Judge Lifts Biden Administration’s Pause on Oil and Gas Leases

(CN) — Crediting several red states’ claims they stand to lose millions in revenue and thousands of jobs from the Biden administration’s pause of new oil and gas leases on federal lands and offshore waters, a federal judge on Tuesday issued an injunction lifting the moratorium.

President Joe Biden instituted the lease suspension with a Jan. 27 executive order called “Tackling the Climate Crisis at Home and Abroad.”

It stated the pause would remain in place until the Interior Department's secretary did a comprehensive review of the potential climate impacts of federal oil and gas leasing practices, including analyzing whether to increase royalty payments owed to the government for coal, oil and gas extracted from public lands.

Joined by 12 other Republican-led states, Louisiana sued the Biden administration over the moratorium on March 24 in Lake Charles federal court.

The states claim the Biden administration bypassed public notice-and-comment periods and other steps required before lease sales can be postponed and said the delay in sales will ultimately hurt restoration efforts, as the money states use to restore land comes from such leases. 

Under the Mineral Leasing Act, 50% of revenues from oil and gas leases on federal lands go to the state in which the lease is located, and 40% goes to the Reclamation Fund, which pays for maintenance of irrigation systems in several Western states.

Alaska, also a plaintiff in the suit, is an outlier. It gets 90% of revenue from in-state leases on federal lands.

In a declaration backing the states, Republican Louisiana state Representative Jerome Zeringue said Louisiana’s $50 billion coastal restoration plan is funded primarily by revenue from offshore oil and gas leases, and the state had already taken a hit from the feds’ cancellation in February of a Gulf of Mexico lease sale.

The plaintiffs, all of whom have Republican attorneys general, are Louisiana, Alabama, Alaska, Arkansas, Georgia, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah and West Virginia.

Timothy Considine, a University of Wyoming economics professor, gave another prognosis on behalf of the challengers, bringing in states that are not involved in the litigation.

He calculated if a nationwide leasing moratorium were imposed from 2021 through 2025, New Mexico, Colorado, Utah, North Dakota, Montana, Alaska and Wyoming, which filed its own suit challenging the moratorium, would lose around $1.61 billion annually in revenue.

Considine also projected those same seven states would lose a combined average of 58,676 jobs per year if the leasing moratorium lasted through 2025.

The government countered with its own expert opinions.

Walter Cruickshank, a deputy director of the Bureau of Ocean Energy Management, which auctions off offshore drilling leases as part of the Interior Department, said despite the moratorium drilling in Gulf of Mexico leases has continued at the same levels as the last four years.

Mustafa Haque, an Interior Department petroleum engineer, said the states’ projections the pause would push them off a financial cliff were unfounded because 13.89 million acres of leased federal land is not yet producing oil and gas, so a temporary leasing pause would not cause a substantial drop off in production.

U.S. District Judge Terry Doughty, a Donald Trump appointee, sided with the states.

He found the Outer Continental Shelf Lands Act and Mineral Lease Act require the Interior Department to sell onshore and offshore oil and gas leases.

Furthermore, Doughty said, under OCSLA the federal government established a five-year offshore leasing program that started in 2017 after a thorough vetting process that included millions of comments from the public, approval by affected governors and final approval from the Interior Department’s secretary.

He said the Biden administration was wrong to postpone or cancel lease auctions for the Western Gulf of Mexico and Alaska’s Cook Inlet, included in the already approved five-year program.

“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. Neither OCSLA nor MLA gives the agency defendants authority to pause lease sales,” Doughty wrote in a 44-page order.

He also agreed with the states the Biden administration violated the Administrative Procedure Act by implementing the moratorium without putting it through a public notice-and-comment period required for substantive rules.

The states argued they would be irreparably injured from job losses, diminished revenue and higher gasoline prices should the moratorium stand.

And they wouldn’t be able to recoup those losses, they claimed, because the federal government is shielded from paying monetary damages by sovereign immunity.

Judge Doughty agreed. “Even though existing leases are proceeding, the fact that new oil and gas leases on federal lands and in federal waters are paused will ultimately result in losses to plaintiff states which they will likely not be able to recover,” he wrote.

Louisiana Attorney General Jeff Landry, who is leading the challenge, praised the ruling. “This is a victory not only for the rule of law, but also for the thousands of workers who produce affordable energy for Americans,” he said.

“We appreciate that federal courts have recognized President Biden is completely outside his authority in his attempt to shut down oil and gas leases on federal lands,” he added.

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