This client alert provides a brief overview of President Biden’s recent decision to expand the ban on offshore oil and gas leasing, outlining its background, scope, and potential impact on the energy industry.
Key Takeaways:
- President Biden has issued two Presidential Memoranda banning new offshore oil and gas leases across extensive areas of the U.S. coastline.
- The ban covers over 625 million acres, including the entire Atlantic and Pacific coastlines, the eastern Gulf of Mexico, and parts of Alaska's Northern Bering Sea.
- This action is the largest withdrawal of offshore areas from oil and gas leasing in U.S. history.
- Existing leases are not affected by this ban.
- President-elect Donald Trump indicated he will move quickly to revoke this ban.
Background:
On January 6, 2025, President Biden invoked Section 12(a) of the Outer Continental Shelf Lands Act (OCSLA) to take an executive action prohibiting new oil and gas leases in vast offshore areas. President Biden cited the environmental and economic risks associated with offshore drilling, particularly the threat to coastal communities, marine ecosystems, and local economies reliant on fishing, tourism, and recreation. This action builds on previous withdrawals, including prior protection of portions of the Northern Bering Sea and the Beaufort Sea in the U.S. Arctic Ocean.
Scope of the Drilling Ban:
The ban covers more than 625 million acres, representing the largest withdrawal in U.S. history. The affected areas include:
- The entire U.S. East Coast, from Canada to the southern tip of Florida, and the eastern Gulf of Mexico, totaling approximately 334 million acres.
- Nearly 250 million acres off the West Coast, encompassing the coastlines of California, Oregon, and Washington.
- An additional 44 million acres in Alaska's Northern Bering Sea, known as the Northern Bering Sea Climate Resilience Area.
Impact on the Industry:
While the ban significantly limits future oil and gas development in U.S. federal waters, it is important to note that existing leases remain unaffected. The ban will likely have a limited impact on current oil and gas production, as nearly all production occurs in the Western and Central Gulf of Mexico, which is not affected by the ban. Additionally, industry activity in the newly withdrawn areas has historically been minimal. However, the ban could hinder companies from developing new offshore oil and gas resources in the future. Notably, over 80% of 12 million acres already leased in this region remain untapped, indicating significant potential for continued production within existing lease areas. The administration emphasizes that U.S. oil production from federal lands and waters reached an all-time high in 2024, suggesting that the newly restricted areas have limited potential for fossil fuels and that their development would pose significant environmental risks.
The Trump administration indicated it will attempt to revoke this ban at the beginning of his administration, however, this reversal will likely face legal and procedural hurdles.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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