Bringing The Law

Abstract 

Like many of their fossil fuel producing counterparts, the Bakken states of North and South Dakota are fighting new federal regulations from the Biden Administration threatening fossil fuel development. As President Biden attempts to lead the country towards a carbon-neutral future, leaders in the Dakota’s are rallying support in their attempt to lead the states towards sustained revenue and prosperity through the development of the area’s natural fossil fuel resources. State leaders have realized that halting new oil and gas leasing on federal lands as well as the revoked permit for the Keystone XL Pipeline project will slash investment, cut jobs, drop wages, and pummel tax revenues throughout the region. As their fight continues, they are working to evaluate the impact of the climate related executive orders and enact legislation for the state to decide how their state’s resources should be developed.

Key Points

  • North and South Dakota were impacted by several federal executive orders in January 2021. The 60-day moratorium on federal leases and drilling permits, methane emissions, the social cost of greenhouse gasses, and indefinitely halting construction on the Keystone XL pipeline. Officials from both states say President Biden’s executive orders will slash investment, cut jobs, drop wages, and pummel tax revenues throughout the region.

  • President Biden signed 42 executive actions within his first two weeks in office. Kelly Armstrong (R-ND) stated that if the policies the president enacted regarding the Keystone XL and new energy leasing for federal lands are an indication for the next four years in office, “it is clear Biden will side with the radical climate activists over the needs of millions of Americans whose jobs will be jeopardized by more reckless federal overreach” [4]. 

  • Many in North and South Dakota are frustrated that rescinding the border crossing permit for the Keystone XL Pipeline was to fulfill a campaign promise and not to promote the nation’s environmental goals. Many aspects of the pipeline construction and operation had changed since its 2015 initial climate review. TC Energy Corporation announced the pipeline would achieve net zero emissions in 2023 when placed in operations, be fully powered by renewable energy by 2030, include Indiginous communities as equity owners, and finish construction with 100% union labor. Scrapping the project resulted in the termination of 1,000 existing jobs, eliminating 13,200 future U.S. and Canadian jobs, and erasing the projected reduction of 3 million tonnes equivalent of greenhouse gas emissions per year from pipeline transportation efficiencies.

  • North and South Dakota have taken legislative action against Biden’s executive orders at the local and state level. North Dakota Governor Doug Burgum has directed state agencies to assess the economic damage and identify opportunities to challenge the moratoriums on federal oil and gas leasing. Representatives in both states have also introduced bills to circumvent executive orders relating to the Keystone XL Pipeline and allow the state to exempt itself from certain presidential orders relating to pandemics, gun rights, or regulation of coal, oil or agriculture deemed unconstitutional.

  • While the legislative actions presented by North and South Dakota are long shots, the states recognize the potential long-term impacts Biden and his administration’s climate policies could have on the states revenue, job creation, and energy security. By joining forces with other energy dependent states, they are pursuing alternative avenues for protecting the jobs and economic livelihood at risk for residents of the Dakotas.

Introduction 

In his first week after being sworn into office, 46th President of the United States Joe Biden signed a series of executive orders focused on addressing climate change. More specifically, he signed orders targeting fossil fuel production. Several western state officials say President Biden’s executive order halting new oil and gas leasing on federal lands as well as the revoked permit for the Keystone XL Pipeline project will slash investment, cut jobs, drop wages, and pummel tax revenues throughout the region. To conclude our series investigating how oil and gas producing states are attempting to fight Biden’s actions, the Media Team at RARE PETRO is taking it up north into the Bakken states, where fossil fuels are a key pillar of their energy dependent economies, to see how North and South Dakota are fighting federal regulations. As President Biden attempts to lead the country towards a carbon-neutral future, leaders in North and South Dakota are rallying support in their attempt to lead their states towards sustained revenue and prosperity from the development of the area’s natural fossil fuel resources. Calculations show a harsh reality that in the president’s first term alone, gross domestic product across eight oil and gas producing states (Alaska, California, Colorado, Montana, New Mexico, North Dakota, and Utah) will decline by $33.5 billion, slash 58,786 jobs, $15 billion in wages, and $8.3 billion in state tax revenues [1]. Now as the Federal Government continues to restrict fossil fuel development throughout the country, state and local pushback has become increasingly prominent as Federal regulations severely impact tax revenues, job creation, and personal royalty income. 

