Appeals court strikes down ruling that blocked Biden administration pause on lease sales

A federal appellate judge struck down a lower court’s decision that had stopped the Biden administration from pausing the auction of oil and gas drilling rights in federal lands and water, a key campaign pledge in the president’s plan for tackling climate change.

On Wednesday, the U.S. Court of Appeals for the 5th Circuit vacated a district-court decision from last year in favor of Louisiana and a dozen other states, many of which rely on oil and gas royalties to fund their governments. Circuit Judge Patrick E. Higginbotham sent the case back to the lower court, writing that its initial decision stopping Biden’s moratorium on leasing was too vague to be valid.

The latest ruling may help reinvigorate President Joe Biden’s efforts to slow global warming by reforming the federal government’s oil and gas leasing program. Emissions from fossil fuels extracted on federal lands account for nearly a quarter of the nation’s heat-trapping carbon-dioxide pollution.

But the question of whether the oil and gas leasing program can be curtailed to address global warming has ping-ponged from one federal court to another, with none seemingly able to make a lasting decision. Curbing new extraction of oil and gas on public lands is further complicated by the politics of high gasoline prices as well as Democrats’ recently enacted climate, health-care and tax package.

What happens next isn’t clear.

By sweeping away the injunction, the appeals court gives the Biden administration a potential path to pause leasing again. But a compromise won by Sen. Joe Manchin, D-W.Va., in the new climate law mandates new oil and gas sales off the coast of Alaska and in the Gulf of Mexico. The legislation, called the Inflation Reduction Act, also tethers the construction of wind turbines along the East Coast and solar farms in many southwest deserts to ongoing oil and gas auctions, another painful concession for climate advocates.

Interior Department spokeswoman Melissa Schwartz said the Biden administration is reviewing Wednesday’s ruling.

[Oil companies say they’ll move ahead to develop giant Pikka oil project on Alaska’s North Slope]

Green groups were pleased with the decision. “This is a narrow procedural ruling, but it’s a good result,” said Mike Freeman, senior attorney at Earthjustice, an environmental advocacy law firm.

Some environmental advocates urged the Biden administration to stop new leasing. “We know that more leasing for dirty and dangerous offshore drilling and spilling threatens our oceans, climate, and economy,” said Beth Lowell, a vice president at environmental group Oceana.

But Erik Milito, head of the National Ocean Industries Association, a trade group that represents both offshore oil and wind companies, said that the appellate court ruled on a technicality and that Democrats’ new energy law ensures continued offshore oil and gas leasing.

“The case is now back with the district court for action consistent with this new opinion or for a decision on the merits,” he said. “In either case, we could very well see another decision that rejects the leasing pause. In any event, the practical impacts may be minor in light of the mandates of the Inflation Reduction Act.”

During the 2020 race, Biden pledged to halt new oil and gas drilling - “period, period, period,” he said on the campaign trail. One of Biden’s first actions in office was to pause leasing to review the program.

“Their original plan was to take a timeout,” Earthjustice’s Freeman said, adding that reforms were “much needed” not only to address climate change but also to reduce impacts on wildlife and improve returns for taxpayers.

But U.S. District Judge Terry A. Doughty in Louisiana struck down Biden’s Jan. 27, 2021, executive order, at the time dealing a major blow to the president’s plans to cut greenhouse gas emissions. The decision by Doughty, an appointee of President Donald Trump, highlights the challenge in curbing fossil fuel production when current law directs the government to hold auctions. The authority to suspend oil and gas leasing lies “solely with Congress,” Doughty wrote.

After the moratorium was struck down, the Interior Department held the largest offshore oil and gas lease sale in the nation’s history, putting 80 million acres in the Gulf of Mexico up for auction.

But only a fraction of that area - about 1.7 million acres - actually sold, and before the leases could take effect, yet another federal judge invalidated the entire sale. That decision from the U.S. District Court for the District of Columbia found that the government had justified the sale using a flawed analysis written during the Trump administration, which assumed that the climate impacts would be worse if the acreage went unsold.

In an effort to win Manchin over to a climate deal, the Biden administration left open the door to more offshore drilling in a proposal issued earlier this summer. But Kevin Book, a managing director at the consulting firm ClearView Energy Partners, said the administration has considerable leeway to constrain new drilling.

The recent court ruling, he wrote in a note Wednesday, “does not change our existing expectation for the Biden Administration to pursue the smallest number of onshore and offshore lease sales necessary to enable green energy development.”