Louisiana Wins Environmental Assessment in Oil Lease Case

NEW ORLEANS, Louisiana, October 24, 2006 (ENS) - The State of Louisiana agreed today to dismiss its lawsuit against the United States after the Department of the Interior promised a complete environmental analysis of oil and natural gas leasing in federal waters off the state's coast. The analysis must take into account the effects of hurricanes Katrina and Rita, as well as the cumulative impacts of offshore leasing activity on the coastal zone.

Until the Interior Department's Minerals Management Service, MMS, has completed its environmental analysis, no exploration plan will be permitted on leases sold in Western Gulf Lease Sale 200, held in August.

Governor Kathleen Blanco said today, "This is an historic victory for Louisiana and for all states whose voices deserve to be heard in matters of their own destiny."

A damaged oil platform rests at an oil refinery south of Venice, Louisiana, October 25, 2005, two months after Hurricane Katrina. (Photo by Robert Kaufmann courtesy FEMA)

The settlement comes in a lawsuit filed by the State of Louisiana challenging Interior's Western Gulf of Mexico Lease Sale 200, charging the sale was improperly conducted without a thorough environmental analysis.

The governor filed suit, she said today, so the federal government would, "not be allowed to get away with a cookie cutter environmental assessment that ignored the devastation to our coast during the 2005 hurricane season."

To illustrate how much the state's coast has changed, she cited a new federal government report by the U.S. Geological Survey, a sister agency to MMS in the U.S. Department of Interior. It finds 217 square miles of Louisiana's coast was turned into open water by Hurricanes Katrina and Rita.

In August the Court said that the state was likely to prevail on the merits of its claims and set the matter for an expedited hearing.

Since then, as requested by the Court, Louisiana and the federal government have been negotiating to resolve the issues before the trial date set for November 13.

The Chandeleur Islands 60 miles east of New Orleans on August 31, 2005, two days after Hurricane Katrina made landfall. Storm surge and large waves from Katrina submerged the islands, stripped sand from the beaches, and eroded large sections of the marsh. Today, few recognizable landforms remain. (Photo courtesy USGS)

“Resolving this dispute by agreement rather than litigation benefits our nation's energy security by assuring we can move ahead on the leases issued in Lease Sale 200,” said Steve Allred, Interior's assistant secretary for land and minerals management.

Lease Sale 200 garnered $340,935,514 in high bids from 62 companies for parcels on the Outer Continental Shelf, OCS.

Allred says this level of activity underscores the Gulf of Mexico's importance to domestic energy production and the oil and gas industry's interest in expanding its deepwater operations.

To win the promise of a complete environmental assessment, Louisiana had to agree not to challenge the issuance of leases to companies for the parcels they acquired rights to develop under Lease Sale 200 in August.

Louisiana also agreed not to use the National Environmental Policy Act to challenge Interior's approval of exploration plans for the Lease Sale 200 parcels, if a complete assessment is done in a timely manner.

An oil spill at a refinery in Chalmette, St. Bernard Parish, Louisiana resulted when an oil tank was forced from its foundation by Hurricane Katrina's massive storm surge. September 18, 2005 (Photo by Robert McMillan courtesy FEMA)

Under the settlement, Interior will not offer new leases in the Gulf of Mexico off the coast of Louisiana before it issues the Record of Decision on the Environmental Impact Statement.

While today's settlement delays future offshore oil and gas lease sales until that is done, Interior is now planning the next set of lease sales. The agency will continue the preparation and completion of a NEPA Environmental Impact Statement for the 11 sales planned in the Gulf of Mexico during the next five year OCS leasing program - 2007-2012.

Allred said the settlement "sets the next five year lease program on the right track." That review must now take into account the impact of Hurricanes Katrina and Rita on Louisiana's wetlands and infrastructure.

The MMS reports that 76 percent of the 4,000 platforms that the agency administers were in the path of Hurricanes Katrina and Rita. There was no loss of life nor any significant spills on the OCS, and 100 percent of OCS subsurface safety valves held firm.

MMS says that 108 older facilities, not built to MMS' upgraded design standards, were destroyed. They account for only 1.7% of the Gulf's oil production and 0.9% of the Gulf's gas production. Another 53 platforms suffered significant damage.

The MMS manages the mineral resources on 1.76 billion acres of the Outer Continental Shelf.

About 43 million OCS acres are leased, accounting for about 20 percent of America's domestic natural gas production and about 30 percent of America's domestic oil production.