US court ruling puts 299 federal offshore Gulf leases sold in 2023 in jeopardy

A federal court judge put 299 federal leases sold during a congressionally mandated March 2023 sale in limbo Mar. 24, ruling that the US Interior Department’s environmental assessment failed to consider the environmental impacts of potential development.

Specifically, Judge Amit Mehta of the US District Court’s DC Circuit found that the Bureau of Ocean Energy Management (BOEM) violated the National Environmental Policy Act (NEPA) by improperly evaluating Lease Sale 259’s effects on the endangered Rice’s whale and greenhouse gas emissions from new drilling.

The sale, encompassing about 1.6 million acres in federal waters off the US Gulf Coast, raised about $263.8 million and was expected to yield about 1.1 billion bbl of oil and over 4 tcf of natural gas over 50 years, according to BOEM, which administered the sale and conducted the environmental assessment. 

Chevron was a major player, with winning bids of $108 million, including on popular deepwater tracts in the Green Canyon and Keathley Canyon areas (OGJ Online, Mar. 29, 2023).

Congress ordered the sale—the last Gulf sale held during the Biden administration—as part of a compromised reached to pass the Inflation Reduction Act (IRA) of 2022.

Earthjustice, which argued the case on behalf Healthy Gulf and other environmental groups, urged the judge to invalidate the leases.

The American Petroleum Institute (API), an intervenor in the case, insisted the court could not throw out the leases, given the IRA’s mandate to hold the sale. “That argument misses the mark,” Mehta wrote. 

He ordered that the parties submit additional briefs to the court on possible remedies that could include sending the environmental analysis back to the agency for supplemental environmental review or canceling the leases. A federal judge last July overturned another mandated lease sales, in Alaska’s Cook Inlet, on similar grounds (OGJ Online, July 17, 2024).

API said it was reviewing the court’s decision and evaluating options. “This is yet another example of activists weaponizing the NEPA process in the courts to block critical access for exploration, underscoring how permitting reform is essential to ensuring access to affordable, reliable energy,” said API spokesman Scott Lauermann.

Environmental groups hailed the ruling for recognizing “the serious hazards Lease Sale 259 would have inflicted upon Gulf coast communities, as well as the harms it would have caused to Gulf ecosystems and highly imperiled species like the endangered Rice’s whale,” said Devorah Ancel, senior attorney with Sierra Club’s Environmental Law Program.

BLM first-quarter onshore lease sales generate $39 million

Meanwhile, the Interior Department said it generated $39 million in total receipts from oil and gas sales held in the first quarter. The sales were in Montana/North Dakota ($11 million), New Mexico ($20 million), Wyoming ($6 million), and Nevada ($295,000). The sales involved leasing 34 parcels on 25,038 acres.