On June 15, 2021, the United States District Court for the Western District of Louisiana granted a nationwide preliminary injunction in favor of Louisiana and twelve other states which halted enforcement of the Biden administration’s prohibition on oil and gas leases on public lands and water memorialized in Section 208 of Executive Order 14008 (“E.O. 14008”). The court does not normally favor nationwide injunctions but found necessity in the interest of uniformity—government lease sales affect public lands and offshore waters countrywide.
E.O. 14008 prioritizes the climate crisis in foreign policy and planning at the cost of a significant reduction in U.S. oil and gas production by ordering the Department of the Interior (“DOI”) to pause granting new oil and natural gas leases on public lands or in offshore waters. The stated intent of the order was to allow for a “comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices” in light of “potential climate and other impacts associated with oil and gas activities.” The injunction issued by the District Court specifically prohibits the implementation of the executive order’s lease moratorium, which the court found violated the Administrative Procedure Act (“APA”), the Outer Continental Shelf Lands Act (“OCSLA”), and the Mineral Leasing Act (“MLA”). The federal government failed to provide public notice and comment periods for the lease moratorium and cancellations as required by the APA for all agency rulemaking. Additionally, the APA prohibits government agencies from acting contrary to existing law, acting arbitrarily and capriciously, and unreasonably withholding or delaying agency required activity – the MLA requires the DOI to hold lease sales quarterly, at a minimum, and the OCSLA requires the DOI to promote offshore development through a five-year leasing program under which leases are granted to the highest bidder. The court held that the MLA and OCSLA (each of which was subject to extensive public notice and comment) permit government cancellation or suspension of a lease sale to address problems with a specific lease, but stop short of granting the federal government the discretion to broadly cancel or suspend leases to conduct the comprehensive review contemplated by E. O. 14008. The court did not take issue with the performance of comprehensive reviews of government leases but declined to allow government agencies to “ignor[e] acts of Congress” in the process. The court also considered the likelihood of irreparable harm to the states if the E.O. was upheld, determining that the federal government’s sovereign immunity would prevent states from recovering for damages to their economies, including lost revenue and state funding. Avoiding these losses requires only that the federal government to adhere to the OCSLA and MLA as written by continuing to keep the lands available for development. The states of Louisiana, Texas, South Dakota, Wyoming, and others filed suit against multiple members of the Biden administration on April 22, 2021, requesting declaratory and injunctive relief from the executive order. On June 15, the preliminary injunction was issued, and the suit remains pending.
On July 7, 2021 the State of North Dakota sued the DOI and Bureau of Land Management (“BLM”) in the United States District Court for the Western Division District of North Dakota, claiming that the federal agencies illegally canceled oil and gas lease auctions in the state, costing North Dakota $80 million in lost revenue. As the nation’s second-largest producer of crude oil, the state of North Dakota stands to lose billions of revenue dollars if the executive order is upheld. North Dakota’s claims mirror those of the plaintiff states in the Western District case—that the suspension of new oil and gas leases on federal lands and offshore waters is unlawful because the DOI overstepped its authority and failed to follow legally required procedures when suspending the leases. North Dakota’s Attorney General, Wayne Stenehjem, issued a statement explaining that he filed the lawsuit to protect the state’s economy, workforce, and Constitutional right to control its natural resources, emphasizing North Dakota’s annual generation of around $94 million in royalty revenue from oil and gas production on leased federal and tribal lands. The lawsuit also seeks a forced rescheduling of two lease sales cancelled by the BLM this year pursuant to E.O. 14008.
On August 16, 2021, the American Petroleum Institute (“API”), joined by eleven industry trade groups, filed a lawsuit against the DOI in the Western District of Louisiana which also contends that the DOI’s “indefinite [leasing] pause” under E. O. 14008 fails to satisfy APA procedural requirements and ignores a congressional mandate requiring the federal agency to hold lease sales and provide a justification for substantial policy shifts. The API’s lawsuit alleges 8 causes of action against the DOI, including claims that the DOI violated federal laws and regulations ranging from the MLA and OCSLA to the Federal Land Policy and Management Act (“FLPMA”).
In response to the above, the DOI issued a statement on August 16, 2021, confirming the filing of an appeal of the Western District’s preliminary injunction. The DOI called the appeal “important and necessary” to the facilitation of the DOI’s role as a steward of federal resources, citing the federal leasing programs’ contribution to greenhouse emissions and the department’s responsibility to support environmental conservation. The DOI confirmed that it will comply with the injunction and proceed with leasing during the appeal, with the following caveats: the department will “continue to exercise its legal authority to do so while taking into account the leasing program’s ‘many deficiencies’ and will continue to conduct review and analysis to address necessary changes to the program to allow the department to meet the Biden administration’s goals for cutting greenhouse emissions.”
E.O. 14008 creates confusion and uncertainty for states like North Dakota which rely on the production of oil and gas to fuel their economies. Though the Western District of Louisiana’s injunction has temporarily blocked the suspension of federal oil and gas leases, it is preliminary only and the court has yet to issue a final ruling. Final decisions in the North Dakota and API lawsuits are also pending. In the interim, the Biden administration continues to develop plans to extend the ban. We will continue to monitor legal developments related to E.O. 14008.
Kuiper Law Firm, PLLC specializes in oil and gas issues; if you have any questions about the information in this article, or how it applies to you and your operations, do not hesitate to contact us.