Federal Court Reverses 2018 Gulf of Mexico Lease Sales

A federal appeals court in Washington, D.C. on Tuesday reversed a lower court’s decision which found that two 2018 lease sales by the U.S. Department of the Interior to oil companies in the Gulf of Mexico were valid.

The D.C. Circuit Court of Appeals rejected two arguments by environmental groups, but agreed that the agency “sidestepped” a report that contained “some evidence” which asserted potential risks.

The appeals court upheld the lower court’s finding that the Interior Department “adequately considered the option of not leasing” and also “reasonably refused to consider potential future regulatory changes.”

But it found the Interior Department’s Bureau of Ocean Energy Management (BOEM) “unreasonably refused to consider possible deficiencies” in how the department’s Bureau of Safety and Environmental Enforcement (BSEE) carried out its work enforcing safety and environmental regulations to limit risks and harm to the Gulf from oil and gas operations.

“Given the one shortcoming we have identified, we remand without vacatur,” Judge Gregory C. Katsas wrote in the ruling (pdf).

The legal saga emerged over the 2018 lease sales of 150 million acres in the Gulf of Mexico for oil exploration. The D.C. federal district court ruled in April 2020 that the sales were valid, prompting environment groups to appeal the ruling.

Report ‘Sidestepped’

Environmental groups argued the lease sales weren’t properly analyzed for risks to people, wildlife, and the environment under the National Environmental Policy Act.

According to the ruling, BOEM “did not consider” whether BSEE’s inspection work was as “rigorous” as the agency noted in its analysis.

Evidence of deficiencies in BSEE’s work was asserted in a report by the Government Accountability Office (GAO), which faulted the agency for maintaining “outdated policies and procedures” and failing to develop “criteria to guide how it uses enforcement tools,” according to the ruling.

The ruling noted that BOEM promised to address the “asserted deficiencies” in the report but later reneged, “telling commenters that the issues were outside the scope of the [environmental impact statements] at that stage.”

“Here, BOEM sidestepped the GAO report and offered only unelaborated statements that BSEE’s enforcement was ‘rigorous.’ In the circumstances here, that was not good enough,” the ruling stated.

As a result of the ruling, the lease sales, which were made as part of a 2017 five-year energy plan, will go back to the federal government. The 2018 lease sales were made during the Trump administration.