Trump's offshore order at 1: Most changes still to come

In the year since President Trump launched his "America-First" offshore energy strategy, federal officials have been slow to implement many of the White House’s recommendations for deregulating oil and gas production in the nation’s oceans.

Interior Secretary Ryan Zinke earlier this year took a major step toward that goal with his controversial announcement that the Bureau of Ocean Energy Management would open more than 90 percent of the U.S. outer continental shelf to oil and gas leasing. BOEM’s sister agency, the Bureau of Safety and Environmental Enforcement, is expected to unveil changes to an Obama-era offshore safety rule this week.

But BOEM, BSEE and other agencies mentioned in the Trump administration’s offshore executive order, which celebrated its anniversary Saturday, have yet to publicly announce developments on nearly all other provisions of the directive.

"The process of deregulating or modifying regulations is slow and torturous," said Kevin Book, managing director of research for ClearView Energy Partners LLC.

That’s particularly true offshore where work sites are remote, equipment is expensive and operations are complicated, he said. In comparison, the Trump administration has acted swiftly on its deregulatory targets for onshore production (Energywire, March 28).

Interior’s onshore scorecard includes the rescission of two regulations governing oil and gas valuation and hydraulic fracturing, as well as a proposal to significantly rewrite guidance for methane emissions from energy operations on federal and tribal lands.

"There’s only so much that Interior can do at one time," said Randall Luthi, president of the National Ocean Industries Association, which has supported the administration’s offshore deregulatory agenda.

As they have with Trump’s onshore energy actions, environmental groups have pledged to wage a legal battle against any efforts to increase access for offshore drillers.

"We will fight him at every turn, and we won’t hesitate to take the Trump administration to court should it shortcut bedrock environmental laws," said Earthjustice attorney Erik Grafe.

Here’s where the Trump administration’s "America-First" offshore energy strategy currently stands.

5-year plan

The banner achievement thus far from last year’s order has been Interior’s decision to hold oil and gas lease sales in most of the U.S. outer continental shelf between 2019 and 2024.

If approved, the revisions would reverse the Obama administration’s move to close nearly all federal waters to exploration and development.

"Our agency has worked diligently to achieve the president’s and Secretary Zinke’s ‘all-of-the-above’ strategy for energy dominance, and we continue to make significant progress," said BOEM acting Director Walter Cruickshank. "Safe, reliable and affordable energy is critical to U.S. economic growth and prosperity, as well as to national security. This is what drives us to continuously strive to do our best for the American taxpayer."

The draft proposed plan released by Trump’s Interior in January has been opposed by nearly every coastal state outside the Gulf of Mexico, where offshore drilling is already taking place. An interim draft is due this fall, and a final plan is expected next year.

Zinke has indicated that subsequent drafts of the 2019-2024 plan could shrink the acreage available to oil and gas operators.

Well control rule

BSEE is expected to announce revisions this week to a key rule drafted in the aftermath of the 2010 Deepwater Horizon explosion and oil spill in the Gulf of Mexico.

The proposed changes to the 2016 blowout preventer systems and well control rule will appear in an upcoming edition of the Federal Register, BSEE revealed last week (E&E News PM, April 27).

"BSEE is cautiously optimistic as we sense enthusiasm expressed by industry officials about increased activity in the Gulf of Mexico that stems from treating them as partners while holding them accountable for oil and gas operations," said bureau spokeswoman Karla Marshall.

BSEE so far has provided few specifics on the exact changes it will propose.

Environmental advocates have promised to keep a close eye on the revisions and plan to stay active in the rulemaking process. This week’s Federal Register notice will mark the start of a 60-day comment period on the rule rewrite.

"History has already taught us the lesson that when the oil industry drills, it spills," said Steve Mashuda, managing attorney for oceans at Earthjustice. "The administration’s attempt to erode commonsense safety and environmental protections designed to prevent another tragedy on the scale of Deepwater Horizon is deeply troubling."

Production safety systems rule

Federal officials have also changed several rules, policies and procedures that aren’t specifically mentioned in the offshore order.

