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Feds ‘Dinged’ for Quickly Moving Oil Lease Freeze, Lawyers Say

June 16, 2021, 7:35 PM

A federal order overturning a temporary pause on oil and gas leases shows the legal challenges ahead for ambitious climate and environmental actions done outside of the lengthy rulemaking process, lawyers say.

“When you try to do something by fiat that Congress has told you that must be done through a process, you’re going to get dinged,” Wayne D’Angelo, an environmental lawyer at Kelley Drye and Warren LLP, told Bloomberg Law.

Judge Terry Doughty from the U.S. District Court for the Western District of Louisiana issued a preliminary injunction Tuesday that scraps an Interior Department freeze on new leases.

The pause was an early action towards President Joe Biden’s climate goals, and part of a growing thicket of challenges from red-state attorneys general against Biden’s bold environmental agenda.

‘Wholesale, Generic’ Order

The injunction tossing a “wholesale, generic Executive Order” on actions not under the Interior Department’s purview is on solid legal ground, said Bob Comer, co-head of U.S. mining for Denver-based Norton Rose Fulbright US LLP.

“By statute, Interior must hold quarterly oil & gas lease sales, and as such, the President is without authority to unilaterally ‘pause’ those sales,” Comer said in an email.

But environmental advocates and some lawmakers lambasted the decision, including House Natural Resources Committee Chair Raúl M. Grijalva (D-Ariz.).

Grijalva said in a statement that the action by Doughty—whom President Donald Trump appointed—
is “simultaneously wrong on the legal merits and a sign of why federal leasing laws need to be updated.”

Interior Secretary Deb Haaland told a Senate panel on Wednesday that her agency is reviewing the decision and will comply with the ruling.

Legal Vulnerability

University of Wyoming law professor Sam Kalen said Doughty’s ruling contains a “smorgasbord” of issues that leaves the order legally vulnerable.

“Some of his administrative law decisions are a little bit unsupported,” Kalen noted. “And he probably wouldn’t be able to sustain those at any court of appeals.”

The administration could have fared better with a more robust justification for pausing the leases during its review, Kalen added.

The implications of the order could be short-lived on appeal, or if the administration freezes leases “via other mechanisms,” according to a research note from energy analyst ClearView Energy Partners.

Biden will likely seek those “workarounds on lease-specific grounds,” Comer said.

A New ‘Lens’

Reverberations are possible in a similar consolidated challenge pending at the U.S. District Court for the District of Wyoming, attorneys noted.

More broadly, Doughty’s decision could also add to a thicket of case law on challenges against actions with real-world impacts done outside of the rulemaking process—precedent that was built up from lawsuits against Trump administration executive orders, D’Angelo said.

“It’s a totally different lens for this administration,” D’Angelo said. “This could signal a higher level of scrutiny across lots of different administrative actions.”

To contact the reporter on this story: Jennifer Hijazi in Washington at jhijazi@bloombergindustry.com

To contact the editor responsible for this story: Rebecca Baker at rbaker@bloombergindustry.com

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