Federal Court Throws Out Biden's Offshore E&P "Withdrawal" Areas

The ruling could make it possible to expand the reach of future drilling activity to include more areas off the West Coast and Alaska (USCG file image)

A federal judge has thrown out the Biden administration's sweeping ban on offshore oil and gas lease sales outside of the Gulf of Mexico and the North Slope of Alaska, allowing future lease sales to proceed in new geographies.

The "withdrawal," released in the final weeks of Biden's time in office, covered all of the lease planning areas of the West and East Coasts of the lower 48 states, parts of the Bering Sea, the Straits of Florida, and the eastern Gulf of Mexico. In all, more than 625 million acres of federal seabed were withdrawn from leasing using the president's authority under the U.S. Outer Continental Shelf Lands Act (OCSLA), and Biden's memorandum claimed that this status would last "indefinitely."

The declaration was the largest lease area withdrawal in U.S. history; however, it only covered areas without active E&P activity. All of the regions with significant oil and gas interest - the central U.S. Gulf, Cook Inlet, and Alaska's Arctic coastline - were not withdrawn.

Multiple oil-producing states joined the American Petroleum Institute in a lawsuit to reverse the withdrawal, but faced a hurdle in the form of an earlier precedent. In 2019, a federal judge ruled that based on the text of the law, a sitting president cannot reverse a previous OCSLA withdrawal once made. The plain language of the statute is mute on this question: unlike several comparable laws governing onshore federal land, it does not explicitly address the question of reversals.

On Thursday, US District Court Judge James D. Cain, Jr. - a Reagan appointee in the Western District of Louisiana - disagreed with the 2019 court opinion and ruled in favor of E&P interests, striking down Biden's declaration.

"The language of [OCSLA] itself establishes that withdrawals must be subject to reversal or modification. The statute specifies that the president may exercise this authority 'from time to time,' which courts have recognized as encouraging an ongoing duty to revisit and amend regulations," he wrote. "Presidents have exercised this authority to modify the withdrawals of prior administrations. The orders of President Obama and President Biden, on the other hand, purported to apply for 'a period of time without specific expiration,' i.e., indefinitely. To the extent these were indeed supposed to overcome the power of subsequent executives to revoke or modify their withdrawals, they constituted a departure from the executive branch’s longstanding practice and exceed the authority granted under § 12(a)."

In a statement, the American Petroleum Institute said that the court's ruling would be positive for the energy economy.

"We welcome the court’s decision to vacate this politically motivated decision and ensure our nation’s vast offshore resources remain a critical source of affordable energy, government revenue and stability around the world. This ruling marks another important step in advancing a robust new five-year offshore leasing program and ensuring the U.S. can meet rising energy demand," said API SVP and General Counsel Ryan Meyers.