A federal appeals court ruled Monday evening to force the Biden administration to hold a large offshore oil and gas lease sale in the Gulf of Mexico without added ecological protections.

The U.S. Fifth Circuit Court of Appeals ruled that the Bureau of Ocean Energy Management (BOEM), a subagency of the Department of the Interior (DOI), must hold Lease Sale 261, a huge offshore oil and gas lease required by the Inflation Reduction Act, within 37 days, according to the ruling’s text. The sale — which has been subject to extensive litigation involving the government, activist organizations and industry groups — was initially scheduled for September, but was pushed back when BOEM attempted to require added protections for the Rice’s whale before the sale, and delayed again earlier in November when the agency cited the need to wait and see how the appeals court would decide on a September ruling against the government’s position.

“Energy independence scored an important win tonight with the Fifth Circuit decision lifting unjustified restrictions on oil and natural gas vessels and restoring acreage for offshore energy development,” Ryan Meyers, senior vice president and general counsel for the American Petroleum Institute, said of the court’s ruling. “The U.S. Gulf of Mexico plays a critical role in maintaining affordable, reliable American energy production, and today’s decision creates greater certainty for the essential energy workforce and the entire Gulf Coast economy.”

Tuesday’s decision affirms an earlier ruling by a subordinate court, which held that the government’s late alterations to the sale were illegal. BOEM had introduced new restrictions intended to protect the Rice’s whale and sliced 6 million acres from the lease sale area after entering into a settlement agreement with environmentalist groups that had sued the government for conducting an allegedly inadequate environmental review process.

It is unclear at this time whether there will be any further litigation pursuant to the lease sale or delays to its timeline.

“The court’s ruling is a necessary and positive response to an unwarranted decision by the Biden administration,” Erik Milito, president of the National Ocean Industries Association, said of the ruling. “The removal of millions of highly prospective acres, along with the imposition of excessive restrictions, resulted from a voluntary agreement with activist groups that sidestepped legal processes, disregarded scientific considerations and neglected public input.”

Offshore oil production in federally controlled Gulf waters accounted for about 15% of total U.S. crude oil output in 2021, according to the U.S. Energy Information Administration. As the Gulf of Mexico’s oil is considered less carbon-intensive to produce than oil from most other regions, diminished production in the affected zone could be replaced by more carbon-intensive barrels from elsewhere in the world, according to the American Petroleum Institute.

BOEM, DOI and the White House all did not respond immediately to requests for comment.

Nick Pope on November 15, 2023

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