Oklahoma’s Battle For Federal Lands


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Abstract

Shortly after being sworn into office, President Joe Biden signed an executive order to indefinitely ban lease sales for oil and gas development on all federal lands and offshore waters. Since energy production, namely oil and gas, is the backbone of Oklahoma’s economy, Oklahoma Governor Kevin Stitt went to bat with an executive order of his own in an attempt to overrule the order. While there is no certainty Oklahoma will be able to ignore or become exempt from Biden’s executive order, they can certainly let policy makers in Washington, D.C. know the problems that the new restrictions will cause.


Key Points 

  • The State of Oklahoma has recently pushed back against some of President Biden’s executive orders on energy policy. Oklahoma Governor Kevin Stitt signed his own executive order to protect the state’s resources from a “Washington power grab.”

  • The order by Governor Stitt recognizes that the state has reduced CO2 emissions from the power sector by 34% since 2005 compared to a 12% national average. It focuses on what the state believes to be Federal overreach and an inhibition of Oklahoma’s ability to develop its own natural resources while destroying jobs. Direction is given by the Governor for the state to utilize all lawful actions to challenge the Federal government relating to responsible resource development.

  • Every American president has issued at least one executive order, but they are not actual legislation. Executive orders do not require Congressional approval, and only a sitting U.S. President is able to overturn existing executive orders.

  • During Biden’s first week in office, he signed an executive order authorizing the Secretary of the Interior the ability to indefinitely extend the 60-day moratorium for drilling and leasing on Federal lands. This moratorium would have major economic implications on several Western states including New Mexico where revenue tied to the oil and gas industry accounts for ? of total state spending.

  • Under the Trump administration, there were several state level executive orders signed to circumvent policy implemented at the Federal level. When a ban on oil and gas exploration in the Outer Continental Shelf was lifted, Oregon enacted a state executive order to prevent pipelines from being installed in state waters. This effectively made offshore development in Oregon too cost-prohibitive to pursue.

  • Oklahoma will likely try to prove the Federal Government has infringed on a Constitutional right to exercise its ability for determining how to properly and responsibly develop natural resources. If that doesn’t work it could try to lessen the blow of Biden’s restrictions by creating incentives for development near Federal lands or reducing state royalty rates where applicable on acreage with both Federal and State leases. 

  • With oil and gas production historically being major components of Oklahoma’s economy, it is no wonder the state is pushing back. Oklahoma may not be able to ignore the recent energy policy enacted by the Federal Government, but it could find “loophole” legislation to protect the jobs and revenue that resource development creates for the state. Potential also exists that the Department of the Interior may not extend the Federal moratorium past 60 days. For now the state will focus on proving with sound science that hydrocarbon development in their state is in line with the nation’s new environmental goals and further Federal intervention is not necessary.

Introduction

An individual or group refusing to let another individual or group tell them what to do or how to act is not a new concept. After all, the United States arose from growing tensions between residents of Great Britain’s 13 North American colonies and the colonial government, which represented the British crown and led to the American Revolution. While not as dramatic as a declaration of independence, there are growing issues between recent rules imposed by the Federal Government and several states in the Union. One state that has recently spoken out about some of the Biden Administration’s executive orders is the State of Oklahoma. Shortly after being sworn into office, 46th President of the United States Joe Biden signed an executive order to indefinitely ban lease sales for oil and gas development on all federal lands and offshore waters. Since energy production, namely oil and gas, is the backbone of Oklahoma’s economy, Oklahoma Governor Kevin Stitt (R. OK) went to bat with an executive order of his own. President Biden is attempting to lead the country towards a carbon-neutral future while Governor Stitt is attempting to lead his state and those living in it towards sustained revenue and prosperity from the development of the area’s natural fossil fuel resources. As the Federal Government continues to restrict fossil fuel development throughout the country, the possibility of state and local pushback becomes more likely, especially if Federal regulations severely impact tax revenues, job creation, and personal royalty income. 