Among those regulations is BSEE’s production safety systems rule. Interior last year floated a batch of changes to the 2016 regulation. Experts largely regarded the revisions as immaterial and warned that changes to the well control rule would be far more consequential (Energywire, Jan. 30).

As a result of the executive order, BSEE has also begun a risk-based inspection program, increased physical inspection times and launched a new quality assurance process for permit reviews, according to information provided by the bureau.

Financial assurance framework

In his order, Trump directed BOEM to revisit its financial assurance framework, which could have major implications for offshore operators.

Adjustments to the framework could affect the cost of decommissioning rigs in the outer continental shelf, said Book of ClearView Energy Partners.

"It’s no small thing," he said.

While BOEM has concluded that a new framework is necessary, it has yet to propose a new rulemaking.

Arctic rule

The offshore order could also prompt changes to BSEE’s 2016 Arctic drilling rule, which introduced more stringent environmental standards for oil production in the world’s northernmost waters.

BSEE said it is currently working to determine whether revisions are warranted.

The Trump administration has demonstrated an appetite for opening Alaska’s lands and waters to oil and gas development. The offshore order also revoked an Obama-era withdrawal of Arctic waters, and the draft proposed five-year leasing strategy would open all but one section of Alaska’s oceans to energy operations.

See below for an annotated version of the executive order, or click here for a PDF version.

By the authority vested in me as President by the Constitution and the laws of the United States of America, including the Outer Continental Shelf Lands Act, 43 U.S.C. 1331 et seq., and in order to maintain global leadership in energy innovation, exploration, and production, it is hereby ordered as follows:

Section 1. Findings. America must put the energy needs of American families and businesses first and continue implementing a plan that ensures energy security and economic vitality for decades to come. The energy and minerals produced from lands and waters under Federal management are important to a vibrant economy and to our national security. Increased domestic energy production on Federal lands and waters strengthens the Nation’s security and reduces reliance on imported energy. Moreover, low energy prices, driven by an increased American energy supply, will benefit American families and help reinvigorate American manufacturing and job growth. Finally, because the Department of Defense is one of the largest consumers of energy in the United States, domestic energy production also improves our Nation’s military readiness.

The order defines the offshore applications of President Trump’s March 2017 executive order “Promoting Energy Independence and Economic Growth.”

Sec. 2. Policy. It shall be the policy of the United States to encourage energy exploration and production, including on the Outer Continental Shelf, in order to maintain the Nation’s position as a global energy leader and foster energy security and resilience for the benefit of the American people, while ensuring that any such activity is safe and environmentally responsible.

This clause sets the stage for revisions to the 2017-2022 National OCS program. The draft proposed 2019-2024 program would open nearly all of the outer continental shelf to drilling.

Sec. 3.Implementing an America-First Offshore Energy Strategy. To carry out the policy set forth in section 2 of this order, the Secretary of the Interior shall: (a) as appropriate and consistent with applicable law, including the proce-dures set forth in section 1344 of title 43, United States Code, in consultation with the Secretary of Defense, give full consideration to revising the schedule of proposed oil and gas lease sales, as described in that section, so that it includes, but is not limited to, annual lease sales, to the maximum extent permitted by law, in each of the following Outer Continental Shelf Planning Areas, as designated by the Bureau of Ocean Energy Management (BOEM) (Planning Areas): Western Gulf of Mexico, Central Gulf of Mexico, Chukchi Sea, Beaufort Sea, Cook Inlet, Mid-Atlantic, and South Atlantic;

The 2019-2024 program would go beyond these regions to include the North Atlantic, eastern Gulf of Mexico (after 2022), the Pacific and nearly all remaining areas off of Alaska’s coast.

(b) ensure that any revisions made pursuant to subsection (a) of this section do not hinder or affect ongoing lease sales currently scheduled as part of the 2017–2022 Outer Continental Shelf Oil and Gas Leasing Proposed Final Program, as published on November 18, 2016; and (c) develop and implement, in coordination with the Secretary of Commerce and to the maximum extent permitted by law, a streamlined permitting approach for privately funded seismic data research and collection aimed at expeditiously determining the offshore energy resource potential of the United States within the Planning Areas.

