The sale of 1.7 million acres in the Gulf of Mexico, sold at auction for $192 million in March 2019, was canceled by a federal judge who ruled that the sale violated federal law when it relied on an “arbitrary and capricious” climate change impact model.
The ruling was a major victory for environmental groups that want to halt all offshore drilling. The Biden administration was forced to go through with the sale after a Louisiana judge ruled that the “pause” in offshore drilling initiated by Biden was illegal.
The Interior Department’s Bureau of Ocean Energy Management based its decision to go through with the sale on a climate analysis completed during the Trump administration. That analysis found little impact on emissions in the Gulf of Mexico.
But the judge, at the urging of several environmental groups, ruled the Bureau of Ocean Energy Management relied on an “arbitrary and capricious” climate impact model and canceled the sale.
Scott Lauermann, a spokesman for the American Petroleum Institute, which represents oil and gas companies, said in a statement: “We are reviewing this disappointing decision and considering our options. Offshore energy development plays a critical role in strengthening our nation’s economy and energy security.”
Companies had argued to the court that vacating the lease sale would compromise the confidential bids that were submitted for the tracts, making their competitors aware of who was bidding on what, and for how much.
Shell, BP, Chevron and Exxon Mobil offered $192 million for the rights to drill in about 1.7 million acres in the area offered by the government. Though the sale occurred on Nov. 17, the leases have not yet been issued.
Enlisting the federal judiciary as lobbyists for environmental groups is par for the course. But empowering a judge to determine the fate of a couple hundred billion dollars worth of oil might be carrying things a bit too far.
Oil industry executives said Thursday they are counting on the Biden administration to appeal the court ruling. “At a time of geopolitical uncertainty and rapidly rising energy prices, U.S. oil and gas production is more important than ever to curb inflation and to fortify our national security,” Erik Milito, president of the National Ocean Industries Association, which represents offshore energy companies, said in a statement.
Environmental groups said they want the administration to live up to its campaign promises. “We will continue to hold the Biden administration accountable for making unlawful decisions that contradict its pledge to take swift, urgent action on code red climate and environmental justice priorities,” said Hallie Templeton, legal director at Friends of the Earth, an environmental group that was part of the lawsuit.
We don’t have to guess which side Biden will come down on. But the real question is whether Biden will keep complaining about the high cost of gasoline as he cuts off avenues of future production almost as fast as new oil fields are discovered.
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