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Biden Oil Leasing Halt Can Survive Legal Challenges, Lawyers Say

Jan. 25, 2021, 11:01 AM

An industry trade group is pledging legal action to force the Biden administration to hold quarterly oil and gas leases, but legal observers say the federal government’s expected moratorium on such sales stands on solid legal ground.

The Interior Department on Jan. 20 temporarily halted oil and gas leasing activity on federal lands and waters for 60 days, a move widely expected to be a prelude to a long-term moratorium set to be unveiled next week as part of President Joe Biden’s climate plan.

Industry groups and legal observers expect the administration to do that in part by conducting extended environmental reviews on oil, gas, and possibly coal leasing, gumming up the leasing process for the long term.

“We fully expect they’ll use the guise of an environmental review that goes on for years and years to stop leasing and permitting,” said Kathleen Sgamma, president of the Western Energy Alliance, which represents 200 fossil fuel companies operating on federal lands in California, Colorado, Montana, Nevada, and other states.

“And yes, we intend to sue as they miss quarterly lease sales and fail to issue permits in the meantime,” Sgamma said.

But such suits are unlikely to succeed, said John Leshy, a law professor at the University of California, Hastings and former Interior solicitor in the Clinton administration.

“I think the industry’s chances of overturning this in court (even with Trump judges) are slim,” Leshy said via email.

‘Clear Authority’

Attorneys disagree about the Biden administration’s level of legal authority to suspend fossil fuel leasing on federal lands and waters, but most say the administration has some leeway to do so.

Biden has clear legal authority to halt oil and gas leasing, at least for a while, Leshy said. The Mineral Leasing Act says the Interior secretary “may” lease federal lands, and lease sales shall be held at least quarterly, he said.

But the act’s leasing mandate applies only to lands that are eligible for leasing, and federal law provides several ways for the Interior secretary to administratively declare lands ineligible, Leshy said.

But Bob Comer, co-head of U.S. mining for Denver-based Norton Rose Fulbright US LLP, said he doesn’t believe a legal basis exists for the Biden administration to halt oil and gas lease sales in order to conduct an environmental review of the program.

That’s because the program already exists and has been operating for years, said Comer, a former Interior associate solicitor in the George W. Bush administration.

Even so, courts may be inclined to support delays in leasing, Comer said.

“Courts are reticent to force the agencies to take action, while they more commonly allow agencies to defer action,” Comer said. “They will continue to defer lease sales until a court orders them to do otherwise.”

Legal Precedent

Legal precedent does suggest that Interior can suspend leasing in order to conduct a new environmental review of its oil and gas leasing program, said Pat Parenteau, an environmental law professor at the Vermont Law School.

For example, a federal court ruled that the Trump administration first needed to conduct an environmental review before it lifted an Obama-era coal leasing moratorium. Trump Interior officials did so, determined a deeper study wasn’t needed, and the court allowed coal leasing to restart, Parenteau said.

The 2019 ruling by the U.S. District Court for the District of Montana found that when the Interior Department called off the Obama-era moratorium on federal coal leasing, it undertook a “major federal action” that required a full environmental review under the National Environmental Policy Act.

The ruling showed new environmental reviews for existing programs may be upheld in court—and climate change is a good reason to do another review, he said.

“At least four courts have invalidated leasing for failure to consider climate change impacts,” Parenteau said via email. “It makes sense to hit the pause button and fix the problem” using a programmatic environmental impact statement—though Biden should make sure the review isn’t open-ended, he said.

“It has to be done right,” he said.

To contact the reporter on this story: Bobby Magill at bmagill@bloombergindustry.com

To contact the editors responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com; Chuck McCutcheon at cmccutcheon@bloombergindustry.com

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