Federal Ruling Threatens Gulf Oil Production as Impacts Loom for U.S. Energy Security
Jack Cramton
Posted September 12, 2024
Legal Background: A federal judge recently struck down the 2020 biological opinion (BiOp) issued by the National Marine Fisheries Service (NMFS). Among other things, the BiOp assessed risks to marine species from offshore oil and natural gas development in the Gulf of Mexico and implemented mitigation requirements for additional protections. NMFS now has until Dec. 20 to issue a new BiOp, because that is the date the judge set for the 2020 BiOp to be vacated.
What’s at Stake: Failure to produce a new BiOp by Dec. 20 could significantly slow down or halt nearly all offshore oil operations in the Gulf, which produces nearly 2 million barrels of oil per day – around 15% of U.S. output! Without intervention from Congress or courts, each offshore permit – numbering in the thousands – would require individual consultations under the Endangered Species Act, likely overwhelming agencies.
Potential Energy Impacts: If the Gulf were a country, it would rank among the world’s top 12 oil producers. Thus, a shutdown would drastically affect energy markets, potentially raising costs and bolstering adversaries like Russia and Iran. Gulf Coast refineries and utilities could face supply shortages, and future investment in offshore production could be discouraged.
How We Got Here:
- The 2020 BiOp was challenged by environmental groups in 2021, but a settlement agreement temporarily paused the legal proceedings while NMFS worked on a new opinion.
- The agreement also said that the Bureau of Ocean Energy Management (BOEM) would include Rice’s whale vessel restrictions as a lease stipulation in the planned Gulf Lease Sale 261. Because these actions were ruled unlawful and enjoined, the groups withdrew from the BiOp settlement, allowing the original lawsuit to proceed.
- In August, a Maryland court voided the 2020 BiOp effective on Dec. 20.
The Latest: API, Chevron, the EnerGeo Alliance and the National Ocean Industries Association (NOIA) have filed a notice of intent to appeal the decision and reverse the Maryland court order.
Challenges Ahead: Early indications suggest NMFS may not meet the court’s deadline, with completion potentially pushed into 2025.
Go Deeper: There also is concern the only scheduled 2025 Gulf lease sale could be delayed or blocked while the BiOp issue plays out. That is a critical point, because the administration only scheduled three Gulf lease sales in its five-year offshore leasing program (2025, 2027 and 2029) and none this year – the first year without a lease sale since Lyndon Johnson was president. If the 2025 sale is delayed over the BiOp, that could extend the gap in lease sales further, potentially setting up gaps in future production.
Call to Action: With U.S. energy security at risk, Congress must urgently press NMFS to expedite the new BiOp. The stakes are too high for delay; swift action is needed to safeguard U.S. energy leadership.
About The Author
Jack Cramton serves as API’s Vice President for Federal Government Relations, leading strategy for federal legislative and regulatory advocacy in Washington, D.C., and managing API’s federal team. Before joining API in 2020, Jack served at the U.S. Department of Energy as the associate deputy assistant secretary of Senate Affairs, where he was part of the team that represented the administration’s interests on Capitol Hill and helped numerous political appointees navigate the Senate confirmation process. Jack gained experience on Capitol Hill as a policy advisor covering energy for U.S. Sen. Bill Cassidy (Louisiana) during his time in the U.S. House and Representatives and U.S. Senate. Cramton is a graduate of the University of Michigan with a Bachelor of Arts in Political Science. He currently resides in Silver Spring, Maryland, with his wife Allison, and their four children.