DC Circuit Vacates Bush-era Oil and Gas Lease Expansion

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SandBar 8:2, July, 2009 Recommended citation: Hiatt, R. Bradley, DC Circuit Vacates Bush-era Oil and Gas Lease Expansion , 8:2 SandBar 7 (2009). DC Circuit Vacates Bush-era Oil and Gas Lease Expansion Ctr. for Biological Diversity v. U.S. Dept. of the Interior, 2009 U.S. App. LEXIS 8097 (D.C. Cir. 2009). *R. Bradley Hiatt, 2L, University of Mississippi School of Law* On April 17, 2009, the Court of Appeals for the District of Columbia vacated a Bush-era program expanding oil and gas leases on the Outer Continental Shelf (OCS). Despite rejecting a number of claims against the Department of the Interior (Interior), the court found Interior’s reliance on a shoreline study in its initial evaluation of the lease program’s expansion areas irrational and invalid. Background The Lease Expansion Program (Program) proposed twenty-one potential lease-sales in eight areas off the OCS, an area generally encompassing lands 3 to 200 miles offshore, for oil and gas development. The proposed lease areas were off the Alaskan and Virginian coasts, as well as in the Gulf of Mexico. Four of the lease areas were in the Bering, Beaufort, and Chukchi Seas off the Alaskan coast. The five-year Program was slated to span from 2007 to 2012. The OCS off the coast of Alaska in the Bearing, Beaufort, and Chukchi Seas hosts an abundance of wildlife, including many whale, walrus, seal, and bird species, including two populations of polar bears and the North Pacific right whale. In addition, the Chukchi Sea plays a central role in the subsistent, cultural, and religious activities of the Native Village of New Hope, a federally recognized tribal government. The Outer Continental Shelf Land Act (OCSLA) regulates the lease of OCS areas for gas and oil development. The Act creates a four-tiered, pyramidal framework for the leasing programs. Under the Act, preparatory stages for offshore projects are governed by broader requirements that graduate into stricter mandates in the later leasing, exploration, and production stages. The disputed Program, proposed in August of 2005 and approved by Secretary of the Interior Dirk Kempthorn in April of 2007, was in the first stage of the OCSLA process. The Center for Biological Diversity, Alaska Wilderness League, Pacific Environment, and the Native Village of Point Hope, (collectively the Center) challenged the Interior Department’s 2005 approval of the plan under the Endangered Species Act (ESA), the National Environmental Policy Act (NEPA), and the OCSLA. ESA and NEPA Claims Among other charges, the Center claimed Interior violated both the requirements of the ESA and NEPA in its initial approval of the Leasing Program. The ESA requires an agency, if it concludes an action “may affect a listed species or critical habitat,” to consult with either the National Marine Fisheries Service or the Fish and Wildlife Service.1 However, rather than requiring Interior to take these steps in the initial phase of the program, the court reasoned that ESA requirements should be applied at the appropriate stage in the OCSLA process. The court held that the initial phase of the Leasing Program does not include any actions that would adversely affect any species or habitat in the OCS areas or trigger the ESA requirements. Therefore, the ESA claims were unripe. On the other hand, NEPA imposes procedural requirements to ensure agency actions are both well informed and fully considered as to any environmental impact. To satisfy NEPA, an agency must establish an environmental impact statement addressing three primary issues: (1) the environmental impact of the proposal; (2) the unavoidable and adverse environmental impacts which cannot be avoided; and (3) alternatives to the agency’s proposed action. Similar to the ESA claims, the Center’s NEPA-based accusationsfailure by the Interior to account for greenhouse gases and gaps in initial baseline information–were unripe due to the multi-staged nature of OCSLA. The court ruled that any NEPA obligations under OCSLA mature only at the second, leasing stage of the program, a point in which resources are “irreversibly and irretrievably” committed.2 OCSLA Claims The Center also claimed that the Department violated OCSLA by: (1) failing to account for climate change in its initial assessment, (2) providing insufficient baseline information, and (3) irrationally relying on a NOAA study of shoreline sensitivity. First, the court brushed aside the larger greenhouse gas claims by looking to the statutory language. The Center argued that the Department should have considered “the present and future impact of climate change on the Program areas” and “the impact on climate change by the additional consumption caused by the Program.”3 OCSLA’s mandates, however, require Interior to consider only the effects of gases produced by the exploration, development, and production of the oil and gas resources, not the global need or consumption of the resources. Second, the court dismissed the baseline information claim by again pointing to the graduated, pyramidal structure of OSCLA which the court suggested was in place to resolve any gaps in the information as it became necessary and proper. The last remaining challenge, however, found the court siding with the Center. In developing a leasing program, § 18(a)(2)(G) of OSCLA obliges Interior to consider “the relative environmental sensitivity85of different areas of the [OCS].”4 Though the court recognized that an agency has substantial leeway over their method of consideration and is given deference in its decision, it nonetheless declared Interior’s evaluation of the environmental sensitivity of these areas irrational. Interior relied solely on a NOAA study of shoreline environmental sensitivity in its assessment and, because the OCS is largely an offshore area, the court held that any evaluation of OCS sensitivity must include more than just a single shoreline study. Additionally, the court explained that the requisites of § 18(a)(2)(G) are conjoined with those of § 18(a)(3), a three-factor environmental evaluation amounting to a “condensation of the A7 18(a)(2) factors.”5 As a result, because the Interior’s § 18(a)(2) consideration was irrational, the court accordingly found the A7 18(a)(3) analysis improper. Conclusion The court vacated the Interior’s 2007 to 2012 Leasing Program and remanded the program back the Secretary of the Interior for reconsideration. Endnotes 1. Ctr. for Biological Diversity v. United States Dept. of the Interior, 2009 U.S. App. LEXIS 8097, 34 (D.C. Cir. 2009). 2. Id.* at 29 (citing Mobil Oil Corp. v FTC,* 562 F.3d 170, 172 (2d Cir. 1977)). 3. Id. 4. Id. at *50. 5. Id.
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SandBar 8:2, July, 2009
Recommended citation: Hiatt, R. Bradley, DC Circuit Vacates Bush-era Oil and Gas Lease Expansion , 8:2 SandBar 7 (2009).

