Court orders Interior to conduct lease sale without last-minute restrictions

Sept. 22, 2023
A federal court issued a preliminary injunction requiring the DOI to go ahead with its impending Gulf of Mexico oil and gas lease sale without the restrictions on acreage and ship movements that were added just a month before the planned sale.

A federal court issued a preliminary injunction Sept. 21 requiring the Interior Department to go ahead with its impending Gulf of Mexico oil and gas lease sale without the restrictions on acreage and ship movements that were added just a month before the planned sale.

The US District Court for the Western District of Louisiana ordered Interior’s Bureau of Ocean Energy Management (BOEM) to hold Lease Sale 261 by Sept. 30 as mandated by Congress. BOEM has scheduled the sale for Sept. 27, with a bid deadline of 10 a.m. Central Time Sept. 26.

The Interior Department filed a notice Sept. 22 that it would appeal the injunction to the US Court of Appeals for the Fifth Circuit.

The district court found that an injunction was warranted because the industry plaintiffs were likely to succeed at trial in their charges that BOEM violated the Outer Continental Shelf Lands Act (OCSLA) and the Administrative Procedure Act in the way BOEM tacked on acreage restrictions and ship restrictions without adequate justification in terms of legal and regulatory procedure and without adequate opportunity for public comment.

The extra restrictions were announced to protect Rice’s whales, an endangered species only known to live in the northeastern Gulf of Mexico in an area where no oil and gas leasing occurs. BOEM in January concluded that the restrictions in place to protect whales appeared sufficient, 7 months before announcing new restrictions.

“The process followed here looks more like a weaponization of the Endangered Species Act than the collaborative, reasoned approach prescribed by the applicable laws and regulations,” Judge James Cain wrote. “Even when an agency’s decision is based on political considerations, it is not excused from justifying the position—particularly when the decision is a pivot from a prior policy.”

The judge referred to BOEM’s action in changing the terms of the lease sale as “bait-and-switch tactics.” He wrote, “The procedural error is particularly grave here, because of both the compressed timeline and BOEM’s inexplicable about-face on the scientific record it had previously developed.”

The contested BOEM restrictions, stemming from a deal struck between the Biden administration and environmental activists in another court case, would have blocked new exploration in 6 million acres of highly prospective locations stretching across the Gulf and would have imposed operational restrictions for oil and gas industry ships passing through those areas. BOEM formalized the restrictions in an Aug. 23 final notice of sale (OGJ Online, Aug. 25, 2023).

The state of Louisiana, Chevron Corp., the American Petroleum Institute, and Shell Offshore Inc. sued the Biden administration over the lease sale restrictions added in August. The case, naming the Interior secretary as lead defendant, is Louisiana v. Deb Haaland.

Sale delay suggested

The injunction was issued on the same day that the court held a hearing on the case. An observer who attended the hearing said a Justice Department attorney representing BOEM asked the judge to delay the sale past the Sept. 30 mandated deadline.

The judge responded, “Are you asking me here in the Western District of Louisiana to overturn an act of Congress signed by the president?”

The government attorney replied, “We see that deadline as fluid.”

The Biden administration had attempted to block lease sales that had already received regulatory approvals through the most recent OCSLA 5-year plan. The Inflation Reduction Act of 2022, an extensive tax and spending act, required the administration to go ahead with the planned lease sales, the last of which is Lease Sale 261, required to be held no later than Sept. 30, 2023.

Erik Milito, president of the National Ocean Industries Association, welcomed the preliminary injunction with a statement issued Sept. 22.

“The injunction is a necessary and welcome response from the court to an unnecessary decision by the Biden administration,” Milito said. “The removal of millions of highly prospective acres and the imposition of excessive restrictions stemmed from a voluntary agreement with activist groups that circumvented the law, ignored science, and bypassed public input.”

Environmental groups intervened in the Louisiana v. Deb Haaland case on the side of the Biden administration. The Sierra Club, Center for Biological Diversity, Friends of the Earth, and Turtle Island Restoration Network, as intervenors, also filed a notice of intent to appeal.