Business/economics

Court Vacates Federal US Gulf Lease Sale

A federal judge tossed out the results of Sale 257, held last November, because of what it said was the government’s underestimation of the potential effect on the environment.

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Lease Sale 257 attracted $192 million in apparent high bids from 33 participating companies.
Source: Getty

A US judge has nullified the sale of Gulf of Mexico (GOM) offshore tracts that were part of Federal Lease Sale 257 held in November and ordered regulators to take a deeper look at the potential impacts on climate. US District Judge Rudolph Contreras in Washington, DC vacated the lease sale in a 67-page decision issued this week. The judge found that the US Interior Department underestimated the climate impacts of the leases and doing a further analysis wouldn’t overly harm the companies seeking the leases.

In his ruling, Judge Contreras concluded that the Interior Department’s Bureau of Ocean Energy Management (BOEM) 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 GOM. Completed under the Trump administration, the analysis found that the climate impacts would be worse if the acreage went unsold because it would lead to greater dependence of foreign oil and lead to more harmful emissions overseas.

The decision effectively tosses out the results of the lease auction that attached $192 million in high bids from 33 participating companies. Sale 257 was the second-to-last scheduled under a 5-year program drawn up by the Obama administration. The judge’s decision now raises questions regarding the final US Gulf auction under the plan slated for this spring.

Early in his administration, US President Joseph Biden put a temporary halt on all new oil and gas leasing. However, a federal judge in Louisiana ordered the feds to move ahead with the leases. Soon after, environmental groups sued to halt the sale.

Interior spokeswoman Melissa Schwartz said in a statement 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.”

Environmental groups lauded the ruling with many hoping it is the first step in abolishing the federal offshore leasing program altogether.

“We are pleased that the court invalidated Interior’s illegal lease sale,” said Brettny Hardy, senior attorney for Earthjustice. “We simply cannot continue to make investments in the fossil fuel industry to the peril of our communities and increasingly warming planet. This administration must meet this critical moment and honor the campaign promises President Biden made by stopping offshore leasing once and for all. Interior should use its next 5-year leasing plan to protect our coastal communities and public waters and offer no new offshore leases. We can no longer afford to do anything less.”

Industry groups and the oil companies themselves were less enthusiastic about Judge Contreras’ ruling. Now that the sealed bids have been opened and publicly read, there would be no way to “redo” the sale fairly as all of the players now know which leases each were after.

In total, 308 blocks received high bids in Sale 257. The most active operators in the sale included ExxonMobil, which placed 94 apparent high bids, followed by BP (46), Chevron (34), Anadarko [now Occidental] (30), and Shell (20).