Ctr. for Biological Diversity v. U.S. Dept. of the Interior, 2009 U.S. App. LEXIS 8097 (D.C. Cir. 2009).

R. Bradley Hiatt, 2L, University of Mississippi School of Law

On April 17, 2009, the Court of Appeals for the District of Columbia vacated a Bush-era program expanding oil and gas leases on the Outer Continental Shelf (OCS). Despite rejecting a number of claims against the Department of the Interior (Interior), the court found Interior’s reliance on a shoreline study in its initial evaluation of the lease program’s expansion areas irrational and invalid.

Background
The Lease Expansion Program (Program) proposed twenty-one potential lease-sales in eight areas off the OCS, an area generally encompassing lands 3 to 200 miles offshore, for oil and gas development. The proposed lease areas were off the Alaskan and Virginian coasts, as well as in the Gulf of Mexico. Four of the lease areas were in the Bering, Beaufort, and Chukchi Seas off the Alaskan coast. The five-year Program was slated to span from 2007 to 2012.

The OCS off the coast of Alaska in the Bearing, Beaufort, and Chukchi Seas hosts an abundance of wildlife, including many whale, walrus, seal, and bird species, including two populations of polar bears and the North Pacific right whale. In addition, the Chukchi Sea plays a central role in the subsistent, cultural, and religious activities of the Native Village of New Hope, a federally recognized tribal government.

