The Biden administration blocked off millions of acres of federal waters from an upcoming oil and gas lease sale as a result of its settlement with environmental groups over wildlife protections.
The Bureau of Ocean Energy Management (BOEM), an Interior Department subagency tasked with managing offshore energy development, published a final notice of sale for Lease Sale 261 late Wednesday, including six million fewer acres than it previously scheduled. The Gulf of Mexico lease sale is set to take place in late September and marks the final planned federal oil and gas sale.
"The biggest impact will be on the reduced acreage that is going to be offered in the lease sale," National Ocean Industries Association President Erik Milito told Fox News Digital in an interview ahead of the announcement. "That is a massive amount of highly-prospective acreage that could lead to energy production, especially when you consider that there are producing facilities in the proximity of some of that acreage."
Milito added after the announcement that BOEM's decision to strip millions of acres from the sale and issue other restrictive conditions on companies "poses a real barrier to America’s energy production capabilities, at a time when they’re needed more than ever, with inflation driving up the costs of everything for Americans, including gasoline at the pump."
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Overall, BOEM said it would offer 12,395 blocks across approximately 67 million acres in multiple regions of the Gulf of Mexico, less than the 13,620 blocks across 73.4 million acres it originally planned to offer. According to industry, the acreage stripped from the sale included potentially oil-rich tracts located in the middle of the lease area.
Offshore lease sales often span large swaths of federal waters, but earn bids on a fraction of blocks projected by companies to contain more resources and to have a higher return on investment. For example, BOEM auctioned off 73.3 million acres during Lease Sale 259 in March, but received bids worth $263.8 million for 313 tracts spanning 1.6 million acres.
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"With this announcement, the administration is removing approximately 6 million acres of the Gulf of Mexico and adding new and unjustified restrictions on oil and gas vessels operating in this area, amounting to a lease sale in name only," said Holly Hopkins, the American Petroleum Institute's vice president of upstream policy.
"Today’s announcement leaves American energy developers in a period of extended uncertainty, with no future offshore lease sales scheduled," Hopkins continued. "This action defies Congress’ mandate in the Inflation Reduction Act, jeopardizes U.S. energy security and violates the Biden administration’s energy obligations to the American people."
In addition to removing acreage from the sale, BOEM also imposed restrictions on oil and gas vessel traffic associated with the leases set to be auctioned. Among the requirements, BOEM said specially-trained visual observers must be aboard all vessels traversing the area, all ships regardless of size must travel no quicker than 10 knots and vessels should only travel through the area in the daytime.
"These restrictions are not supported by the record and target the men and women of the oil and natural gas industry operating in this region, ignoring all other vessel traffic," Hopkins said, arguing the restrictions only apply to fossil fuel companies that operate just a portion of vessels traversing the area.
BOEM's restrictions came in response to the Biden administration's settlement last month with a coalition of four environmental groups led by the Sierra Club.
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In a federal stipulated stay agreement filed on July 21, the National Marine Fisheries Service (NMFS) agreed to a number of conditions requested by the groups which, in response, agreed to temporarily pause litigation in the related case. The case dates back nearly three years when, in October 2020, the environmental coalition sued the NMFS for failing to properly assess the oil industry impacts on endangered and threatened marine wildlife in the Gulf of Mexico.
The groups pursued the lawsuit after the NMFS coordinated a multiagency consultation studying the effects all federally regulated oil and gas activities would have on species listed under the Endangered Species Act in the Gulf of Mexico over the next 50 years. The groups argued in the original complaint that the NMFS' biological opinion resulting from its consultation was not based on the best science.
The settlement specifically expands protections for the Rice’s whale, a species listed as endangered.
NOIA and API both argued the decision Wednesday contravenes the congressional intent of the Inflation Reduction Act, which reinstated multiple lease sales, including Lease Sale 261, after the Biden administration axed them in May 2022. In the sale's record of decision, it is mandated to be region wide while its environmental analysis didn't acknowledge risks it may pose to the Rice’s whale.
