A federal judge is sending Interior Department officials back to the drawing board after concluding a Cook Inlet oil and gas lease sale didn’t adequately consider the possible impacts on endangered beluga whales in the area.
The ruling temporarily suspends a lease held by dominant Cook Inlet producer Hilcorp. The privately held Texas-based oil and gas company won a 5,693-acre lease in a 2022 sale.
Hilcorp was the only bidder in the lease sale, which was mandated by the 2022 Inflation Reduction Act. At the insistence of West Virginia Democratic Sen. Joe Manchin, that climate-focused federal law also included provisions mandating oil and gas lease sales in Cook Inlet and the Gulf of Mexico.
A coalition of Alaska-based and national environmental groups challenged the Cook Inlet lease sale. They argued the Interior Department agency that offered the sale had not taken a hard enough look at the possible impacts of drilling on the endangered population of roughly 300 beluga whales that live in Cook Inlet. Oil and gas production involves loud undersea noises from things like piledriving, drilling and vessel traffic, and the groups argued that can interfere with belugas’ echolocation.
U.S. District Judge Sharon Gleason agreed, but she stopped short of vacating the lease sale entirely. She ordered the Bureau of Ocean Energy Management to come up with a supplemental environmental analysis and a range of alternative lease arrangements that better account for the possible impacts on Cook Inlet beluga whales.
“In sum, the Court finds that BOEM failed to consider a reasonable range of alternatives at the leasing stage in violation of [the National Environmental Policy Act] because it failed to consider any alternative that would offer for lease a reduced number of blocks that would meaningfully reduce overall impacts, could feasibly meet the purpose and need of Lease Sale 258, and would better allow for ‘informed decision-making and informed public participation,’” Gleason wrote in the 49-page order.
That could ultimately force the Interior Department to shrink or cancel Hilcorp’s lease, said Earthjustice attorney Carole Holley, who represented the Center for Biological Diversity, the Natural Resources Defense Council, Cook Inletkeeper, Alaska Community Action on Toxics and the Kachemak Bay Conservation Society.
“This ruling just confirms that the Inflation Reduction Act is far more limited in scope than industry and its allies, and in this case, the state of Alaska, have been pushing, and it does not override NEPA, or our other bedrock environmental laws,” Holley said by phone.
The National Environmental Policy Act is a Nixon-era law that requires federal agencies to evaluate the possible environmental impacts of their actions. Earthjustice and a variety of conservation groups are also challenging similar lease sales mandated by the Inflation Reduction Act in the Gulf of Mexico.
Though the state of Alaska and federal government often clash on resource development, Alaska intervened in the case to support the lease sale. Department of Law Communications Director Patty Sullivan said in a prepared statement that the state was disappointed by the decision.
“In 2022 Congress sought to provide certainty for this overdue and long awaited lease sale,” Sullivan said. “The state is disappointed with the continued uncertainty in leasing caused by the court’s order, which is counter to the intent of Congress to provide certainty.”
A spokesperson for the Alaska office of the Bureau of Ocean Energy Management did not respond to a phone call seeking comment. The agency manages oil and gas activity in federal waters, which generally begin three miles offshore. Most Cook Inlet oil and gas production occurs onshore or in state waters.
Hilcorp is the only company with active federal leases in Cook Inlet, though none of its 15 federal leases were producing oil or gas as of January 2024, according to Interior Department data. Hilcorp did not respond to a phone call seeking comment.
Oil and gas industry analysts point to long-term trends, including rising renewable energy production and higher production costs, as reasons for lackluster interest in recent oil and gas lease sales.
The Bureau of Ocean Energy Management will be required to update the court on its progress on a supplemental environmental analysis in six months, the judge ruled.
