White House accused of violating IRA over new offshore oil restrictions

In a move to balance environmental protection and energy industry interests, the White House has taken steps to prevent oil and gas drilling on more than 6 million acres of federal waters. Industry groups have contested the decision, asserting that it contradicts the Biden administration’s own Inflation Reduction Act and threatens American energy security.

“Today’s announcement leaves American energy developers in a period of extended uncertainty, with no future offshore lease sales scheduled,” American Petroleum Institute Vice President of Upstream Policy Holly Hopkins said. “This action defies Congress’s mandate in the Inflation Reduction Act, jeopardizes U.S. energy security and violates the Biden administration’s energy obligations to the American people.”

The move stems from a concerted effort by environmental organizations to safeguard a whale species teetering on the brink of extinction. Seeking to navigate a middle path, the federal government has permitted the sale of more drilling locations in the Gulf of Mexico, albeit with significant restrictions. The heart of this dilemma arises from provisions set by the Inflation Reduction Act aimed at the energy sector.

While the legislation allocated substantial funds towards offshore wind initiatives, it also tied the government’s ability to grant leases for these types of renewable energy projects to its allowing for additional oil leases in U.S. waters. The Inflation Reduction Act stipulates that, before the Department of the Interior can issue a single offshore wind lease, a lease sale for offshore oil covering at least 60 million acres must have taken place in the previous year. This mandate will apply over the law’s ten-year duration.

“This Administration continues to kowtow to radical environmentalists at the expense of American energy security and costs to American families,” Sen. Joe Manchin (D-WV) said. “Let me be clear, the exclusion of more than 6 million productive acres from the upcoming offshore oil and gas lease sale in the Gulf of Mexico based on a settlement reached in the name of protecting Rice’s whale while conveniently only targeting oil and gas is yet another example of this administration’s intentional undermining of the strong energy security provisions in the Inflation Reduction Act.”

Additionally, the White House-endorsed Inflation Reduction Act reinstated a previously illegal Gulf of Mexico oil lease known as Lease Sale 261. Back in 2022, a federal judge blocked this sale due to the Interior Department’s failure to transparently disclose the potential greenhouse gas emissions stemming from it.

“I’m thrilled the court saw through the Biden administration’s horribly reckless decision to hold the largest oil lease sale in U.S. history without carefully studying the risks,” Kristen Monsell, oceans legal director at the Center for Biological Diversity, said following the judge’s decision.

In July of 2023, the Biden administration reached a settlement in court with a coalition of environmental groups that had raised concerns about the impact of oil leases on the endangered Rice’s whale species, with as few as just 52 remaining in the wild. As part of this settlement, the administration agreed to exclude around 11 million acres in the Gulf of Mexico from future oil lease sales, a move that is now directly impacting Lease Sale 261.

“It is time to transition away from fossil fuels. Continued development in the Gulf of Mexico creates unfair burdens on communities in Houston and across the Gulf South,” Kristen Schlemmer, legal director for Bayou City Waterkeeper, said. “Moving forward with Lease Sale 261 means more drilling in the years to come. It means more facilities in our backyards. It means higher rates of cancer and heart and lung diseases, and it means more risks during major storms.”

The Bureau of Ocean Energy Management’s recent publication of the final notice of sale for Lease Sale 261 displayed a lease area reduced by more than six million acres compared to the previous plan, close to a 10% drop in total area offered. Oil industry groups have decried this reduction, noting that the removed acreage potentially contains oil-rich locations.

“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 said. “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.”

In addition to the reduced lease area, the government has enacted heightened restrictions on oil and gas vessel traffic in response to calls for enhanced protections for Rice’s whales. These measures include speed limits on boats, daytime-only ship travel, and the requirement for specially-trained visual observers aboard all vessels.

Responding to these new White House regulations, an oil and gas industry trade group known as the American Petroleum, along with the state of Louisiana and Chevron, filed a lawsuit against the Biden administration. The plaintiffs argue that the government’s changes are “arbitrary and unlawful.”

“Today we’re taking steps to challenge the Department of the Interior’s unjustified actions to further restrict American energy access in the Gulf of Mexico,” American Petroleum Senior Vice President and General Counsel Ryan Meyers said in a statement.