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DC District Court Addresses Relationship of Oil and Gas Leases to Climate Change

Last week the U.S. District Court for the District of Columbia ruled on oil and gas Lease 257 issued by the U.S. Government for 80.8 million acres of the Gulf of Mexico pursuant to the Bureau of Ocean Energy Management’s (“BOEM”) 2017–2022 Program. The ruling in Friends of the Earth v. Haaland, among other things addressed issues of climate change. If upheld, the determination may have far reaching impacts.

The action, against various federal officials alleged that the issuance of the Lease violated the National Environmental Protection Act (“NEPA”) and the Administrative Procedure Act (“APA”). The Court addressed four cross motions for summary judgment.

The Lease involves the portion of the Gulf of Mexico known as the Outer Continental Shelf. “The Outer Continental Shelf Leasing Act (“OCSLA”) is the statutory framework under which the Department of the Interior may lease areas of the Outer Continental Shelf. 43 U.S.C. 1334; Ctr. for Biological Diversity v. U.S. Dep’t of Interior,563 F.3d 466, 472 (D.C. Cir.2009) [hereinafter “Biological Diversity”]. OCSLA sets forth a four-stage process for potential oil and gas production that is “pyramidic in structure, proceeding from broad-based planning to an increasingly narrower focus as actual development grows more imminent.” State of Cal. ex rel. Brown v. Watt, 668 F.2d 1290,1297 (D.C. Cir. 1981).”

The stages range from bidding for leases, development of general plans to submission and review of a more detailed plans where various state and federal agencies must review the plan and the lease may be terminate if it would “probably cause serious harm or damage.” Under NEPA the federal government must look at the potential impacts of the lease and as the plan is develop, if new information comes forward, there must be a supplemental review of potential environmental impacts. While there have been prior decisions granting much authority to approve leases pursuant to OCSLA, the Court noted “…NEPA sets a floor that agencies must comply with even if an agency’s underlying statute, such as OCSLA, could be construed to set a lower one.” .

The leasing was part of BOEM five year program to develop the protocol for the designated area. “NEPA provides that the environmental analysis conducted at each stage may incorporate by reference previous, related analyses, a method known as ‘tiering’.” Therefore, it was proposed that there would be a supplemental environmental review each year. This was done initially, but in 2020 there was no additional environmental review. Instead, a determination was issued that the 2018 supplemental EIS was sufficient. Shortly before President Biden took office, a determination was made to proceed with the Lease. Then, when President Biden took office, the President issued an Executive Order, pausing all such leases pending further review.

Louisiana and other jurisdictions challenged the Executive Order in the Western District of Louisiana. The court issued a preliminary injunction against implementation of the executive Order and BOEM began to implement the process for the leasing and issued a new Record of Decision for the leasing. As a result, the current action was instituted claiming violations of NEPA and the APA. Louisiana and other parties intervened and the parties agreed that the Lease sale could go forward, but implementation would be stayed pending a determination of cross motions for summary judgment.

The Court noted that, as the issue is whether the agency review was adequate. The review by the Court is limited to an examination of the agency record and “deciding whether, as a matter of law, an agency action is supported by the administrative record and is otherwise consistent with the APA standard of review.”

The Court went through a detailed discussion of the claim that the issues were not ripe for judicial review. The Court concluded the issues are ripe, as among other things, “… the Federal Defendants do not challenge this action on ripeness grounds, and none of the parties argue that the lease sale was not a ‘major federal action’ requiring the agency to take a hard look at its actions under NEPA”. Further, “…once a lease is issued BOEM cannot unilaterally undo that decision for at least five years and the government must pay a penalty if it does so.”

Plaintiffs’ challenges included an argument that BOEM failed to include in calculations of total emissions, foreign greenhouse gas emissions in comparing the proposal to the no action alternative. The Court noted that the reports relied upon by BOEM found that there was a potential range of reduction in foreign oil consumption, in the no action alternative, of between one and six billion barrels. Therefore, the Court determined:

“BOEM ‘should have either given a quantitative estimate of the downstream greenhouse emissions that will result from’ the reduced foreign consumption ‘or explained more specifically why it could not have done so.’ Sierra Club (Southeast Market),867 F.3d at 1374.”

While BOEM had issued an addendum, in which it stated it could not calculate the potential changes in the emissions, the Court states that BOE failed to use available information to make a reasonable summary of existing evidence of potential impacts. Further, undercutting BOEM’s argument that it could not have done an analysis was that fact that shortly after issuing its record of decision in this matter, it issued an analysis of the already available data, on reduction of foreign emissions through no action, with respect to the next proposed lease it considered. Thus, the Court concluded the most recent evaluation by BOEM of the subsequent lease “…demonstrates that it was possible for BOEM to have done so in a scientifically reliable way with the information available to it when it evaluated Lease Sale 257…. Barreling full-steam ahead with blinders on was simply not a reasonable action for BOEM to have taken here.”

Plaintiffs also claimed new information had come to light that required a supplemental EIS. Much of this information deals with climate change, and the Court states that BOEM noted such issues. “Indeed, the seriousness with which BOEM considered climate change as part of its analysis was precisely what made its reliance on its counterintuitive conclusion that the No Action Alternative would increase greenhouse gas emissions such a grave error.”

The Court noted several other issues raised by Plaintiffs and concluded that while in certain instances the review may not have been ideal, it was adequate enough to avoid being overturned.

As to remedy for the failure to take a hard look at the issue of foreign greenhouse gas emissions, he Court noted the standard remedy would be vacatur to require the agency to go back and take a hard look at the issue. Further, the Court stated that remand without vacatur often “invites agency indifference.” Therefore, the question becomes whether the error is serious and whether vacatur would be disruptive and is unnecessary.

“With an informed hard look at the full emissions impacts of Lease Sale 257, BOEM“ may well approve another alternative included in the EIS or deny the lease altogether.” Liberty,982 F.3d at 740…. The Court is doubtful, especially given the multiple opportunities at which BOEM could have remedied this error and did not, that it can remedy that misstep on remand.”

There was also an argument that vacatur would be disruptive, but the Court found that none of the leases have been awarded or have become effective.

Therefore, the Court vacated the determination and sent it back to BOEM in order to fully address the issue of impacts upon foreign greenhouse gas emissions of the no action alternative and whether that would alter or negate the issuance of the Lease 257.


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