Federal Actions

Many states have issues with the series of actions by the president from canceled lease sales to his executive orders on climate change, and the Dakota’s are no different. On January 20th, the Department of the Interior issued a 60-day moratorium on federal leases and drilling permits hours before Joe Biden released his first two executive orders on climate change. While the Dakota’s disagree with the actions taken by the Department of the Interior to halt the approval of drilling permits for two months, it was Joe Biden’s second executive order on climate change titled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis” that sent state officials into a frenzy. The order lays the groundwork for new climate guidelines including methane emissions, protection of Alaska’s Arctic National Wildlife Refuge, defining accounting measures for the social cost of greenhouse gasses, and revoking the Keystone XL pipeline permit [2]. The final portion of this executive order revokes Trump’s 2019 permit for TC Energy Corporation to construct, connect, operate, and maintain pipeline facilities at the Canadian-U.S. border. In addition to grievances over Biden’s second executive order, the Dakota’s have voiced their objections, along with the rest of their oil producing counterparts, to Executive Order 13990 signed by President Biden on January 27th. This order extended the ban on all federal leasing activities indefinitely “pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices” by the Secretary of the Interior [3]. Dakota state officials say President Joe Biden’s executive orders halting the Keystone XL Pipeline Project and new leases for oil and gas on federal lands will slash investment, cut jobs, drop wages, and pummel tax revenues throughout the region. 

Implications For The Dakotas 

The fact of the matter is: thousands of Dakotans rely on jobs supported by the energy industry to provide for their families. According to North Dakota Congressman Kelly Armstrong, “during his first two weeks in office, President Biden signed an unprecedented 42 executive actions, many of which are a direct assault on thousands of jobs in North Dakota’s oil and gas industry. Specifically, he rescinded a key permit for the Keystone XL Pipeline and implemented an [indefinite] moratorium on new energy leasing on all federal lands. If the policies he chose to enact during his first few days in office are any indication of his priorities for the next four years, it is clear Biden will side with the radical climate activists over the needs of millions of Americans whose jobs will be jeopardized by more reckless federal overreach” [4]. A main source of aggravation for many in both North and South Dakota was the fact that rescinding the border crossing permit for the Keystone XL Pipeline project was to fulfill a campaign promise and not to promote the nation’s environmental goals. 

Figure 1: Map of the United States Keystone XL Project Section [18]

Biden’s order officially revokes the March 2019 permit for the Keystone XL Pipeline Trump granted to TransCanada Keystone Pipeline, L.P. (now TC Energy Corporation) to construct, connect, operate, and maintain pipeline facilities at the international border of the United States and Canada [5]. The permit was revoked citing a 2015 review that noted the proposed pipeline would not serve U.S. interests and would undermine U.S. climate leadership by undercutting the credibility and influence of the United States in urging other countries to take ambitious climate action [5]. Ironically, API CEO, Mike Sommers, put it perfectly when announcing “revoking the Keystone XL pipeline is a significant step backwards both for environmental progress and our economic recovery” [6]. Why? The Keystone XL project has changed considerably since it was originally conceived, and this project was about to serve as the gold standard for responsible and sustainable energy infrastructure development. 

A week before the project’s cancellation, TC Energy Corporation announced they would achieve net zero emissions across the project’s operation once placed into service in 2023 and had committed “operations will be fully powered by renewable energy sources no later than 2030” [6]. In addition to its green initiatives, TC announced the signing of Indigenous communities as equity owners, and the project would be constructed under a Project Labor Agreement ensuring 100% of construction is done through union labor [6]. Following the successful implementation of this initiative, TC Energy expected to be among the top 10 corporate renewable sponsors in North America. Additionally, the project was projected to eliminate more than three million tonnes of CO2 equivalent emitted every year in greenhouse gas emissions – the equivalent of approximately 650,000 cars taken off the road [6]. Finally, as part of this announcement, TC Energy was expected to spur an investment of over $1.7 billion in communities along the Keystone XL footprint creating approximately 1.6 gigawatts of renewable electric capacity, and thousands of construction jobs in rural and Indigenous communities [6]. 

Figure 2: TC Energy Keystone XL Initiatives [19]

Pipelines are not only the safest and most reliable method for transporting oil to markets, but the initiatives announced ensured the Keystone XL would have the lowest environmental impact of any oil pipeline in existence. Therefore, the proposition from TC Energy was directly in line with Biden’s initiatives, yet the project was shut down on his first day as President of the United States. A key statement about the Keystone XL permit in his executive order is quoted as saying, “at home, we will combat the [environmental] crisis with an ambitious plan to build back better, designed to both reduce harmful emissions and create good clean-energy jobs” [5]. With the cancellation of the Keystone XL project, one of the largest green initiatives in 2021 has been eliminated forever, over 1,000 jobs were immediately terminated, the creation of an estimated 10,400 U.S. and 2,800 Canadian jobs throughout the pipeline’s construction will no longer occur, and nearly 48,000 tons of steel scrap will now be left behind to pollute the environment [7, 8, 9]. 

