Updated September 9, 2021
Offshore Oil and Gas: The Biden Administration’s Leasing
“Pause” and Subsequent Actions
On January 27, 2021, President Joe Biden issued Executive
with performing a comprehensive review,” although “there
Order (E.O.) 14008, directing multiple administrative
is a problem in ignoring acts of Congress while the review
actions to address climate change. Section 208 of the order
is being completed.” On March 25, 2021, the department
directed the Secretary of the Interior to “pause new oil and
held an online forum to gather oral feedback to inform the
natural gas leases on public lands or in offshore waters
review. DOI also solicited written feedback, and
pending completion of a comprehensive review and
departmental officials stated in May that they had received
reconsideration of Federal oil and gas permitting and
more than 100,000 written comments. DOI had announced
leasing practices, ...” to the extent that such actions are
that an “interim report” was due to be completed in summer
“consistent with applicable law.” The E.O. stated that the
2021. On August 16 and 24, 2021, DOI announced that it
review must evaluate “potential climate and other impacts”
was continuing to review the program, including preparing
associated with oil and gas leasing, as well as whether to
a report.
adjust royalties paid to the federal government from
onshore and offshore oil and gas production to account for
Offshore Lease Sales Affected by the
“climate costs.”
Pause
Pursuant to the E.O., DOI’s Bureau of Ocean Energy
As implemented by the Department of the Interior (DOI),
Management (BOEM) had postponed two lease sales that
the leasing pause has consisted of a halt on sales of new
were scheduled for 2021 under the agency’s five-year oil
onshore and offshore oil and gas leases since the date of the
and gas leasing program for 2017-2022. BOEM had paused
E.O. During this period, exploration and development of
Lease Sale 257 in the Gulf of Mexico, originally scheduled
existing leases have continued. Some stakeholders have
for March 17, 2021, and had paused its early planning work
asserted that the pause has significantly affected long-term
for Lease Sale 258 in Alaska’s Cook Inlet. Also, BOEM
prospects for oil and gas investment, production, and
made no announcements and initiated no planning
revenues, while others have asserted that it has had few
regarding Lease Sale 259, a second lease sale planned for
such impacts, given that activities on existing leases are
the Gulf of Mexico later in 2021.
continuing.
DOI subsequently resumed some lease sale work to comply
Status of Leasing Pause and Review
with the legal injunction on implementing the pause. DOI
On June 15, 2021, in response to a lawsuit filed by multiple
submitted a record of decision for Lease Sale 257 in the
state attorneys general, the U.S. District Court for the
Gulf of Mexico on August 31, 2021, and announced in
Western District of Louisiana issued a preliminary
press releases that a notice of sale is expected in September.
injunction (—F. Supp. 3d—, 2021 WL 2446010 [W.D. La.
Additionally, DOI announced that BOEM would issue and
June 15, 2021]) prohibiting DOI from implementing the
take comments on a draft environmental impact statement
leasing pause with respect to both onshore and offshore
for the lease sale in Alaska’s Cook Inlet.
lease sales that the agency had temporarily halted. The
court found, among other things, that DOI had acted in an
How the E.O.’s required review may affect future lease
“arbitrary and capricious” manner, in violation of the
sales is unknown. For example, the review might or might
Administrative Procedure Act (5 U.S.C. §§551 et seq.), by
not lead to changes in lease terms such as rental and royalty
halting the lease sales solely on the basis of the E.O.
rates for future sales. BOEM has discretion to regulate lease
terms under the Outer Continental Shelf Lands Act
On August 16 and 24, 2021, DOI issued press releases
(OCSLA; 43 U.S.C. §§1331-1356b) and other authorities.
announcing an appeal of the preliminary injunction and
BOEM also has, in the past, canceled some lease sales that
stating that the department would “proceed with leasing
were scheduled in five-year programs based on
consistent with the district court’s injunction during the
environmental reviews of those prospective sales under the
appeal.” DOI stated that it would conduct such leasing “in a
National Environmental Policy Act (NEPA; 42 U.S.C.
manner that takes into account the program’s many
§§4321 et seq.).
deficiencies.” DOI’s announced actions include steps to
move forward with two previously scheduled offshore lease
New Five-Year Leasing Program
sales (see below).
BOEM’s current five-year offshore oil and gas leasing
program ends in June 2022. Typically, preparation of a new
Although DOI is enjoined from effectuating the leasing
program takes two to three years. During the Trump
pause directed by the E.O., it has initiated the policy review
Administration, BOEM released a draft of a new five-year
also mandated by the order. With regard to the review, the
program and sought public comment. The Biden
court decision stated that “there is certainly nothing wrong
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Offshore Oil and Gas: The Biden Administration’s Leasing “Pause” and Subsequent Actions
Administration could continue to work from this draft
Separate from the pause itself, the E.O.’s required review of
program or could begin a new process.
the oil and gas leasing program could affect offshore
revenues going forward. The E.O. specifically directed DOI
It is unclear how the E.O. may affect BOEM’s work on the
