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‘Defiant’ Interior Unlikely to Lease Oil Soon, Despite Injunction

Aug. 17, 2021, 7:45 PM

Attorneys say they aren’t expecting the Interior Department to announce an immediate oil and gas lease sale, after the agency said Monday that it’ll proceed with leasing following a federal court injunction.

Setting the day and time of an oil and gas lease sale requires advance planning, and “you cannot wake up one morning and just say, let’s have a lease sale tomorrow or in, say, 30 days, without being ready,” said Sam Kalen, a natural resources law professor at the University of Wyoming.

Interior announced Monday it would restart lease sales, more than two months after the U.S. District Court for the Western District of Louisiana issued a preliminary injunction against the White House’s leasing pause. But the agency still hasn’t made an official notice of an upcoming lease sale, either on shore or offshore.

“In complying with the district court’s mandate, Interior will continue to exercise the authority and discretion provided under the law to conduct leasing in a manner that takes into account the program’s many deficiencies,” including impacts to tribes, the climate and the environment, the announcement said.

The agency on Monday also filed a notice of appeal in the case, Louisiana v. Biden.

Showing ‘Recalcitrance’

The oil and gas industry, and attorneys aligned with the industry, say Interior violated the injunction by not immediately scheduling a lease sale before the end of the quarter as required under the Mineral Leasing Act. The act requires 45 days’ public notice prior to a quarterly lease sale.

Interior spokesman Tyler Cherry declined to comment Tuesday about when a lease sale will be announced.

“Now that the Interior Department has missed the deadline to hold any sales before October, it’s crystal clear there is no intention of complying with the judge’s order,” said Kathleen Sgamma, president of the Alliance, which filed a separate lawsuit challenging the pause.

Interior is showing “recalcitrance,” is likely not complying with the injunction, and hasn’t issued the notices necessary to hold a lease sale anytime soon, said John C. Martin, a partner at Holland & Hart LLP in Wyoming.

Ample Time to Comply

Though it’s too late to hold a lease sale in the third quarter, Interior can still hold a lease sale before the end of the year, said Mark Squillace, a natural resources law professor at the University of Colorado Law School.

“So long as Interior can show it is planning a sale for the 4th quarter I don’t think that the court is likely to intervene,” he said in an email.

The agency may be taking time to ensure a lease sale complies with the National Environmental Policy Act, and it is likely on sound legal ground if it can be transparent about that to a court, Kalen said.

The announcement that Interior intends to begin leasing to comply with the injunction shouldn’t be interpreted as a signal that a sale is imminent, according to an analysis published Tuesday by research firm ClearView Energy Partners LLC.

“The defiant tone of Interior’s grudging deference to the court ruling reinforces our expectation for the Biden Administration to look for other ways to pause leasing,” ClearView said in its analysis, adding that Interior is suggesting it may find ways to make future lease sales less attractive to the industry.

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

To contact the editors responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com; Rebecca Baker at rbaker@bloombergindustry.com

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