CASPER — The Biden administration legally postponed the oil and gas lease sales scheduled for the first quarter of 2021, a federal judge ruled Friday in a blow to Wyoming and oil and gas industry groups.
U.S. District Judge Scott W. Skavdahl of Wyoming determined that the first-quarter delays “were not arbitrary, capricious, or an abuse of discretion,” rejecting arguments from the state, the Western Energy Alliance and the Petroleum Association of Wyoming that they were.
The oil and gas industry maintains the Biden administration violated the Mineral Leasing Act, a 1920 law that requires the Department of the Interior to hold onshore lease sales at least quarterly in every state “where eligible lands are available,” by not leasing any federal lands to oil and gas companies for five consecutive quarters.
Skavdahl only considered the actions taken by the Interior Department during the first quarter, before the legal challenges were filed in Wyoming.
“Our initial reaction is disappointment,” Michael Pearlman, Gov. Mark Gordon’s communications director, said in a written statement.
“We continue to believe the cancellation of numerous lease sales is unlawful, and we will carefully review this decision and evaluate our options,” he added. “Regardless, Wyoming people should know that Governor Gordon will continue to fight to protect our state’s interests.”
Friday’s decision differs from last month’s ruling out of Louisiana, in which U.S. District Judge Terry Doughty found that the Department of the Interior acted unlawfully when it suspended first-quarter leasing, and barred federal officials “from implementing a Stop … on new oil and gas leases on public lands and in offshore waters,” in the 13 states involved in that case.
Wyoming was not one of them, though the state’s oil and gas interests said it was a promising sign.
Skavdahl, however, sided with the Interior Department, which said it postponed the sales because the associated environmental review did not meet heightened standards — particularly of leasing’s climate impacts — established by other federal courts, and it needed to redo those Trump-era assessments before holding a sale.
Environmental groups have successfully challenged federal oil and gas lease sales, including in Wyoming, over the last several years, with judges repeatedly vacating those leases or requiring the Interior Department to redo its climate analysis.
Two separate lawsuits were filed against the federal oil and gas lease sale held in Wyoming in June — the state’s first since President Joe Biden took office.
Shannon Anderson, staff attorney for the Powder River Basin Resource Council, said Skavdahl made clear in the decision that “if there’s a need to do additional environmental analysis, those lease parcels are not yet ready for leasing.”
The Powder River Basin Resource Council was one of the 21 environmental groups represented in the case by Earthjustice and the Western Environmental Law Center — both of which sued over the June lease sale — this time in support of the Interior Department.
“We are pleased to see this well-reasoned order in such an important case,” the groups said in a joint statement following the decision. “We hope that moving forward, the Biden administration won’t shy away from exercising its authority to limit oil and gas leasing in order to protect our climate and the environment.”
Taylor McKinnon, a senior public lands advocate at the Center for Biological Diversity, another of the groups, said in a written statement that the ruling will help the Biden administration “bring federal fossil fuel programs to a swift and orderly end.”
That’s exactly what the oil and gas industry now fears the the Interior Department will do.
Skavdahl’s ruling “essentially gives a free pass to the Biden administration to never lease another acre, so long as they say they’re not finished with environmental review,” said Pete Obermueller, president of the Petroleum Association of Wyoming. “There’s no deadline. There is no mechanism by which to enforce them finishing environmental review. There’s really no avenue for us at this point, if the judge’s ruling stands.”
The decision is significant, he said, especially for the state’s smaller producers, which need to secure new leases in order to keep operating.
Environmental groups, including the Powder River Basin Resource Council, argue that the industry’s existing Wyoming leases and drilling permits are more than enough.
“They hold more than 13 million acres of public lands oil and gas leases, allowing them to continue operating as normal for years without causing market disruptions,” Bob LeResche, a board member, said in a written statement.
The Petroleum Association of Wyoming has not decided whether it will appeal.
“We have to digest it a little further, and figure out our next steps,” Obermueller said. “The court did not engage with really any of our arguments, which was very disappointing.”
Standing — the legal right to bring a lawsuit — proved central to Skavdahl’s decision.
He focused, initially, on “when the petitions for review were filed, what agency actions were being challenged, what agency actions actually had been made at that point,” Anderson said. “And limited the case significantly that way.”
The industry groups that sued in Wyoming over the leasing pause filed their lawsuit on Jan. 27, 2021, while Wyoming filed its petition on March 24, 2021.
Because the Interior Department delayed its planned March 2021 lease sales in between those dates, Skavdahl found that only Wyoming had standing to challenge the first-quarter delay — and none of the petitioners had standing to challenge the later second-quarter delay.
“As of (March 24), the DOI had postponed all March 2021 lease sales, which Petitioner Wyoming has standing to challenge in this lawsuit,” Skavdahl wrote. “However, at that time, the DOI still had time to hold second-quarter lease sales.”
It’s now up to the Biden administration to plan around the conflicting rulings.
The Interior Department has not announced another onshore oil and gas lease sale. With months of public participation required before federal leases can be sold, it’s looking less and less likely that Wyoming’s next sale will happen this year.