The Oil Industry Is Ready To Fight President Biden In Court

Yves here. It appears that the Biden Administration, even in taking what would seem to be a modest step, curtailing new energy leases on Federal lands, is trying to do some things via executive authority that actually require legislation.

By Julianne Geiger, a veteran editor, writer and researcher for Originally published at OilPrice

Reeling from the effects of the pandemic, the oil industry is in no mood to fool around. When newly inaugurated President Joe Biden canceled the Keystone XL pipeline project, refiners on the Gulf Coast shuddered. How would they get the Canadian oil they needed? But when President Biden paused all oil and gas permitting on federal lands and waters and canceled lease sales, struggling oil and gas companies took the gloves off and prepared for a fight.

At stake is the industry’s very survival.

One recently announced fight involves Continental Resources, an Oklahoma-based exploration and production company that relies on permits to allow it to conduct its normal business. But in January, on the day President Biden was inaugurated, the Department of the Interior clamped down–on President Biden’s direction–on approving permits for oil and gas exploration on federal lands and in federal waters. It did this not by banning permits outright but by limiting which Interior employees could approve permits. The number of employees to approve permits has dwindled significantly to a total of nine, limited to “leadership” only. It is an effective suspension of the permitting process, although not an outright suspension.

The suspension order, signed January 20, was to last for a period of sixty days–until March 21.

But according to Continental, the Department of the Interior’s actions are unconstitutional, and on February 23, it filed a lawsuit in a U.S. District Court in North Dakota. The challenge, according to the 44-page lawsuit, is that by delaying 50 of Continental’s permits, it has violated a provision in The Mineral Leasing Act, which spells out strict deadlines that the Department of the Interior must follow during the permitting review process. 

In other words, the Act tells the DoI how much time they have to rule on permit applications, and this suspension has essentially stalled the permitting process.

But Continental isn’t the only one on this warpath.

The Western Energy Alliance, just seven days after President Biden took office, filed a lawsuit challenging his order that banned oil and nat gas leasing on federal public lands. The WEA alleges that President Biden exceeded presidential authority and his order violates the National Environmental Policy Act, the Federal Lands Policy and Management Act, and much like Continental’s lawsuit, it violates the Mineral Leasing Act, which requires the Interior Secretary to hold quarterly lease sales.

The WEA filed their suit in the U.S. District Court for the District of Wyoming–a state that ranks first in federal natural gas production and third in oil. Wyoming also has more federal acres leased than any other state.

Biden’s Keystone XL cancellation has also drawn the wrath of the oil and gas industry, with more than a dozen U.S. states considering a lawsuit against the federal government. The 830,000 barrel per day pipeline project has been stuck in regulatory muck for well over a decade prior to its cancellation.

States were quick to urge Biden to reconsider. But their pleas appeared to have fallen on deaf ears, citing energy security, lost jobs, and lost revenues.

In a letter from 14 Attorneys General, including Montana’s Attorney General Austin Knudsen, the states threatened some type of vague legal action.

“Please be aware that states are reviewing available legal options to protect our residents and sovereign interests. In the meantime, we urge you to reconsider your decision to impose crippling economic injuries on states, communities, families, and workers across the country.”

In a departure from the rash of lawsuits, but no less striking, 24 Republican senators have banded together to support a bill in the U.S. Senate designed to stop the executive order that paused new oil and gas leasing on federal lands. The bill is known as Protecting our Wealth of Energy Resource Act (aka the POWER Act) of 2021 and would prohibit a President or Secretaries of the Interior, Agriculture and Energy departments from blocking energy or mineral leasing and permitting on federal lands and waters without Congressional approval.

Despite the legal challenges, the new administration’s policies show no signs of shifting. Interior Secretary nominee Deb Haaland’s testimony this week would not commit to ending Biden’s suspension of oil and gas leasing. “If confirmed, it is President Biden’s agenda, not my own, that I would be moving forward,” Haaland said, implying that Biden’s green energy vision would be executed. The nominee went on to say, however, that the ban would not be “a permanent thing”.

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  1. duffolonious

    This certainly shows how little the oil industry gives to the Dems.

    I wonder if any of these companies make money and if more leases are required to rearrange the deck chairs on the Titanic to convince investors keep buying.

  2. ZacP

    This administration is otherwise obedient to the usual suspects, FIRE sector, military-industrial complex, etc, so I can’t figure out why they are pissing off the fossil fuel folks. What’s the political calculus? Is there more money to be made with some kind of transition to green energy? Are they just allowing more favored oil and gas allies time to gain leverage in the market? Will they soon fold on the moratorium and keystone XL and go back to usual business?

    1. Peter Lynch

      The oil business had been a bad business for at least a decade. I am an investment banker and I can tell you that when the list of industry sectors – consumer products, utilities, oil and gas, timber etc O&G has be LAST in return to investors over last 3 years, last 5 years and last 10 years. It is the most heavily subsidized industry in the world. AS to Fracking – the top 1- public fracking companies have NEVER made money ( I mean by that – free cash flow ) it is a cash-burning non-business and that is assuming they will not keep their promises and properly close down facilities and a number of environmental requirements that they were aware of. They will walk away, as the coal industry did and leave the rest of us to foot the bill.

      1. Keith Newman

        @ Peter Lynch
        All true. Nonetheless I hang on to a few hundred shares of Suncor. They are not an investment but rather an insurance policy against the US attacking Iran. The company is located in a secure location (Canada) and would offset massive declines elsewhere a little. Hopefully no attack will occur since Iran is able to defend itself but the US has already destroyed most of the countries on its Middle-Eastern hit list.

  3. Mikel

    So, if the ban requires legislation, it can be used as a bargaining chip for other legislation?
    Or they are toothless executive authority measures, expected to be overturned in courts?
    Trying to see the angles here….

    1. drumlin woodchuckles

      Perhaps instead of just trying to see the angels here, members of the anti-fossil-carbon community might try seeing the opportunities here as well.

      If Biden actions are buying time for tens of millions of pro-green people to organize to strangle down their own level of coal, gas and oil consumption, those tens of millions of people should try doing that. The goal would be to attrit and degrade fossil fuel revenue streams so deeply that the political power of the fossil fuel industries is itself attrited and degraded to the point where these industries can no longer protect themselves through political channels. That can’t even beGIN to happen unless something close to a hundred million allegedly-green-minded people begin strangle back their own fossil use and help eachother re-arrange their lives and societies to strangle back fossil use even deeper.

      Every dollar is a bullet on the field of economic combat. There are only two sides here, and the future is zero sum. One side will march to victory on a road of the other side’s bones.

      1. Rod

        yes — Into the breech we go…

        If Biden actions are buying time for tens of millions of pro-green people to organize to strangle down their own level of coal, gas and oil consumption, those tens of millions of people should try doing that.

  4. Will

    How do you propose feeding the tens of millions of green minded people sans fossil fuel? Are they to eat each other? Every single physical item that creates your world relies heavily on fossil fuel for production and transport. Especially your lithium battery and solar panel.. Seriously, how are we to eat and survive let alone thrive if gas hits 6 dollars per gallon? Your 15 would need to be about 30 for workers creating your physical universe.. Or, eat each other i guess.

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