US judge scraps Gulf of Mexico oil lease sale over climate concerns

Environmental group Earthjustice challenged the auction on behalf of four other green organisations

A federal court said the Biden administration failed to conduct a proper environmental review. AP

A US federal judge invalidated the results of an oil and gas lease sale in the Gulf of Mexico on Thursday, saying the Biden administration had failed to properly account for the auction's climate change impact.

The decision cast uncertainty over the future of the US federal offshore drilling programme, which has been a big source of public revenue for decades but also drawn the ire of activists concerned about its impact on the environment and contribution to global warming.

The Gulf of Mexico accounts for 15 per cent of existing oil production and 5 per cent of dry natural gas output, according to the Energy Information Administration.

In the decision, Judge Rudolph Contreras of the United States District Court of the District of Columbia ruled to vacate the Bureau of Ocean 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 US oil majors including ExxonMobil and Chevron.

Thursday's decision came after the environmental group Earthjustice challenged the sale on behalf of four other green groups, arguing US President Joe Biden's Interior Department was relying on a years-old environmental analysis that did not accurately consider greenhouse gas emissions that would result from development of the blocks.

Mr Contreras agreed, criticising the administration for excluding foreign consumption from its greenhouse gas emissions analysis and for ignoring the latest science about the role of oil and gas development on global warming.

Mr Biden campaigned for the White House partially on a pledge to end federal oil and gas drilling to fight climate change but efforts to suspend new auctions failed after Gulf Coast states sued.

Congress has mandated that the US hold regular auctions of public lands for oil and gas development.

“We are pleased that the court invalidated Interior’s illegal lease sale,” said Brettny Hardy, Earthjustice’s senior attorney. “We simply cannot continue to make investments in the fossil fuel industry to the peril of our communities and increasingly warming planet.”

The offshore drilling industry slammed the decision.

“Uncertainty around the future of the US federal offshore leasing programme may only strengthen the geopolitical influence of higher emitting — and adversarial — nations, such as Russia,” National Ocean Industries Association President Erik Milito said in reaction to the ruling.

Scott Lauermann, a spokesman for oil industry lobby group the American Petroleum Institute, said it was “reviewing the decision and “considering our options".