A judge on Tuesday cleared the way to resume the sale of oil and gas leases on US public lands, granting an injunction blocking the Biden administration suspension of new projects and dealing a blow to the president’s efforts to shift the country away from fossil fuels.
The Louisiana court ruled in favour of 13 broadly pro-fossil fuel states including Texas, Alaska and Oklahoma, granting a preliminary injunction against the White House’s pause on new leases. The decision allows for leasing to resume while the court hears further arguments on the case.
“The omission of any rational explanation in cancelling the lease sales, and in enacting the pause, results in this court ruling that plaintiff states also have a substantial likelihood of success on the merits of this claim,” Judge Terry Doughty said.
The ruling was a significant setback for Joe Biden, who ordered the suspension of new leases for fossil fuel development on public lands and waters in January while a review of the permitting process was carried out.
The suspension — which did not affect existing drilling permits — fulfilled an election pledge and marked the president’s most significant move against the energy sector after he campaigned on a “transition away from oil”.
The interior department said it would comply with Tuesday’s decision but would continue work on the review, which it said would “outline next steps and recommendations”.
The department declined to comment on when lease auctions might resume.
The suspension did not affect activity on private land, which makes up most US oil and gas output. Instead, it applied specifically to federally held lands and waters, which account for about 22 per cent of American oil production.
But the judge found the pause could do significant harm to states where production depends on public lands. “Millions and possibly billions of dollars are at stake,” Doughty wrote. “Plaintiff states have a reliance interest in the proceeds derived from offshore and on land oil and gas lease sales.
The decision was welcomed by the oil industry. “The federal leasing pause is harmful to our nation’s national security, environmental progress and economic recovery,” said Kevin O’Scannlain, vice-president of upstream policy at the American Petroleum Institute, Big Oil’s powerful Washington lobby group. “We are pleased to see the court ruling that natural gas and oil leasing must resume on federal lands and waters.”
The National Ocean Industries Association, which represents offshore drillers in the Gulf of Mexico, also welcomed the decision, which it said “simply confirms the legal requirements” for the interior department to schedule offshore oil and gas lease sales.
But Tuesday’s ruling is unlikely to be the final word on the matter. The preliminary injunction will remain in place until the final resolution of the case or an appeal to a higher court.
“The victory may be shortlived,” analysts at ClearView Energy Partners, a Washington consultancy, wrote. “Not only do we expect Interior to appeal the ruling, but we also think the Biden administration might look to pause leasing via other mechanisms.”
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