North Dakota sued the Biden administration on July 7 for not granting new oil and gas leases on public land.
A document filed at the U.S. District Court for North Dakota’s Western Division accused the moratorium of significantly hindering the local economy.
The Peace Garden State is the nation’s second-largest oil producing jurisdiction behind Texas. Oil and gas production represents 54 percent of the North Dakotan economy and generates about $93.6 million in state royalties each year.
“Oil and gas produced from leases on federal and Indian lands in North Dakota are an important part of this sector,” the document said. “Oil and gas production are [also] central to North Dakota’s economy and the welfare of citizens … generating approximately 76 percent of the state’s tax revenue and creating approximately 66,000 good-paying jobs.”
President Joe Biden previously suspended all new oil and gas permits on federal lands and waters for 60 days.
This means Interior Department agencies and bureaus have no authority to issue drilling leases or permits until the Democrats finish reviewing legal and policy implications of the federal minerals leasing program, according to a Department of Interior memo obtained by Reuters. The order does not limit existing operations.
“The importance of Bureau of Land Management-administered oil and gas leases in North Dakota is magnified by the unique ‘split-estate’ nature of much of the surface and mineral ownership interests in North Dakota,” the court document said. “[This] allows relatively small federal mineral interests to control exploration and production from much larger pooled and co-located state and private surface mineral interests that are jointly operated under communitization agreements.”
North Dakota believes the moratorium is unlawful.
“Federal defendants’s arbitrary decision to cancel oil and gas leases violates several major federal statutes,” the document said. “[This includes] those aimed at recognizing the critical role of states like North Dakota, managing natural resources, protecting the environment, and ensuring due process in executive branch administrative decisions.”
The state alleged the Biden administration’s policy on oil and gas leases has already significantly impacted on royalty revenue streams.
“Damages caused by federal defendants’s unlawful blocking of oil and gas development on state and private lands are in addition to the hundreds of millions of dollars in lost royalties, from federal defendants’s unlawful moratorium on the leasing of federal mineral interests,” the document said.
“Federal defendants have unlawfully, unilaterally and arbitrarily exercised veto power over the development of state and private mineral interests, exceeding federal defendants’s statutory jurisdiction under the Mineral Leasing Act,” it added.
The state also claimed the moratorium had prevented it from effectively administrating oil and gas production in its own jurisdiction.
“Unilateral actions of the federal defendants have deprived North Dakota of its ability to regulate such development, effectively exercising an unlawful federal veto over North Dakota’s authority to regulate state and privately-owned natural resources in the state,” the document said.
“Federal defendants intend to further violate their mandatory duties under the Mineral Leasing Act into the foreseeable future, and thus will continue to unlawfully, unilaterally and arbitrarily block the development of significant state and private mineral interests in North Dakota in excess of federal defendants’s statutory jurisdiction under the Mineral Leasing Act,” it added.
Sen. Kevin Cramer (R-N.D.) recently proposed legislation that prohibits the Biden administration from blocking oil or mineral leasing and permitting, on federal lands and waters, without first obtaining congressional consent. He described the moratorium as a silly and unlawful regulatory exercise.
“In addition to being a foolish idea, President Biden’s moratorium on oil and gas leasing on public lands is illegal,” he said in a statement. “It increases federal and state budget shortfalls, hampers state and private mineral owners’s rights, and makes the United States less energy independent and more reliant on foreign producers who are not all good actors like Russia, Saudi Arabia, or Venezuela.”
Cramer supports North Dakota Attorney General Wayne Stenehjem’s legal challenge to the Biden administration.
“[I] applaud him for standing up for North Dakota, and stand ready to help in any way I can,” he said.
North Dakota Gov. Doug Burgum (R) previously blamed the lease suspension for causing state, county, and local governments to lose more than $100 million in revenue.
“Going forward, the cost could easily run into the hundreds of millions of dollars and, if it went on permanently, it could be billions of dollars,” he said according to Breitbart.
Burgum alleged it is necessary for the federal government to hold leases quarterly.
“The action to suspend the holding the leases is actually illegal and that is part of the basis of the lawsuit,” he said. “[The $100 million] supports health, education, and all [of] the basic services in our state–that is the cost already just on these canceled leases.”