Executive Order Charts New Path For Offshore Energy Development
On April 28, 2017, the Trump administration issued an Executive Order entitled “Implementing an America-First Offshore Energy Strategy.” This EO calls for expanded oil and gas leasing in areas of the U.S. Outer Continental Shelf (OCS) that were recently placed off-limits to energy development, and instructs several federal agencies to reevaluate and possibly reverse recent regulations imposed on the offshore oil and gas industry. If fully implemented, the EO would clear the way for expanded and expedited development of OCS energy resources.
The EO has one immediate impact: It effectively rescinds the Obama Administration’s December 2016 withdrawals of the Arctic and Atlantic OCS from future oil and gas leasing. Those withdrawals, and their reversal, raise novel issues regarding the nature of the President’s withdrawal authority under Section 12(a) of the Outer Continental Shelf Lands Act that likely will be decided in the courts.
Relatedly, the EO orders the Secretary of the Interior to review the recently finalized 2017-2022 5-Year OCS leasing plan, and consider revising it to provide for annual oil and gas lease sales in the Gulf Of Mexico, offshore Alaska, and in the Mid-and South Atlantic – a process that likely will require many months if not years. On May 1, 2017, the Secretary of the Interior, Ryan Zinke, signed a Secretarial Order directing the Bureau of Ocean Energy Management (BOEM) to initiate this review. Once the review process has begun, BOEM may open additional areas to oil and gas leasing, such as the Pacific OCS offshore California. The EO also directs the National Marine Fisheries Service to “fully account” for the energy potential (including renewable energy potential) of OCS areas before establishing or expanding national marine sanctuaries there.
The EO also puts back on the table a host of Obama-era regulations of the offshore oil and gas industry, several of which have sparked controversy in recent months. Specifically, it orders the Department of the Interior (DOI) to “reconsider” the need for BOEM’s September 2016 Notice to Lessees (NTL) requiring additional financial assurance from OCS oil and gas lessees; the April 2016 well control rule; the July 2015 Arctic Drilling Rule; and the proposed offshore air quality rule, a prior administration priority that was never finalized. Under the EO, DOI will, “as appropriate,” suspend, revise, withdraw, or revoke these rules. The EO also orders DOI to review the Bureau of Safety and Environmental Enforcement’s entire “regulatory regime” to consider the need for new regulation and ensure consistency with the energy-focused priorities articulated in the EO.
The EO similarly seeks to lessen the regulatory burden on activities that support OCS energy development, such as geological and geophysical surveys. In this regard, the EO instructs DOI to develop a “streamlined permitting approach” for exploratory seismic surveys, and orders the Commerce Department to review NOAA’s July 2016 “Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing,” which has been cited as a potential obstacle to the deployment of seismic surveys, particularly in the Atlantic. The EO also orders DOI and the Commerce Department to expedite all stages of consideration of Incidental Take Authorization Requests under the Marine Mammal Protection Act, another administrative bottleneck for OCS energy-related authorizations.
Consistent with several other recent EOs, the offshore energy EO seeks to revert the regulatory landscape to pre-2015 status in an effort to lessen recently-imposed regulatory burdens and encourage domestic economic activity. But wholesale rescission of the Obama-era regulations on the OCS is far from certain. Except for the offshore air quality rule (which was never finalized) and the 2016 financial assurance NTL and NOAA Technical Guidance (which are both agency policy documents), substantively altering or rescinding any of the Obama-era regulations will require adherence to the notice-and-comment rulemaking procedures of the Administrative Procedure Act, a process that can be both time-consuming and contentious. Among other things, the new administration will need to justify that these rules are unresponsive to issues presented by the 2010 Deepwater Horizon incident, and unnecessary to protect marine species or the marine environment. Interested stakeholders should watch the dockets of the respective DOI and Department of Commerce agencies and consider participating in any upcoming rulemaking actions, policy revisions, or litigation challenges.
Beveridge & Diamond’s Natural Resources & Project Development practice counsels clients on the issues addressed in the April 28 Offshore Executive Order, including representing clients in OCS project development, regulatory enforcement, and litigation. For more information on how these regulatory and policy developments may impact your business, please contact the authors or your usual Beveridge & Diamond contact.