In addition to lost jobs, discontinued revenue streams, and moving backwards from environmental progress following the cancelation of the Keystone XL Project; leaders in both North and South Dakota worry what economic implications arise from an indefinite ban on new federal leases for fossil fuel development. North Dakota Governor Doug Burgum says Executive Order 13990 threatens American energy security, our nation’s economic growth, and the jobs of tens of thousands of North Dakotans [10]. While there are no concrete numbers quite yet, Governor Burgum understands the harsh implications of the President’s actions on his state and neighboring states and thus has called North Dakota’s state agencies to action.  

State Actions

Since thousands of Dakotans rely on jobs supported by the energy industry to provide for their families, leaders in both states have called local and state agencies to action. Starting with North Dakota, on Tuesday February 2nd, Governor Doug Burgum issued an executive order directing state agencies to assess the economic damages of Biden’s moratoriums on oil and gas leasing on federal lands, calling on them to “identify opportunities” to challenge the new federal actions [11]. By directing state cabinet agencies to determine the impacts of recent executive orders issued by the Biden administration in North Dakota, he will have firmer footing when the state steps up to fight the Biden Administration. That being said, Burgum’s executive order comes in the wake of moves by North Dakota’s congressional leadership to counter the Biden climate agenda. Each of the state’s senators and its congressman have introduced legislation in Washington aimed at counteracting the recent White House moves and plan to utilize the data called on by Doug Burgum as their ammunition. 

Representative Kelly Armstrong (R-ND) introduced a long shot bill in the House of Representatives on February 2nd to circumvent Biden’s action against the Keystone XL Project, legislation that would green light continued construction of the U.S. and Canadian pipeline without presidential approval [12]. Representative Armstrong along with House Republican Leader Kevin McCarthy (R-CA), House Republican Whip Steve Scalise (R-LA), and 83 other Republicans have officially introduced the Keystone XL Pipeline Construction and Jobs Preservation Act. Their argument lies in the fact the Keystone XL pipeline is expected to provide approximately 11,000 jobs and up to 60,000 indirect and supporting jobs, generate tax revenue, decrease reliance on foreign energy, and strengthen American national security and energy independence [12]. In a statement, Armstrong called Biden’s cancellation of the Keystone permit “an attack on the way of life for thousands of people who rely on energy production to feed their families” [11]. The bill is broadly supported by Republicans but faces an uphill battle in the Democratically-controlled House. 

In addition, North Dakota Representatives John Hoeven, Matthew Ruby, and Austen Schauer were among six total representatives alongside former North Dakota Senators Heidi Heitkamp, Jordan Kannianen, and Oley Larsen that introduced House Bill 1164 to the Legislative Assembly of North Dakota. The bill would allow North Dakota to exempt itself from applying certain presidential orders [13]. Under the bill, orders could go unenforced if the attorney general deems them unconstitutional relating to pandemics, gun rights, the regulation of coal, oil, or agriculture, and more. The purpose is to determine the constitutionality of the order and whether the state should seek an exemption from the application of the order or seek to have the order declared to be an unconstitutional exercise of legislative authority by the president [13]. But North Dakota is not the only state introducing House bills to review Biden’s actions. Legislation introduced in the South Dakota House of Representatives seeks to give the state’s attorney general the authority to review executive orders from President Joe Biden and potentially nullify any order deemed unconstitutional [14]. HB 1194 was introduced by Republican State Representative Aaron Aylward, and the legislation is described as an act “to authorize the review of certain executive orders issued by the President of the United States” [14]. The process to potentially nullify an executive order, which by nature bypasses congressional approval, begins with a review by the Executive Council of the Legislative Research Board, followed by a referral from the Council to the attorney general and the governor [13]. Once the referral has been made, the attorney general may examine the order to determine whether the state can seek an exemption or declare it unconstitutional [14]. If the bills are to pass, it would restore state-level decision making power relating to fossil fuel development back to the Dakotas that had previously been taken away by presidential executive orders. 