The Outer Continental Shelf Land Act (OCSLA) regulates the lease of OCS areas for gas and oil development. The Act creates a four-tiered, pyramidal framework for the leasing programs. Under the Act, preparatory stages for offshore projects are governed by broader requirements that graduate into stricter mandates in the later leasing, exploration, and production stages. The disputed Program, proposed in August of 2005 and approved by Secretary of the Interior Dirk Kempthorn in April of 2007, was in the first stage of the OCSLA process. The Center for Biological Diversity, Alaska Wilderness League, Pacific Environment, and the Native Village of Point Hope, (collectively the Center) challenged the Interior Department’s 2005 approval of the plan under the Endangered Species Act (ESA), the National Environmental Policy Act (NEPA), and the OCSLA.

ESA and NEPA Claims
Among other charges, the Center claimed Interior violated both the requirements of the ESA and NEPA in its initial approval of the Leasing Program. The ESA requires an agency, if it concludes an action “may affect a listed species or critical habitat,” to consult with either the National Marine Fisheries Service or the Fish and Wildlife Service.1 However, rather than requiring Interior to take these steps in the initial phase of the program, the court reasoned that ESA requirements should be applied at the appropriate stage in the OCSLA process. The court held that the initial phase of the Leasing Program does not include any actions that would adversely affect any species or habitat in the OCS areas or trigger the ESA requirements. Therefore, the ESA claims were unripe.

      On the other hand, NEPA imposes procedural requirements to ensure agency actions are both well informed and fully considered as to any environmental impact. To satisfy NEPA, an agency must establish an environmental impact statement addressing three primary issues: (1) the environmental impact of the proposal; (2) the unavoidable and adverse environmental impacts which cannot be avoided; and (3) alternatives to the agency’s proposed action. Similar to the ESA claims, the Center’s NEPA-based accusationsfailure by the Interior to account for greenhouse gases and gaps in initial baseline information–were unripe due to the multi-staged nature of OCSLA. The court ruled that any NEPA obligations under OCSLA mature only at the second, leasing stage of the program, a point in which resources are “irreversibly and irretrievably” committed.2

OCSLA Claims
The Center also claimed that the Department violated OCSLA by: (1) failing to account for climate change in its initial assessment, (2) providing insufficient baseline information, and (3) irrationally relying on a NOAA study of shoreline sensitivity. First, the court brushed aside the larger greenhouse gas claims by looking to the statutory language. The Center argued that the Department should have considered “the present and future impact of climate change on the Program areas” and “the impact on climate change by the additional consumption caused by the Program.”3 OCSLA’s mandates, however, require Interior to consider only the effects of gases produced by the exploration, development, and production of the oil and gas resources, not the global need or consumption of the resources. Second, the court dismissed the baseline information claim by again pointing to the graduated, pyramidal structure of OSCLA which the court suggested was in place to resolve any gaps in the information as it became necessary and proper.

      The last remaining challenge, however, found the court siding with the Center. In developing a leasing program, § 18(a)(2)(G) of OSCLA obliges Interior to consider “the relative environmental sensitivity85of different areas of the [OCS].”4 Though the court recognized that an agency has substantial leeway over their method of consideration and is given deference in its decision, it nonetheless declared Interior’s evaluation of the environmental sensitivity of these areas irrational. Interior relied solely on a NOAA study of shoreline environmental sensitivity in its assessment and, because the OCS is largely an offshore area, the court held that any evaluation of OCS sensitivity must include more than just a single shoreline study. Additionally, the court explained that the requisites of § 18(a)(2)(G) are conjoined with those of § 18(a)(3), a three-factor environmental evaluation amounting to a “condensation of the A7 18(a)(2) factors.”5 As a result, because the Interior’s § 18(a)(2) consideration was irrational, the court accordingly found the A7 18(a)(3) analysis improper.

Conclusion
The court vacated the Interior’s 2007 to 2012 Leasing Program and remanded the program back the Secretary of the Interior for reconsideration.

Endnotes
1. Ctr. for Biological Diversity v. United States Dept. of the Interior, 2009 U.S. App. LEXIS 8097, *34 (D.C. Cir. 2009).
2. Id. at *29 (citing Mobil Oil Corp. v FTC, 562 F.3d 170, 172 (2d Cir. 1977)).
3. Id.
4. Id. at *50.
5. Id.