Executive Order In Question 

Oklahoma Governor Kevin Stitt signed an executive order criticizing the Biden Administration’s attack on energy producing states like Oklahoma in order to “protect Oklahoma’s oil and gas industry from a Washington power grab” [1]. Stitt’s order highlights Oklahoma’s role as a global leader in energy production as well as the state’s successful “all of the above” strategy that has reduced carbon dioxide emissions to levels below the national average while producing the most affordable energy in the United States [2]. Since 2005, Oklahoma has reduced carbon dioxide emissions from the power sector by more than 34% while the national average is 12% [2]. In addition, the order also criticizes the Biden Administration’s attack on energy producing states like Oklahoma, specifically citing the Federal overreach and dismissal of Oklahoma’s constitutional ability to properly determine how to best develop its own natural resources. After signing the order, Governor Stitt made his stance very clear by announcing “energy production is the backbone of Oklahoma’s economy. My executive order sends a clear message to the Biden Administration that threatening to destroy Oklahoma jobs and our constitutional ability to develop our oil and gas is unacceptable. We will not be passive in responding to systematic attacks on Oklahoma values” [1]. 

Filed February 8, 2021, Executive Order 2021-03 is strongly worded and to the point. The order highlights the fact that the oil and gas industry has provided the energy to power and feed the world while simultaneously having the cleanest and most affordable energy in the country [2]. Furthermore, Oklahoma has reduced CO2 emissions by 19% more than the national average since 2005 while still providing hundreds of thousands of jobs. In addition, the energy industry pays billions of dollars of taxes to state and local governments assisting schools, services, and infrastructure. The order argues that President Biden’s executive order 13990 is adverse to energy producers throughout the United States and is in contravention of Article II Section 2 and the 10th Amendment of the U.S. Constitution because it prevents Oklahoma from exercising its ability to properly determine how best to steward and develop its natural resources [2]. Governor Stitt therefore directs every state agency to utilize all lawful powers and methods to challenge any actions by the Federal Government that diminishes or destroys Oklahoma’s ability to encourage job growth and responsible development of their natural resources. 


The Power Struggle

Governor Stitts actions are bold and brazen, but do they matter? They most certainly show his resolve towards his constituents, but to determine if his actions will make a difference is another matter. To begin to answer this question, the concept of a Presidential Executive Order needs to be unpackaged. With the U.S. executive branch, one of the most common presidential documents is an executive order. Every American president has issued at least one, totaling more than 14,015 to date since George Washington took office in 1789 [3]. More importantly, an executive order is a “signed, written, and published directive from the President of the United States that manages operations of the Federal Government” [3]. They are numbered consecutively, so executive orders may be referenced by their assigned number, or their topic. For example, the first executive orders on climate change released by President Biden (covered in parts one, two, and three of the RP Biden Energy Policy Series) are 13990, 13992, and 14008 respectively [4]. Both executive orders and proclamations have the force of law, much like regulations issued by federal agencies, so they are codified under Title 3 of the Code of Federal Regulations, which is the formal collection of all of the rules and regulations issued by the executive branch and other federal agencies [4]. But executive orders are not legislation. They require no approval from Congress, and Congress cannot simply overturn them. Congress may pass legislation that might make it difficult, or even impossible, to carry out the order such as removing funding, but only a sitting U.S. President may overturn an existing executive order by issuing another executive order to that effect [4].

Figure 2: Federal Lands of Oklahoma [17] 

So what does this mean for Oklahoma? On inauguration day, acting U.S. Interior Secretary Scott de la Vega enacted a 60-day moratorium suspending new oil and gas leasing on all federal lands [5]. A week later on the newly coined Climate Day, Joe Biden went a step further by releasing an executive order allowing the Secretary of the Interior to indefinitely suspend all new “oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices in light of the Secretary of the Interior’s broad stewardship responsibilities over the public lands and in offshore waters, including potential climate and other impacts associated with oil and gas activities on public lands or in offshore waters” [6]. Therefore, a 60-day moratorium suspending new oil and gas leases on all federal lands and waters can now be extended indefinitely based on a decision from the Secretary of the Interior. The moratorium order can absolutely be uplifted pending a comprehensive environmental and climate review. This is where Governor Stitt’s Order begins to gain ground. Secretary of the Interior nominee, Deb Haaland, is to work with the Secretary of Agriculture nominee, Tom Vilsack, the Secretary of Commerce nominee, Gina Raimondo, and the Secretary of Energy nominee, Jennifer Granholm, to make an informed decision on the ban [7]. 

