On Tuesday, U.S. District Judge Terry A. Doughty of the Western District of Louisiana granted Plaintiff States’ request for an injunction to block the Biden Administration’s pause on new federal oil and gas lease sales (“Lease Pause”).  Louisiana v. Biden, Jr., Case No. 2:21-cv-00778-TAD-KK, 2021 WL 2154963 (W.D. La. June 15, 2021).

The Lease Pause had been issued pursuant to Executive Order 14008, which was signed by President Biden on January 27, 2021 (“Executive Order”).  The Executive Order, in part, ordered the Secretary of the Interior to pause new oil and gas lease sales on public lands and on the OCS pending completion of a comprehensive review of potential climate and other impacts.  As a result, no lease sales have taken place since the Executive Order was signed.  Specifically, no quarterly lease sales have been held on public lands, as required by the Mineral Leasing Act (“MLA”).  Further, offshore Lease Sales 257 and 258, which were included in the Five-Year Program that was approved under the Outer Continental Shelf Lands Act (“OCSLA”), were both canceled.

The thirteen Plaintiff States alleged the Executive Order and the Agency Defendants’ implementation of the Order violated multiple provisions of the Administrative Procedures Act (“APA”), including requirements that agencies (1) act in accordance with law and not in excess of statutory authority, (2) engage in reasoned decision making and not act arbitrarily or capriciously, (3) follow notice-and-comment rulemaking requirements when promulgating or amending substantive rules, and (4) not unlawfully withhold or unreasonably delay required agency action.  See Opinion at 5.

The Court first addressed certain preliminary issues.  The Court found that the Plaintiff States had standing to assert their claims.  Further, the Court found that the causes of action were reviewable by the Court.  In particular, the Court found that the Lease Pause was a “Final Agency Action” under the APA, rejecting the Agency Defendants’ contention that the Lease Pause was not Final Agency Action because the Lease Pause was merely an interim postponement of lease sales rather than a decision to forego lease sales entirely.  Id. at 24.  The Court reasoned that an agency action need not be “permanent” in order to qualify as a Final Agency Action.  Id.  The Court also found that the Lease Pause was not exempt from APA review as a decision “committed to agency discretion by law.”  Id. at 26-27.  In making such finding, the Court differentiated between an agency canceling or suspending a lease sale due to a problem with a specific lease and an agency cancelling all lease sales, stating “there is a huge difference between the discretion to stop or pause a lease sale because the land has become ineligible for a reason such as an environmental issue, and, stopping or pausing a lease sale with no such issues and only as a result of [the Executive Order].”  Id. at 25.  Accordingly, “[t]he discretion to pause a lease sale to eligible lands is not within the discretion of the agencies by law under either OCSLA or the MLA.”  Id.

The Court then analyzed whether the Plaintiff States satisfied the four elements required for a preliminary injunction.

(1) Likelihood of Success on the Merits.

Before addressing the Agency Defendants’ actions, the Court first discussed the Executive Order itself.  The Court reasoned that, although President Biden’s actions were not subject to the APA, there was still a question as to whether the Executive Order exceeded the President’s authority under OCLSA.  See id. at 4.  The Court discussed League of Conservation Voters v. Trump, 363 F. Supp. 3d 1013 (D. Alaska 2019) where the court found that OCSLA did not give the President specific authority to revoke a prior President’s withdrawal of OCS lands from disposition.  Id.  Instead, the court in League of Conservation Voters found that the power to revoke a prior withdrawal lies solely with Congress.  Id. at 4-5.  Relying on the League of Conservation Voters reasoning, the Court found that “since OCSLA does not grant specific authority to a President to ‘Pause’ offshore oil and gas leases, the power to ‘Pause’ lies solely with Congress.”  Id. at 5.  Thus, the Court concluded there was a substantial likelihood that the Executive Order exceeded President Biden’s presidential powers.  Id.

The Court then addressed the likelihood of success of the specific claims against the Agency Defendants under the APA:

  1. First, the Court found that the Plaintiff States had a substantial likelihood of success on their claim that the Lease Pause was “contrary to law” under the APA. The Court reasoned that OCLSA (and the Five-Year Program in effect pursuant thereto) as well as the MLA “require the Agency Defendants to sell oil and gas leases.”  Id. at 33.  Relying on several Opinions previously issued by the Department of Interior Solicitor’s Office, the Court reasoned that the Agency Defendants had no authority to make significant revisions to the Five-Year Program without going through the procedure set forth in OCSLA.    Further, the MLA requires Interior to hold lease sales at least quarterly.  Thus, the Court concluded that, through the Lease Pause, Interior effectively amended both OCSLA and the MLA without authority to do so.  Id. at 33-34.
  2. Second, the Court found that the Plaintiff States had a substantial likelihood of success on their claim that the Lease Pause was “arbitrary and capricious” under the APA. The Court reasoned that neither the Executive Order nor any other pronouncement by the Agency Defendants provided any explanation for the Pause.  Id. at 34.
  3. Third, the Court found that the Executive Order, as implemented by Interior, was a “substantive rule” under the APA. The Court reasoned that the Lease Pause left the Agency Defendants with no freedom to exercise discretion.  Id. at 36.  Further, the Lease Pause was not merely procedural in nature but instead modified substantive rights and interests.  Id. at 36-37.  As a substantive rule, the Lease Pause was subject to APA notice-and-comment requirements.  Because the Agency Defendants did not follow such requirements, the Court concluded that the Plaintiff States had a substantial likelihood of success on the claim that the Lease Pause violated the APA notice-and-comment provision.  at 37.
  4. Fourth, the Court found that the Plaintiff States had a substantial likelihood of success on their claim that the Lease Pause constituted an “agency action unlawfully withheld or unreasonably delayed.” The Court reasoned that the Agency Defendants had not provided a lawful basis for delaying the lease sales.  Id. at 38-40.  The Court pointed out that the primary rationale for the Lease Pause was the Executive Order, which the Court previously determined was likely unlawful.  The Agency Defendants’ reliance on the Executive Order resulted in a substantial likelihood of success on the merits of the “unreasonably withheld” claim.  at 38-40.

