US Gulf oil, gas auction to proceed without new restrictions meant to protect whales

In a win for the oil industry, a Louisiana court late Sept. 21 granted a preliminary injunction that will put 6 million acres off the US Gulf Coast back on the table as part of an upcoming offshore oil and gas lease sale.

The court's ruling also removes stipulations on oil and gas operations that the Interior Department had incorporated into the leasing terms to provide additional protections to the endangered Rice's whale.

Interior is set to hold Lease Sale 261 on Sept. 27, the last of three offshore oil and gas lease sales mandated by the Inflation Reduction Act. And with no new offshore leasing plan in place and seemingly no work being commenced on the environmental reviews needed to hold another auction, this could be the last opportunity for oil and gas producers to scoop up new acreage in federal waters for a few years.

At issue is the final notice of sale (FNOS) issued by the Bureau of Ocean Energy Management Aug. 23 that withdrew 6 million acres from the lease and inserted a new stipulation restricting vessel activity in the lease area.

That notice incorporated measures from a voluntary settlement agreement the Biden administration entered into with environmental groups in July to expand Rice's whales' protected habitat while a review reconsidering a 2020 biological opinion is ongoing.

Rice's whales, estimated to number only around four dozen, are found in the DeSoto Canyon region off the Florida Panhandle where the Continental Shelf breaks from 100 meters to 400 meters deep, according to the federal Marine Mammal Commission. The whales are threatened by seismic surveys, pollution and vessel strikes, according to the commission.

The settlement bars oil and gas vessels from operating at night, restricts them to slow speeds and implements other restrictions within a region of the Gulf of Mexico where the Rice's whale may reside.

The American Petroleum Institute, Chevron, Shell and the state of Louisiana challenged those leasing terms and asked the US District Court for the Western District of Louisiana to require Interior to add back those acres (State of Louisiana, et al v. Deb Haaland, et al, 2:23-CV-01157).

Interior did not immediately respond to a request for comment.

'Bait and switch'

The court said that the state and industry players met the heightened standard for an injunction, finding both a substantial likelihood of success on the merits and a substantial threat of irreparable injury if the injunction were not granted.

"BOEM failed to follow its own procedures by making significant changes to the FNOS, thereby depriving both affected states and the public the opportunity for meaningful review and comment," according to the court order. "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."

Cain equated BOEM's actions to a "bait and switch" for the state of Louisiana and pointed to "sizable impacts on bidding dynamics and operations for the industry parties" from the "last-minute changes."

He added that BOEM's "unexplained change in position" based on a single study on the Rice's whale appeared "more like a weaponization of the Endangered Species Act than the collaborative, reasoned approach prescribed by the applicable laws and regulations."

Cheers, jeers

"We are pleased that the court has hit the brakes on the Biden administration's ill-conceived effort to restrict American development of reliable, lower-carbon energy in the Gulf of Mexico," API Senior Vice President and General Counsel Ryan Meyers said in a statement.

National Ocean Industries Association President Erik Milito also welcomed the court's response.

"In a period when inflation is increasing expenses for Americans, particularly in terms of gasoline prices, we must fully harness America's energy production capabilities, particularly those offshore," he said Sept. 22.

As expected, environmental groups took the ruling as a blow to conservation and wildlife protections in favor of what they consider to be harmful drilling activities.

"The oil and gas industry's greed is astounding, and I'm heartbroken that oil executives won't make even minor accommodations to protect a whale from going extinct," Kristen Monsell, oceans legal director at the Center for Biological Diversity, said in an email.