A federal court in Alaska overturned an oil and gas lease sale that had been mandated by the Biden administration’s Inflation Reduction Act (IRA) as part of a political compromise with West Virginia Senator Joe Manchin, on grounds that the U.S. government violated the law when holding the sale. The ruling affects a lease sale held in December 2022 of offshore tracts for oil and gas development in the Cook Inlet in the northern Gulf of Alaska. And a federal judge for the US District Court for the District of Columbia blocked the Bureau of Land Management (BLM) from approving new oil and gas drilling permits on 120,000 acres of public land in Wyoming until the agency conducts a supplemental review of the related environmental impact. BLM’s Wyoming State Office had finalized a lease sale of the land in June 2022.
Federal Court Overturns Alaska Oil Lease Sale
On the night of July 16, a federal court in Alaska overturned an oil and gas lease sale that had been mandated by the Biden administration’s Inflation Reduction Act (IRA) as part of a political compromise, on grounds that the U.S. government violated the law when holding the sale. The ruling affects a lease sale held in December 2022 of offshore tracts for oil and gas development in the Cook Inlet in the northern Gulf of Alaska that had been mandated as part of a compromise to pass the Inflation Reduction Act in 2022. The sale offered nearly a million acres of federal waters in Alaska to oil and gas development. Senator Joe Manchin from West Virginia, whose vote was crucial for passage of the IRA, tethered oil lease sales to offshore wind lease sales in the IRA to encourage U.S. President Joe Biden to continue to hold oil and gas drilling auctions. Biden has leased fewer offshore acres for oil and gas development than any president since WWII.
The court decision is a win for environmental groups who objected to the inclusion in the IRA of oil lease sales that had been previously canceled. The federal district court found that the Interior Department failed to consider a reasonable range of alternative leasing areas, which violates the National Environmental Policy Act, did not weigh the impact of vessel noise on Beluga whales in the area and did not assess the “cumulative impact” of this sale on the environment. Two other lease sales mandated in the IRA are currently being litigated. Congress clearly stated that the sales must take place, and it is unclear what the final disposition will be.
Federal Court Blocks Drilling Permits in Wyoming
New oil drilling permits on nearly 120,000 acres of public land in Wyoming were temporarily blocked by a federal court. Judge Christopher R. Cooper of the US District Court for the District of Columbia blocked the Bureau of Land Management (BLM) from approving new oil and gas drilling permits on the land until the agency conducts a supplemental review of the related environmental impact, which he says it must do in the next 180 days. Cooper previously ruled that the Interior Department’s BLM failed to fully comply with the National Environmental Policy Act when assessing the environmental impact of drilling on the land “and explaining its decision to authorize a lease sale of this magnitude in light of its own estimates of the steep social costs from the projected greenhouse gas emissions.” “Social costs” of carbon have risen more than 38-fold in price under the Biden Administration, as part of his “all-of-government” approach to meeting his promise to the UN under the Paris Accords. (From under $5 per ton under Trump to $190.) The higher the cost alleged by the government, the harder it is to legally justify investments in domestic energy production.
BLM’s Wyoming State Office finalized a lease sale of the land in June 2022 with environmental groups suing the same day, challenging the BLM’s environmental review and the size of the sale. In March, Cooper agreed with environmental groups that oil development on the land may harm local wildlife and groundwater supplies, ordering another round of briefings before issuing a ruling. The groups had asked for the court to vacate the approved leases, while BLM asked to remand it back to the agency for further consideration without vacatur. Judge Cooper wrote, to “avoid any environmental harm while the Bureau revises its NEPA analysis, the Court will require that the Bureau pause approval of any new drilling permits or surface disturbing activities on the leased parcels during remand.”
In a separate case earlier this year, Cooper upheld the Biden administration’s first oil and gas leases on public lands. Those sales, on 173 parcels across seven states, were also challenged by anti-fossil fuel groups on the grounds that the BLM did not fully account for the sales’ greenhouse gas emissions. But Cooper sided with the Interior Department, finding no legal shortcomings in the agency’s environmental analysis.
Conclusion
Two recent federal court cases made U.S. oil and gas development more difficult when a judge in Alaska overturned an oil and gas lease sale that had been mandated by the Biden administration’s Inflation Reduction Act (IRA) as part of a political compromise with Senator joe Manchin, and when a federal judge in DC temporarily blocked permits for oil and gas drilling on 120,000 acres of public land in Wyoming, sending the case back to BLM for further environmental analysis. The Alaska ruling affects a lease sale held in December 2022 of offshore tracts for oil and gas development in the Cook Inlet in the northern Gulf of Alaska. These cases further President Biden’s war against oil and gas development in the United States, favoring oil production in Iran and Venezuela instead, despite U.S. oil and gas production being of the best environmentally quality in the world.
