Top oil industry lobbying groups set the stage for a potential lawsuit challenging the Biden administration’s pause in approving new liquefied natural gas exports.

In a petition filed Monday with the Energy Department, the American Petroleum Institute and six other groups say the indefinite delay runs afoul of a legal mandate for the agency to issue permits to broadly export LNG unless there’s been a clear finding the shipments aren’t in the public interest. The petition calls the move “arbitrary and capricious” and says it violates administrative requirements in federal law — a prelude to potential litigation that could raise the same claims.

The filing underscores deep industry angst over the Biden administration moratorium that threatens to disrupt plans for multibillion-dollar export projects along the US Gulf Coast — while potentially encouraging overseas rivals to boost their LNG output. Qatar on Monday announced plans to double down on its ongoing supply wave with a new project capable of liquefying and exporting 16 million tons of gas annually. 

Industry allies, including some moderate Democrats, have appealed to the administration to reverse course, and the House of Representatives passed legislation that effectively would preempt the pause. But the legislation is unlikely to pass the Senate — and even if it did, it probably would be vetoed.

“At a time of geopolitical turmoil around the world, the Department of Energy’s arbitrary LNG freeze is not only unlawful, it cedes America’s energy advantage to hostile nations while jeopardizing thousands of American jobs,” Rob Jennings, an API vice president, said in a news release. “There is bipartisan recognition that this move is political, and we will continue to take any steps necessary to resume American leadership on LNG.”

President Joe Biden last month ordered the halt in approving new licenses to export LNG to European, Asian and other countries that are not US free-trade partners while the Energy Department scrutinizes how the shipments affect climate change, the economy and national security. Those studies are set to inform future Energy Department decisions about the path forward and pending export applications, including potentially prolonging the moratorium.

Separately Monday, a trade group representing LNG exporters and related companies said in a letter to the president the pause would have “significant, negative market ramifications” as US developers would be hard-pressed to obtain financial commitments and finish projects ahead of the next global supply wave.  

“We hope the United States doesn’t blow it,” Fred H. Hutchison, chief executive officer of the USLNG Association, wrote in the letter. The group also joined the API petition along with the American Exploration and Production Council, the National Association of Manufacturers and the Center for Liquefied Natural Gas.