Editorial: Steady as she goes

July 5, 2021

A federal judge in Louisiana on June 15 blocked the Biden Administration’s indefinite pause on new leases to drill for oil and gas on public lands and ordered that lease sales continue. Judge Terry Doughty, US District Court for the Western District of Louisiana, granted a preliminary injunction against the ban requested in March by 13 attorneys general who asserted that the executive branch had circumvented legal requirements such as public comment periods in imposing it.

Judge Doughty ruled that existing statues require that lease sales continue while the case’s arguments are heard and enjoined the Department of the Interior from implementing the pause. Federal lawyers have argued that, though established by law, the lease sales aren’t required by law, that the Secretary of the Interior has broad discretion in leasing matters, and that public notice and comment periods don’t apply to the suspension.

The Interior Department said it would “comply with the decision,” meaning lease sales will likely resume. An interim report from Interior on the program’s future is expected in third-quarter 2021. The Biden Administration is likely to appeal Judge Doughty’s ruling in the meantime.

“Millions and possibly billions of dollars are at stake,” Doughty wrote in explaining the states’ need for relief. “Local government funding, jobs for plaintiff-state workers, and funds for the restoration of Louisiana’s coastline are at stake. Plaintiff states have a reliance interest in the proceeds derived from offshore and on land oil and gas lease sales.”

Interior has yet to make it clear, however, when (or even if) it will resume lease sales. In June 23 testimony before Congress, Interior Sec. Deb Haaland said simply that the department’s lawyers were reviewing the decision, while repeating her assertion that Interior planned to abide by it.

In direct questioning regarding reinstatement of an offshore Gulf of Mexico sale that had been expected in March but was cancelled, she noted that the Federal Register hadn’t yet published a notice that the sale was back on while promising a detailed answer at some point in the future. The Bureau of Ocean Energy Management rescinded Gulf of Mexico Oil and Gas Lease Sale 257 on Feb. 12 in response to Biden’s January executive order banning new sales on federal land or waters.

Differing interests

The suit in response to these actions was filed by Louisiana’s attorney general and the court’s injunction was well received there. New Mexico, though not a party to the suit, had cautioned the Biden Administration that the ban on new leases would hurt the state, which draws one-third of its revenues from oil and gas, half of which is produced on federal land. New Mexico had the third-highest oil production in the country in 2020, nearly 380,000 b/d.

The state government’s stance was echoed by the Eddy County Commission, positioned at the epicenter of New Mexico’s oil and gas industry. But commissioners in Santa Fe County, which draws much of its revenue from tourism, approved a resolution expressing support for the leasing pause.

Pres. Biden could declare a climate emergency to strengthen his administration’s legal hand, but so far does not appear inclined to do so. More likely is action to resume leasing but at increased costs and with stricter regulations.

The industry has done a good job so far avoiding extreme positions or reactions that would have given Biden a ‘bad guy’ to demonize. It’s done such a good job in fact, that the Department of Interior now appears to be the scofflaw of the situation, and a ban that was once feared to be permanent has, at least temporarily, been lifted after just months.

As mentioned previously, an appeal is likely on its way. But, for the moment, the industry is back in the driver’s seat. Steady as she goes.