Energy & Environment

Court’s invalidation of offshore drilling sale ratchets up the pressure on Interior

The Interior Department is under pressure from both the fossil fuel industry and environmentalists over an assessment of an offshore drilling lease sale first greenlighted by the Trump administration.  

A cancellation of the offshore lease in the Gulf of Mexico by a federal judge was a win for the Biden administration, but now the decision rests with the Interior Department on how to proceed.  

The agency faces a tough decision about whether to cancel, change or maintain the sale without the ability to blame the outcome on Trump-era calculations.  

The development is the latest in a saga of court challenges regarding this particular offshore drilling lease sale.  

The lease sale, known as Lease Sale 257, was originally approved at the end of former President Trump’s tenure. It was later carried out by the Biden administration after a June ruling against its pause on new oil and gas leasing. 

Last week, Judge Rudolph Contreras, an Obama appointee, invalidated the sale and the leases won during it, stating that the Trump administration’s assessment had failed to account for how the sale would change global fossil fuel demand, potentially worsening climate change.  

In his decision, Contreras gave the Biden administration a great deal of latitude on how to approach the solution to this problem, writing that he would “vacate Lease Sale 257 and allow the agency an opportunity to remedy its … error as it so chooses in the first instance.” 

“The Court does not specify how BOEM must do so, on what timeline, or what ultimate conclusion it must reach, leaving those issues to the sound discretion of the agency,” he said, referring to the Bureau of Ocean Energy Management.  

Asked about next steps, the Interior Department referred The Hill to a statement issued on the decision in which spokeswoman Melissa Schwartz said the department was “reviewing the court’s decision concerning deficiencies.”

Schwartz also emphasized that the department was “compelled to proceed with Lease Sale 257” by the June ruling and said that “deficiencies” in the overall oil and gas program need change. 

“Especially in the face of the climate crisis, we need to take the time to make significant and long overdue programmatic reforms,” she said. 

According to Sara Gosman, an environmental law professor at the University of Arkansas, the ruling leaves the BOEM, which is overseen by the Interior Department, with multiple options.  

In an emailed statement to The Hill, Gosman said that after its revised analysis, the department could choose to either not hold the sale or decide to hold a smaller one if these decisions are backed by a new analysis.  

She also said that the department may be able to “drag its feet and not make a decision” until the end of the current leasing period, effectively halting it.  

However, Gosman noted that the dragging-its-feet approach would be “risky” because of the June injunction, saying in a follow-up interview that it could spur additional litigation or that the court could even hold the federal government in contempt.  

At the start of his tenure, President Biden issued a pause on all new drilling lease sales as the Interior Department reviewed the federal oil and gas program.  

In June, Judge Terry Doughty issued a preliminary injunction against that pause, ruling that as the case proceeded, the administration would have to continue its leasing program.  

The sale took place in November and received fierce backlash from environmentalists, who said the department should have modified the sale or waited for the results of an appeal.  

In August, they sued over it, and a court last week ruled in the environmentalists’ favor. 

The Interior Department is now under close scrutiny from both the oil and gas industry and environmental groups while they await its decision on the matter.  

Environmentalists hope that the sale will ultimately be canceled.  

“I think that any reasonable, science-based, comprehensive analysis would show that it is simply too harmful to the environment and can’t go forward,” said Kristen Monsell, oceans legal director at the Center for Biological Diversity.  

“If you’re putting us on a course to address the climate crisis, there is no reason to keep holding sales because there is already so much leased today,” said Aaron Weiss, deputy director at the Center for Western Priorities.  

Meanwhile, industry groups and Republican-led states have pushed for a robust drilling program.  

“We would be hopeful that they would understand that a decision to not move forward with some urgency would be detrimental to Americans for many reasons when it comes to the need for domestic energy production,” said Erik Milito, president of the Natural Ocean Industries Association, which represents both offshore drilling and offshore wind interests.  

The Biden administration last year wrapped up its assessment of its overall oil and gas leasing program, saying that it should raise royalties for onshore drilling, but did not make a similar recommendation for offshore drilling.  

Instead, it said that BOEM was working on changes following a different report recommending that it ensure it is “capturing the full value” of the leases it offers.  

It also said, for both onshore and offshore drilling, the department will continue to study the best way to incorporate the cost of the planet-warming emissions — but it didn’t lay out specific steps that would be taken. 

Weiss said that, overall, he hopes the department action is part of a larger plan to meet its climate goals.  

“At the end of the day, President Biden has said we have to limit the impacts of climate change to 1.5 degrees Celsius. We have to put America on track to net-zero emissions by 2050. You can’t do that if you’re continuing to hold lease sales, but you also have to do it the right way to get us there,” he said.  

“And so, what I hope this is part of is a comprehensive plan to reaching that net-zero,” he added.  

Industry is also closely watching what the administration will do with oil and gas leasing in general.  

“It will be incumbent on the Administration to defend responsible U.S. offshore production and to take the necessary steps, including the development of a new U.S. offshore oil and gas leasing program, to ensure continued leasing and energy production from the U.S. Gulf of Mexico, for the benefit of all Americans,” Milito said in a statement following the latest court decision. 

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