to evaluate royalty rate adjustments as part of its review.
next five-year program. Although the E.O. called for a
The effects of any royalty rate adjustments could be
pause on new oil and gas leases, BOEM is required by the
uncertain. For example, if the review led to an increase in
OCSLA to prepare a five-year program. One possibility is
royalty rates, federal revenues could increase, resulting in
that BOEM could undertake some aspects of the E.O.’s
higher amounts available for disbursement to state and
required review in the context of the economic and
federal programs. Alternatively, if such royalty rate
environmental assessments conducted for the five-year
increases made leasing unattractive to offshore operators,
program. For example, previous five-year programs
lower federal revenues and disbursements could result.
considered potential climate and other impacts associated
with offshore oil and gas leasing, as is required in the E.O.
Role of Congress
Some other requirements of the E.O., such as an evaluation
The 117th Congress has addressed the leasing pause in
of royalty rates, typically have been pursued outside the
oversight hearings and through legislation. Members have
development of five-year programs.
debated the purposes and impacts of halting new oil and gas
leasing on federal lands, whether temporarily or
Offshore Drilling Permits
permanently. Some Members have introduced bills to
DOI stated in a February 2021 fact sheet that the E.O.’s
support regular, ongoing federal oil and gas leasing—for
“targeted pause does not impact existing operations or
instance, by explicitly prohibiting DOI from halting leasing
permits for valid, existing leases, which are continuing to
without congressional authorization (e.g., H.R. 543, S. 76)
be reviewed and approved.” According to a database
or by requiring an economic study before the President
maintained by DOI’s Bureau of Safety and Environmental
could impose a leasing halt or moratorium (e.g., H.R.
Enforcement (BSEE), more than 450 permits to drill on
4266). Conversely, some legislation would direct DOI not
existing offshore leases have been issued since the E.O.’s
only to pause oil and gas leasing but also to end it entirely
publication on January 27, 2021. Another BSEE database
on some or all federal lands (e.g., H.R. 2519, S. 1115).
shows approval of more than 350 exploration and
Members also have debated the advisability of fiscal
development plans for existing offshore leases during that
changes to the leasing program such as those being
time. Separate from the leasing pause in E.O. 14008, DOI
evaluated in the Administration’s review of the leasing
issued two internal memoranda establishing new approval
program. Some Members have introduced legislation
processes for certain federal oil and gas permitting
concerning federal oil and gas royalties and other fiscal
activities.
aspects of the leasing program (e.g., H.R. 1517, H.R. 2102,
S. 1167). Congress may continue to consider issues related
Offshore Revenue Considerations
to the leasing program review, including the climate
Offshore oil and gas revenues provide most or all of the
impacts of oil and gas leasing on federal lands and the
funding for several federal conservation and restoration
optimal fiscal terms for federal leasing.
programs, including the Land and Water Conservation Fund
(54 U.S.C. §§200301 et seq.), the Historic Preservation
Additional Reading
Fund (54 U.S.C. §§303101-303103), and the newly
For more information related to the leasing pause called for
established National Parks and Public Land Legacy
in E.O. 14008, see CRS Legal Sidebar LSB10627,
Restoration Fund (54 U.S.C. §200402). Also, under the
Unpaused: District Court Enjoins Biden Administration
OCSLA and the Gulf of Mexico Energy Security Act of
from “Pausing” Oil and Gas Leasing on Federal Land, by
2006 (43 U.S.C. §1331 note), a portion of offshore oil and
Adam Vann; and CRS In Focus IF11785, Potential State
gas revenue is shared with coastal states, with most of the
Impacts of a Pause on Federal Onshore Oil and Natural
funds going to Alabama, Louisiana, Mississippi, and Texas.
Gas Leases, by Brandon S. Tracy. For more information on
offshore oil and gas lease sales and planning, see CRS
Federal offshore oil and gas revenues fluctuate from year to
Report R44504, Five-Year Program for Offshore Oil and
year based on multiple factors and totaled $3.7 billion in
Gas Leasing: History and Program for 2017-2022, by
FY2020. More than 90% of this total came from royalties,
Laura B. Comay, Marc Humphries, and Adam Vann; and
with the remainder from bonus bids at lease sales and rents
CRS Report R44692, Five-Year Offshore Oil and Gas
paid prior to production. The leasing pause has had certain
Leasing Program for 2019-2024: Status and Issues in Brief,
revenue effects, for example on bonus bids, since lease
by Laura B. Comay.
auctions were not being held. However, any effect of the
pause on royalties—which form the high majority of the
Laura B. Comay, Specialist in Natural Resources Policy
offshore revenues shared with states and used for federal
programs—would be unlikely to emerge in the short term,
IF11909
because new offshore oil and gas leases typically take
several years to reach a point where production would
begin and royalties would be generated.


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Offshore Oil and Gas: The Biden Administration’s Leasing “Pause” and Subsequent Actions


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https://crsreports.congress.gov | IF11909 · VERSION 2 · UPDATED

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