Fifth Circuit Vacates and Remands Injunction on Nationwide Oil and Gas Lease Pause

On August 17, 2022, the U.S. Court of Appeals for the Fifth Circuit (the Court) vacated and remanded an order by the federal district court for the Western District of Louisiana (the District Court) of a nationwide preliminary injunction enjoining the Biden administration (the Government) from pausing oil and gas lease sales. The Court found that the District Court’s decision lacked specificity.

The case addressed Section 208 of Executive Order 14,008, issued by President Joe Biden on January 27, 2021, which, among other things, provided the following:

To the extent consistent with applicable law, the Secretary of the Interior shall pause new oil and natural gas leases on public lands or in offshore waters pending completion of a comprehensive review and reconsideration of Federal oil and gas permitting and leasing practices in light of the Secretary of the Interior’s broad stewardship responsibilities over the public lands and in offshore waters, including potential climate and other impacts associated with oil and gas activities on public lands or in offshore waters.

The Bureau of Land Management explained the same day that the pause did “not impact existing operations or permits for valid, existing leases …” and provided “a chance to review the federal oil and gas program to ensure that it serves the public interest and to restore balance on America’s public lands and waters to benefit current and future generations.” However, on June 15, 2021, the District Court issued the preliminary injunction.

Specifically at issue were two offshore lease sales, Lease Sale 257 in the Gulf of Mexico and Lease Sale 258 in Alaska. Of these, Lease Sale 257 was held after the District Court’s injunction; however, prior to the injunction, the Bureau of Ocean Energy Management canceled public comments and virtual hearings for Lease Sale 258 in light of the executive order. On March 24, 2021, 13 states (the States) filed a complaint seeking injunctive relief, alleging that the Department of the Interior violated the Administrative Procedure Act by acting in a manner arbitrary and capricious, and contrary to law, and by failing to go through notice and comment when implementing lease sale postponements or cancellations. This resulted in the District Court’s issuing of the preliminary injunction, which the Government appealed.

The Court found that the District Court’s order failed to meet Federal Rule of Civil Procedure Rule 65(d), as it issued an injunction on the implementation of the pause without defining the term specifically. The Government had argued that the pause referred to and enjoined the executive order, which is not subject to judicial review, while the States had argued that it referred to an “… unwritten but conspicuous nationwide lease-sale ‘Pause’ ….” The Court opined that while the District Court “devoted several pages to a section titled, ‘Is there a Pause?’ … [it] did not state whether the Pause was unwritten.” The Court found that the District Court’s order and the accompanying memorandum failed to define the “pause” with precision and thus failed to meet Rule 65(d) requirements. The Court found that it could not reach the merits of the appeal when “it … [was] unclear what final agency action the district court predicated its order upon.”

The case now goes back to the lower court for further proceedings. However, the implications of the lower court’s decision may be short-lived, particularly given the Biden administration’s interest in continuing to pause oil and gas extraction on federal lands or in federal waters. Tied to this are provisions affecting offshore leasing in the Inflation Reduction Act (IRA), which President Biden signed on August 16, 2022. Among other things, the IRA mandates that the Secretary of the Interior issue leases for Lease Sale 257 on an expedited basis and conduct Lease Sale 258 before the end of the year. The Secretary of the Interior also must hold onshore oil and gas lease sales before issuing rights-of-way for wind or solar projects on federal lands, and the Department of the Interior must offer offshore oil and gas lease sales prior to leasing parcels on Outer Continental Shelf lands for offshore wind. The steps that the department must follow to comply with these aspects of the IRA are complicated, however, by pending litigation in the U.S. Court of Appeals for the District of Columbia Circuit over its compliance with the National Environmental Policy Act with respect to the Record of Decision for Lease Sale 257.

Sidley is tracking all of these issues. For a more in depth discussion of the IRA, see our alert here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.