Legal Updates

“All of the Above Energy”/ “Energy Dominance”: The Courts Strike Back on Climate Change

Although the Obama and Trump administrations differ markedly on climate change and energy policy, their oil and gas decisions are being similarly faulted by federal courts. President Obama had an “all of the above” energy policy that included the development of oil and gas but took addressing climate change as a serious obligation. President Trump has by executive order (EO 13783), agency policies (Secretarial Order 3360) and rulemakings rejected Obama climate change policies to support an “energy dominance” energy policy.

In March 2019, two federal courts considered two different phases of the Bureau of Land Management’s (BLM) oil and gas process—leasing and development—and found BLM’s National Environmental Policy Act (NEPA) analysis faulty for failing to adequately consider greenhouse gas (GHG) emissions and climate change impacts. WildEarth Guardians v. Zinke (D.D.C., March 13, 2019) (WEG) and Citizens for a Healthy Community v. BLM (D. Colo., March 27, 2019) (Citizens). Oil and gas lease holders in Wyoming and an oil and gas development in Colorado have been stymied as the courts direct BLM to improve its analysis of climate change impacts. The WEG court refused to vacate the leases, but on remand directed BLM to complete a new analysis before allowing development on existing leases or any new leasing. Although the industry has asked the administration to appeal the WEG decision, the administration’s next move is not clear. The Citizens court has asked for additional briefing on a remedy.

Background. BLM has a three-phase process for making available federal oil and gas – planning, leasing and development. Each phase is an agency decision that triggers NEPA. In a Resource Management Plan (RMP), BLM identifies lands closed, open or open with environmental stipulations to oil and gas and prepares an Environmental Impact Statement (EIS). At the leasing phase, BLM considers particular parcels that it may offer for lease and will either rely on the RMP EIS or conduct a separate lease parcel environmental analysis (EA). At the development phase, BLM will address the site-specific development of a lease(s) in an EA or EIS depending on the size of the proposal. BLM’s NEPA compliance is reviewed under the Administrative Procedure Act (APA) to determine whether it is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(a).

Decisions. What can we learn from how the D.C. and Colorado courts addressed BLM’s climate change analysis? In WEG, BLM was making leasing decisions in 2015 and 2016 in Wyoming, Utah and Colorado on 460,000 acres. (The court addressed only the Wyoming leases at this stage of the proceeding.) In Citizens, BLM was reviewing a Master Development Plan (MDP) and a separate 25-well Project in western Colorado. In WEG, the lease EA/“Finding of No Significant Impact” (FONSI) was tiered to a plan-level RMP EIS. In Citizens, BLM had prepared an MDP EIS and an EA/FONSI for the 25-well development that were challenged. (Earlier, in Wilderness Workshop v. BLM (D. Colo. 2018) this same court had found inadequate BLM’s RMP-level oil and gas climate change analysis). Although both courts faulted BLM’s climate change analysis, there were differences in their conclusions that, in part, relate to the particular leasing phase being addressed.

In WEG, the D.C. court found BLM’s largely qualitative discussion of the direct and indirect impacts of GHG emissions on climate change inadequate. “Simply put, NEPA required more robust analysis of GHG emissions from oil and gas drilling and downstream use. Accordingly, BLM’s EAs and FONSIs for the Wyoming Lease Sales are inadequate.” BLM tried to argue that climate change analysis was best left to the site-specific development stage when more facts (e.g., number of wells) were known. The court disagreed and found “the leasing stage is the point of no return with respect to emissions” and while BLM could not “foresee the environmental impacts of specific drilling projects, it could reasonably foresee and forecast the impacts of oil and gas drilling across the leased parcels as a whole.” The court discussed in detail the available information that BLM could have used to conduct a quantitative analysis of direct impacts. Similarly, the court found BLM must discuss the downstream GHG emissions and impacts – “downstream GHG emissions from fossil fuel use are an indirect effect of BLM’s oil and gas leasing program at issue here.” Although in this instance the court did not require a quantitative analysis of those impacts, the court on remand directed BLM to explain why a quantitative analysis could not be done or would not be helpful to BLM’s decision-making. Finally, the WEG court required the BLM’s cumulative impacts analysis (looking at past, present and reasonably foreseeable GHG emissions and the incremental impact of the challenged leases) to use what the court saw as readily available data to prepare a quantitative analysis that BLM could then compare to a qualitative discussion of local, regional and national GHG emissions, but not global emissions, to determine the cumulative impact of issuing these leases. The court rejected requiring either the use of the Social Cost of Carbon (SCC) or a global carbon budget, but did direct BLM to consider whether using the SCC could contribute to its decision-making.

In Citizens, BLM was looking at site-specific impacts from a defined development project. There was much in BLM’s Project analysis of climate change that the court approved of. The court found the BLM’s cumulative impacts analysis of GHG and climate change for the Project sufficient because BLM: 1) looked at Colorado coal-fired power plant emissions and did a comparative analysis; 2) “provided a qualitative analysis of climate change and the role played by GHG emissions” and discussed the potential for impacts by relying on the Intergovernmental Panel on Climate Change report and National Climate Change Assessment; 3) performed a regional cumulative impacts analysis of future mineral development in the next ten years using a Colorado Air Resources Management Modeling Study; and 4) followed the Council on Environmental Quality’s draft guidance to predict the GHG emissions for the Project wells. The court rejected the Plaintiffs’ argument that BLM should have discussed the cumulative emissions in a global context. The court found BLM properly examined the “ecological, economic and social impacts” of GHG emissions and rejected requiring BLM to use the SCC to put a dollar figure on impacts. “Here, I agree with [BLM] that it is within their discretion to decide whether to analyze an effect quantitatively or qualitatively.” Where the court faulted BLM’s analysis was on the consideration of downstream GHG emissions from the proposed development. The court concluded that BLM should have used the production estimates it used in its economic analysis to calculate those secondary GHG emissions in order to compare them to regional and national GHG emissions. “Simply put an agency cannot rely on production estimates while simultaneously claiming it would be too speculative to rely upon the predicted emissions from those same production estimates.”

The WEG decision has significant impacts for BLM’s NEPA analysis at the lease stage – how will BLM consider GHG emissions and the direct and indirect impacts on climate change? Citizens is helpful because it describes what at least one court finds adequate for BLM to use to consider cumulative impacts at the development stage. Both courts have rejected BLM’s argument that it doesn’t know enough to consider secondary impacts and have made it clear that BLM must do more with available data to quantitatively discuss GHG emissions and climate change impacts in its NEPA documents. The Obama leasing analysis in WEG fell short and the Trump administration is being pressed by the courts to actively address climate change, something the President calls a “Chinese hoax,” in its NEPA analyses for the planning, leasing and development phases of its “energy dominance” agenda.