The Federal government rescinded a 2012 agreement that slowed oil permitting on federal lands in California. The change could lead to increased leasing and oil production in the state. The agreement terminated on June 29, 2025.
The 2012 Memorandum of Understanding (MOU) between the Bureau of Land Management (BLM) and the California Geologic Energy Management Division (CalGEM) outlined state and federal collaboration on the regulation of oil production where both the federal and state agencies had jurisdiction. The 2012 MOU replaced a 2008 MOU, which delineated the roles and responsibilities of the two agencies during the permitting process. The 2012 MOU, however, allowed the state agency to delay new oil permits on federal property in California.
Four California Republican congressmen sent a letter to Interior Secretary Doug Burgum thanking him for rescinding the MOU. In the letter, representatives David Valadao, Vince Fong, Doug LaMalfa, and Tom McClintock stated that the MOU has “historically acted as a significant barrier to oil production in California, compounded by CalGEM’s persistent failure to meet its obligations regarding the timely issuance of permits for new well drilling.” This “dereliction of duty is jeopardizing our energy independence and undermining our economic stability at a time when the demand for reliable energy sources is critical.”
The congressmen argued that the “outdated nature of this MOU, in conjunction with CalGEM's current regulatory practices, has stifled energy production on federal lands within California, despite our state's vast untapped oil and gas resources.”
The letter noted that, before Governor Gavin Newsom took office, California oil and gas operators usually drilled more than 3,000 new oil and gas wells and produced more than 500,000 barrels of oil each year. That rate has fallen significantly since he took office, they stated, noting that “just 21 new oil and gas wells were permitted in 2024 and daily production of oil fell to under 325,000 barrels.”
“BLM continues to permit new wells in California; however, CalGEM has asserted that the state must conduct a dual permitting process despite the fact that no statute recognizes their role on federal land,” the letter stated. “Over the last 15 years, BLM has increasingly granted CalGEM the ability to review, delay, and affect permit applications on federal lands. This was accomplished through informal practices and agreements, not through any statutory changes. As a result, over 100 permits that have been fully approved by BLM languish awaiting CalGEM’s contrived permitting process.”
The congressman stated that the reduced production has reduced oil revenue in California by $9 billion per year, including a loss of $100 million in property tax revenue for Kern County each year.
Oil production on Federal lands in California is approximately 8% to 10% of the state’s total oil and natural gas production, according to the BLM. The agency manages nearly 600 producing oil and gas leases in California, and more than 95% of all Federal drilling occurs in Kern County.
In June, the BLM opened public comments on potential changes to a regional resource management plan for Federal lands in Central California that the Biden administration closed to new oil and gas leasing in 2022 pending environmental review.