While many were selected by Biden for their climate forward thinking, not all of them are anti-oil and gas. For instance, Secretary of Energy nominee Jennifer Granholm noted, “I think it is important that as we develop fossil fuels that we also develop the technology to reduce greenhouse gas emissions” when asked about her support for the industry [8]. Conversely, the person Biden selected to implement his campaign to end new oil and gas leasing is Deb Halland who has said she is, “wholeheartedly against drilling and fracking on public lands” [9]. Interestingly enough she hails from New Mexico, the state with the nation’s most oil production on Federal lands. The oil and gas industry is the greatest economic contributor to the state, supporting more than 134,000 jobs and $16.6 billion in annual economic activity including $2.8 billion in fiscal year 2020, accounting for 33.5% of total state spending [10]. While New Mexico is a rabbit hole to be explored in a future periodical, the fact remains that these individuals have been instructed to work together to determine the best path forward for energy development “guided by the best science” [11]. Therefore, if Oklahoma can prove using “the best science” that their energy industry not only provides economic vitality to the state through job creation and responsible development while simultaneously leading down a road towards a cleaner tomorrow, they certainly have a shot of defeating Biden’s initiative. 


Worked In The Past

Oftentimes the best way to predict the future is to investigate the past. Utilizing that logic, several State Level Executive Orders that have attempted to overturn Federal ones may give insight into the potential success of Oklahoma Governor Kevin Stitt’s actions. A perfect example was the battle between President Trump and the State of Oregon. Just four months into office in 2017, President Trump signed Executive Order 13795 that declared the re-opening of America’s Outer Continental Shelf to offshore oil and gas exploration — a move that aimed to reverse Obama’s late-in-office invocation of section 12 (a) of the Outer Continental Shelf Lands Act of 1953 [12]. Obama’s order interpreted a 1953 law to effectively stop all drilling rigs from operating in American-controlled waters in the Arctic and Atlantic: both in state owned territorial areas up to three miles offshore and Federal waters up to 200 miles offshore [12]. At the time of Trump’s executive order, Oregon’s waters had an existing safeguard: a state bill signed into law in 2010 that prohibited offshore drilling in territorial seas. One problem was Oregon House Bill 3613 wrote its own expiration date of January 2, 2020, stoking fears in 2017 that a new generation of emboldened energy speculators might start poking around the Pacific Ocean [12]. On October 24, 2018, Oregon Governor Kate Brown enacted Executive Order 18-28 warning the feds that “several provisions in state and federal law authorize state agencies to object to federal leasing on the OCS,” but three months later Oregon Senate Bill 256 hit the floor that “repeals sunset on moratorium on oil, gas and sulfur leasing in territorial sea” [13]. Most importantly the bill closed a loophole that could foil the plans of any would-be driller off the Oregon coast by banning pipelines from being installed through state waters, making it extremely cost-prohibitive to bring oil to land. 

Figure 3: Territorial and Federal Offshore Map of Oregon [18]

What Oregon truly wanted was to get the same treatment the Sunshine State received with former U.S. Interior Secretary Ryan Zinke’s 2019–2024 National Outer Continental Shelf Oil and Gas Leasing Program. The program formalized the Trump Administration’s intent to offer new drilling and exploration leases up and down the Pacific coast—the first original leases on offer in the Pacific since 1984 [12]. But Zinke offered just one state, Florida, an exemption. After meeting with Florida Governor Rick Scott, Florida’s coasts were excluded from the leasing program until President Trump’s executive order solidified the motion. It extended the life of the moratorium by 10 years to prohibit drilling in federal waters off of Florida’s Gulf Coast until 2022 and also expanded the ban to include Florida, Georgia, and South Carolina’s Atlantic Coast [14]. The move brought outrage to Oregon and many other coastal states across the country that had long asked to be excluded from the new National Outer Continental Shelf Oil and Gas Leasing Program, so the state took action into its own hands. 

So what are the historic correlations to the situation in Oklahoma? The state is unhappy with how the Federal government targeted Federal lands and associated income and are utilizing their powers to support their state. Since Oregon was not exempt from Federal offshore drilling during the Trump administration they enacted state laws making the order too cost prohibitive to develop offshore assets around the state. Oklahoma is now moving in a similar direction by identifying potential issues and legislative workarounds to the Presidential Executive Order 13990. Stitt believes the order is in contravention of Article II Section 2 and the 10th Amendment of the U.S. Constitution as it prevents Oklahoma from exercising its ability to properly determine how best to steward and develop its natural resources. If Oklahoma can prove it is responsibly producing energy while still moving towards net-zero emissions and creating jobs, they might be able to get an exemption. If those tactics are unsuccessful, the state representatives may enact mandates or tax breaks clever enough to incentivize more energy production in the state. 


