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Judge throws out massive Gulf of Mexico oil and gas lease sale

The decision cancels 1.7 million acres of drilling leases, citing a flawed analysis completed during the Trump administration.

A man fishes near docked oil drilling platforms in Port Aransas, Tex., on May 8, 2020. (Eric Gay/AP)
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A federal judge on Thursday invalidated the largest offshore oil and gas lease sale in the nation’s history, ruling that the Biden administration violated federal law by relying on a seriously flawed analysis of the climate change impact of drilling in the Gulf of Mexico.

The decision in the U.S. District Court for the District of Columbia threw out 1.7 million acres of oil and gas leases that the Biden administration actually did not want to sell. Shortly after taking office, President Biden suspended new oil and gas drilling on lands and waters owned by the federal government. But after a Louisiana judge struck down the moratorium last summer, administration officials said they were forced to go through with the sale in November.

The auction took place just four days after Biden pledged ambitious climate action to world leaders at a United Nations climate summit in Glasgow, Scotland. Although the administration offered up to 80 million acres in the Gulf of Mexico for drilling leases, the Interior Department ultimately sold only a fraction of that amount. The sale netted nearly $192 million and ranked as the most profitable offshore auction since March 2019.

Then environmental advocacy organizations filed a lawsuit claiming that the sale rested on incorrect assumptions.

In his ruling, Judge Rudolph Contreras concluded that the Interior Department’s Bureau of Ocean Energy Management had based its decision to hold the sale on a flawed environmental analysis that miscalculated the greenhouse gas emissions associated with future oil and gas drilling in the Gulf of Mexico. Completed under the Trump administration, the analysis found that the climate impacts would be worse if the acreage went unsold because oil companies with lower environmental standards would increase their production overseas, leading to more greenhouse gas emissions.

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The model and the set of assumptions that produced this result were “arbitrary and capricious,” Contreras wrote, reaching the same conclusion as both the U.S. Court of Appeals for the 9th Circuit and the U.S. District Court for the District of Alaska in previous cases concerning lease sales based on a similar analysis.

“The Court believes that [the Bureau of Ocean Energy Management’s] error was indeed a serious failing,” Contreras wrote.

The decision means the Biden administration will have the chance to conduct a new environmental analysis to quantify the climate impacts of future oil and gas production.

In a statement late Thursday, Interior spokeswoman Melissa Schwartz said that given the court ruling in Louisiana, “we were compelled to proceed with Lease Sale 257 based on the previous administration’s environmental analysis and its decision to approve the lease sale. We are reviewing the Court’s decision concerning deficiencies in that record.”

“Our public lands and waters must be protected for generations to come,” Schwartz added. “We have documented serious deficiencies in the federal oil and gas program. Especially in the face of the climate crisis, we need to take the time to make significant and long overdue programmatic reforms. Our work will be guided by the law, science and sound policy.”

Climate activists said they hope the new environmental assessment will lead to a different outcome.

“We’re confident that once they do the emissions modeling right, given the climate crisis that we’re in, they will reach the decision that leasing doesn’t make sense right now,” said Brettny Hardy, an attorney for the environmental law firm Earthjustice, who worked on the case.

Scott Lauermann, a spokesman for the oil and gas industry’s largest trade group, the American Petroleum Institute, called the decision “disappointing.” And Erik Milito, president of the National Ocean Industries Association, which represents offshore oil and gas companies, called on the administration to “defend responsible U.S. offshore production and to take the necessary steps to ensure continued leasing and energy production from the U.S. Gulf of Mexico, for the benefit of all Americans.”

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The decision comes at a sensitive time for the Biden administration, which has been criticized by environmental groups for failing to curb fossil fuel production in the United States. At a Thursday briefing, White House press secretary Jen Psaki defended the administration’s climate policies and said that the court ruling striking down the oil and gas moratorium had become a “significant challenge.”

Legal challenges have “made it impossible for us to stop many of these leases,” Psaki said.

correction

A previous version of this article misspelled the name of Erik Milito, president of the National Ocean Industries Association. The article has been corrected.

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