Biden Leasing Ban Faces Uncertain Future

Biden Leasing Ban Faces Uncertain Future
The ruling requires the Interior Department to immediately restart leasing while legal challenges to the ban continue.

(Bloomberg) -- President Joe Biden’s plans to curtail fossil fuels hit an early roadblock Tuesday, when a federal judge ruled against the administration’s temporary ban on selling new drilling rights on federal lands and waters.

The preliminary injunction issued late Tuesday by Louisiana-based U.S. District Judge Terry Doughty also is a victory for Republican state attorneys general who have launched a legal attack on Biden’s broad policy agenda by challenging his moves on everything from immigration to energy.

Tuesday’s ruling, sought by 13 red states, blocks the Interior Department from continuing to halt the sale of new oil and gas leases from federal lands and waters that provide nearly a quarter of the nation’s crude supplies. The president directed the moratorium in a Jan. 27 executive order, saying it was necessary to allow the agency to conduct a “comprehensive review” of its leasing program, including its impact on climate change.

Interior Secretary Deb Haaland told senators Wednesday that the agency was reviewing the ruling.

“We will respect the judge’s decision in this issue,” Haaland told a Senate appropriations subcommittee hearing Wednesday.

The agency has been developing an interim report that will guide whether -- and how -- to restart federal oil and gas leasing programs with recommendations for regulatory and statutory changes. That report will be issued in early summer, Haaland said, and, according to an emailed Interior statement, will “outline next steps and recommendations for the department and Congress to improve stewardship of public lands and waters, create jobs and build a just and equitable energy future.”

However, Doughty’s ruling requires the Interior Department to immediately restart leasing while legal challenges to the ban continue.

Oil industry advocates have warned any long-term halt in leasing jeopardizes jobs and domestic energy production and could stifle some funding for coastal land conservation that is tied to the sale of drilling rights in the Gulf of Mexico.

About 22% of total U.S. crude supplies and 12% of U.S. natural gas came from federal lands and waters in 2019, according to the Energy Information Administration.

“Any pause of American energy opportunities will do untold harm towards American economic, energy and environmental progress,” said Erik Milito, head of the National Ocean Industries Association. “As we emerge from the pandemic and move forward with economic growth, it is more important than ever that we seize the opportunity to produce oil and gas here in the U.S. to help avert potential inflationary risks and proactively ensure affordable energy for all walks of life.”

Environmental groups countered that the judge’s order fails to account for the climate damage created by greenhouse gases emitted when oil and gas are burned.

“The judge’s order turns a blind eye to runaway climate pollution that’s devastating our planet,” said Randi Spivak, public lands program director at the Center for Biological Diversity.

Doughty, appointed to the bench in 2018 by former President Donald Trump, ruled that Biden’s executive order violated federal laws governing oil and gas leasing. He also faulted the Biden administration for failing to offer “any rational explanation” for its pause.

“Millions and possibly billions of dollars are at stake,” Doughty wrote. “Local government funding, jobs for plaintiff state workers and funds for the restoration of Louisiana’s coastline are at stake.”

The administration is likely to appeal the ruling, so the injunction could be short-lived. Still, it shows the legal barriers standing in the way of Biden’s clean-energy agenda, with federal courts reshaped by the addition of conservative Trump-appointed judges, said ClearView Energy Partners in a research note for clients.

The administration also could seek to invoke other legal authorities in reimposing a leasing moratorium.

--With assistance from Robert Burnson.

© 2021 Bloomberg L.P.



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