Sec. 4. Responsible Planning for Future Offshore Energy Potential. (a) The Secretary of Commerce shall, unless expressly required otherwise, refrain from designating or expanding any National Marine Sanctuary under the National Marine Sanctuaries Act, 16 U.S.C. 1431 et seq., unless the sanctuary designation or expansion proposal includes a timely, full accounting from the Department of the Interior of any energy or mineral resource potential within the designated area—including offshore energy from wind, oil, natural gas, methane hydrates, and any other sources that the Secretary of Commerce deems appropriate—and the potential impact the proposed designation or expansion will have on the development of those resources. The Secretary of the Interior shall provide any such accounting within 60 days of receiving a notification of intent to propose any such National Marine Sanctuary designation or expansion from the Secretary of Commerce.

(b) The Secretary of Commerce, in consultation with the Secretary of Defense, the Secretary of the Interior, and the Secretary of Homeland Security, shall conduct a review of all designations and expansions of National Marine Sanctuaries, and of all designations and expansions of Marine National Monuments under the Antiquities Act of 1906, recently recodified at sections 320301 to 320303 of title 54, United States Code, designated or expanded within the 10-year period prior to the date of this order. (i) The review under this subsection shall include:

(A) an analysis of the acreage affected and an analysis of the budgetary impacts of the costs of managing each National Marine Sanctuary or Marine National Monument designation or expansion; (B) an analysis of the adequacy of any required Federal, State, and tribal consultations conducted before the designations or expansions; and

(C) the opportunity costs associated with potential energy and mineral exploration and production from the Outer Continental Shelf, in addition to any impacts on production in the adjacent region.

The Interior Department’s review of five marine monuments resulted in recommendations to amend three sites — Northeast Canyons and Seamounts, Pacific Remote Islands, and Rose Atoll — for commercial fishing purposes. Interior also reviewed, but did not recommend changes to, the Marianas Trench and Papahānaumokuākea marine national monuments. The recommendations did not specifically mention energy potential within the monuments.

(ii) Within 180 days of the date of this order, the Secretary of Commerce, in consultation with the Secretary of Defense and the Secretary of the Interior, shall report the results of the review under this subsection

The Commerce Department’s review has yet to be released to the public.

(c) To further streamline existing regulatory authorities, Executive Order 13754 of December 9, 2016 (Northern Bering Sea Climate Resilience), is hereby revoked.

With Trump’s offshore directive, the 2016 order withdrawing certain areas of the Arctic out of consideration for offshore drilling was revoked.

to the Director of the Office of Management and Budget, the Chairman of the Council on Environmental Quality, and the Assistant to the President for Economic Policy.

Sec. 5. Modification of the Withdrawal of Areas of the Outer Continental Shelf from Leasing Disposition. The body text in each of the memoranda of withdrawal from disposition by leasing of the United States Outer Conti-nental Shelf issued on December 20, 2016, January 27, 2015, and July 14, 2008, is modified to read, in its entirety, as follows: ‘‘Under the authority vested in me as President of the United States, including section 12(a) of the Outer Continental Shelf Lands Act, 43 U.S.C. 1341(a), I hereby withdraw from disposition by leasing, for a time period without specific expiration, those areas of the Outer Continental Shelf des-ignated as of July 14, 2008, as Marine Sanctuaries under the Marine Protec-tion, Research, and Sanctuaries Act of 1972, 16 U.S.C. 1431–1434, 33 U.S.C. 1401 et seq.’’ Nothing in the withdrawal under this section affects any rights under existing leases in the affected areas.

Sec. 6. Reconsideration of Notice to Lessees and Financial Assurance Regu-latory Review. The Secretary of the Interior shall direct the Director of BOEM to take all necessary steps consistent with law to review BOEM’s Notice to Lessees No. 2016–N01 of September 12, 2016 (Notice to Lessees and Operators of Federal Oil and Gas, and Sulfur Leases, and Holders of Pipeline Right-of-Way and Right-of-Use and Easement Grants in the Outer Continental Shelf), and determine whether modifications are necessary, and if so, to what extent, to ensure operator compliance with lease terms while minimizing unnecessary regulatory burdens.

