The Big Squeeze? Proposed 2023-2028 Oil and Gas Leasing Program on the Outer Continental Shelf is Reduced to 11 Proposed Lease Sales; Further Reductions May Be Forthcoming

Publication of the Proposed Program has triggered the beginning of a 90-day public comment period, during which BOEM will hold four public meetings.  Following the comment period, BOEM will finalize its process by issuing a Proposed Final Program (“PFP”).  Given the current penchant to remove lease sales, as reflected in the reductions made to the original list of potential lease sales, together with warnings made in the public notice and associated press release, the current slate of potential leases may be further reduced in the PFP.  The language in the public notice and statements made by the agency may provoke those who oppose the lease sales to flood BOEM with comments in support of a zero-sale scenario, perhaps to provide political cover for further reductions.  Interested parties have an opportunity to act now to provide public comment, and should consider the effects of the Proposed Program and potential changes in the PFP.

Statutory Considerations for Issuance of the National Program.

BOEM is an agency within the DOI and has been delegated responsibility for all federal OCS leasing and program development issues for oil and gas.  The National Program is the schedule of oil and gas lease sales in the federal government’s 26 OCS planning areas, and BOEM — as part of its delegated responsibilities — proposes the leasing program to the Secretary of the Interior, who has the statutory authority to accept and implement the program.  The National Program is renewed every five years.  The most recent National Program was for the period 2017 to 2022.

The Secretary must formally consider and approve the proposed National Program before any lease sales may commence.  In providing the requisite approval, the Secretary is obligated under the OCS Lands Act² to assess the timing and location of exploration, development, and production of oil and gas among the OCS regions based on the following factors:

(1)        existing information concerning the geographical, geological and ecological characteristics of such regions;

(2)        an equitable sharing of developmental benefits and environmental risks among the various regions;

(3)        the location of such regions with respect to, and the relative needs of, regional and national energy markets;

(4)        the location of such regions with respect to other uses of the sea and seabed, including fisheries, navigation, existing or proposed sea lanes, potential sites of deepwater ports, and other anticipated uses of the resources and space of the OCS;

(5)        the interest of potential oil and gas producers in the development of oil and gas resources as indicated by exploration or nomination;

(6)        laws, goals and policies of affected States that have been specifically identified by the Governors of such States as relevant matters for the Secretary’s consideration;

(7)        the relative environmental sensitivity and marine productivity of different areas of the OCS; and

(8)        relevant environmental and predictive information for different areas of the OCS.

BOEM Issuance of the DPP and Proposed Program.

BOEM under the Trump administration initiated the three-step process for issuance of the National Program.  BOEM concluded step one on January 9, 2018, when it published the DPP.  Included in this initial scoping document were 47 potential lease sales in 25 of the 26 OCS planning areas:

• 19 lease sales in the Alaska region;
• 12 lease sales in the Gulf of Mexico region;
• 9 lease sales in the Atlantic region; and
• 7 lease sales in the Pacific region.

BOEM under the Biden administration recently concluded step two, with BOEM announcing the issuance of the Proposed Program.  The Proposed Program reflects BOEM’s winnowing process, following its assessment of the factors described above, together with its receipt and consideration of more than two million comments that were made during the public comment period for the DPP.  BOEM whittled down the overall number of potential lease sales in the Proposed Program, from 47 potential sales to 11 potential sales:

• 10 lease sales in the Gulf of Mexico region; and
• 1 lease sale in the Alaska region in the northern portion of the Cook Inlet.

For purposes of comparison, the 2017 to 2022 National Program approved by the Secretary of the Interior under the Obama administration on January 17, 2017 similarly included ten lease sales in the Gulf of Mexico region and one lease sale in the Cook Inlet Program Area offshore Alaska.  This time around, however, there are signs that the number of potential lease sales could be further decreased by the time the PFP is finalized and made ready for Secretary Haaland’s approval.

What’s Next?

