August 8, 2022

Inflation Reduction Act Advances Stalled Offshore Oil and Gas Lease Sales

Holland & Knight Alert
Jim Noe | Elizabeth Leoty Craddock | Kayla Gebeck Carroll

The Inflation Reduction Act (the Act), which passed the U.S. Senate on Aug. 7, 2022, requires that previously announced offshore lease sales in the Gulf of Mexico and Alaska be held during the next two years.

The Act requires the U.S. Department of the Interior (Interior) to award leases to the highest bidders in Lease Sale 257, which was held in November 2021. In January 2022, the U.S. District Court for the District of Colombia vacated Lease Sale 257 after finding that Interior's environmental review failed to adequately consider certain greenhouse gas emissions related to holding the offshore oil and gas lease sale. See Friends of the Earth v. Haaland, 2022 WL 254526 (D.D.C. Jan. 27, 2022).

The Act directs Interior to rely on its Record of Decision for Outer Continental Oil and Gas Leasing Program Final Programmatic Environmental Impact Statement issued on Jan. 17, 2017 (82 Fed. Reg. 6643). The Act also requires Interior to move forward with Lease Sale 258 in Alaska Region's Cook Inlet by Dec. 31, 2022, and two additional Gulf of Mexico Lease sales, Lease Sales 259 and 261, by March 2023 and September 2023, respectively. The Act provides that the restored and new lease sales be held despite the fact that the Five-Year Leasing Plan mandated by the Outer Continental Shelf Lands Act expired in June 2022.

Interior is currently evaluating a new Five-Year Leasing Plan, although it is uncertain if Interior will allow for future offshore oil and gas leasing other than the leases mandated by the Act. (See previous Holland & Knight alert, "Interior Releases Draft Program for New Offshore Leases; Future Uncertain," July 5, 2022.) The Act also ties new offshore wind leasing to offshore oil and gas leases by requiring that, in order to hold a new offshore wind lease sale, at least one offshore oil and gas lease sale that offered at least 60 million acres be held within the year prior to the new offshore wind sale.

The House of Representatives is expected to pass the Act as early as this week. (For an in-depth review of the Inflation Reduction Act, see Holland & Knight's alert, "The Inflation Reduction Act: Summary of the Budget Reconciliation Act," Aug. 8, 2022.)

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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