The Fight over the Biden Administration's Moratorium on New Federal Oil and Gas Leasing

President Biden kicked off his presidency with a slew of executive orders aimed at numerous policy goals, including much-discussed climate issues. One such executive order signed by Biden on January 27, 2021, is Executive Order 14008 (E.O. 14008), entitled “Tackling the Climate Crisis at Home and Abroad.” Section 208 of E.O. 14008 instructed the secretary of the interior to “pause new oil and natural gas leases on public lands or in offshore waters” (the moratorium) while the administration completes a comprehensive review of the leasing program overall. The review was intended to consider potential climate and other impacts of current federal oil and gas permitting/leasing practices and determine whether to take action to account for corresponding climate costs.

Even so, the plain text of E.O. 14008 did not envision impacting existing leases or drilling permits for valid, existing leases or restricting energy activities on private or state lands. Nevertheless, in February 2021, the Bureau of Ocean Energy Management canceled Lease Sale 257 in the Gulf of Mexico and halted Lease Sale 258 in Cook Inlet, Alaska, in accord with E.O. 14008. Additionally, the Bureau of Land Management postponed or canceled planned first- and second-quarter lease sales for federal lands in Colorado, Montana, Nevada, New Mexico, North Dakota, Oklahoma, South Dakota, and Utah, as well as states located east of the Mississippi River.

Litigation

In response to E.O. 14008 and the related actions by the federal agencies, Alabama, Alaska, Arkansas, Georgia, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah, and West Virginia (collectively, the Plaintiff States), filed suit in the U.S. District Court for the Western District of Louisiana on March 24, 2021, against Biden and various officials within the Department of the Interior (DOI). Complaint, State of Louisiana v. Biden, Case No. 2:21-cv-00778 (W.D. La. filed Mar. 24, 2021). The Plaintiff States alleged that the “pause” violated the U.S. Constitution, the Administrative Procedure Act (APA), the Outer Continental Shelf Lands Act (OCSLA), and the Mineral Leasing Act (MLA). Id. at 2. They alleged that, under the OCSLA, the DOI secretary must conduct lease sales in accordance with the five-year leasing program in effect at the time. The Plaintiff States further argued that, under the MLA, the DOI secretary must auction federal oil and gas leases at least quarterly in each state where eligible lands are available. They sought declaratory and injunctive relief, stating that the postponed sales were delayed without sufficient rationale because E.O. 14008 did not provide any basis to deviate from the statutory mandates of the OCSLA or the MLA. Furthermore, the Plaintiff States alleged that the moratorium is arbitrary and capricious under the APA and must be vacated. Accordingly, in their subsequent motion for a preliminary injunction, the Plaintiff States focused on alleged violations of the APA.

Preliminary Injunction

On June 15, 2021, Judge Doughty of the Western District of Louisiana dealt a blow to E.O. 14008 by issuing a nationwide preliminary injunction to prevent the implementation of E.O. 14008’s oil and gas leasing moratorium. Memorandum Ruling, State of Louisiana v. Biden, Case No. 2:21-cv-00778 (W.D. La. June 15, 2021).

With respect to the OCSLA, the court reasoned that because a recent case in the U.S. Court of Appeals for the Ninth Circuit found that a president does not have specific authority under the OCSLA to revoke a prior land withdrawal, there is a “substantial likelihood” that Biden, similarly, does not have authority to “pause” the offshore oil and gas leasing program. Id. at 5. Additionally, in this ruling, Doughty determined that the Biden administration likely violated the APA on a number of counts. The court held that because the OCSLA requires lease sales in accord with a five-year plan and because the MLA mandates quarterly lease sales, then the moratorium effectively would be an instance of the agencies “amending two Congressional statutes . . . which they do not have the authority to do.” Id. at 33. Furthermore, the court found that the moratorium is likely arbitrary and capricious because E.O. 14008 lacks a rationale or reasoning for the moratorium. In a similar vein, Doughty held that the fact that the agencies did not hold a notice and comment period prior to the cancellation of the leases likely constituted a violation of the APA. Finally, the court held that there was a likelihood that agency action was unlawfully withheld or unreasonably delayed because the OCSLA and the MLA required the lease sales to be held and the relevant agencies did not have the authority to contravene those mandates.

Regarding the likelihood of irreparable harm should the injunction not be granted, the court reasoned that the potential damage articulated by the Plaintiff States relating to the “loss of jobs in the oil and gas sector, higher gas prices, losses by local municipalities and governments, as well as damage to Plaintiff States’ econom[ies],” in addition to the possibility of reduced funding to Louisiana’s coastal recovery and restoration program, would be “difficult, if not impossible to recover,” especially considering the defendants’ sovereign immunity. Id. at 40, 41.

Ultimately, in considering the final two aspects for a preliminary injunction, the balance of equities and the public’s interest, Doughty concluded that the Plaintiff States are favored in these regards because the defendants would “simply be doing what they had already been doing” and “were statutorily required to do” under the OCSLA and the MLA. Id. at 42. In contrast, on the Plaintiff States’ side, “[m]illions and possibly billions of dollars are at stake. Local government funding, jobs for Plaintiff State workers, and funds for the restoration of Louisiana’s Coastline are at stake.” Id.

Response to Injunction

While the DOI was initially ambiguous regarding how it would respond to this nationwide injunction, it now appears that the injunction has had a significant impact on the DOI’s actions. Near the end of August 2021, the DOI announced that over 20,000 acres in states such as Colorado, Montana, New Mexico, North Dakota, Utah, and Wyoming potentially will be included in lease sales in the first quarter of 2022.

Thus, even though the defendants have appealed the preliminary injunction, it is unclear if the administration will continue its efforts to enforce or defend the moratorium or if it will decide to achieve its relevant policy goals in another manner. It is conceivable that this case could go the way of the Obama administration’s moratorium on federal oil and gas activities after the Deepwater Horizon incident, in that a suit was filed and an injunction achieved under the APA, leading the Obama administration to relinquish its moratorium.

Regardless, this case challenging E.O. 14008 demonstrates litigants’ ability to achieve some level of success using the APA to contest government action on this front.