(2) Substantial Threat of Irreparable Harm.

The Court found that the Plaintiff States demonstrated a substantial threat of irreparable harm due to “reduced funding for bonuses, ground rent, royalties, and rentals,” and “damage for reduced funding” for various state programs.  Id. at 40.  Among other damages, the Plaintiff States also “claim[ed] damages through 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’ economy.”  Id.

(3 & 4) The Balance of Equities and the Public Interest.

The Court concluded that equity and public interest factors both favored the Plaintiff States.  The Court reasoned that, if the Lease Pause were enjoined, the Agency Defendants would be doing what they were statutorily required to do under OCSLA and the MLA.  Id. at 42.  On the other hand, the Court reasoned that “[m]ilions and possibly billions of dollars are at stake” for the Plaintiff States.  Id.

Accordingly, the Court granted the Plaintiff States’ Motion for Preliminary Injunction concluding that the Agency Defendants “shall be enjoined and restrained from implementing [the Lease Pause] with respect to Lease Sale 257, Lease Sale 258, and all eligible lands onshore.”  Id. at 43.

It is uncertain how the Agency Defendants will proceed in light of the Court’s ruling.  It is possible that Interior could simply come up with another basis for not holding onshore and offshore lease sales as the Agency Defendants intimated to the Court.  See id. at 14.  It is also possible that Interior could take steps to amend the Five-Year Program to modify the offshore lease sale schedule.  If, on the other hand, the Agency Defendants move forward with lease sales, then questions remain, including the timeframe for conducting those lease sales.

If you have questions regarding the Opinion, please do not hesitate to contact us.

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Photo of Jana Grauberger Jana Grauberger

Jana Grauberger is an oil and gas lawyer with more than 20 years experience. Clients turn to her as a trusted advisor in connection with their contract negotiations, regulatory advice and appeals, litigation, and arbitration related to onshore and federal offshore upstream and…

Jana Grauberger is an oil and gas lawyer with more than 20 years experience. Clients turn to her as a trusted advisor in connection with their contract negotiations, regulatory advice and appeals, litigation, and arbitration related to onshore and federal offshore upstream and midstream projects and facilities. Jana has represented clients in negotiating a wide variety of onshore and offshore contracts, including purchase and sale agreements, farmouts, participation agreements, joint operating agreements, production handling agreements, platform use agreements, gathering agreements, connection agreements, construction contracts, transportation contracts, and decommissioning agreements. She also represents clients in connection with regulatory matters involving Department of Interior agencies, including the Bureau of Ocean Energy Management (BOEM), the Bureau of Safety and Environmental Enforcement (BSEE), and the Office of Natural Resources Revenue (ONRR).

Photo of Elizabeth Byrne Elizabeth Byrne

Elizabeth practices in the firm’s Houston office focusing on oil & gas litigation. Elizabeth represents a variety of oil & gas industry clients in various general commercial disputes, tort and environmental disputes, and disputes arising under mineral leases and joint operating agreements, including…

Elizabeth practices in the firm’s Houston office focusing on oil & gas litigation. Elizabeth represents a variety of oil & gas industry clients in various general commercial disputes, tort and environmental disputes, and disputes arising under mineral leases and joint operating agreements, including disputes related to lease termination, royalty disputes, and trespass.

Photo of Stephen Wiegand Stephen Wiegand

Steve Wiegand’s practice focuses on complex regulatory issues impacting onshore and offshore energy and industrial operations.

In the offshore arena (including the Gulf of Mexico and the Pacific), he advises clients on a wide range of regulatory matters, including compliance with operational and…

Steve Wiegand’s practice focuses on complex regulatory issues impacting onshore and offshore energy and industrial operations.

In the offshore arena (including the Gulf of Mexico and the Pacific), he advises clients on a wide range of regulatory matters, including compliance with operational and safety requirements, appeals of Incidents of Non-Compliance and civil penalty assessments, incident response and associated agency investigations, lease suspensions, and National Pollutant Discharge Elimination System permit compliance.