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Offshore Lease Uncertainty Persists

SVP Government Affairs Tim Tarpley
Tim Tarpley, SVP Government Affairs & Counsel

Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley

After months of uncertainty brought on by the offshore lease moratorium instituted at the beginning of the Biden Administration, there was widespread hope last year that we would begin to return to normal with regularly scheduled lease sales in the Gulf of Mexico after a federal judge in Louisiana ordered the Interior Department to move forward with new lease sales. This hope was bolstered when the Bureau of Energy Management allowed bidding on Lease Sale 257, the largest offshore oil and gas lease sale in U.S. history, which was originally approved at the end of the Trump Administration. 

However, two weeks ago, Judge Rudolph Contreras invalidated the sale and leases that were awarded in November. The court stated that a Trump Administration analysis had failed to account for how the sale would change global fossil fuel demand, potentially worsening climate change. The court held this analysis was required under NEPA and that the analysis done during the Trump Administration by Interior was insufficient. In his decision, Contreras gave the Biden Administration a great deal of latitude on how to approach the solution to this problem, writing that he would “vacate Lease Sale 257 and allow the agency an opportunity to remedy its … error as it so chooses in the first instance.” 

Now, with the validity of the lease sale in question, all eyes are on the Interior Department to see what their next move will be. Will they appeal the decision, or will they go back and conduct an environmental review sufficient to satisfy the court? The agency faces a tough decision about whether to cancel, change or maintain the sale. The decision comes among the larger context of the Biden Administration facing increasing pressure from rising energy prices while the situation between Russia and Ukraine grows in Eastern Europe. 

In some ways, the decision is a win for the Biden Administration, because it allows them in the short term to use the lease sale to show they aim to move forward with domestic energy development, even though they were prevented by the courts, as well as use the decision to divert blame on the Trump-era environmental analysis. However, if Interior choses to refrain from moving forward, pressure will likely grow. There are also fears that a similar scenario could play out for onshore leases on federal lands. Energy Workforce is monitoring this situation closely and will continue to urge the Department of Interior to follow the law and take all appropriate steps in order to ensure that lease sales in the Gulf of Mexico and onshore can continue.

Republicans on the Senate Energy and Natural Resources Committee on Tuesday heard from Laura Daniel-Davis, nominee to be Interior’s assistant secretary for land and minerals management, as they questioned if Interior would re-do the Trump-era environmental review to allow a new Gulf of Mexico lease sale. Daniel-Davis declined to answer, saying the decision ultimately would have to be made by Interior Secretary Deb Haaland. 

In addition, the American Petroleum Institute, who was a party to the original suit, has filed their own appeal.  

Energy Policy Front and Center During Ukraine Crisis

President Biden met with German Chancellor Olaf Scholtz earlier this week and made it clear that should Russia move ahead with an expanded invasion of Ukraine, there would be a series of sanctions that would prevent Nord Stream 2, a system of offshore natural gas pipelines in Europe, from moving forward. When pressed on details for how specifically this would be achieved, the President reiterated that it would be possible and was a certainty. The German side stopped short of making a clear statement that they would block the pipeline despite being pressed on the issue. Should a full-scale invasion occur, there will surely be tremendous pressure on Germany.

President Biden’s meeting with Chancellor Scholtz comes on the heels of President Vladimir Putin’s meeting with French President Emmanuel Macron, in which the French side reported President Putin had indicated he would refrain from any further “escalation” of the situation in Ukraine. However, when asked to clarify these statements, the Russian side appeared to walk these statements back.  

Meanwhile, all eyes are on the Olympic closing ceremony on February 20 as an important date for any possible action on the Russian side, as it is likely that Putin would avoid any escalation during the games.  

If you would like to get involved with the Council’s advocacy efforts or the Government Affairs Committee, contact SVP Government Affairs Tim Tarpley.

Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.


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