Appeals court orders BOEM to go ahead with Gulf of Mexico oil, gas lease sale

A federal appellate court Nov. 14 ruled the Biden administration must go ahead with oil and gas Lease Sale 261 in the Gulf of Mexico without the “11th hour” restrictions the administration added on acreage and ship speeds.

The US Court of Appeals for the Fifth Circuit ordered the Bureau of Ocean Energy Management (BOEM) to hold the lease sale within 37 days of the circuit court’s ruling, which would mean no later than Dec. 22. BOEM had told the court it needed that amount of time to comply with the public notice provisions of the Outer Continental Shelf Lands Act (OCSLA).

Oil and gas trade groups welcomed the decision, and an attorney representing industry plaintiffs in the case told the court during oral arguments earlier Nov. 14 that his clients would be happy to live with the 37-day deadline. A federal attorney at the court said BOEM would soon issue a notice specifying the new deadline for any additional bids and the date for opening the bids, which is the sale date.

A federal district court issued a preliminary injunction in September that barred BOEM from including its new restrictions in the lease sale, which was mandated by law to be held no later than Sept. 30 (OGJ Online, Sept. 22, 2023). The court fight delayed the sale beyond that deadline.

It is a quirk of the case that BOEM appealed the preliminary injunction because of its insistence on the Sept. 30 deadline but did not contest the merits of the case—the legitimacy of BOEM’s new restrictions—before the Fifth Circuit. Only environmental advocacy groups argued the merits, and the appellate court dismissed their arguments for lack of standing, meaning they could not demonstrate they were harmed by the preliminary injunction and hence had no proper role in the dispute.

The case is Louisiana v. Deb. Haaland. The state of Louisiana joined the American Petroleum Institute and Chevron Corp. in filing the lawsuit. A parallel suit, by Shell Offshore Inc., was consolidated with the lead case.

Unexplained policy change

The three-judge panel of the circuit court showed some interest in the merits of the case, even if the government attorney avoided them.

Paul Clement, an attorney participating in the oral arguments on behalf of industry and Louisiana, noted that BOEM, having consulted with the National Marine Fisheries Service, considered protections for the Rice’s whale in a supplemental environmental impact statement issued in January. BOEM’s conclusion in the supplemental EIS was that the risk of a vessel strike of the endangered whale was “exceedingly unlikely,” and consequently the agency went ahead with Lease Sale 259 in March without additional restrictions.

Then, for Lease Sale 261, BOEM came up with new restrictions despite having no new data. The added restrictions including fewer leasing tracts in an “expanded” Rice’s whale habitat, 10-knot speed restrictions on ships in oil and gas work within the expanded zone, and avoidance of ship movements at night “to the maximum extent practicable” in the new zone.

One judge asked why BOEM changed its mind on additional restrictions between the time of the supplemental EIS and late August, when the new restrictions were announced.

“I don’t know, your honor, because they never explained it. They didn’t even acknowledge that they were changing their mind,” Clement said.

“This is just a back-door way to shut down an industry with restrictions that are very debilitating but don’t make any sense,” Clement said at another point. If the restrictions are appropriate, they ought to apply to all operations and industries, he argued.

He noted that there is an ongoing Endangered Species Act process of consideration for the protection of Rice’s whales that at some point could allow the government to impose restrictions on all relevant industries if the conclusion were that such restrictions were needed.

The judges also expressed an awareness that there will be more opportunities for regulatory restrictions, given that each oil and gas company winning an exploration tract must file an exploration plan with federal regulators, and if oil or gas is found, a development plan also must be filed.