Continued Uncertainty: Interior To Resume Leasing But Offers Zero Details On When, Where Or How

The uncertainty continues to mount over the U.S. federal oil and gas leasing program, even as the Department of Interior announced this week that it will comply with a federal judge’s order to hold lease sales.

Within the same announcement, which gave no details as to when or where a sale is to be held, Interior also said it is appealing a federal judge’s ruling that the agency must lift the illegal leasing ban. In June, U.S. District Court Judge Terry Doughty granted a preliminary injunction, ruling that the ban violates the Mineral Leasing Act (MLA) and the Outer Continental Shelf Lands Act (OCSLA).

From Interior:

“The Department of the Interior (Interior) confirmed today that the Department of Justice (DOJ) has appealed the preliminary injunction entered by the district court in Louisiana v. Biden, which enjoined Interior from implementing the pause in new federal oil and gas leasing as set forth in Section 208 of Executive Order 14008. DOJ is appealing that decision to the United States Court of Appeals for the Fifth Circuit. Federal onshore and offshore oil and gas leasing will continue as required by the district court while the government’s appeal is pending.” (emphasis added)

Interior has said on multiple occasions it is complying with the order, including in an exchange last month during the agency’s budget hearing before the Senate Energy and Natural Resources Committee when Interior Secretary Deb Haaland explained that the ban is “still in effect”:

“I supposed that the pause that you are referring to that President Biden ordered in his executive order is, uh – I suppose it’s still in effectI mean you can say that as soon as one lease happens that the pause is over. But what I can say is we’re complying with the court order and we are doing the work necessary to move in that direction soon.” (emphasis added)

Interior’s announcement brings major concerns for America’s energy security:

Uncertainty Remains Around Leasing Program

Although Interior said it would resume leasing after facing mounting legal pressure from multiple lawsuits alleging that it violated the MLA and the OCLA – laws that require lease sales –  among other procedural violations, the announcement provides little relief to the growing uncertainty over the federal leasing program.

In fact, it adds even more questions.

For starters, there’s still no indication of when a sale will be scheduled. Is there still time to reschedule one of the cancelled sales in the third quarter or will a sale take place in 2021 at all?

There’s also no indication of where a sale will be held. Will it be onshore or offshore? The state of Louisiana, which was granted the June injunction, is pushing for Interior to reschedule Lease Sale 257 in the Gulf of Mexico. But there’s no indication from Interior as to whether that will be done. Interior has not said even if it will reschedule the sales cancelled in 2021 or if it will offer up entirely new acreage.

Further, there are zero details yet on what the structure of resumed lease sales will be, although Interior’s announcement alluded to significant changes to come:

“The appeal of the preliminary injunction is important and necessary. Together, federal onshore and offshore oil and gas leasing programs are responsible for significant greenhouse gas emissions and growing climate and community impacts. Yet the current programs fail to adequately incorporate consideration of climate impacts into leasing decisions or reflect the social costs of greenhouse gas emissions including, for example, in royalty rates. Furthermore, past operation of the programs did not adequately reflect the breadth of the Interior Secretary’s stewardship responsibilities, including conserving wildlife habitat, protecting historic and cultural resources, ensuring that public lands are available for multiple uses, protecting marine, coastal, and human environments, meeting trust responsibilities to American Indian and Alaska Native Tribes, and providing a fair return to taxpayers. Moreover, the federal oil and gas programs inadequately account for environmental harms to lands, waters, and other resources, foster speculation by oil and gas companies, and frequently leave impacted communities out of important conversations about how they want the public lands and waters managed.”

Does this mean new National Environmental Policy Act (NEPA) review requirements? Changes to the Environmental Species Act? More or longer public comment and protest opportunities? And if so, does the intended sale follow former procedures or new ones? Does it occur before or after new rulemakings?

Because Interior’s imminent interim review of the federal leasing program will be guidelines, not a formal rulemaking, will scheduling a sale only lift the ban as a formality but not in actuality?

OPEC To The Rescue

For companies operating on federal lands, all the uncertainty that’s taken hold since the ban was initially implemented in January will remain as the lack of details around new sales means that producers still cannot plan new development.

And while the Biden administration’s domestic policies are seemingly geared to slow U.S. production, the administration apparently does not have the same aspirations for other countries. Twice this summer, the White House has urged OPEC+ (i.e. OPEC and Russia) to increase their own production to help lower gasoline prices here in the United States, most recently last week when National Security Advisor Jake Sullivan said that previous increases are “simply not enough” to help with global economic recovery from the pandemic.

These actions threaten U.S. energy jobs and investment, which has the highest environmental, safety, and labor standards in the world and increase reliance on foreign imports. In May, the United imported more oil from Russia than ever before, most of which went to California, which has waged its own campaign against production with predictable outcomes.

In response, Sen. James Inhofe (R-OK) and other Republican Senators sent a letter to the president calling him to boost domestic production:

“It is astonishing that your Administration is now seeking assistance from an international oil cartel when America has sufficient domestic supply and reserves to increase output which would reduce gasoline prices. … The best and most effective way to reduce the cost of gasoline at the pump is to unleash clean, affordable and reliable American energy.”

Perhaps Interior’s interim report – whenever that is finally published – will shed some light on these policies and provide answers to the growing list of questions.

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