Interior to resume oil and gas lease sales amid court fights

With a push from industry, the Interior Department announced Aug. 16 it would halt its moratorium on oil and gas lease sales while it appeals a court order.

The push came in the form of a lawsuit filed Aug. 16 by the American Petroleum Institute, the Independent Petroleum Association of America, the National Ocean Industries Association, and nine other national and regional trade groups.

The associations charged that Interior was violating the Mineral Leasing Act, the Outer Continental Shelf Lands Act, the Administrative Procedure Act, and other laws governing federal land management and regulatory procedures.

Their lawsuit was filed in the US District Court for the Western District of Louisiana, the court where a judge issued a preliminary injunction June 15 requiring Interior to resume leasing (OGJ Online, June 16, 2021).

Five hours after their announcement of the litigation, Interior issued a statement saying it would comply with the June 15 injunction.

Interior confirmed that the Justice Department “has appealed the preliminary injunction entered by the district court in Louisiana v. Biden, which enjoined Interior from implementing the pause in new federal oil and gas leasing,” an Interior statement said. “Federal onshore and offshore oil and gas leasing will continue as required by the district court while the government’s appeal is pending.”

Because the injunction is a preliminary order not a final judgment, and because it is under appeal in the US Court of Appeals for the Fifth Circuit, the trade associations may have ample motivation for pursuing their lawsuit.

Battles ahead

In defending its policy and its decision to appeal, Interior mapped out regulatory, legal, and legislative fights to come.

The department said its onshore and offshore leasing programs fail to adequately incorporate consideration of climate impacts and other environmental impacts into leasing decisions or royalty rates. The department said past policies did not adequately balance the various uses of federal lands as required under Interior’s “multiple use” legal mandates.

Interior also appeared to be looking to Congress for some changes, given that lawmakers have a large role to play in royalties, bonding, site reclamation, and other obligations imposed on companies.

Rep. Raul Grijalva (D-Ariz.), chairman of the House Natural Resources Committee, issued a statement Aug. 16 indicating some of those fights could be injected into the $3.5 trillion budget bill under consideration currently in the House.

Grijalva said he will push to use the budget bill to raise federal royalty rates, to establish fees on greenhouse gases, to reform bonding standards, and to increase fees for participation in lease sales, among other changes.

A budget “reconciliation” bill can focus only on fiscal matters, but those could include such things as revenues from royalties, bonding, and fees.