Industry, States Argue on Appeal for Oil and Gas Lease Sale
Oil and gas companies and 15 states have made their arguments for an appeals court to overturn a federal court ruling so that an oil and gas lease sale for tracts in the US Gulf of Mexico can be completed.
The case, in the US Court of Appeals for the District of Columbia Circuit, stems from a federal district court decision Jan. 27 that not only required more environmental analysis for lease sale 257 but vacated the sale, which was held in November (OGJ Online, Jan. 28, 2022).
The district court judge ordered that the Interior Department come up with an additional set of calculations to estimate the impact on global greenhouse gas emissions if the lease sale were not held at all, calculations the judge said were needed to satisfy the National Environmental Policy Act (NEPA).
In its brief filed June 13 at the appeals court, the American Petroleum Institute (API) cited cases in which the appeals court ruled that no such “speculative” estimate was needed or of any use for a lease sale, and that even if the court insisted on such a calculation, it could be done on remand without vacating the sale.
“The district court upended longstanding precedent holding that the National Environmental Policy Act does not require such speculative assessments at the lease-sale stage,” API said. “It compounded this error by refusing to remand without vacatur.”
The trade group pointed out that Interior can make such calculations when companies submit an exploration plan and when they submit a development and production plan. And at any of those stages Interior can reject the plan or require changes to protect human health and the environment.
Harmful impacts described.
The case is Friends of the Earth v. Haaland. The state of Louisiana filed its own appeal brief on the same day as API, and then other parties filed their supporting briefs June 13. Weighing in were Chevron Corp., BP Exploration and Production Inc., Shell Offshore Inc., the National Ocean Industries Association (NOIA), the EnerGeo trade group of geophysical contractors, 14 states filing jointly, and the US Chamber of Commerce.
The Biden administration, which lost the case in the district court, chose not to appeal.
NOIA and EnerGeo, filing jointly, stressed precedents as API did. Both groups have members with long experience working in the waters off the outer continental shelf (OCS).
“No prior court has ever vacated an OCS lease sale, for good reasons now exhibited here,” NOIA and EnerGeo said. “The district court unraveled years of detailed analyses and substantial investments made in preparation for the sale.”
The two groups explained how geological and geophysical contracting generates valuable data that can be licensed at more than $1 million per license in support of confidential bids. The bidding strategies become public only after winners are determined. But the district court, by vacating the sale after the bid results were announced, has effectively given away confidential strategy information.
Chevron was the high bidder for 34 tracts in the contested lease sale. If a new sale must be held, the company said in its own brief, it will be deprived of the competitive bidding confidentiality required under the Outer Continental Shelf Lands Act.
“Chevron’s competitors, in other words, have an anticompetitive advantage,” the company said.
No fix in sight.
The DC Circuit has repeatedly held that if a federal agency commits an isolated error, the action should be remanded without vacatur for a simple fix, NOIA and EnerGeo said. They listed a string of decisions by the DC Circuit in support of their contention.
They also noted that the current 5-year program for lease sales in the federal offshore will end June 30, making it late for Interior’s Bureau of Ocean Energy Management (BOEM) to arrange a new sale.
“Though the district court expressed blind optimism that BOEM could quickly cure its [alleged] NEPA violation, BOEM predictably has not done so in the several ensuing months given the district court’s vacatur,” the two groups said. “Moreover, BOEM has canceled all other lease sales under its current 5-year leasing program.”
Louisiana in its brief cited not only previous cases by the DC Circuit in support of appellants’ position but said the district court judge essentially botched his own precedent citations. Judge Rudoph Contreras cited two cases that actually were final-stage actions not lease-stage actions, Louisiana said.
In a joint filing led by Montana, 14 states used the occasion for an aggressive criticism of what environmental activists and courts have done under NEPA.
“Litigants—and courts, for that matter—have weaponized the National Environmental Policy Act,” the states said.
The states quoted Columbia University scholar David Hill as saying, “The entire original purpose of doing NEPA analysis has been lost along the way to creating mountains of data and information in the hopes of successfully defending against inevitable litigation.”
The states added that “NEPA challenges have produced a system in which courts consistently tell agencies their analyses fall short,” and as in this case, “NEPA’s goalposts move further back a little more each time.”
The environmental advocacy groups led by Friends of the Earth are not scheduled to file their responding briefs until Aug. 26, after which replies can be filed in September and October, making it very unlikely a decision will be rendered before November at the earliest.https://www.ogj.com/general-interes...gue-on-appeal-for-oil-and-gas-lease-sale