US judge annuls major oil lease sale over climate effect

Court decision casts uncertainty over the future of offshore drilling in a significant win for climate campaigners.

A US judge invalidated a major oil-and-gas lease sale saying the government failed to account for its climate change effect, in a significant win for environment advocates.

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

In the decision, Judge Rudolph Contreras ruled to vacate the lease, which offered about 80 million offshore acres (37.4 million hectares) in the Gulf of Mexico in an auction last November – the largest in US history.

The move drew criticism after the Biden administration pledged to move away from fossil fuels in the fight against climate change.

The sale generated more than $190m, the highest since 2019, on 1.7 million acres sold. It drew bids from US oil majors including Exxon Mobil Corp and Chevron Corp.

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.

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

‘Peril of our communities’

Devorah Ancel, senior lawyer at the Sierra Club, one of the plaintiffs, told the Financial Times: “The Biden administration’s failure to adequately evaluate the climate impacts of this massive lease sale wasn’t just out of step with their stated commitment to climate action, it was also illegal.”

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 United States 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 lawyer, in a statement. “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”.

The Gulf of Mexico, located along the southeastern United States, is one of the most important oil production regions in the country.

Biden last January had announced a moratorium on new gas and oil drilling on federal land pending a review in an effort to make responding to the climate crisis a central part of his presidency.

But a federal judge in Louisiana, nominated by former president Donald Trump, ruled in June the administration had to get congressional approval for such a move.

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