A year to the day from when President Joseph Biden announced a moratorium on federal leasing for oil and gas drilling just a week after his term began, a federal district court judge for the District of Columbia invalidated the largest oil and gas lease sale—for 2,700 square miles—in U.S. History. The lease, which fetched a combined offer of $192 million from some of the largest energy companies in the world, was for offshore drilling rights in the Gulf of Mexico. The November 2021 auction for the lease was resumed after a successful challenge from various states, led by Louisiana, to Biden’s January 2021 federal leasing moratorium.
However, in a lengthy ruling issued Thursday, January 27, 2022, Judge Rudolph Contreras called the decision “unreasonable,” based on modeling that was “arbitrary and capricious,” and he found that the U.S. Department of the Interior’s analysis of the lease sale was errant because it did not take into account that the greenhouse gas emissions that would result from the sale would amount to a violation of the National Environmental Policy Act. His finding was the same as those issued in two prior decisions in the U.S. Court of Appeals for the Ninth Circuit and Alaska federal District Court in which lease sales using the same analysis were deemed flawed. Accordingly, Judge Contreras sent the proposed sale back to the Interior Department in order for it to reassess the sale in light of the additional greenhouse gas emissions consideration, and to go forward with it, nullify the sale entirely, or take any other steps.
Following the decision, the Interior Department responded that it had been “compelled” to proceed with the lease sale following the lifting of the moratorium, and that the Department’s faulty analysis—that leaving the acreage unsold would create more emissions because foreign oil companies would increase their own productions—had been completed under the prior administration. In an effort to show its commitment to flagging deficiencies in the federal oil and gas leasing program, a spokesperson for the Interior Department pointed to a November 26 report in which it recommended an overhaul of the federal oil and gas leasing program (outlined by ELM here).
Industry stakeholders are not as accepting of the decision. The National Ocean Industries Association, for instance, responded by claiming such a decision would harm U.S. energy security because any uncertainty pertaining to the federal oil and gas leasing program would only benefit American adversaries such as Russia and others. Notably, however, the Biden administration has proposed another round of oil and gas lease sales in other locations such as Colorado, Montana, and Wyoming.