Monday, April 15, 2024

Federal Judge: Biden Ban on New Oil Leases Must Be Lifted

by BIZ Magazine

To say this development is positive news for Louisiana’s decimated oil and gas industry would be to understate.

A powerful shot of hope and optimism was injected into Louisiana and numerous other states this week when a Louisiana federal judge issued a nationwide preliminary injunction ruling that the ban on new oil and gas leases imposed by the Biden Administration must be lifted. Finding that the ban failed to offer “any rational explanation” for its imposition, the court, through the grant of the injunction, reversed a January 2021 executive order by Pres. Biden that halted lease sales on federal lands and in federal waters and requires the Department of Interior to immediately restart its leasing program.

Twelve other states joined Louisiana in the suit in opposition to the ban. We should note that not only is this decision significant for the oil and gas industry itself, but also because the sale of the leases and resulting royalties generate millions of dollars in revenues for federal, state, and local governments. The states argued, and the court agreed, that the moratorium on new oil and gas leases on federal lands and waters will cause irreparable harm to these states in several ways, including reducing funding for bonuses, ground rent, royalties, and rentals, and causing job losses and the higher gas prices with which the country is now being blasted.

The court acknowledged that “even though existing leases are proceeding, the fact that new oil and gas leases on federal lands and in federal waters are paused will ultimately result in losses to plaintiff states which they will likely not be able to recover.” The states further argued, and the court again agreed, that the moratorium by the Biden Administration was “arbitrary and capricious” due to the fact that there was “an omission of any rational explanation in cancelling the leases and in enacting the pause.” The court found that the Administration also erred from a procedural standpoint because it “should have given notice and allowed for comment before issuing the pause” as required by the Administrative Procedure Act.

The court went on to acknowledge that the claims of the states are “substantial” noting that “millions and possibly billions of dollars are at stake.” The ruling was based in part on the reliance interest states have in the revenue derived from both water and land-based oil and gas lease sales. Further, these reliance interests included “local government funding, jobs for plaintiff states and funds for the restoration of Louisiana’s Coastline” that are in jeopardy. The court also acknowledged that the Biden ban violates two federal statutes, the Outer Continental Shelf Lands Act (OCSLA) and the Mineral Leasing Act, which requires that the Department of Interior hold regular lease sales for oil and gas production—which hasn’t happened since the beginning of the Biden Administration.

The litigation continues and this fight is obviously not over because the Administration will likely appeal, and the injunction could be short lived. However, this legal victory blunts the short-term efforts of this Administration to unilaterally harm a suffering and desperately needed Louisiana industry.

This is an example of mindless climate change ideology at its worst—a policy change of great magnitude with no public input and with no rational basis that justifies imposing economic devastation on our state so that ideologues who live primarily on the east or west coasts can feel powerful and righteous about imposing their climate change religion on everyone else.

[Another positive bit of news involves the signing into law by Gov. John Bel Edwards of a bill introduced by State Rep. Neil Riser protecting Louisiana’s beautiful and iconic cypress trees by prohibiting harvesting of the trees on state lands. Louisiana’s best-known bald cypress tree—the largest in the country—is approximately 1500 years old and located in Cat Island National Wildlife Refuge in West Feliciana Parish.]

Royal Alexander is a Shreveport attorney.

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