A federal court lifted the Biden administration’s last-minute restrictions on the upcoming sale of offshore oil and gas leases, in a ruling late Thursday.
Judge James Cain of the Western District of Louisiana granted a preliminary injunction request from the plaintiffs — the State of Louisiana, industry association the American Petroleum Institute, and oil companies Chevron and Shell — to block the Bureau of Ocean Energy Management’s (BOEM) restrictions on Lease Sale 261. A lease sale covering millions of acres throughout the Gulf of Mexico is set for next week.
Cain ruled that the federal government should continue selling the lease before Sept. 30 under its original conditions. As a result of a July settlement with environmental groups, BOEM removed about six million acres from sale and imposed various restrictions on oil and gas vessels associated with leases that auctioned to protect the Rice whale species found in parts of the Gulf of Mexico.
“The court observes that plaintiffs have demonstrated substantial potential costs resulting from the challenged provisions,” Cain wrote in his decision. “While the government defendants have focused more on the acreage withdrawal and sales dynamics themselves, many of the plaintiffs’ alleged hardships stem from vessel restrictions.”
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“Plaintiffs in the industry have demonstrated a likelihood that they will burden their operations with current and planned leases,” the decision continued. “The resulting costs are not recoverable by the court’s entry of a permanent injunction and order of another sale.”
Cain also said the Biden administration’s actions appear to be an attempt to “provide scientific justification for a political reassessment of offshore drilling.” And he said the administration’s process looks “more like a weapon of the Endangered Species Act than the collaborative, reasoned approach prescribed by applicable laws and regulations.”
In a statement following Thursday’s decision, API Senior Vice President and General Counsel Ryan Meyers said it was a positive step in ensuring energy security.
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“We are pleased that the court has hit the brakes on the Biden Administration’s ill-advised effort to restrict America’s development of reliable, lower-carbon energy in the Gulf of Mexico,” Meyers said in a statement.
“Today’s decision will allow Lease Sale 261 to move forward as directed by Congress in the Inflation Reduction Act, which removes unjustified restrictions on vessel traffic imposed by the Department of the Interior and restores more than 6 million hectares in the sale,” he added. . “This decision is an important step toward greater certainty for America’s energy workers, a more stable Gulf Coast economy and a stronger future for US energy security.”
In late August, API and its co-plaintiffs filed a lawsuit against the Biden administration calling on the court to require the Biden administration to “live up to its obligations to the American people.” According to the industry, sales such as Sale of Lease 261which is the last federal offshore lease sale scheduled, is essential to ensure long-term oil and gas production.
Overall, BOEM said – following its July eco settlement – it will offer 12,395 blocks on about 67 million acres in several Gulf of Mexico regions, down from 13,620 blocks on the 73.4 million acres originally it planned to offer. The acreage excluded from the sale includes potentially oil-rich tracts located in the center of the lease area.
Offshore lease sales often cover large swaths of federal waters, but get bids on a portion of the blocks that companies expect to contain more resources and have higher returns on investment. For example, BOEM auctioned 73.3 million hectares during Lease Sale 259 in March, but received bids worth $263.8 million for 313 tracts covering 1.6 million hectares.
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“The injunction is a necessary and welcome response from the court to an unnecessary decision by the Biden administration,” said Erik Milito, the president of the National Ocean Industries Association (NOIA). “The removal of millions of highly anticipated acres and the imposition of excessive restrictions came from a voluntary agreement with activist groups that sidestepped the law, ignored science, and bypassed public input.”
In addition to removing acreage from sale, BOEM also imposed restrictions on oil and gas vessel traffic associated with leases scheduled to be auctioned during Lease Sale 261. Among those necessary, BOEM said specially trained visual observers must be on board all vessels passing through the area, all vessels regardless of size must travel no more than 10 knots and vessels should only travel to the area during the day.
BOEM’s restrictions come in response to the administration’s settlement last month with a coalition of four environmental groups led by the left-wing Sierra Club.
In a federal stipulated stay agreement filed on July 21, the National Marine Fisheries Service (NMFS) agreed to some conditions requested by the groups who, in response, agreed to temporarily stop the trial in the related case. The case began nearly three years ago when, in October 2020, an environmental coalition sued NMFS for failing to properly assess the effects of the oil industry on threatened and endangered marine wildlife in the Gulf of Mexico.
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The groups pursued the lawsuit after NMFS coordinated a multiagency consultation studying the effects of all federally regulated oil and gas activities on species such as Rice’s whale listed under Endangered Species Act in the Gulf of Mexico over the next 50 years. The groups argued in the original complaint that NMFS’s biological opinion resulting from its consultation was not based on the best science.
API and NOIA also argued that BOEM’s action violated the congressional intent of Inflation Reduction Actwhich reinstated many lease sales, including Lease Sale 261, after the Biden administration eliminated them in May 2022. In the record of the sale decision, it was mandated to be region-wide while its environmental review does not recognize the dangers it may pose to The rice whale.