BOEM has determined that a new financial assurance framework is warranted, but the bureau has yet to launch a new rulemaking.

The Secretary of the Interior shall also review BOEM’s financial assurance regulatory policy to determine the extent to which additional regulation is necessary.

Sec. 7. Reconsideration of Well Control Rule. The Secretary of the Interior shall review the Final Rule of the Bureau of Safety and Environmental Enforcement (BSEE) entitled ‘‘Oil and Gas and Sulfur Operations in the Outer Continental Shelf-Blowout Preventer Systems and Well Control,’’ 81 Fed. Reg. 25888 (April 29, 2016), for consistency with the policy set forth in section 2 of this order, and shall publish for notice and comment a proposed rule revising that rule, if appropriate and as consistent with law.

BSEE will this week publish proposed revisions to the 2016 Well Control Rule in the
Federal Register.

The Secretary of the Interior shall also take all appropriate action to lawfully revise any related rules and guidance for consistency with the policy set forth in section 2 of this order. Additionally, the Secretary of the Interior shall review BSEE’s regulatory regime for offshore operators to determine the extent to which additional regulation is necessary.

Sec. 8. Reconsideration of Proposed Offshore Air Rule. The Secretary of the Interior shall take all steps necessary to review BOEM’s Proposed Rule entitled ‘‘Air Quality Control, Reporting, and Compliance,’’ 81 Fed. Reg. 19718 (April 5, 2016), along with any related rules and guidance, and, if appropriate, shall, as soon as practicable and consistent with law, consider whether the proposed rule, and any related rules and guidance, should be revised or withdrawn.

BOEM has submitted the results of its review to Interior leadership. The department is currently considering next steps.

Sec. 9. Expedited Consideration of Incidental Harassment Authorizations, Incidental-Take, and Seismic Survey Permits. The Secretary of the Interior and the Secretary of Commerce shall, to the maximum extent permitted by law, expedite all stages of consideration of Incidental Take Authorization requests, including Incidental Harassment Authorizations and Letters of Authorization, and Seismic Survey permit applications under the Outer Continental Shelf Lands Act, 43 U.S.C. 1331 et seq., and the Marine Mammal Protection Act, 16 U.S.C. 1361 et seq.

BOEM and NOAA Fisheries are collaborating on this effort and expect to have recommendations in the near future.

Sec. 10. Review of National Oceanic and Atmospheric Administration (NOAA) Technical Memorandum NMFS–OPR–55. The Secretary of Commerce shall review NOAA’s Technical Memorandum NMFS–OPR–55 of July 2016 (Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing) for consistency with the policy set forth in section 2 of this order and, after consultation with the appropriate Federal agencies, take all steps permitted by law to rescind or revise that guidance, if appropriate.

The Commerce Department has yet to publicly announce the results of this review.

Sec. 11. Review of Offshore Arctic Drilling Rule. The Secretary of the Interior shall immediately take all steps necessary to review the Final Rule entitled ‘‘Oil and Gas and Sulfur Operations on the Outer Continental Shelf—Requirements for Exploratory Drilling on the Arctic Outer Continental Shelf,’’ 81 Fed. Reg. 46478 (July 15, 2016), and, if appropriate, shall, as soon as practicable and consistent with law, publish for notice and comment a proposed rule suspending, revising, or rescinding this rule.

While BSEE has so far focused on other regulatory changes, the bureau is reviewing the provisions of the Arctic Rule. BSEE officials are consulting with Alaska Natives and other stakeholders to determine proposed changes to the rule.

Sec. 12. Definition. As used in this order, ‘‘Outer Continental Shelf Planning Areas, as designated by the Bureau of Ocean Energy Management’’ means those areas delineated in the diagrams on pages S–5 and S–8 of the 2017– 2022 Outer Continental Shelf Oil and Gas Leasing Draft Proposed Program, as published by the BOEM in January 2015, with the exception of any buffer zones included in such planning documents.

Sec. 13. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department or agency, or the head thereof; or (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations. (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.