US court rulings put oil leases on hold in Alaska, Wyoming, pending environmental reviews

Two federal courts, in separate cases, ruled July 16 that US Interior Department agencies in Alaska and Wyoming could not issue oil and gas drilling permits until they conduct supplemental environmental assessments.

In both cases, the court found that the agencies violated the National Environmental Policy Act (NEPA) and gave them 6 months to reevaluate the effects drilling would have on the environment.

The case in Alaska (Cook Inletkeeper v. the US Department of Interior) involves a 2022 lease sale in Cook Inlet in the northern Gulf of Alaska that was mandated by Congress as part of a deal to pass the Biden administration’s major climate law.

Interior’s Bureau of Offshore Energy Management (BOEM) canceled Cook Inlet Lease Sale 258 in May 2021, citing a lack of industry interest, but it revived the sale after passage of the Inflation Reduction Act (IRA), which included both the climate provisions and the lease sale mandate. BOEM offered 224 blocks on 388,000 acres in the northern part of the Cook Inlet planning area, from roughly Kalgin Island in the north to Augustine Island in the south, in water depths of 33-260 ft (OGJ Online, Sept. 23, 2022). The sale, held in December 2022, received a single bid from Hilcorp Alaska of $63,983 for the 2,300-acre lease block 6255 (OGJ Online, Jan. 3, 2023).

Environmental groups sued, asserting that BOEM’s environmental review of Lease Sale 258 and the resulting record of decision violated NEPA. They also objected to Congress including a previously canceled lease sale in the IRA legislation.

The federal district court, in an opinion written by Judge Sharon Gleason, found that the BOEM failed to consider a reasonable range of alternative leasing areas, did not weigh the impact of vessel noise on beluga whales in the area and did not assess the "cumulative impact" of the sale on the environment.

Meanwhile, Judge Christopher Cooper of the US District Court for the District of Columbia, on the same day prohibited the Bureau of Land Management (BLM) from approving new drilling permits on nearly 68,000 acres of federal lands in Wyoming until the agency conducts a supplemental environmental review. He gave BLM 180 days to complete the review.

The case, Wilderness Society v. Haaland, dates to June 2022, when BLM’s Wyoming State Office finalized the lease sale. Environmental groups sued, challenging the BLM’s environmental review and sale’s size. The sale received 81 bids on 122 parcels with high bids totaling nearly $13 million.

Cooper in March 2024 ruled that BLM failed to fully comply with NEPA when it assessed the environmental impacts of drilling and agreed with the environmental groups that oil development could harm local wildlife and groundwater supplies. He did not issue a remedy then, instead asking for another round of briefings before issuing the ruling.

The environmental groups had requested the court to vacate the approved leases, while BLM sought time to conduct another environmental review. Cooper ordered BLM to “pause approval of any new drilling permits of surface-disturbing activities” to “avoid any environmental harm” while the agency reviews its NEPA analysis.