President Joe Biden has an opportunity for a reset on climate policy after a federal judge rejected an administration plan to lease millions of acres in the Gulf of Mexico for offshore oil drilling.
U.S. District Judge Rudolph Contreras tossed the drilling plan late Thursday, saying the Interior Department did not adequately take into account the proposed drilling’s effect on planet-warming greenhouse gas emissions.
Environmentalists say the lease sale goes against Biden’s campaign promise to stop new oil and gas leasing on federal land and water. The court decision was released on the one-year anniversary of a federal leasing moratorium Biden ordered as part of his efforts to combat climate change.
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.
The 68-page decision by Contreras sends the proposed Gulf lease sale back to Interior to decide next steps.
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.
Moving ahead with the sale — initiated by the Trump administration — “was terrible policy and also bad politics,'' said Drew Caputo, vice president of litigation at Earthjustice, one of the environmental groups that challenged the offshore sale.
Biden “campaigned on addressing climate change, and a growing sector of the electorate — young, diverse and active — are climate change voters,'' he said. "They voted for Biden, and if he wants them to vote for him again the White House needs to respond on climate.''
Melissa Schwartz, a spokeswoman for Interior Secretary Deb Haaland said the administration was “compelled" to proceed with the lease sale following 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.
“Especially in the face of the climate crisis, we need to take the time to make significant and long overdue programmatic reforms,″ Schwartz said. ”Our public lands and waters must be protected for generations to come.”
The White House has not acted on the Interior report, which was submitted in late November. "The oil and gas lease program continues to be under review,'' White House spokesman Vedant Patel said Friday. He referred questions to Interior.
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.
“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 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 impact 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.
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.
