Biden Administration Takes Action on Oil & Gas Permits but Policy Still Evolving

Since US President Biden’s inauguration, the Biden administration has taken several actions to restrict the issuance of oil and gas permits for production on federal public lands and federal offshore waters, but the extent of the shift in policy undertaken remains uncertain as the US Department of Interior has continued to issue permits for drilling on such public lands and waters. Accordingly, the Interior Department’s future actions will need to be monitored carefully to assess the scope and implications of the administration’s policy with respect to energy development on federal lands and waters.

On January 20, 2021, Scott de la Vega, acting secretary of the interior, signed Order No. 3395 (the “Order”) that elevated decisions related to energy production from the Interior Department career officials to the senior political leadership of the department. The full scope of actions covered by the Order is set forth below. The Order appeared to be designed to halt most of the Interior Department’s regulatory and major administrative actions until at least the confirmation of Deb Haaland, President Biden’s nominee for secretary of the interior.

Subsequently, on January 27, 2021, President Biden signed the lengthy and far-reaching Executive Order on Tackling the Climate Crisis at Home and Abroad (the “Climate Crisis EO”), which further establishes the administration’s climate change policies across the federal government. (A full analysis of this executive order will be forthcoming.) Among the policies it establishes, the Climate Crisis EO addresses the Biden Administration’s policy with respect to the use of federal lands. Specifically, the Climate Crisis EO states that:

It is the policy of [his] administration to lead the Nation’s effort to combat the climate crisis by example – specifically, by aligning the management of Federal procurement and real property, public lands and waters, and financial programs to support robust climate action.

To advance this policy, Section 208 of the Climate Crisis EO directs the secretary of the interior to pause new oil and natural gas leases on public lands and offshore waters pending completion of a comprehensive review and reconsideration of federal oil and gas permitting and leasing practices. This analysis is to include a consideration of how to account for climate costs related to natural resource extraction, whether through adjusted royalty rates or other appropriate actions. A key question left unanswered is whether the Department of Interior will utilize in preparing this analysis the estimates of the social cost of carbon and other greenhouse gases required to be calculated under Executive Order 13990.¹

At this time, it is unclear the extent to which both the Order and the Climate Crisis EO will halt energy exploration and production on federal public lands and offshore public waters. Although it appeared that the Biden administration intended to suspend permitting on federal lands and waters, the Department of Interior has nevertheless continued to issue new drilling permits since President Biden took office.² The administration has also clarified that it has not imposed a moratorium on drilling on federal land.³

It is also important to note that the Order and the Climate Crisis EO do not apply to drilling on tribal lands or private lands. The Order and the Climate Crisis XO also do not directly apply to the certification of regulated interstate gas pipeline facilities, which is within the exclusive jurisdiction of the Federal Energy Regulatory Commission.  The Order and the Climate Crisis EO do not affect permits issued by the Trump administration or existing oil and gas operations under valid leases. Those permits will allow their holders to continue new drilling. However, their ability to extract resources may be diminished due to an inability to secure rights-of-way, roads and other supporting infrastructure depending on how the Interior Department ultimately decides to implement the Climate Crisis EO. The Order also applies to coal leases and permits and blocks the approval of new mining plans.

The Order suspends delegations of authority to department bureaus and offices for 60 days, and covers the following actions:

• Publishing or aiding in the publishing of any notices in the Federal Register, including, but not limited to, notices of proposed or final agency action and actions taken in accordance with the National Environmental Policy Act;
• Issuing, revising or amending resource management plans under the authority of Section 202 of the Federal Land Policy and Management Act, as amended;
• Granting rights of way, easements or any conveyances of property or interests in property, including land sales or exchanges, or any notices to proceed under previous surface-use authorizations that will authorize ground-disturbing activities;
• Approving plans of operation or amending existing plans of operation under the General Mining Law of 1872;
• Issuing any final decisions with respect to R.S. 2477 claims, including recordable disclaimers of interest;
• Appointing, hiring or promoting personnel at a position at or above the level of GS 13 (except for seasonal hires or emergency workforce personnel); and
• Issuing any onshore or offshore fossil fuel authorizations including, but not limited to, leases, lease amendments, affirmative extensions of leases, contracts or other agreements, or permits to drill.

The above-listed actions may only be taken by the secretary, deputy secretary, solicitor, assistant secretary – Policy, Management and Budget, assistant secretary – Land and Minerals Management, assistant secretary – Water and Science, assistant secretary for Fish and Wildlife and Parks, assistant secretary – Indian Affairs, or the assistant secretary – Insular and International Affairs.

² https://www.bloomberg.com/news/articles/2021-01-27/biden-issues-dozens-of-oil-drilling-permits-in-first-few-days.

³ https://www.doi.gov/pressreleases/fact-sheet-president-biden-take-action-uphold-commitment-restore-balance-public-lands.