With America’s strategic petroleum reserve depleted and the world’s oil supply threatened by conflict in the Middle East, the Biden administration announced Thursday that a major Gulf Coast oil and gas lease sale would be indefinitely postponed pending an upcoming court ruling.
According to the Inflation Reduction Act (IRA) Tracker, Section 50265 of President Biden’s multi-billion-dollar climate legislation “stipulates that, in order for the DOI [Department of of the Interior] to issue offshore wind development leases, DOI must have offered offshore oil and gas development leases covering at least 60 million acres in the previous year.”
“The section further stipulates that DOI may only issue onshore wind and solar right-of-ways if, in the previous 120 days, it has held onshore oil and gas lease sales totaling at least 2 million acres or 50 percent of the acreage for which expressions of interest were submitted for that period (whichever is less),” the IRA Tracker explains.
Lease Sale 261, which, according to Fox Business, “is set to span nearly 73 million acres across the Gulf of Mexico,” was a step by the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) toward complying with that IRA mandate.
“Under the IRA, BOEM was ordered to hold the sale by the end of September,” Fox Business reports, “but it became the subject of litigation after the agency added last-minute environmental restrictions.”
“Until the court rules, BOEM cannot be certain of which areas or stipulations may be included in the sale notice. Potential bidders in Lease Sale 261 should not submit bids until BOEM provides additional instruction,” BOEM said in a statement. “BOEM will hold any bids already received and will hold the sale after it receives further direction from the Court of Appeals.”
Fox Business explains the legal battle:
In late August, the fossil fuel industry group American Petroleum Institute (API), alongside the State of Louisiana and U.S. oil company Chevron, sued BOEM after the agency issued its Lease Sale 261 notice of sale, which made six million fewer acres available to oil and gas extraction than previously scheduled, as part of a settlement with eco groups. The agency also created multiple vessel restrictions for companies that obtain leases.
Then, on Sept. 21, Judge James Cain of the Western District of Louisiana granted a preliminary injunction to plaintiffs and ordered the Biden administration to proceed with Lease Sale 261 without restrictions. After the government appealed, the U.S. Court of Appeals for the Fifth Circuit allowed BOEM to delay the sale until Nov. 8.
And last week, the appeals panel issued an indefinite stay on the lower court’s preliminary injunction. The next arguments in the case are set for Nov. 13.
API Vice President of Upstream Policy Holly Hopkins slammed the delay.
“From issuing the weakest 5-year program for offshore leasing in U.S. history to repeatedly delaying congressionally-mandated lease sales, the Department of the Interior continues to demonstrate its willingness to ignore the clear and growing need to expand American energy leadership and reduce reliance on foreign energy sources,” she stated.
“Beyond the sale that was postponed today, there will be no offshore sales until 2025 – the longest gap in offshore sales since 1966,” Hopkins warned. “The U.S. oil and natural gas industry stands ready to support the nation’s energy security through reliable, lower carbon-intensive energy produced here in the U.S. Gulf of Mexico, but the Interior Department’s inconsistent policies undermine the certainty needed to invest in future production.”
Senate Energy and Natural Resources Chairman Joe Manchin (D-W.Va.) responded to the Fith Circuit Court’s ruling by blaming the administration and urging BOEM to move forward with the sale on Nov. 8.
“I also want to express my frustration that just this morning, the Bureau of Ocean Energy Management announced that it would again delay the Gulf of Mexico Lease Sale 261, despite the director testifying before this committee one week ago that ‘All systems are go’ to hold the lease sale on November 8,” he said during a Thursday committee hearing.
“BOEM is once again blaming the courts for delaying the sale, but the delays are entirely the Administration’s fault,” Manchin continued. “The Department of the Interior was so eager to meet the demands of environmental groups to restrict the sale that it bypassed important legal requirements leading to this litigation.”
“In the federal stipulated stay agreement filed on July 21, the National Marine Fisheries Service (NMFS) agreed to a number of conditions requested by the groups that, in response, agreed to temporarily pause litigation in the related case,” Fox Business reports. “The case dates back nearly three years when, in October 2020, the environmental coalition sued the NMFS for failing to properly assess the oil industry’s impacts on endangered and threatened marine wildlife in the Gulf of Mexico.”
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