Conclusion

Oklahoma Governor Kevin Stitt is standing up to President Biden to protect the oil and gas industry in his state. Stitt is using the 10th Amendment as an argument that Oklahoma has the right to develop it’s natural resources in a way that best benefits its residents, not at the sole discretion of the Federal Government. In his executive order, Stitt directs state agencies to use “all civil methods and lawful powers to protect its 10th Amendment powers and challenge any actions by the Federal Government that would seek to diminish or destroy Oklahoma’s ability to encourage job growth and the responsible development of our natural resources within the energy industry” [2]. Furthermore, in a statement after signing the executive order Stitt said, “Energy production is the backbone of Oklahoma’s economy. My executive order sends a clear message to the Biden Administration that threatening to destroy Oklahoma jobs and our constitutional ability to develop our oil and gas is unacceptable. We will not be passive in responding to systematic attacks on Oklahoma values” [15]. 

With oil and gas production historically being major components of Oklahoma’s economy, it is no wonder the state is pushing back. While there is no certainty Oklahoma will be able to ignore or become exempt from Biden’s executive order, they can certainly let policy makers in Washington, D.C. know the problems that the new restrictions will cause. Potential also exists to enact “loophole” legislation that could circumvent the Federal order without breaking it to incentivize the state’s resource development. History has shown this has been done with other states and administrations. A prime example for this is legislation passed in Oregon that banned offshore drilling or pipeline construction in territorial seas making exploration in Federal offshore waters too cost prohibitive for development. If Oklahoma can do the opposite to make resource development cost effective, companies will continue to develop the energy infrastructure while striving towards emission reduction targets. This could be done through tax incentives, subsidies, or litigation against lost asset value, which may reduce the impacts from the Federal leasing ban without harming their state economy. Furthermore, the possibility exists that after “completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices,” the Secretary of the Interior might not find any issues and the Federal moratorium will be lifted. While this scenario is unlikely given their environmental fortitude and petroleum disdain, the agencies are required to utilize the best possible science. If the state of Oklahoma can prove with sound science that hydrocarbon development in their state is in line with the nation’s new environmental goals, there is a chance they may become exempt like Florida during the Trump administration. While a state by state exemption does not seem very likely, Oklahoma certainly has a fighting chance in their battle against a federal leasing ban. 


References

[1] https://www.governor.ok.gov/articles/press_releases/governor-stitt-signs-executive-order-to-protect-ok 

[2] https://www.sos.ok.gov/documents/executive/1980.pdf?fbclid=IwAR18ci9bBeWvTkOm8HHg0aVCsFJYCg3vx5meAZR5_siQe5b_e4fYvt3TFXU 

[3] https://www.americanbar.org/groups/public_education/publications/teaching-legal-docs/what-is-an-executive-order-/ 

[4] https://www.federalregister.gov/presidential-documents/executive-orders/joe-biden/2021 

[5] https://www.cnn.com/2021/01/27/business/fracking-ban-biden-federal-leasing/index.html?utm_source=morning_brew  

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

[7] https://en.wikipedia.org/wiki/Political_appointments_by_Joe_Biden 

[8] https://www.npr.org/sections/president-biden-takes-office/2021/01/27/960852859/energy-nominee-jennifer-granholm-stresses-climate-action-and-jobs  

[9] https://www.bloomberg.com/news/articles/2020-12-17/biden-s-latest-climate-nominees-have-fought-fossil-fuel-projects?sref=h5EZFUoq 

[10] https://www.krwg.org/post/oil-and-natural-gas-contributed-28-billion-new-mexico-budget-fy-2020 

[11] 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/ 

[12] https://www.pdxmonthly.com/travel-and-outdoors/2019/04/oregon-bans-offshore-drilling-again 

[13] https://olis.oregonlegislature.gov/liz/2019R1/Measures/Overview/SB256 

[14] https://www.tampabay.com/florida-politics/buzz/2020/09/08/trump-expands-ban-on-new-florida-offshore-drilling-sites/ 

[15] http://mccarvillereport.com/archives/54629 

[16] https://www.eia.gov/environment/emissions/state/

[17] http://www.mymaps.com/okatlas/geopolitical/federal/federalland.htm 

[18] https://www.oregonocean.info/index.php/cs-reg-road-map

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