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The Federal Government has joined the Sierra Club et al in appealing Judge Cain’s order on Sale 261. BOEM has nonetheless committed to complying with the order if the appeal fails (likely).

BOEM is taking steps to comply with an order issued on September 21, 2023, by the U.S. District Court for the Western District of Louisiana regarding Gulf of Mexico Outer Continental Shelf Oil and Gas Lease Sale 261.   

Lease Sale 261 will be conducted on September 27, 2023. In accordance with the court’s order, BOEM will include lease blocks in Lease Sale 261 that were previously excluded due to concerns regarding potential impacts to the Rice’s whale distribution in the Gulf of Mexico.  

BOEM is also extending the bid submission period to 3 p.m. CST on September 26, 2023. 

BOEM

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Quotes from the judge’s order (emphasis added):

The challenged lease term for the expanded Rice’s whale area only arose in a July 2023 district court filing and then appeared in the FNOS for Lease Sale 261 on August 25, 2023—one month before the statutory deadline for the sale. BOEM failed to follow its own procedures by making significant changes to the FNOS, thereby depriving both affected states and the public the opportunity for meaningful review and comment. The procedural error is particularly grave here, because of both the compressed timeline and BOEM’s inexplicable about-face on the scientific record it had previously developed. (p.19)

The challenged provisions inserted into these leases at the eleventh hour, and the acreage withdrawal, are based only on an unexplained change in position by BOEM on a single study a few months after that supplemental EIS. The process followed here looks more like a weaponization of the Endangered Species Act than the collaborative, reasoned approach prescribed by the applicable laws and regulations. (p.22).

According to an affidavit from Shell’s commercial manager, the new restrictions on vessel traffic apply to an area of the northern Gulf that separates Shell’s existing offshore leases from the onshore infrastructure that supports them. Shell Offshore Inc., No. 2:23-cv-1167, at doc. 4, att. 2, ¶¶ 23–27. (p. 23).

Given the shaky justification offered by BOEM, the court cannot find that the challenged provisions are so necessary that withholding them even on a preliminary basis will outweigh the risk of irreparable economic harm shown by plaintiffs. Additionally, “there is generally no public interest in the perpetuation of unlawful agency action.” (p. 26)

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Gulf of Mexico oil production increased to 1.853 bopd in June which is more in line with production at the beginning of the year and the EIA 2023 forecast. Production remains well below BOEM’s 2.0 million bopd forecast for 2023.

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The court filing is attached. See the previous post on this matter.

This Court should grant Plaintiffs—the State of Louisiana, the American Petroleum Institute (“API”), and Chevron U.S.A. Inc. (“Chevron”)—a preliminary injunction and prevent those unlawful provisions from permanently disrupting the result of the fast-approaching lease sale (which Congress has directed must occur by September 30, and which cannot be delayed without causing Plaintiffs even more serious injury).

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See the attached document.

From a regulatory policy standpoint, this appears to be a strong filing. Operationally, the most important points pertain to the costly and premature Rice’s whale restrictions first discussed on this blog.

Most notably, the plaintiffs seek (p.39):

  1. A preliminary and permanent injunction striking, setting aside, and enjoining BOEM from implementing the specific challenged provisions of the Final Notice of Sale and Record of Decision for Lease Sale 261;
  2. An order vacating the specific challenged provisions of the Final Notice of Sale and Record of Decision for Lease Sale 261;
  3. An order compelling Defendants to proceed with Lease Sale 261 on September 27, 2023, without the challenged provisions;

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Lease Sale 261 stipulations

In addition to the lease stipulation, the entire expanded Brice’s whale area has been excluded from the lease sale. Senator Manchin strongly criticized that decision:

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.

Senator Manchin

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The attached comments were submitted to BOEM via Regulations.gov. The comments address specific provisions of the proposed rule and include a recommendation to hold companies fully accountable for their lease transfers, but not for subsequent transfers in which they are not a party.

Do I get a t-shirt for being one of the first 2000 entries? 😀

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1137 comments to date per Regulations.gov. This would imply one or more organized commenting campaigns.

I will share my comments on this blog after they have been submitted.

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For the first time in the history of the US OCS program, Federal ontracts have been awarded for the decommissioning of facilities in the Matagorda Island area of the Gulf of Mexico. The use of taxpayer funds for this purpose should be an embarrassment for the offshore industry and its regulators, past and present.

Rather than touting these contracts, the regulators should be explaining how this happened and how it will be prevented in the future. Fortunately, BOEM’s proposed decommissioning financial assurance rule is open for comment until the end of this month, so we have an opportunity to provide input.

Matagorda Island Gas, the company whose wells the public will be plugging, had a poor compliance record, and is another example of why compliance should be a primary factor in determining supplemental financial assurance requirements.

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See the Block Island Wind Farm’s reef environment in the BOEM video below.

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