News & Insights

Nationwide Oil And Gas Lease Pause Survives Fifth Circuit Ruling, But Likely Does Not Survive Inflation Act

On January 27, 2021, President Biden signed Executive Order 14008, which was meant to develop policies to combat climate change. Exec. Order No. 14008, 86 Fed. Reg. 7,619 (January 27, 2021). One such policy set forth in Section 208 of the Order sought to:

“pause new oil and natural gas leases on public lands or in offshore waters pending  completion of a 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.”

This paused the auctions of leaseholds on public lands for natural gas and oil exploration.

Thirteen states, led by Louisiana, sued the federal government and various agencies responsible for implementing the federal policy on March 24, 2021. On March 31, 2021, the States moved for a preliminary injunction against the Biden administration and the federal agencies responsible for implementing the pause on sale of leaseholds to prevent the pause. The Federal District Court for the Western District of Louisiana granted the temporary injunction on June 15, 2021.

Lease Sale 257 (off the coast of Louisiana) and 258 (in Alaska) are the Lease Sales made the basis of the suit. Upon the grant of the injunction in June, Lease Sale 257 was held as planned. However, in February, the Bureau of Ocean Energy Management cancelled the public comment period and virtual hearings related to Lease Sale 258. The Parties appealed.

On August 17, 2021, the Fifth Circuit Court of Appeals vacated the injunction by the Louisiana federal court and remanded the case to the lower court, holding that the terms the lower court had used to issue its injunction were not specific enough in describing the behavior or actions to be enjoined.

In its opening brief, the Government argued that the lower court could not properly enjoin an executive order. The States argued in turn that the lower court did not enjoin the executive order itself. Rather, the pause should be considered a final administrative action. The Government responded to that, arguing that Rule 65(d) of the Federal Rules of Civil Procedure requires greater specificity in describing the action or behavior to be enjoined, and that trial court’s description was lacking. Because the lower court did not define the “pause” that it sought to enjoin, it did not comply with the requirements of Rule 65. The Court of Appeals remanded for that reason. Because the appeal was decided on a matter of procedure, the Court of Appeals did not reach arguments regarding the more substantive issues involved.

Immediately after the Fifth Circuit remanded the case, on August 18, 2021, the Western District of Louisiana reissued its injunction, enjoining the pause and defining the actions to be enjoined more clearly. The trial court wrote that the executive order by President Biden was not sufficient to change procedures mandated by two statutes implicated by the pause, the Outer Continental Shelf Lands Act (OCSLA) and Mineral Leasing Act (MLA). The Court ruled that the statutes in question do not allow discretion to the agencies to stop the lease process because Congress, through those statutes, directed the agencies to make the eligible lands available for lease.

The case will likely not be appealed again because the Inflation Reduction Act (IRA), passed last month, also requires that lands like the ones involved in the case be leased to produce energy. The IRA requires that the Secretary of the Interior issue a lease for 257 and that Lease Sale 258 be expedited. In keeping with the pressing aims of the IRA, the Biden administration and the heads of the administrative agencies involved will likely not attempt to hold back these sales and sales like them.