U.S. Judge Annuls Gulf of Mexico Oil Auction Over Climate Impact

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

The decision has cast uncertainty over the future of the U.S. federal offshore drilling program, 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% of existing U.S. oil production and 5% 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 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’s decision came after the environmental group Earthjustice challenged the sale on behalf of four other green groups, arguing U.S. 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 about the role of oil and gas development on global warming.

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

 

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