Controversial lease sale in Alaska’s Cook Inlet that drew one bid conducted improperly, judge rules

Cook Inlet is viewed from the Kenai shoreline on Aug. 14, 2018. Redoubt Volcano looms in the distance. A 2022 federal oil and gas lease sale was held improperly and impacts to endangered beluga whales must be reanalyzed, a federal judge has ruled. (Photo by Yereth Rosen/Alaska Beacon)

A congressionally mandated 2022 Cook Inlet oil and gas lease sale that drew only a single bid violated environmental laws, and the agency responsible must rewrite its analysis of impacts, a federal judge has ruled.

U.S. District Court Judge Sharon Gleason, in a ruling issued Tuesday, found that the U.S. Bureau of Ocean Energy Management failed to properly consider endangered Cook Inlet beluga whales as required by law when it offered nearly 1 million acres for leasing at the end of 2022.

BOEM, an agency within the Department of the Interior, must now conduct a supplemental environmental impact statement and potentially issue a new decision about the already-held lease sale to correct those lapses, Gleason said.

Representatives of environmental groups that had sued BOEM just days before the lease sale was held said they were gratified by the ruling.

“This is a huge victory for Cook Inlet belugas. I hope this decision makes it clear to federal officials that they can’t keep ignoring the ways offshore drilling threatens these critically endangered whales,” Kristin Monsell, oceans legal director at the Center for Biological Diversity, said in a statement.

The sale, Cook Inlet Lease Sale 258, was originally planned as part of a five-year schedule set in 2016 by President Barack Obama’s administration.

In May of 2022, after starting its review, BOEM canceled the sale, citing lack of industry interest. That cancellation drew sharp criticism from Alaska politicians and from U.S. Sen. Joe Manchin of West Virginia, then a Democrat but now an independent. Manchin, whose vote was key to passage of the Inflation Reduction Act, pushed for the provision in that law that mandated that the lease sale be held by the end of 2022. The Inflation Reduction Act was a high priority for the Biden administration and passed narrowly, with no Republican votes.

In the end, the sale went forward on Dec. 30, 2022. Hilcorp Alaska LLC submitted the sole bid .

Gleason’s ruling suspends that Hilcorp lease.

In her ruling, she found multiple flaws in the presale environmental analysis.

BOEM erred in lumping endangered beluga whales with all other marine mammals when it analyzed cumulative impacts of oil leasing in Cook Inlet, she said. She agreed with the plaintiffs’ argument that the belugas should have been considered on their own.

BOEM also “failed to take the requisite hard look at the impact of vessel noise on Cook Inlet beluga whales,” focusing primarily on noise produced by pile-driving and seismic activities but largely dismissing  the problem of vessel noise, which is considered to be the most prevalent human-caused noise underwater, Gleason said.

The agency also failed to consider a “reasonable range of alternatives” for a lease sale that would have removed some territory from the auction block and thus meaningfully reduce overall impacts, she said. The smaller lease sale contemplated by BOEM removed only about 6% of territory from the offerings; the plaintiffs argued that northern Cook Inlet habitat important to belugas should have been off-limits to leasing.

Gleason rejected an argument made by the state of Alaska, but not by the federal government, that analysis under the National Environmental Policy Act was unnecessary because the lease sale mandate was part of the Inflation Reduction Act. The state intervened in the case, defending BOEM and the lease sale it held.

Gleason also rejected some claims made by the environmental plaintiffs, siding with BOEM on those subjects, which included the way a large oil spill would affect the endangered belugas.

Because the sale was mandated in the Inflation Reduction Act, Gleason could not void the sale entirely, said Carole Holley, an attorney with Earthjustice, the environmental law firm that represented four of the five plaintiffs.

“The agency has no discretion in holding the lease sale,” Holley said. “But what they do have is a responsibility to do a proper environmental analysis and to look at the cumulative effects on an endangered species and to properly evaluate a lease sale in this area, what impacts it may have.”

It is unclear how long it will take BOEM to complete the supplemental environmental study that Gleason ordered, Holley said. The judge has called for the agency to submit a status report on that process within six months.

But she rejected some other claims made by the environmental plaintiffs, such as a claim that BOEM failed to properly consider the impact that a large oil spill would have on the endangered beluga population.

Even before this ruling, Cook Inlet Lease Sale 258 was part of a bumpy history for oil and gas leasing in those federal waters. Over the past two decades , three previously scheduled sales in that basin were canceled for lack of interest, and one held in 2004 failed to attract any bids.

Spokespeople for neither Hilcorp nor the Department of the Interior were available to comment on the ruling as of Wednesday afternoon.

The genetically distinct and isolated population of belugas in Cook Inlet numbers about 330 , down from about 1,300 animals in 1979, according to the National Oceanic and Atmospheric Administration.

SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX

The post Controversial lease sale in Alaska’s Cook Inlet that drew one bid conducted improperly, judge rules appeared first on Alaska Beacon .