Federal judge throws out oil lease sale in Gulf of Mexico

A federal court has rejected a plan to lease millions of acres in the Gulf of Mexico for offshore oil drilling, saying the Biden administration failed to conduct a proper environmental review.

The decision Thursday by U.S. District Judge Rudolph Contreras sends the proposed lease sale back to the Interior Department to decide next steps. The ruling said it was up to Interior to decide whether to go forward with the sale after a revised review, scrap it or take other steps.

Environmental groups hailed the decision and said the ruling gave President Joe Biden a chance to follow through on a campaign promise to stop offshore leasing in federal waters. The decision was released on the one-year anniversary of a federal leasing moratorium Biden ordered as part of his efforts to combat climate change.

“We are pleased that the court invalidated Interior’s illegal lease sale,” said Brettny Hardy, a senior attorney for Earthjustice, one of the environmental groups that challenged the sale.

“This administration must meet this critical moment and honor the campaign promises President Biden made by stopping offshore leasing once and for all,'' Hardy added. "We simply cannot continue to make investments in the fossil fuel industry to the peril of our communities and increasingly warming planet.''

A spokeswoman for Interior Secretary Deb Haaland said the agency was reviewing the decision.

Energy companies including Shell, BP, Chevron and ExxonMobil offered a combined $192 million for drilling rights on federal oil and gas reserves in the Gulf of Mexico in November.

The Interior Department auction came after attorneys general from Republican states led by Louisiana successfully challenged a suspension on sales that Biden imposed when he took office.

Companies bid on 308 tracts totaling nearly 2,700 square miles (6,950 square kilometers). It marked the largest acreage and second-highest bid total since Gulf-wide bidding resumed in 2017.

The auction was conducted even as Biden has tried to cajole other world leaders into strengthening efforts against global warming, including at United Nations climate talks in Scotland in early November. While Biden has taken a number of actions on climate change, he has faced resistance in Congress and a sweeping $2 trillion social and environmental spending package remains stalled. The so-called “Build Back Better” plan contains $550 billion in spending and tax credits aimed at promoting clean energy.

In his 68-page ruling, Contreras said Interior failed to accurately disclose and consider the greenhouse gas emissions that would result from the lease sale, violating a bedrock environmental law.

"Barreling full-steam ahead with blinders on was simply not a reasonable action for BOEM to have taken here,'' he said, referring to Interior's Bureau of Ocean Energy Management.

Environmental reviews of the lease auction — conducted under former President Donald Trump and affirmed under Biden — reached the unlikely conclusion that extracting and burning more oil and gas from the Gulf would result in fewer climate-changing emissions than leaving it.

Similar claims in two other cases, in Alaska, were rejected by federal courts after challenges from environmentalists.

Federal officials have since changed their emissions modeling methods but said it was too late to use that approach for the November auction.

The National Ocean Industries Association, which represents the offshore industry, slammed the ruling and called U.S. oil and gas production crucial to curbing inflation and strengthening national security.

“The U.S. offshore region is vital to American energy security and continued leases are essential in keeping energy flowing from this strategic national asset,'' said Erik Milito, the group's president. “Uncertainty around the future of the U.S. federal offshore leasing program" would benefit Russia and other adversaries, he said.

The administration has proposed another round of oil and gas sales in Wyoming, Colorado, Montana and other states. Interior Department officials proceeded despite concluding that burning the fuels could lead to billions of dollars in potential future climate damages.

Emissions from burning and extracting fossil fuels from public lands and waters account for about a quarter of U.S. carbon dioxide emissions, according to the U.S. Geological Survey.

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Associated Press writer Matthew Brown in Billings, Mont., contributed to this story.