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Federal judge strikes down Biden's pause on new oil, gas leases in federal areas

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Federal judge strikes down Biden's pause on new oil, gas leases in federal areas

A federal judge in Louisiana struck down the Biden administration's pause on new oil and gas leases on federal lands and waters, citing federal laws requiring the U.S. Department of the Interior to issue leases.

U.S. District Judge Terry Doughty ruled that Interior was "enjoined and restrained from implementing the pause of new oil and natural gas leases on public lands or in offshore waters," in a June 15 ruling. The decision will remain in effect for the entire nation until the case is resolved or a higher court issues another order.

President Joe Biden issued the pause in January as part of a sweeping executive order aimed at combatting the climate crisis. The Biden administration has said it is conducting a thorough review of the leasing program but did not offer a timeline for that evaluation. As a result, the agency canceled its first- and second-quarter 2021 lease sales.

The move drew significant outcry from the oil and gas industry and several Republican lawmakers who argued the moratorium would hurt local and state revenue streams and threaten interest in future production on federal lands. Among the various legal challenges, 13 states sued Biden, Interior Secretary Deb Haaland and various administration officials in March over the decision. Those states included Alabama, Alaska, Arkansas, Georgia, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah and West Virginia.

The Louisiana judge granted a preliminary injunction in favor of the plaintiffs, noting that the leasing pause violated the Mineral Leasing Act, or MLA, and Outer Continental Shelf Lands Act, or OCSLA. As a result, the states have a "substantial likelihood of success on the merits" of their claim, according to the ruling.

"Agency defendants have no authority to make significant revisions in OCSLA five-year plan without going through the procedure mandated by Congress," according to the filing. "MLA requires the DOI to hold lease sales, where eligible lands are available at lease quarterly. By pausing the leasing, the agencies are in effect amending two congressional statutes, OCSLA and MLA, which they do not have the authority to do."

The judge also chided the Biden administration for failing to offer an explanation for the pause aside from pointing to the need for a comprehensive leasing program review.

"If an administrative agency does not engage in reasoned decisionmaking, a court, under the [Administrative Procedure Act], shall hold unlawful and set aside agency action, findings and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," the judge wrote. "A command in an executive order does not exempt an agency from the APA's reasoned decisionmaking requirement."

An Interior spokesperson said the federal agency will comply with the decision.

"The Interior Department continues to work on an interim report that will include initial findings on the state of the federal conventional energy programs, as well as outline next steps and recommendations for the department and Congress to improve stewardship of public lands and waters, create jobs, and build a just and equitable energy future," the spokesperson said in an email.

While the ruling "exemplifies a headwind" for Biden's regulatory plans, ClearView Energy Partners LLC wrote in a June 15 note that "the victory may be short-lived."

"But with or without a pause by another means, the administration could still pursue broader reforms," the firm wrote. "We believe the Biden administration may hope to rewrite onshore Resource Management Plans and offshore five-year plans for oil and gas leasing to limit the available acreage they would be compelled to lease, and that Secretary Deb Haaland could use Interior's vast statutory authorities to cancel some or all sales in such new, de minimis plans."

The American Petroleum Institute welcomed the ruling, calling on Interior to resume new lease sales. The leasing pause threatened national security and economic recovery, API Vice President of Upstream Policy Kevin O'Scannlain said.

"Now is the time for the administration to put an end to this 'import more oil' policy that threatens American jobs and deprives state and local communities of much-needed revenue, all while likely increasing emissions and the risks of climate change," O'Scannlain said.

In response to cheers from the GOP, House Natural Resources Committee Chairman Raul Grijalva, D-Ariz., said the ruling demonstrated the need for Congress to update its federal leasing laws.

"We need to update our fossil fuel leasing laws across the board to establish a cleaner, more sustainable standard of use for our public resources, as this committee is already seeking to do," the chairman said. "Our economic and environmental future shouldn't be subject to rulings based on industry-funded science or opportunistic complaints that we didn't hear until President Biden was sworn into office."