Valerie Volcovici and Nichola Garoom

(Reuters) -A U.S. judge’s surprise decision this week to annul the Biden administration’s first Gulf of Mexico oil lease auction because of its climate change impact has raised questions about the future of the nation’s federal drilling program – and played directly into the president’s hand.

President Joe Biden is a Democrat. In his campaign, he pledged to eliminate federal oil and natural gas drilling. After taking office, he immediately announced a suspension on all lease sales pending a comprehensive review of drilling’s effects on climate change. About 25% of U.S. crude oil and natural gas comes from federal lands or waters.

After several successful lawsuits by Louisiana drilling states, his administration was forced to sell the property. The federal law in the United States requires that auctions be held on a regular schedule to increase energy independence and to generate income.

With 1.7million acres of land sold in November, this was the largest auction since 2019 and generated $190,000,000. Exxon Mobil (NYSE: Chevron (NYSE:).

This week’s ruling, from a judge in the District of Columbia who was appointed by former President Barack Obama, came after a challenge by environmental group Earthjustice. Judge canceled the entire auction, claiming that the Interior Department had failed to adequately account for global warming.

Biden’s Interior Department utilized an environmental impact statement prepared by Trump’s administration for the auction. It was used because it included a number of climate-skeptic arguments. Because oil is less expensive elsewhere, it argued that production from the Gulf of Mexico could reduce greenhouse gas emissions.

Biden’s Interior Department has to do the original intent: review climate and environmental impacts of drilling. However, it hasn’t yet indicated whether other auctions for drilling will be suspended while this review is completed or the timeframe.

“Always Consider Our Options”

Environmental group sued in the case praised the decision of the court and hoped that the administration would stop leasing. Biden, however, was accused of undermining the auction by a Louisiana state official. In the hope of maintaining sales, the U.S. drill industry and its supporters will likely appeal.

Biden’s Interior Department had an inkling that its Gulf of Mexico oil auction wasn’t on legal ground.

It was noted in the Record of Decision regarding the sale that several months later, an appeals court in 2020 decided the government should take into consideration foreign oil consumption as part of its assessment of greenhouse gas emission impacts from such sales.

This ruling effectively blocked U.S. approval for Hilcorp’s Liberty drilling program in Alaska.

The sale document from the Interior Department stated that it didn’t believe that it was necessary to perform additional analyses on foreign consumption and its impact on emissions.

Un Interior Department official refused to comment.

Ali Zaidi is the White House’s deputy national climate advisor. He said that the U.S. Oil Leasing Program must be overhauled and that Interior Department should have enough space for that.

WildEarth Guardians (an environmental group that sued the federal governments over onshore leasing’s climate impact and has won numerous victories), said this week’s ruling cast doubts on whether the administration is able to proceed with any other planned sales in the first half of this year.

We’ve established a standard. Jeremy Nichols, WildEarth Guardians’ attorney said that this latest ruling sets an even higher bar. It raises the question of whether or not the Bureau of Land Management will be legally able to justify additional onshore oil-and gas leasing.

A group of people sought an order by a New Mexico Federal Judge to stop U.S. drilling permit authorizations on parcels involved in the three Trump administration lease sale transactions. The Bureau of Land Management granted 118 drilling permits to the affected parcels.

Scott Lauermann, a spokesman for oil industry lobby group the American Petroleum Institute, said late Thursday the API was reviewing the Gulf of Mexico decision and “considering our options.”

Elizabeth Murrill is the Solicitor General for Louisiana and an intervenor in this case. She stated that the court as well as the Biden administration had hurt blue-collar workers.

“It is extremely disappointing that the Biden administration continues to sabotage oil and gas lease sales. She said that such actions have a negative impact on consumers and devastate jobs. They also jeopardize our national security.

Michael Wirth (Chevron CEO), whose company was among the highest bidders for the Gulf of Mexico deal, stated that Chevron was evaluating the situation.

“We’re disappointed because these lease sales have been conducted successfully in the Gulf of Mexico for decades now and have resulted in us being one of the largest leaseholders out there with over 240 leases,” he said.