* Ruling vacates Gulf of Mexico Lease Sale 257 held in Nov
* Ruling finds govt environmental analysis flawed
* Gulf of Mexico is key U.S. oil, gas production area
Jan 27 (Reuters) - 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 and Chevron Corp
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.
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
"We have documented serious deficiencies in the federal oil
and gas program," Interior spokesperson Melissa Schwartz said in
a statement. "Especially in the face of the climate crisis, we
need to take the time to make significant and long overdue
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 Interiors
illegal lease sale," said Brettny Hardy, Earthjustices senior
attorney, 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."
It was unclear how the ruling would affect the
administration's plans to offer more than 300,000 acres of
onshore leases to drillers by the end of this quarter. Like the
Gulf sale, those auctions were initiated after a federal judge
in June ordered the government to resume oil and gas leasing.
The offshore drilling industry slammed the decision.
"Uncertainty around the future of the U.S. federal offshore
leasing program 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 (API), said the API was
"reviewing the decision and "considering our options."
The decision is not the first time a court has cited faulty
environmental analyses in blocking oil and gas development on
federal lands. In August, a federal judge reversed the
government's approval of a $6 billion ConocoPhillips development
in Alaska, a decision that was cited in Contreras' ruling.
(Reporting by Nichola Groom and Valerie Volcovici; Editing by
Jacqueline Wong and Christian Schmollinger)