Federal judge invalidates Gulf of Mexico lease sale

Federal judge invalidates Gulf of Mexico lease sale

Jan 27, Reuters - A federal judge invalidated the results of an oil and gas lease sale in the Gulf of Mexico on Thursday, saying the Biden administration did not properly account for the auction's climate change impact.

The decision has cast doubt over the future of the U.S. federal offshore drilling program, which has been a huge source of public revenue for decades but has also drawn the ire of activists concerned about its impact on the environment and global warming.

The Gulf of Mexico is responsible for 15% of the U.S. oil production and 5% of dry natural gas output, according to the Energy Information Administration.

Judge Rudolph Contreras of the United States District Court of the District of Columbia ruled to annul the Bureau of Ocean Energy Management's Lease Sale 257, which offered about 80 million offshore acres 37.4 million hectares in the Gulf of Mexico in an auction last November.

The sale generated more than $190 million, the highest since 2019, on 1.7 million acres sold. It drew bids from U.S. oil majors, including Exxon Mobil Corp XOM.N and Chevron Corp CVX.N Thursday, after the environmental group Earthjustice challenged the sale on behalf of four other green groups, arguing that U.S. President Joe Biden's Interior Department did not accurately consider greenhouse gas emissions that would result from development of the blocks.

Contreras faulted the administration for not including foreign consumption in its greenhouse gas emissions analysis and ignoring the latest science about the role of oil and gas development in global warming.

The Interior Department, which oversees federal oil and gas development, said it was reviewing the decision.

Biden campaigned for the White House to end federal oil and gas drilling to fight climate change, but attempts to suspend new auctions failed after Gulf Coast states sued.

Interior spokesman Melissa Schwartz said in a statement that we have documented serious deficiencies in the federal oil and gas program. In the face of the climate crisis, we need to take the time to make significant and long overdue programmatic reforms. Congress has mandated that the United States hold regular auctions of public lands for oil and gas development.

Brettny Hardy, Earthjustice's senior attorney, said we are pleased that the court invalidated Interior's illegal lease sale. We can't continue to invest in the fossil fuel industry because it's dangerous for our communities and warming planet. It was not clear how the decision would affect the administration's plans to offer more than 300,000 acres of onshore leases to drillers by the end of the quarter. Like the Gulf sale, the auctions were initiated in June after a federal judge ordered the government to resume oil and gas leasing.

In response to the ruling, the United States federal offshore leasing program could strengthen the geopolitical influence of higher emitting and adversarial nations, such as Russia, National Ocean Industries Association President Erik Milito said.

Scott Lauermann, a spokesman for the American Petroleum Institute API, said the API was reviewing the decision and considering our options. The decision is not the first time that a court has cited faulty environmental analyses in blocking oil and gas development on federal lands. A federal judge reversed the government's approval of a $6 billion ConocoPhillips development in Alaska in August, a decision that was cited in Contreras' ruling.