USA - New obstacles raise questions over US Interior's court-ordered restart of oil, gas leasing

The US Interior Department, as promised, has moved forward with steps to restart oil and natural gas leasing on public lands and offshore waters, but environmental groups and progressive lawmakers have made moves that could now scuttle those plans.

The first lease sale of the Biden administration, for the Gulf of Mexico, could come as soon as October, with onshore lease sales following in Q1 2022. Washington observers, however, are skeptical as to whether those lease sales will be further stalled or come to fruition at all.

Though Interior is fighting a court order that blocked its pause on new federal oil and gas leasing, the Bureau of Ocean Energy Management on Aug. 31 released an updated record of decision for Lease Sale 257, indicating the department’s intention to proceed with the sale of offshore leases on more than 80 million acres in the Gulf of Mexico this fall.

Interior’s Bureau of Land Management on Aug. 31 also followed through with starting 30-day scoping processes, soliciting public input on parcels comprising at least 750,000 acres across nine states that were previously under consideration for deferred Q1 and Q2 2021 onshore lease sales.

“Interior could still suspend the sales if it wins its appeal, or, alternatively, the Biden administration could draw out environmental reviews, cancel sales via other statutory authorities, or impose terms that might make the sales less attractive to potential bidders,” ClearView Energy Partners said in a research note.

New lawsuit

Bolstering skepticism on the fate of upcoming lease sales, Friends of the Earth, Healthy Gulf, Sierra Club and the Center of Biological Diversity on Aug. 31 challenged in a federal district court the Interior’s decision to hold Lease Sale 257, while the House Natural Resources Committee floated legislative proposals that would raise oil and gas royalty rates and leasing costs for development on federal land and put further prohibitions on offshore leasing areas.

The lawsuit charges Interior with relying on “arbitrary environmental analysis” to greenlight the largest offshore lease sale in US history, a move environmental groups say will “contribute substantially to greenhouse gas pollution” and “exacerbate the climate crisis” in the Gulf of Mexico.

The environmental groups assert that Interior’s review of the sale comes to an “irrational conclusion” that the resulting forecast production of up to 1.12 billion barrels of oil and 4.4 Tcf of gas will not contribute to climate change. They further argue that Interior used an outdated environmental analysis that lacks new information on threats to newly listed endangered species, new interest in leasing the Gulf for wind projects and other issues not considered in the previous National Environmental Policy Act review.

The groups asked the US District Court for the District of Columbia to vacate Interior’s “unlawful decision” to hold Lease Sale 257 and enjoin any leases issued pursuant to the unlawful sale (Friends of the Earth, et al v. Haaland, et al, 21-cv-02317).

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