executive Orders to Restore Public Lands and Waters, Combat Coronavirus
The White House, Executive Order on Tackling the Climate Crisis at Home and Abroad
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