Legislative Outlook: Need for Reliable Energy in the U.S. More Important Now Than Ever

By Energy Workforce Government Affairs Team

The energy services and technology sector faces many critical policy issues that affect the more than 600,000 American workers who make up our Member Companies and workforce.

Energy Workforce is a strong advocate for our members by engaging with government at both the state and federal levels to elevate the industry and tell the story of the men and women of the sector who bring affordable, clean energy to the country and the world.

Federal Leasing Program

Since the beginning of the Biden Administration, the federal oil and gas leasing program has had its ups and downs. Given that the Biden Administration began with an executive order that paused new lease sales both offshore and onshore, as well as an administrative temporary pause on permitting, it should not come as a surprise that issues and concerns continue.

In June 2021, a federal judge in Louisiana blocked the executive order and instructed the Department of Interior to halt the moratorium and restart the federal lease sale process. In response to this ruling, the Department of Interior hosted Lease Sale 257 on November 17, 2021. In January, a federal judge in Washington held that this lease sale, which was conducted by following guidelines developed during the Trump Administration, did not follow proper NEPA guidelines. The Biden Administration has yet to either appeal this ruling or conduct a new NEPA analysis in order to attempt to satisfy the terms of the ruling. This deadlock means that the federal offshore leasing program is on hold.

In February, the industry appears to have been pushed back by a few more yards as the Biden Administration once again halted new leases and permits for federal oil and gas drilling. U.S. District Judge James Cain of the Western District of Louisiana issued an injunction preventing the Biden Administration from using the social cost of carbon formula in decisions around oil and gas drilling on public land or in rules governing fossil fuel emissions.

The ruling has consequences for a range of Biden Administration actions on climate change, with the Interior Department’s federal oil and gas leasing program being the most significant.

In an appeal filed by government attorneys on February 19, the Biden Administration argued Cain’s injunction left them with no choice but to institute a pause on all projects where the Administration was using this calculation.

Shortly after the ruling, the Interior Department issued a statement making it clear that the decision would delay any upcoming lease sales. “The Interior Department has assessed program components that incorporate the interim guidance on social cost of carbon analysis from the Interagency Working Group, and delays are expected in permitting and leasing for the oil and gas programs. The Department continues to move forward with reforms to address the significant shortcomings in the nation’s onshore and offshore oil and gas programs.”

Where does all this leave the U.S. energy industry that relies on these leases for future production? With increasing energy demand coming from all over the world, now is the absolute worst time for our country to be taking available energy off the table. It appears that the Department continues to look for legal and other avenues to slow and delay the restart of the federal leasing program. This delay grows ever more serious as the crisis in Europe threatens the energy supply of our friends and allies, making the need for reliable U.S. energy even more important.

Russian Invasion of Ukraine

Russia’s full-fledged invasion of Ukraine prompted the United States, in partnership with several European nations, to issue a series of sanctions on Russia. The first wave of sanctions included a halt to the Nord Stream 2 pipeline. This controversial pipeline, set to carry natural gas from Russia directly to Germany via the Baltic Sea, was seen as a threat to energy security throughout Europe. Germany announced it would suspend certification of the pipeline and the United States announced its own sanctions on the company Nord Stream 2 AG and its senior leadership.

While the halt of Nord Stream was intended to be an impactful move, it did not deter Russia from furthering its invasion into Ukraine. The United States and Europe, in keeping with their promises, swiftly announced additional sanction intended to cripple the Russian economy and force the military to abandon plans of a further of their invasion.

Sanctions against Russia, one of the top energy producers in the world, have already impacted the price and supply of oil and natural gas throughout the world. Russia’s aggressive actions in Ukraine are set make a much greater impact throughout the global markets, only compounding the current energy supply issues the world already faces.

“Build Back Better”

President Biden’s signature legislative package, “Build Back Better,” remains stalled in the Senate after a version passed the House last fall. With the Senate divided 50-50 between Democrats and Republicans and the GOP united against the package, every Democrat is needed to support its passage. Sen. Joe Manchin (D-W. Va) pulled out of negotiations with the White House after voicing concerns about the cost of the package, its climate provisions, its impact on the deficit and its effect on rising inflation.

The White House and President Biden suggest the proposal will pass later this year, but its scope is narrowing. Initially looking to address everything from climate change to prescription drugs, it is more likely that components of the bill will be broken off and passed individually. While Sen. Manchin has expressed a desire to break up some of the climate portions and attempt to pass them on their own, the prospect of this grows more unlikely as time goes on. Upcoming elections and a likely pivot of focus on the Russian invasion of Ukraine will likely dominate the political calendar for the time being.

Forced Labor Prevention in China

In December 2021, President Biden signed the “Uyghur Forced Labor Prevention Act,” a bill intended to combat the use of forced labor, specifically in the Xinjiang region of China. The bill is intended to punish China for their actions in Xinjiang against the Uyghur minority. The bill operates on the basic premise that goods produced in this region of China have a significant chance of being produced using forced labor, so it aims to keep any products or materials produced in the region out of the U.S. markets.

While U.S. companies strongly support this legislation in practice, keeping these products out of the market will be challenging. The Chinese government cannot be relied upon for transparency and has been known to use a variety of tactics to hide places of origin, making it difficult for U.S. companies that are based thousands of miles away to identify the origin of products imported from China.

The Department of Homeland Security, which is overseeing the implementation of this law, is partnering with industry to effectively enforce this legislation. In order to not exacerbate the current supply chain issues, DHS is seeking input from companies on issues such as origin verification techniques and unique features of specific raw materials from the region. Energy Workforce plans to offer input where appropriate, to join in the shared goal of compelling the Chinese government to end the horrific oppression of the Uyghur people.

REGROW Act

In November 2021, Congress passed legislation that will fund and support state-sponsored orphaned wells plugging programs starting in the summer of 2022. The Revive Economic Growth and Reclaim Orphaned Wells (REGROW) Act of 2021, which was integrated into the bipartisan infrastructure bill, will provide $4.275 billion for orphaned wells cleanup on state and private lands, $400 million for cleanup on private and tribal lands, and $32 million for research.

Energy Workforce & Technology Council, led by the Well Servicing Committee, is forming a working group to draft a best practices document to help support and educate the sector for plugging orphaned wells. The document will detail and emphasize safety standards and requirements that should be considered during the initial bidding process of all upcoming plug and abandon (P&A) projects.

Plugging orphaned oil and gas wells presents an opportunity to mitigate harmful emissions and provide an economic boost to communities transitioning away from fossil fuel economies. This working group will help ensure that all future P&A jobs are facilitated responsibly and safely. The group will also offer education and resources on how Member Companies can access the opportunities around the country for this work.

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Energy Workforce's Government Affairs team covers the critical issues that impact the energy sector and our Member Companies. To become involved, contact SVP Government Affairs Tim Tarpley at ttarpley@energyworkforce.org.