The Interior Department reinstated an offshore oil and gas lease sale that was invalidated by a federal judge earlier this year, its Bureau of Ocean Energy Management confirmed Wednesday, against the interests of environmental groups and Democrats who want an end to the federal leasing programs.
BOEM accepted the high bids for Lease Sale 257, the lone offshore lease sale carried out in 2021, and companies are being sent their lease forms for execution, according to one source familiar with the matter. The action complies with a directive from Congress, provided in the Democrats’ Inflation Reduction Act, that the lease sale be reinstated within 30 days of passage.
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BOEM accepted 307 highest valid bids for tracts in the Gulf of Mexico auctioned for a total of $189,888,271. The bureau originally held the lease sale in November 2021, but a federal judge invalidated the results in January of this year.
The Gulf of Mexico sale’s reinstatement is a setback for environmentalists, who successfully challenged the lease sale in court. In January, Judge Rudolph Contreras, an Obama nominee, ruled that the Interior Department’s underlying paperwork fell short of meeting the agency’s environmental review obligations under the National Environmental Policy Act.
The American Petroleum Institute, an industry group representing oil and gas companies, appealed the ruling, while the Biden administration declined to appeal.
The department’s reinstatement of the sale is a direct challenge to President Joe Biden’s campaign promise to restrict the leasing and permitting of federal lands for oil and gas development.
Cole Ramsey, API’s vice president of upstream policy, said the trade group is pleased the Interior Department offered the leases but that “it is disappointing that it took 19 months and an act of Congress to get us to this point.”
Environmental groups, including the lead plaintiff against 257, have indicated a readiness to take additional legal action against the reinstatement of the lease sale.
Lease Sale 257 and three other canceled offshore lease sales received a lifeline in the Inflation Reduction Act, Democrats’ signature tax, green energy, and healthcare spending bill, as part of a larger series of concessions made to secure the support of Sen. Joe Manchin (D-WV), who supports leasing of federal land for oil and gas.
The Inflation Reduction Act ordered Interior Department to award bids offered for 257 and to carry out the other three sales, which would otherwise not have been offered due to the expiration in June of the five-year offshore leasing program, in which those sales were contemplated.
Other provisions in the Inflation Reduction Act favoring oil and gas tie the development of renewable energy on federal lands to the regular leasing of lands and offshore acreage for oil and gas.
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Many Democrats oppose the continued leasing of federal lands and waters for mineral leasing, and several bills were introduced this Congress to scale back the leasing programs.
Liberal Democrats and green groups that oppose the Inflation Reduction Act’s oil and gas provisions have spoken out against them but overwhelmingly supported the legislation for its several hundred billion dollars in incentives and grants for green energy and other environmental priorities.
BOEM said Wednesday it is “committed to implementing the law, including direction regarding the federal oil and gas programs,” while it also talked up the Inflation Reduction Act as “a historic and transformational investment toward achieving President Biden’s ambitious goals to tackle the climate crisis while lowering costs for working families and creating good-paying jobs.”
