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Interior Climate Review Threatens Advance of Oil, Gas Leases

Aug. 25, 2021, 7:28 PM

The Interior Department plans to consider drilling’s effect on the climate when making oil and gas leasing decisions, possibly allowing officials to scuttle fossil fuel projects while still complying with court orders.

Interior’s disclosure came in a Tuesday filing in U.S. District Court for the Western District of Louisiana designed to show it’s complying with Judge Terry Doughty’s preliminary injunction in Louisiana v. Biden. The agency had appealed the injunction on Aug. 16 in the U.S. Court of Appeals for the Fifth Circuit.

The department wants to ensure it’s fully complying with the National Environmental Policy Act “by appropriately analyzing greenhouse gas emissions from proposed sales,” Laura Daniel-Davis, principal deputy assistant Interior secretary for land and minerals management, said in an affidavit in the filing.

Interior’s Bureau of Land Management plans to hold an onshore oil and gas lease sale in December to comply with the injunction, according to the filing. The Bureau of Ocean Energy Management separately will also hold a previously-scheduled offshore lease sale.

But Interior,in a statement, said it’ll decide whether to offer individual land parcels for lease only after an environmental review expected to include climate impacts. Those intentions, outlined in a memorandum, show that the department is violating the June injunction against a leasing pause, the oil and gas industry and the state of Wyoming said.

Interior is disregarding both the letter and spirit of the injunction and won’t likely be following through with its promise to hold a lease sale, said Kathleen Sgamma, president of the Western Energy Alliance, one of several groups that sued separately to force the White House to end its leasing pause.

“The filing makes our strategy easier,” she said. “Now we know for sure that Interior has no intention of leasing this year, and can make a stronger case that the judge needs to act quickly.”

‘Hard to Predict’

Interior said in the filing that, despite the injunction, it retains the discretion to decide whether to issue a lease for any given parcel of land based on its environmental impact.

“Whether this will satisfy the court is hard to predict,” said Susan Jane Brown, a staff attorney at the Western Environmental Law Center. Interior’s forthcoming environmental analysis will need to be judged on its merits, she said.

Presuming the land management bureau evaluates each proposal carefully and candidly weighs costs and benefits, it’s feasible for the agency “to conclude that individual parcels should not be opened to leasing,” Brown said.

Interior has some degree of discretion over how it conducts a lease sale, but its filing opens up the possibility that the court could impose new paramaters on the sale and the scope of its NEPA analysis, said John C. Martin, an oil and gas attorney and partner at Holland & Hart LLP.

Interior spokesman Tyler Cherry declined to comment Wednesday.

Wyoming Gov. Mike Gordon on Wednesday called Interior’s filing “disrespectful” and said the agency is breaking the law. The state filed its own lawsuit against the leasing pause, and the case has been consolidated with the alliance’s. In a statement, Gordon said the state would pursue its “legal options” to force Interior to begin leasing again.

Analyses Already Done

The land bureau under the Trump administration prepared two quarterly lease sales for 2021. But Interior, under the Biden administration, is ignoring the environmental analyses already completed for those sales and is doing more unnecessary analysis, Sgamma said.

“Numerous” judicial decisions have faulted the land bureau for its historic inadequate accounting of greenhouse gas emissions, Daniel-Davis said in the affidavit. For example, a federal court in Alaska last week tossed out ConocoPhillips’ oil and gas leases there because the land bureau failed to account for climate impacts in its decision to issue the leases.

“If they actually take a hard look at those climate impacts, none of these lease sales should be happening at all,” said Mike Freeman, an attorney for the environmental law group Earthjustice.

NEPA’s requirement for such a “hard look” makes it difficult for Interior to argue that it should move toward a lease sale more quickly, said Sam Kalen, a natural resources law professor at the University of Wyoming.

“The Department is within its discretion to ensure that its leasing decisions account for the changing energy transition and the necessity of curtailing GHG emissions,” Kalen said via email.

To contact the reporter on this story: Bobby Magill at bmagill@bloombergindustry.com

To contact the editor responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com; John Hughes at jhughes@bloombergindustry.com

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