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Fifth Circuit postpones federal ruling on offshore lease sales in Gulf of Mexico

The U.S. oil and natural gas industry, led by the Gulf states of Texas and Louisiana, have set records in petroleum exports and led in exports of liquified natural gas in the first half of 2023.

Published: September 27, 2023 11:00pm

(The Center Square) -

Last week a federal judge ruled the Biden administration must go through with offshore lease sales in the Gulf of Mexico by Sept. 27 as originally planned and under original conditions. One week later, the Fifth Circuit amended the ruling, pushing back the lease sale date to Nov. 8.

Louisiana Attorney General Jeff Landry, who sued over another restriction imposed on the industry, said the ruling was “a major win not only for the rule of law, but also for Louisiana jobs and affordable energy. At a time when working families are being squeezed by unaffordable Bidenomics, I am glad to deliver yet another victory defeating overreaching bureaucrats.

“Congress is clear: lease sales must take place; so we are grateful the Judge cut through the noise and upheld the law,” Landry added. He also said “our fight is far from over,” the initial ruling granted relief “against the President’s latest attack on reliable and affordable American energy.”

The U.S. oil and natural gas industry, led by the Gulf states of Texas and Louisiana, have set records in petroleum exports and led in exports of liquified natural gas in the first half of 2023. The industry has also provided a “lifeline” to European countries reducing reliance on Russia and suffering from failed “green energy” policies, according to data previously reported on by The Center Square.

Last Thursday, Judge James Cain of the Western District of Louisiana granted the plaintiffs request for a preliminary injunction in a lawsuit filed against the Biden administration by the state of Louisiana, American Petroleum Institute (API) and petroleum companies, Chevron and Shell. They sued after the Biden administration attempted to hamper U.S. oil production again, as its repeatedly done since January 2021, they argued. This time, the attempt was through the Bureau of Ocean Energy Management's (BOEM) restrictions on Lease Sale 261, which covers millions of acres in the Gulf of Mexico.

Cain ruled, "The court observes that plaintiffs have demonstrated substantial potential costs resulting from the challenged provisions. While the government defendants largely focus on the acreage withdrawal and dynamics of the sale itself, many of plaintiffs’ alleged hardships arise from the vessel restrictions."

He ordered the federal government to proceed with the lease sale no later than Sept. 30 and under the original conditions. The ruling was a reversal of terms BOEM reached three months earlier in a settlement with environmental groups that proposed removing six million acres from the sale. It also imposed restrictions on oil and gas vessels associated with Lease Sale 261, including the National Marine Fisheries Service proposing designating 28,000-square-miles in the Gulf as critical habitat for Rice’s whales.

The environmental groups opposing offshore drilling allege the industry would cause the whale to go extinct because it only lives in the northern part of the Gulf of Mexico. In 2019, NOAA Fisheries designated the Gulf of Mexico Bryde’s whale as an endangered subspecies under the Endangered Species Act. In 2021, it expanded the designation to include Rice’s whale, which is also protected under the Marine Mammal Protection Act.

In response to Cain’s ruling, API’s senior vice president and General Counsel Ryan Meyers said, “We are pleased that the court has hit the brakes on the Biden Administration’s ill-conceived effort to restrict American development of reliable, lower-carbon energy in the Gulf of Mexico.” He said the ruling will allow Lease Sale 261 to move forward “as directed by Congress in the Inflation Reduction Act, removing the unjustified restrictions on vessel traffic imposed by the Department of the Interior and restoring the more than 6 million acres to the sale. This decision is an important step toward greater certainty for American energy workers, a more robust Gulf Coast economy and a stronger future for U.S. energy security.”

The federal government appealed the ruling to the U.S. Court of Appeals for the Fifth Circuit.

On Monday, a panel of three Fifth Circuit judges granted a partial stay only to push back the date of the lease sale from Sept. 27 to Nov. 8.

The court ruled, “No extension will be granted. That is to say: Insofar as the preliminary injunction is concerned, the final paragraph of the Memorandum Order remains in effect, pending appeal of the preliminary injunction, with the exception that ‘September 30, 2023,’ is changed to ‘November 8, 2023.’”

It also denied most pretrial motions filed.

The delay, BOEM said, “allows time for a more orderly lease sale process.”