	Most Recent Developments

President Bush announced on June 18, 2008, that he would like to open areas of the Outer Continental Shelf (OCS) for oil and gas development currently under presidential and congressional moratoria (discussed in more detail below). But, on July 14, 2008, President Bush reversed his position and lifted the executive ban on the OCS imposed in 1990 by President George H.W. Bush. Congressional action approving the Continuing Appropriations Act for FY2009 ( P.L. 110 - 329 , enacted September 30, 2008), continued the funding of government activities through March 6, 2009, or until a regular appropriations bill is enacted, omitted language that provided for the congressional OCS moratoria along the Atlantic and Pacific coasts. 111-8 ) does not contain the OCS moratoria. Those areas may now be made available for preleasing, leasing, and related activity that could lead to oil and gas development. The moratorium, however, is still in place for most of the Eastern Gulf of Mexico which was placed off-limits statutorily until 2022 under the Gulf of Mexico Energy Security Act of 2006 (GOMESA) ( P.L. There are some indications in the 111 th Congress that a total OCS ban is unlikely, but the question may be, how much of the OCS remains open and available for oil and gas drilling. Separate legislation ( H.R. 1696 ) has been introduced to place MMS planning areas in the North Atlantic and Mid-Atlantic permanently off-limits to oil and gas leasing and development. Further, the Administration began planning its next five-year leasing program in August 2008 that would, if approved, be implemented as early as 2010 - two years ahead of schedule. The proposed new five-year program, introduced in January 2009, would supersede the current five-year leasing program from 2007-2012. A new five-year lease program, beginning in 2010, would allow the newly opened OCS areas to be offered in a lease sale sooner than if they remained on their current schedule. The Obama Administration extended the comment period on the proposed five-year leasing program 180 days beyond its required 60 days to assess the information they have on the OCS for energy development, including renewable energy development. In 1998, President Clinton extended the offshore leasing prohibition until 2012. Proponents of the moratoria contend that offshore drilling would pose unacceptable environmental risks and threaten coastal tourism industries, whereas supporters of expanded offshore leasing counter that more domestic oil and gas production is vital for the nation's energy security. Congress enacted the moratoria for each of fiscal years 1982-2008 through the annual Interior Appropriations bill. The permanent appropriations law ( P.L. Thus, when President Bush lifted the executive ban, it did not include the EGoM. Congressional debate over royalty relief for OCS oil and gas producers has been ongoing. Kerr McGee Oil and Gas Corp. (acquired by Anadarko Petroleum Corp. in August 2006) challenged MMS's assertion in a lawsuit that it had authority to place price thresholds in the DWRRA leases (1996-2000). A recent U.S. District Court decision , however, which was upheld by a 3-member panel in the U.S. Court of Appeals, ruled that the Secretary of the Interior had no authority to impose price thresholds for oil and gas leases held under the DWRRA.. Based on the court ruling, the lessees, therefore, should have the right to produce up to the specified volume of oil and gas in the lease, regardless of the price. In the inventory, the DOI provided mean estimates of 8.5 billion barrels of known oil reserves and 29.3 trillion cubic feet (tcf) of natural gas; 82% of the oil and 95% of the gas is in the Gulf of Mexico (GOM). 109 - 432 ).
Oil and gas leasing in the Outer Continental Shelf (OCS) has been an important issue in the debate over energy security and domestic energy resources. The Department of the Interior (DOI) released a comprehensive inventory of OCS resources in February 2006 that estimated reserves of 8.5 billion barrels of oil and 29.3 trillion cubic feet (tcf) of natural gas. Another 86 billion barrels of oil and 420 tcf of natural gas are classified as undiscovered resources. Congress had imposed moratoria on much of the OCS since 1982 through the annual Interior appropriation bills. A Presidential Directive issued by President George H.W. Bush in 1990 (and extended by President Clinton until 2012) also banned offshore oil and gas development in much of the OCS. Proponents of the moratoria contend that offshore drilling would pose unacceptable environmental risks and threaten coastal tourism industries. However, on June 18, 2008, President Bush announced his support for lifting the moratoria on offshore oil and gas development. However, President Bush said that he would not lift the executive ban until Congress acted to lift its ban first. But, on July 14, 2008, President Bush reversed his position and lifted the executive ban on the OCS before Congress acted.
Congressional action approving the Continuing Appropriations Act for FY2009 (P.L. 110-329, enacted September 30, 2008), continued the funding of government activities through March 6, 2009, or until a regular appropriations bill is enacted, omitted language that provided for the congressional OCS moratoria along the Atlantic and Pacific coasts. The permanent appropriations law (P.L. 111-8) does not contain the OCS moratoria. Those areas may now be made available for preleasing, leasing, and related activity that could lead to oil and gas development. The moratorium, however, is still in place for most of the Eastern Gulf of Mexico which was placed off-limits statutorily until 2022 under the Gulf of Mexico Energy Security Act of 2006 (GOMESA) (P.L. 109-432). There are some indications in the 111th Congress that a total OCS ban is unlikely, but the question may be, how much of the OCS remains open and available for oil and gas drilling. Separate legislation (H.R. 1696) has been introduced to place MMS planning areas in the North Atlantic and Mid-Atlantic permanently off-limits to oil and gas leasing and development.
Further, the Administration began planning its next five-year leasing program in August 2008 that would, if approved, be implemented as early as 2010 - two years ahead of schedule. The proposed new five-year program, introduced in January 2009, would supersede the current five-year leasing program from 2007-2012. A new five-year lease program, beginning in 2010, would allow the newly opened OCS areas to be offered in a lease sale sooner than if the MMS remained on their current schedule. The Obama Administration extended the comment period on the proposed five-year leasing program 180 days beyond its required 60 days to assess the information they have on the OCS for energy development, including renewable energy development.
Royalty relief, particularly for deep-water projects, has come under closer scrutiny since it was revealed in a February 2006 New York Times article that leases issued during 1998 and 1999 did not contain price thresholds for royalty relief (above which royalties apply) as part of the Deep Water Royalty Relief Act (DWRRA) of 1995 (leases issued between 1996-2000). However, Kerr McGee Oil and Gas Corp. (now Anadarko Petroleum Corp.) filed a lawsuit challenging the Minerals Management Service's (MMS) authority to impose price thresholds in the DWRRA leases. A recent U.S. District Court decision, which was upheld by a 3-member panel in the U.S. Court of Appeals, ruled that the Secretary of the Interior had no authority to impose price thresholds for oil and gas leases held under the DWRRA .