Beveridge & Diamond
 

D.C. Circuit Vacates 2007-2012 Outer Continental Shelf Leasing Program, But Rejects Climate Change Claims

Beveridge & Diamond, P.C., April 21, 2009

The U.S. Court of Appeals for the District of Columbia Circuit vacated the U.S. Department of the Interior (“Interior”) Minerals Management Service (“MMS”) 2007-2012 Five-Year Leasing Program for oil and gas development on the Outer Continental Shelf (“OCS”).  Center for Biological Diversity v. U.S. DOI, No. 07-1247 (D.C. Cir. April 17, 2009).  The Five-Year Leasing Program covers 21 lease sales scheduled between July 1, 2007 and June 30, 2012, in eight OCS areas, including Alaska and the Gulf of Mexico.  This decision not only has important consequences for holders of OCS leases issued in lease sales conducted since July 1, 2007, but also will likely influence Interior’s next Five-Year Leasing Program (2010-2015), currently under development.  Equally important, this ruling may have lasting impacts on any entity engaged in or facing the growing incidence of climate change litigation brought under a variety of federal natural resources statutes. 

Three national environmental organizations and an Alaska village challenged the Five-Year Leasing Program under the Outer Continental Shelf Lands Act (“OCSLA”), National Environmental Policy Act (“NEPA”), and the Endangered Species Act (“ESA”).  Plaintiffs prevailed on only one of their claims, i.e., failure under OCSLA to adequately assess the environmental sensitivity of OCS areas.  Focusing on Alaska, the Court found that Interior’s analysis was limited to shoreline areas and did not extend to the OCS area (beginning three miles offshore) as required by statute.  As a result, Interior could not conduct a “proper balance” of potential environmental harm and oil and gas discovery.  The Court vacated and remanded the Five-Year Leasing Program, but created a glaring omission.  Namely, the Court ignored that Gulf of Mexico OCS lease sales have already occurred under the 2007-2012 Five Year Leasing Program, and offered no guidance regarding the current status of those leases.  MMS has issued hundreds of leases and received billions of dollars in bonus bids since July 2007.  Those leases are in various stages of development.

From a procedural and constitutional standpoint, however, the ruling offers some positive signs for natural resource developers.  The Court dismissed Plaintiffs’ separate NEPA and ESA claims on standing and ripeness grounds.  Rejecting Plaintiffs’ “substantive theory of standing” for their climate change claims, the Court limited the Supreme Court’s finding of standing in Massachusetts v. EPA, 549 U.S. 497 (2007) to claims by a “sovereign,” asserting injury beyond general harms to its citizens.  Here, even the Alaska village Plaintiff asserted no individualized harm, especially since the OCS is federally-owned.  Moreover, the alleged climate change impacts from additional oil and gas use were not sufficiently concrete or imminent and implicated too tenuous a causal link to the Five-Year Leasing Program.  The Court did find standing for the NEPA climate change claim under a theory of “procedural” injury based on inadequate assessment of the risk to animals affected by offshore drilling, but did not cite any specific evidence.  Nevertheless, the Court found this claim unripe because approval of the Five-Year Leasing Program is only the first of several stages for OCS development.  The Court similarly held that Interior may defer ESA consultation until the actual leasing stage. 

Finally, the Court limited the sorts of claims that could be brought under OCSLA.  Regarding climate change, the Court held that Interior is not required to consider the global or local environmental impact of oil and gas consumption before approval of a Leasing Program.  Rather, OCSLA does not authorize Interior to consider consumption once oil and gas have been extracted from the OCS; any such consideration would contravene Congress’ determination in OCSLA that oil and gas production should proceed on the OCS.  Separately, Interior need not conduct all baseline biological research by the time of Leasing Program approval, but rather it may wait until actual leasing.

For more information about this case’s impacts on OCS leasing and development, please contact Peter Schaumberg (pschaumberg@bdlaw.com, (202) 789-6043), Fred Wagner (fwagner@bdlaw.com, (202) 789-6041), or James Auslander (jauslander@bdlaw.com, (202) 789-6009). 

For more information regarding the decision’s effects on climate change issues and litigation, please contact Russ LaMotte (rlamotte@bdlaw.com, (202) 789-6080) or David Friedland (dfriedland@bdlaw.com, (202) 789-6047). 

Please click here to read the Court’s full opinion.

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