WASHINGTON -- 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 did not adequately take into account the lease sale's effect on planet-warming greenhouse gas emissions, violating a bedrock environmental law.
The decision by U.S. District Judge Rudolph Contreras in Washington on Thursday sends the proposed lease sale back to the Interior Department to decide next steps. The judge said it was up to decide decide whether to go forward with the sale after a revised review, scrap it or take other steps.
"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 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.
The Biden administration proceeded with the sale after losing a court case in Louisiana last summer. Energy companies including Shell, BP, Chevron and ExxonMobil offered a combined $192 million for drilling rights on more than 300 tracts totaling nearly 2,700 square miles, one of the largest sales ever in the Gulf.
Biden has set an ambitious goal to slash planet-warming greenhouse gas emissions in half by 2030, speeding what is already a market-driven growth of solar and wind energy and lessening the country's dependence on oil and gas. The push comes as the effects of climate change, including more powerful hurricanes, wildfires and drought, are increasing.
Melissa Schwartz, a spokeswoman for Interior Secretary Deb Haaland, said the administration was "compelled" to proceed with the lease sale after the Louisiana court ruling.
Interior has "documented serious deficiencies in the federal oil and gas program,″ Schwartz said, adding that Haaland has recommended an overhaul of the nation's oil and gas leasing program to limit areas available for energy development and raise costs for energy companies to drill on public land and water.
Despite being on the losing side of Thursday's ruling, the administration can count it as a win for Biden's climate agenda, said analysts Rene Santos and Sami Yahya with S&P Global Platts.
'RESETS THE CLOCK'
"This decision basically resets the clock back to January 2021 when Biden issued the executive order halting new permits and leases," Santos and Yahya said in an email.
The June court ruling in Louisiana had forced the administration to rely on a Trump-era environmental analysis that has been faulted by courts for underestimating the climate impacts of large fossil fuel sales. A review conducted by the Trump administration 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 in place.
Federal officials have since changed their emissions modeling methods but said it was too late to use that approach for the November auction.
Louisiana officials said Friday they are exploring potential legal remedies.
"It is extremely disappointing that the Biden administration continues to sabotage oil and gas lease sales," said state Solicitor General Elizabeth Murrill, who works for Republican Attorney General Jeff Landry.
Biden's actions "are crippling consumers, destroying jobs and jeopardizing our national security," Murrill said.
In the short term, the ruling is expected to have little effect on oil and gas companies operating in the Gulf since they already have numerous leases and the ones in dispute likely would not have been developed for many years.
GLOBAL CONUNDRUM
Still, if the disputed leases are not reoffered and future sales get curtailed, it would mark a significant setback for the oil industry in a region that accounts for 15% of total U.S. crude production.
"This ruling is yet another example of the increasing policy and legal uncertainty that is jeopardizing the future of American energy leadership and leading to greater dependence on foreign energy sources that result in higher emissions," said Frank Macchiarola, senior vice president of the American Petroleum Institute, the oil industry's top lobbying group.
Macchiarola urged the administration to continue lease sales in the Gulf of Mexico, calling the region "critical for meeting demand for affordable energy while generating billions in government revenue."
Energy analyst Jim Krane at Rice University's Baker Institute said the Gulf leasing dispute underscores a conundrum as governments struggle to address global warming: Fossil fuels are wreaking havoc on the climate, but limiting domestic supplies won't reduce demand and could cause prices to rise, encouraging more production in countries with fewer environmental restrictions.
Restricting production in the Gulf of Mexico is the "wrong target anyway" for opponents of fossil fuels, Krane said, since it's less carbon intense than oil that's produced onshore through fracking. "We'd all be better off with a tax on carbon and letting companies and their customers figure out how they can reduce their emissions," he said.
Information for this article was contributed by Matthew Brown and Janet McConnaughey of The Associated Press.