Figure 3: North Dakota’s Congressional Delegation [20]

In addition to moves made in the House, North Dakota Senators John Hoeven and Kevin Cramer signed onto companion legislation to bypass Biden’s order and move forward with Keystone XL construction. Senate Bill S.563 is a “bill to amend the Federal Reserve Act to prohibit certain financial service providers who deny fair access to financial services from using taxpayer funded discount window lending programs, and for other purposes” [14]. While it was only introduced to the Senate in early March, the bill adds to the laundry list of actions government officials in both North and South Dakota have recently performed in an effort to grant their states reprieve from the president’s actions. Luckily, they are not alone as they are part of a twenty-one state lawsuit filed against President Joe Biden over his controversial canceling of the Keystone XL pipeline [15]. The lawsuit, filed in the U.S. District Court for the Southern District of Texas, alleges that Biden has exceeded his presidential authority by canceling the pipeline on his first day in office, a move that even angered Canada. Although the Keystone lawsuit garnered plenty of support, neither North or South Dakota are involved in the most recent lawsuit against the executive branch. It includes thirteen states suing the Biden Administration in late March over suspending new oil and gas leases on federal land and water and attempts to reschedule canceled sales of offshore leases in the Gulf of Mexico, Alaska waters, and western states [16].

Conclusion

Energy production is at the heart of North Dakota’s economy and is a key pillar for South Dakota. President Biden’s actions on climate change and fossil fuel development threaten their wellbeing. These states rely on the income energy production generates and is why the Dakotas have directed state agencies to determine the fiscal, economic, and workforce impacts of this regulatory overreach. They have also joined forces with other energy dependent states to make sure their voices are heard by the current administration. As put by North Dakota Governor Doug Burgum, “we will pursue all available avenues to ensure that North Dakota remains a powerhouse for the nation and a beacon of innovation, entrepreneurship and responsible, clean energy development” [17]. Even though the Bakken states share the President’s goal for addressing climate change marked by U.S. innovation, skilled union workers, and powered by American energy, Biden’s executive order seems to be a step backwards for both the nation’s economic recovery and environmental progress. It threatens to cost thousands of jobs and much-needed revenue while increasing emissions by slowing the transition to cleaner fuels. Only innovation, not regulation, will provide a viable path forward for stable, low-cost, clean energy. Since the world will continue to demand more energy, fossil fuels will continue to be at the heart of the global energy mix. Even if all American greenhouse gas emissions ceased, emissions from developing nations would continue to increase. Therefore, there must be an increased focus on developing lower-carbon intensive infrastructure on a global scale to ensure the entire world, not only the developed world, is pursuing a path towards an environmentally sustainable future. In the meantime, energy producing states will continue to fight Biden’s executive orders that punish economic viability to satisfy political promises made on the campaign trail. 

References 

[1] https://news.bloombergtax.com/daily-tax-report/western-states-say-biden-oil-halt-is-crushing-blow-to-economy 

[2] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-public-health-and-environment-and-restoring-science-to-tackle-climate-crisis/ 

[3] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/ 

[4] https://www.grandforksherald.com/opinion/columns/6877104-Armstrong-President-Joe-Biden%E2%80%99s-first-actions-are-a-direct-assault-on-North-Dakota  

[5] https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-protecting-public-health-and-environment-and-restoring-science-to-tackle-climate-crisis/ 

[6] https://www.globenewswire.com/news-release/2021/01/18/2159705/0/en/Keystone-XL-commits-to-become-first-pipeline-to-be-fully-powered-by-renewable-energy.html 

[7] https://www.bnnbloomberg.ca/keystone-xl-s-demise-prompts-tc-energy-to-slash-1-000-jobs-1.1551961 

[8] https://www.firstcoastnews.com/article/news/verify/verify-yes-thousands-jobs-lost-after-biden-axes-keystone-xl-pipeline-but-not-as-many-as-these-posts-claim/77-8955155e-457d-4fc2-bbd9-35ea8df83ee3 

[9] https://www.bloomberg.com/news/articles/2021-01-23/cancelled-keystone-xl-pipeline-may-yield-48-000-tons-of-scrap 

[10] https://www.kfyrtv.com/2021/02/03/burgum-executive-order-on-biden-impact/ 

[11] https://www.grandforksherald.com/news/government-and-politics/6868916-North-Dakota-leaders-coalesce-against-President-Joe-Bidens-climate-orders

[12] https://napipelines.com/congressman-bill-reverse-keystone-xl-pipeline-decision/ 

[13] https://www.legis.nd.gov/assembly/67-2021/documents/21-0492-03000.pdf  

[14] https://www.lawofficer.com/south-dakota-legislation-seeks-to-nullify-biden-executive-orders/ 

[15] https://www.congress.gov/bill/117th-congress/senate-bill/563?s=2&r=19

[16] https://www.nbcmiami.com/news/national-international/13-states-sue-biden-admin-over-pause-on-oil-gas-leases-on-federal-land/2413359/ 

[17] https://www.kvrr.com/2021/02/02/burgum-orders-state-agencies-to-evaluate-impacts-of-biden-energy-directives/ 

[18] https://www.keystonexl.com/maps/

[19] https://www.keystonexl.com/ 

[20] https://www.nd.gov/government/federal-government

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