Federal Court Issues Permanent Injunction on Federal Oil and Gas Leasing “Pause”

On August 18, 2022, a federal court in Louisiana permanently enjoined President Biden and other governmental officials and agencies from stopping the sale of onshore and offshore oil and gas leases. The order comes just one day after the Fifth Circuit vacated the court’s preliminary injunction on the so-called “pause”.

The court’s order stems from a challenge to an Executive Order that President Biden signed on January 27, 2021. Executive Order 14008, entitled “Tackling the Climate Crisis at Home and Abroad” (“Executive Order”), ordered the Secretary of the Department of the Interior to “pause” new oil and gas leases on public lands or in offshore waters pending the completion of a comprehensive review of Federal oil and gas permitting and leasing practices. Specifically, Section 208 of the Executive Order provides, in pertinent part:

Oil and Gas Natural Development on Public Lands and in Offshore Waters. To the extent consistent with applicable law, the Secretary of the Interior shall pause new oil and natural gas leases on public lands or in offshore waters pending completion of comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices in light of the Secretary of the Interior’s broad stewardship responsibilities over the public lands and in offshore waters, including potential climate and other impacts associated with oil and gas activities on public lands or in offshore waters.

The Bureau of Ocean Management and the Department of the Interior treated the “pause” as an order to stop. Thirteen states challenged the Executive Order in a lawsuit filed on March 24, 2021 in the United States District Court for the Western District of Louisiana. The Plaintiff States included Louisiana, Alabama, Alaska, Arkansas, Georgia, Mississippi, Missouri, Montana, Nebraska, Oklahoma, Texas, Utah, and West Virginia.

At issue in the lawsuit was whether President Biden had the authority to order a “pause” on oil and gas activities in light of the statutory commands under the Outer Continental Shelf Lands Act (“OCSLA”) and the Mineral Leasing Act (“MLA”). The OCSLA and the 2017-2022 Five-Year Oil and Gas Leasing Program govern offshore oil and gas leases, and the MLA governs onshore leases of energy-producing lands held by the Federal Government. After the Executive Order was signed, the Bureau of Ocean Management issued a notice to rescind a prior lease sale, and the Bureau of Land Management halted and postponed oil and gas lease sales. This resulted in the court issuing a preliminary injunction on June 15, 2021 enjoining the pause on leasing in June 2021, which was vacated by the U.S. Court of Appeals for the Fifth Circuit on August 17, 2022. The Fifth Circuit vacated the injunction because it was not specific enough.

On August 18, 2022, the district court issued a permanent injunction against the Government Defendants enjoining them from implementing a stop on new oil and gas leases on public lands and in offshore waters, referred to as a “pause” in the Executive Order. The injunction does not apply to lease sales cancelled after March 24, 2021, or lease sales in states other than in the Plaintiff States. In issuing the permanent injunction, the court held that President Biden lacked the authority to override a statute by executive order, stating that “[e]ven the President cannot make significant changes to the OCSLA and/or the MLA that Congress did not delegate.” The court also held that the Executive Order violated the OCSLA and MLA, and that the Government Defendants violated the Administrative Procedures Act.

Key to the court’s decision to enjoin the “pause” was the economic impact of the Executive Order. In issuing the injunction, the court found that the Plaintiff States’ claims were substantial, noting that “[m]illions and possibly billions of dollars are at stake” and “[l]ocal government funding, jobs for Plaintiff States’ workers, and funds for the restoration of Louisiana’s Coastline at stake.” The court also found that the public interest would be served by the injunction in light of “a time of high gas and oil prices, draining of the Strategic Petroleum Reserve, and looking to other nations to supply the United States’ oil and gas needs”. This leaves a number of issues for trial, including the question of whether an Executive Order can override a statute.

The ruling comes just eleven days after the Inflation Reduction Act was signed into law, which expands oil and gas lease sales off the coast of Alaska and in the Gulf of Mexico.

The court’s full ruling in State of Louisiana et al. v. Joseph R. Biden et al., Case No. 2:21-CV-00778, 2022 WL 3570933 (W.D. La. Aug. 18, 2022) can be found here.