Lawsuit adds new twist to controversial end-of-year Cook Inlet oil and gas lease sale

A canceled but subsequently revived oil and gas lease sale in federal waters off Alaska is being challenged by a coalition of environmentalists.

In a lawsuit filed Wednesday in U.S. District Court in Anchorage, the environmental groups said the Biden administration had failed to adequately evaluate the impacts of next week’s lease sale offering 958,202 acres in Cook Inlet’s federal waters. The sale, which was ordered by Congress four months ago, should be scrapped, the lawsuit said.

“Our coastal communities have stood up repeatedly to say ‘no’ to oil and gas leasing in Lower Cook Inlet. This is our home, not a sacrifice zone,” Taylor Kendal Smith of Cook Inletkeeper, one of the plaintiffs, said in a statement. “There would be little to gain in terms of affordable energy and much to lose in habitat, tourism, fisheries and beauty. Lower Cook Inlet is worth far more — both in economic and cultural senses of value — intact and protected than with oil platforms and pipelines.”

The same auction, Lease Sale 258, was canceled in May for what the Bureau of Ocean Energy Management determined was lack of industry. But the cancellation drew sharp rebukes from politicians in Alaska and from other pro-oil politicians. In large part through the efforts of Sen. Joe Manchin, the West Virginia Democrat who chairs the Energy and Natural Resources Committee, the Inflation Reduction Act of 2022 included a controversial provision requiring that the Cook Inlet lease sale be resurrected and held by the end of the year. The Inflation Reduction Act was signed into law in August.

BOEM is now scheduled to open the bids for the sale, if any are received, on Dec. 30. The lease sale was scheduled after a final environmental impact statement was released on Oct. 20. A draft environmental impact statement had been released almost exactly a year earlier.

While the Congressional mandate makes Lease Sale 258 unusual, the requirements for proper review under the National Environmental Policy Act and the Administrative Procedures Act are unchanged, said Erik Grafe, an attorney with Earthjustice, which is representing Cook Inletkeeper and some of the other plaintiffs. The way that the agency structured the lease sale violated those laws, Grafe said.

“It relied on an EIS that was deficient in a lot of ways,” he said. Instead of considering “a meaningful range of alternatives” with options for much smaller lease sales and many more mitigation measures, the scheduled action’s structure was based on limited options that pointed to leasing nearly the entire amount of acreage under consideration, he said.

According to the lawsuit, the EIS failed to adequately consider the impacts of leasing and potential production on overall carbon emissions and climate change. It also failed to consider numerous impacts of pollution, oil-spill risks and industrial activity to the endangered Cook Inlet beluga whale population, to other marine populations and to people who use the inlet for fishing, tourism, wildlife watching and recreation.

The plaintiffs, along with Cook Inletkeeper, are the Center for Biological Diversity, the Kachemak Bay Conservation Society, Alaska Community Action on Toxics and the Natural Resources Defense Council.

The plaintiffs have not requested any expedited ruling or injunction, Grafe said. That means that if the lease sale is held as scheduled, it will be under a cloud of legal uncertainty, he said. A possible outcome for the agency and for companies submitting bids, if there are any, would be an after-the-fact cancellation of any leases sold, he said.

“So they bid at their peril, and take leases at their peril,” he said.

An Interior spokesman declined to comment on the lawsuit or the question of whether there is any sign of new industry interest in leasing tracts in Cook Inlet.

The Alaska Division of Oil and Gas, meanwhile, is seeking to boost industry interest by holding its own state lease sale in the same region. Bids for the special Cook Inlet lease sale, which is offering 2.8 million acres of state territory, will be accepted through Dec. 28 and will be opened on Dec. 30, the same day as the bid openings for the federal sale, the division said.

The territory offered is the same as what would be available in a normal annual areawide lease sale, said Sean Clifton, a spokesman for the division.

The special sale was arranged to coincide with the federal lease sale, with the combination potentially making the area more attractive to would-be oil and gas explorers.

“It maximizes interest. It takes advantage of companies that are bringing money to the region,” Clifton said. The similarly timed lease sales also allow companies to bid more strategically on acreage around prospects that may be straddling federal and state territory, he said.

The division held its normal annual areawide Cook Inlet lease sale in May but received only two bids. That result was similar to those for all years since 2015. In no year since then were more than eight bids received in any one lease sale, and in 2016 no bids were submitted.

Clifton said the division does not know whether this special lease sale will draw any more interest than the spring sale.

“We’re blind to the bidding also. We find out about 45 minutes before anybody else finds out on the internet,” he said.

After Dec. 30, the next state Cook Inlet lease sale, part of the normal annual program of areawide lease offerings, is scheduled for next spring.