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President Biden’s Oil and Gas Leasing Freeze Reinstated by Court

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August 17, 2022

By Laurel Calkins and Jennifer A. Dlouhy (Bloomberg) —

President Joe Biden won temporary permission to once again pause energy leasing on federal lands and waters, after a US appeals court found a trial judge’s order against the moratorium too vague to review.

The court on Wednesday threw out the judge’s nationwide injunction forcing a restart of leasing from the Gulf of Mexico to Alaska and ordered the judge to revisit the issue. In the meantime, Biden’s pause stands.

The ruling came in a dispute between the administration and 13 energy-producing states led by Louisiana that sued to force Biden to resume leasing he paused a week after taking office. After the lower court last year issued its preliminary injunction against the leasing moratorium, the government appealed.

“We cannot reach the merits of the government’s challenge when we cannot ascertain from the record what conduct — an unwritten agency policy, a written policy outside the executive order, or the executive order itself — is enjoined,” the appeals court wrote on Wednesday. 

New Climate Law

It isn’t clear what immediate effect the ruling will have. Under the just-enacted Inflation Reduction Act, which provides hundreds of billions of dollars to fight climate change, the Interior Department is required to hold two auctions of oil and gas leases in the Gulf of Mexico.

The law also makes future renewable energy projects on federal lands and waters contingent on leasing. The government can issue new wind and solar rights only if it has recently sold new drilling rights too — a requirement designed to spur more fossil fuel leasing despite Biden’s campaign pledge to stop permitting such projects on public lands.

A spokeswoman for the Interior Department said it was reviewing the ruling. Cory Dennis, a spokesperson for Louisiana Attorney General Jeff Landry, didn’t respond to a request for comment.

“The practical impacts” of the ruling, and even of the case’s ultimate outcome, “may be minor” given those leasing mandates, said Erik Milito, president of the National Ocean Industries Association, which represents offshore oil and wind companies.

Energy Demand

Biden issued the moratorium so officials could examine the environmental impact of the leasing. Environmentalists have pressured the president to go further in reducing fossil fuel development on federal lands. 

Drew Caputo, vice president of litigation at the environmental advocacy group Earthjustice, called on the Interior Department to swiftly overhaul federal oil leasing.

“We are in a climate emergency and cannot afford any new leasing that will further entrench the fossil fuel industry’s hold on our country’s energy future,” Caputo said.

Rising energy demand and surging gasoline prices in an election year had prompted administration officials to urge oil companies to boost production from existing leases. Energy interests say the US can’t afford to curtail new development on public lands and waters, which collectively provide about a quarter of the nation’s crude oil supply.

Environmental Impact

Although new offshore production can take years to bring online, oil industry executives say the new auctions are needed to replenish reserves and offset natural declines at existing wells in the Gulf.

After the lower-court judge ordered the Interior Department to restart sales, environmental groups objected in a separate action. A Washington-based judge canceled the first of those auctions, for 1.7 million acres (688,000 hectares) in the Gulf, after finding the government had underestimated the climate consequences.

The 12 other states that sued the Biden administration are Alabama, Alaska, Arkansas, Georgia, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah and West Virginia.

The case is Louisiana v. Biden, 21-30505, 5th US Circuit Court of Appeals (New Orleans).

© 2022 Bloomberg L.P.

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