Environmental groups file lawsuit to halt Cook Inlet offshore oil, gas lease sale

Environmental groups hope to scuttle an offshore oil and gas lease sale slated to take place next week off the coast of Alaska with a lawsuit accusing the US Department of the Interior of failing to account for climate impacts and use its discretion to conduct the sale under more environmentally friendly terms.

The lawsuit, filed Dec. 21, asks the US District Court for the District of Alaska to vacate or enjoin any leases issued under Lease Sale 258, as the groups allege National Environmental Policy Act and Administrative Procedure Act violations in both the final environmental impact statement and record of decision tied to the sale (Cook Inletkeeper, et al v. Interior, et al; 3:22-cv-00279).

Lease Sale 258 comprises 193 Outer Continental Shelf blocks toward the northern part of Alaska's Cook Inlet and covers 958,202 acres of the seafloor, stretching roughly from Kalgin Island in the north to Augustine Island in the south, according to the Bureau of Ocean Energy Management.

In line with the "preferred alternative" laid out in BOEM's final EIS, Interior's record of decision to hold the auction Dec. 30 removed acreage important to beluga whale and northern sea otter critical habitats and "applies additional mitigation measures to reduce potential impacts to beluga whales and their critical habitat and feeding areas, sea otters and their critical habitat, and the gillnet fishery."

But the environmental groups' lawsuit asserts that "alternatives that would have caused significantly less wildlife harm and environmental damage to the region" were rejected as the final EIS only evaluated alternatives that were presumed to result in the same amount of oil and gas activity.

Interior "failed to explain or justify that presumption, particularly given the record evidence showing that future oil demand will decline as conservation provisions like those in the [Inflation Reduction Act] take effect," the groups said in their complaint to the court. "As a result, the final EIS arbitrarily failed to examine alternatives that would, for instance, significantly shrink the area available for leasing or place limits on the extent of oil production within the leased area."

'Could have done so much more'

Lease Sale 258 was slated to take place earlier in 2022 but was among three offshore oil and gas auctions canceled purportedly over court-related delays and a lack of industry interest. However, the IRA, enacted in August, included provisions ensuring future oil and gas leasing to secure support from moderate Democrat and fossil fuel-advocate Senator Joe Manchin of West Virginia.

Though raising the costs producers will face to procure federal lands and waters, the historic climate bill requires Interior to hold Lease Sale 258 by Dec. 31, and Gulf of Mexico lease sales 259 and 261 by March 31, 2023, and Sept. 30, 2023, respectively.

The groups acknowledged the mandate for the sale to happen, but argued in a joint statement that Interior took no steps to limit oil-and-gas drilling despite retaining full "discretion to restrict the amount of offshore acreage put up for lease, limit allowable activity on leased acreage, establish timetables for drilling activity on a leased area [and] take other measures to limit harm."

Environmental groups have urged the Biden administration to halt offshore drilling, but the White House has faced pressure to boost production as geopolitical tensions threatened global oil and natural gas supplies and caused considerable pain at the pump for US drivers.

Erik Grafe, deputy managing attorney for Earthjustice's Alaska regional office, said: "The Biden administration could have done so much more to limit the damage of the [IRA's] lease sale provision in Cook Inlet. Instead, in the midst of a climate and biodiversity crisis, it's offering a huge swath of the ocean, nearly a million acres, to fossil fuel bidders."

"We're going to court to force the administration to comply with our bedrock environmental laws, reconsider this mistake, and act consistently with its climate and biodiversity commitments," Grafe added. "The [IRA] should not prevent the administration from making the right choices to protect future generations."

Earthjustice represents Cook Inletkeeper, Kachemak Bay Conservation Society, and Alaska Community Action on Toxics in the lawsuit filed together with the Center for Biological Diversity and Natural Resources Defense Council.

Onshore leasing reforms

Other groups have focused on getting taxpayers the most bang for their buck if oil and gas leasing is going to continue.

"Bonding rates haven't changed since the 1960s and federal royalty rates are less than what states charge," Autumn Hanna, vice president of Taxpayers for Common Sense, said in a statement.

Her group, along with Public Citizen and Project On Government Oversight, sent a letter to Interior Dec. 22 urging onshore oil and gas leasing reforms they contend are needed "to fix a broken oil and gas leasing system."

Their letter seeks a rulemaking to update oil and gas bond requirements so taxpayers are not left footing the bill for future liabilities; solidify an 18.75% minimum royalty rate for onshore oil and gas development; and codify the potential for development as a selection criterion in evaluating parcels to "make it harder for oil and gas companies to lock up federal lands that have little potential for oil and gas drilling."

"Continuing forward with onshore oil and gas lease sales without implementing needed reforms will lock the federal government into bad deals that continue to shortchange taxpayers," the groups said in the letter. "The federal onshore oil and gas leasing system is failing taxpayers, and every new lease signed under these terms is a loss."