The July 8, 2022 publication of the notice of availability of the Proposed Program and the companion draft Programmic Environmental Impact Statement (“PEIS”) has triggered a 90-day public comment period, until October 6, 2022, to make comments on the 11 potential lease sales currently pending.  During the public comment period, BOEM also plans to host four live virtual open house meetings to discuss aspects of the Proposed Program (times are provided in Eastern Daylight Time):

• August 23, 2022, 4:00-7:00 p.m.;
• August 25, 2022, 5:00-8:00 p.m.;
• August 29, 2022, 7:00-10:00 p.m.; and
• August 31, 2022, 8:00-11:00 p.m.

Following consideration of all comments received, BOEM will complete its three-step analysis with publication of the PFP and a final PEIS, at which point Secretary Haaland’s approval is required before the five-year program may be implemented.

The lease sales included in the PFP may be further reduced.  As disclosed in BOEM’s July 8, 2022 Federal Register notice of availability of the Proposed Program, the “size, timing, location, and number of potential lease sales in [the] Proposed Program will be robustly analyzed in the PFP and Final [PEIS] and may be further narrowed or excluded.”

As possible foreshadowing of reduced lease sales, the notice statement seeks “additional data sources, reasonable assumptions and methodological approaches” from the public that could assist BOEM in estimating how demand for OCS oil and gas could differ in the future under various climate pathways that would be required to reach net zero domestic greenhouse gas emissions by 2050, which is a priority for the Biden administration.  BOEM provides further context on this point, citing in its July 2022 Proposed Program summary report that, according to the International Energy Agency, a roadmap to net-zero emissions by 2050 for the global energy sector would require no new investment in fossil fuel supply projects.  Under this scenario, the Nation’s energy needs would need to be met by sources other than new OCS leasing, as oil and gas production from these new leases sold under the 2023 to 2028 National Program would likely not commence until some five to ten years after the leases are awarded.  Thus, without any future lease sales, OCS oil and gas production would continue only from already existing leases.  Consequently, BOEM reports that the long-term nature of OCS oil and gas development, where oil and gas development on a new lease can continue for decades, makes consideration of future climate pathways relevant to the Secretary’s determinations on how the OCS leasing program best meets the Nation’s energy needs.

While the DOI is obligated to implement the National Program, there is no requirement that actual lease sales be included in the program — which the DOI has chosen to emphasize.  In the July 1, 2022 Press Release, for example, the DOI unequivocally stated that in regards to the National Program, “[t]here is no requirement under [the OCS Lands Act] that mandates any sales in any locations . . . .” In the same vein, the Proposed Program states that there is a no-action alternative in the PEIS, and that the Proposed Program “retains the Secretary’s discretion at the PFP stage to determine that no OCS oil and gas lease sales in any planning area should be scheduled during the 2023–2028 period.”  The evaluation of a no-action (or no sales) alternative is a standard practice, so it is unclear why the DOI would feel compelled to emphasize, in multiple instances, the distinct possibility of eliminating all sales during the 2023 to 2028 National Program cycle.

Whether these comments made by the DOI herald an expectation of an even fewer potential lease sales when the PFP is published remains to be seen.  However, these statements call attention to the importance of the current public comment period, which runs through October 6, 2022. The value of the public comments is all the more emphasized by a statement made by Secretary Haaland, which was also included in the July 1, 2022 Press Release,

From Day One, President Biden and I have made clear our commitment to transition to a clean energy economy.  Today, we put forward an opportunity for the American people to consider and provide input on the future of offshore oil and gas leasing.  The time for the public to weigh in on our future is now.

Issues properly raised during the comment period must be addressed by the agency and may play a determinative role during the remaining rulemaking process.

¹ Notice of availability of the 2023–2028 Proposed Program was published in the Federal Register on July 8, 2022. See 87 Fed. Reg. 40,859 (July 8, 2022).

² 43 U.S.C. §§ 1331−1356b.