Biden admin hit with lawsuit for restricting oil, gas production: 'Put American jobs at risk'

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This is a slap in the face to the oil and gas industry: Phil Flynn

Phil Flynn and Tim Dallinger discuss the Biden administration cutting millions of acres from oil lease on ‘The Story.’

The Biden administration was hit with a federal lawsuit over its recent actions placing restrictions on offshore oil and gas leasing in the Gulf of Mexico.

The American Petroleum Institute (API), State of Louisiana and Chevron filed the complaint late last week and moved for preliminary injunction in the case Tuesday. The lawsuit challenges the Bureau of Ocean Management's (BOEM) notice of sale for the upcoming Lease Sale 261, which made six million fewer acres available to oil and gas extraction than previously scheduled, as part of a settlement with eco groups.

"Congress’ directive is clear in the Inflation Reduction Act that the Department of the Interior must hold offshore Lease Sale 261 in the Gulf of Mexico in order to help meet the energy needs of the American people," API Senior Vice President and General Counsel Ryan Meyers said in a statement Tuesday. 

"However, the Biden Administration has instead pursued illegal roadblocks, removing more than 6 million acres from this lease sale and imposing new and unjustified restrictions that target American energy workers," Meyers added. "These actions place U.S. energy security in a more vulnerable position, put American jobs at risk, and jeopardize the strength of the Gulf Coast economy."

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The Biden administration's actions remove about six million acres of potentially oil-rich leases from an upcoming federal lease sale. (Getty Images)

The lawsuit, according to Meyers, calls for the legal system to require the Biden administration to "fulfill its obligations to the American people."

Lease Sale 261, which is the final federal offshore lease sale scheduled, is set for late September. Industry groups like API have argued such sales are vital to ensure long-term oil and gas production while protecting U.S. national security interests.

"Once again, Joe Biden is unlawfully attempting to kill both Louisiana jobs and affordable energy for all Americans," Louisiana Attorney General Jeff Landry said last week. "We are yet again taking the President to court, where we trust the rule of law will be followed and Biden’s bureaucrats will be defeated."

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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.

Energy industry groups have called for consistent offshore lease sales to ensure long-temr oil and gas production. (AP Photo/Eugene Garcia, File)

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 during Lease Sale 261. 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.

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. 

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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.

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The settlement specifically expands protections for the Rice’s whale, a species listed as endangered.

NOIA and API both argued the BOEM action 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.

BOEM didn't immediately respond to a request for comment.