Sue and Settle: Biden Administration Cedes to Activists, Moves to Limit Offshore Operations Across the Gulf of Mexico

Ceding to activists’ demands to limit oil and natural gas development in the Gulf of Mexico under the guise of protecting the Rice’s whale, the Biden administration has announced “a lease sale in name only” that removes millions of acreage from the parcel and adds burdensome restrictions on operators.

In response to the “arbitrary and unlawful” last-minute changes, the American Petroleum Institute, the state of Louisiana, and Chevron have filed a lawsuit against the Bureau of Ocean Energy Management and the Department of the Interior.

How we got here:

Just before Lease Sale 261 was put forward, BOEM announced a buffer zone impeding vehicle transit in a massive stretch of the Gulf, extending well beyond the Rice’s whale core habitat. Notably, the restrictions in the buffer zone only apply to ships involved in oil and natural gas operations moving through the busy shipping corridor.

Industry groups warned that these “voluntary” restrictions would be made mandatory by incorporation into an upcoming lease sale. These concerns were warranted; the eleventh-hour changes made to Lease Sale 261 adopted the new vessel transit restrictions and withdrew all acreage included in the expanded Rice’s whale habitat zone, dealing another blow to energy production in one of the lowest carbon-intensity basins in the world.

Restrictions Will Limit Energy Production, Harm Local Economies

The new restrictions for oil and natural gas vessels operating in the Gulf limit nighttime travel, require ships to slow or idle transit speed, and avoid certain areas of the Gulf altogether in the chance that one of the endangered whales will be present.

In the short term, these restrictions will result in increased vessel emissions, crowded shipping lanes, a higher risk of vessel collisions, and a decline in energy production. Combined with the reduced acreage, the limitations on vessel traffic render Lease Sale 261 effectively moot.

In response to the one-two-punch dealt by President Biden’s DOI, API Vice President of Upstream Policy, Holly Hopkins, called out the administration for creating “roadblock after roadblock” to American energy production:

“With this announcement, the administration is removing more than 10 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. 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.”

The new limitations on oil and natural gas operations in the Gulf have economic impacts that extend beyond just impeding energy production, and officials representing local communities in the Gulf are raising the alarm. Speaking to the Panama City News Herald, Michael Rubin, President and CEO of Florida Ports Council, said that the new restrictions would cripple Florida ports’ operations:

“I don’t know which one is weirder − the 10 knots or the no vessel movements at night.. It’s going to be almost impossible for a port to run if those go into effect.”

Rubin continued:

“It’s as if NOAA wants Florida to hand up a ‘closed for business’ sign.”

The expansive and unjustified restrictions to offshore development didn’t come out of thin air. Following the settlement of a lawsuit filed in 2020 by activists challenging BOEM’s assessment of the risks to the Rice’s whale, a coalition of environmental groups led by Earthjustice submitted a plan to essentially halt commerce – and energy development – in the Gulf. The petition’s demands were largely satisfied by the Department of Interior’s new restrictions.

More Mixed Messages on Domestic Production

The White House is not a passive player in activists’ “sue and settle” strategy – according to Senator Joe Manchin (D-WV), the revised Lease Sale 261 is evidence that the Biden administration “continues to kowtow to radical environmentalists at the expense of American energy security.”

Despite ongoing calls for increased domestic production from Biden’s cabinet officials, the administration keeps making moves to block resource-rich federal lands and waters from development. Notably, the acreage withdrawn from Lease Sale 261 is particularly high potential, as National Ocean Industries Association President Erik Milito described to Fox News Digital:

“The biggest impact will be on the reduced acreage that is going to be offered in the lease sale… 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.”

After what’s left of Lease Sale 261, there are no more offshore lease sales scheduled, as the White House continues to stall on finalizing a legally-mandated five-year offshore leasing program. API’s Holly Hopkins pointed out the extraordinary risks, and potential illegality, of withholding the five-year plan:

“Today’s announcement leaves American energy developers in a period of extended uncertainty, with no future offshore lease sales scheduled. 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.”

While gas prices rise across the country, increased leases – and production – in the Gulf of Mexico would have a material impact on national crude oil supply. According to the U.S. Energy Information Administration, the Gulf of Mexico is “one of the most important regions for energy resources,” with federal offshore production accounting for 15 percent of total U.S. crude oil production.

Bottom Line: Offshore energy development in the Gulf of Mexico is key in helping the United States achieve energy security and meeting environmental goals. But while American household energy prices climb, the Biden administration continues to cater to activists’ demands by obstructing, delaying, and using every excuse in the playbook to effectively stunt American energy.

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