Judge Says No Offshore Lease Sale—Need More Environmental Impact Analysis First

The D.C. District Court issued an opinion on January 27 that voided a major oil and gas lease sale. Lease Sale 257 offered approximately 80.8 million acres of federal lands in the Gulf of Mexico, making it the largest offshore oil and gas lease sale in U.S. history. Lease Sale 257, which is part of the 2017-2022 Outer Continental Shelf Oil and Gas Leasing Program, was eighth in a series of lease sales. Many people are watching to see how agencies and the courts will balance energy needs with environmental and climate change concerns.

Pursuant to the Outer Continental Shelf Lands Act (OCSLA), the Bureau of Ocean and Energy Management (BOEM) within the U.S. Department of the Interior may lease areas of the Outer Continental Shelf. Under OCSLA, BOEM must prepare a Five-Year Program that consists of proposed lease sale information. After the Five-Year Program is approved, BOEM must conduct a thorough environmental review and allow for public notice and input. Lease Sale 257 was authorized in the last days of the Trump Presidency. Upon taking office, President Biden temporarily stopped all new oil and gas leasing, including Lease Sale 257. However, a Louisiana judge ordered the Biden administration to move ahead with the lease sale. The judge found that the pause was unsupported and effectively amended OCSLA and the Mineral Leasing Act (MLA), which only Congress, and not the administration, has authority to do.

Several environmental advocacy groups then sued to stop the lease sale. The environmental groups challenged Lease Sale 257, alleging that the federal government violated the National Environmental Policy Act (NEPA) and Administrative Procedure Act (APA) in conducting the lease sale. NEPA requires that federal agencies consider the environmental impact of agency actions during the decision-making process. If a federal action will “significantly impact the quality of the human environment,” NEPA requires that agencies produce reports known as Environmental Impact Statements (EIS). In accordance with NEPA, BOEM issued an EIS for the 5-year lease program (Program EIS). The agency then prepared and released an EIS for individual sales within the 5-year lease program,, including Lease Sale 257(Multisale EIS).In addition, a Supplemental EIS was released in 2018 for Lease Sales 250 and 251 (Supplemental EIS). In 2020, BOEM published a Determination of NEPA adequacy that concluded an additional EIS was not needed for Lease Sale 257, as the the environmental analysis in the Program EIS, Multisale EIS, and 2018 Supplemental EIS was sufficient to comply with NEPA. The environmental groups argued BOEM violated NEPA by failing to conduct a Supplemental EIS for Lease Sale 257 and argued the agency failed to exclude foreign greenhouse gas emissions in its quantitative calculation. The State of Louisiana and American Petroleum Institute (API) intervened in support of the lease sale.

The court determined that the government underestimated the climate impact of the leases, and that further analysis would not unjustly harm the companies seeking the leases because the leases had not yet become effective. The court found that the model BOEM used to exclude foreign consumption from the greenhouse gas emissions calculation in the EIS was arbitrary and capricious. The court reasoned that BOEM should have given a quantitative estimate of the downstream greenhouse emissions that would result from the reduced foreign consumption or explained more specifically why it could not have done so. Further, the court stated that BOEM could not rely on a Determination of NEPA Adequacy as a substitute for a Supplemental EIS to determine whether an existing analysis was sufficient without first providing an opportunity for public comment. In sum, the court determined that the environmental analysis was insufficient to proceed with the lease sale. Consequently, the court vacated Lease Sale 257 and remanded to BOEM, allowing the agency an opportunity to remedy its NEPA errors.

Environmental groups supported the ruling and the remand to the agency for further environmental analysis. However, industry groups continue to urge the Biden administration to develop and strengthen offshore leasing in order to support job and infrastructure development. At this time, the agency has not issued any notices or timeline for whether it will prepare a Supplemental EIS for Lease Sale 257, and it is unclear whether the leases will be developed for oil and gas production.