From Alaska to the Gulf Coast, the oil and gas industry and its allies scored key victories in legal battles this year to advance fossil fuel development over green groups’ claims that project approvals violated a bedrock environmental law.
Environmentalists asked courts to strike down fiercely contested offshore lease sales and a controversial gas pipeline — even after Congress passed bills requiring the projects to go forward — because, challengers alleged, federal regulators had failed to take a “hard look” at their environmental impact, as required under the National Environmental Policy Act.
Judges were unconvinced that the groups’ NEPA claims could override congressional action.
When Congress passes laws — such as the 2022 Inflation Reduction Act or 2023 Fiscal Responsibility Act — that direct the government to conduct a lease sale or greenlight a pipeline, NEPA lawsuits don’t stand a chance, said Keith Hall, director of Louisiana State University’s Energy Law Center.
“I think that gets rid of NEPA,” he said.
Despite their courtroom losses, environmental groups say they remain optimistic that NEPA litigation will continue to be an effective tool to shape future energy development. In some cases, lawsuits are ongoing and could be resolved in 2024.
“The feds have acknowledged that the IRA doesn’t disturb the bulk of the NEPA process,” said Kristen Monsell, oceans program litigation director at the Center for Biological Diversity, which has opposed onshore and offshore oil and gas lease sales.
She continued: “I think that gives a pretty strong signal that they will have more than sufficient discretion to change the terms of lease sales to increase environmental protections.”
Gulf lease sales
One of environmentalists’ first NEPA losses against a congressionally backed project this year came this spring in a dispute over a massive oil and gas lease sale in the Gulf of Mexico.
In May, the U.S. Court of Appeals for the District of Columbia Circuit tossed out green groups’ challenge to Lease Sale 257, which had initially been canceled by the Biden administration before Congress reinstated it.
Judges of the D.C. Circuit found that passage of the Inflation Reduction Act had invalidated the case. Even if the court determined that the lease sale violated NEPA, the court was still obligated to allow the sale to proceed because it was required under the legislation.
The D.C. Circuit ruling followed the government’s reinstatement of the sale in September 2022.
The Inflation Reduction Act directed the Interior Department’s Bureau of Ocean Energy Management to issue leases to the highest bidders for the sale, which was originally held in November 2021 and was later canceled by a federal judge. The statute also directed BOEM to hold a handful of other sales, including Lease Sale 258 in Alaska’s Cook Inlet, as well as lease sales 259 and 261 in the Gulf of Mexico.
Last month, the 5th U.S. Circuit Court of Appeals ordered Lease Sale 261 to go forward, following a lower court ruling that found procedural problems with how BOEM had tried to exclude 6 million acres to protect the endangered Rice’s whale. BOEM held the sale Wednesday.
Of the remaining lease sales mandated under the Inflation Reduction Act, two are still subject to legal challenge.
Mountain Valley pipeline
Environmentalists and landowners have battled for years in federal court to prevent completion of the 300-mile Mountain Valley natural gas pipeline.
Earlier this year, Congress put a decisive end to most of those legal fights when it passed a provision of the debt ceiling deal that ensured the pipeline’s completion. The project will carry gas from West Virginia to southern Virginia.
Section 324 of the Fiscal Responsibility Act not only directed federal agencies to issue all necessary permits required for construction, but also barred federal courts from hearing any lawsuits challenging those approvals, including cases already pending before judges.
At first, environmental groups sought to continue their claims that permits reissued by the Forest Service and Fish and Wildlife Service had again failed to comply with NEPA and other federal laws.
However, the 4th U.S. Circuit Court of Appeals reluctantly ruled in August that it could no longer consider their cases, due to Congress’ mandate in the debt ceiling legislation.
In a concurring opinion, Judge Roger Gregory said Section 324 was a “blueprint for the construction of a pipeline by legislative fiat.”
“I fear Congress has employed this Court’s constitutionally directed deference to legislative prerogatives to undermine the Constitution and, in the process, it has made the Court an accessory to its deeds,” said Gregory, who is a Clinton and George W. Bush appointee.
While the NEPA claims against the Mountain Valley pipeline have been dismissed, one long-shot lawsuit is still playing out in the D.C. Circuit. Virginia landowners in the path of the pipeline are seeking to overturn how the Federal Energy Regulatory Commission hands off its eminent domain power to companies building natural gas pipelines.
The landowners are also challenging whether the debt ceiling provision mandating the pipeline violates separation of powers protections under the Constitution. The D.C. Circuit may rule on their claims in 2024.
Alaskan oil
On the other side of the country, environmental and Indigenous groups are fighting to block a major fossil fuel project in Alaska’s National Petroleum Reserve on NEPA grounds — despite a ruling from one previously sympathetic judge who said the project must go forward.
The Center for Biological Diversity and the Sovereign Iñupiat for a Living Arctic claimed that an environmental review by Interior’s Bureau of Land Management of ConocoPhillips’ Willow project should have considered alternative project designs that would limit the amount of oil that could be extracted.
While Congress has not issued any specific mandate on Willow, the judge hearing the case — who once sided with environmentalists in their NEPA lawsuit against a Trump-era approval for the project — found that BLM had correctly balanced resource development requirements under the 1976 Naval Petroleum Reserves Production Act.
Congress established the reserve to meet the nation’s need for oil and gas, said Judge Sharon Gleason of the U.S. District Court for the District of Alaska.
An alternative project design from BLM that left “considerable quantities of economically recoverable oil in the ground” would be inconsistent with Congress’ directive to extract oil from the reserve, said Gleason, an Obama pick.
Another Alaska oil case will also test whether additional NEPA review can halt a congressionally backed project — but in this case, the party seeking to block development is the Biden administration itself.
In October, the Alaska Industrial Development and Export Authority sued the Biden administration for canceling seven leases in the Arctic National Wildlife Refuge.
The Alaska public corporation claimed the cancellation of the lease sales violated a congressional mandate under the 2017 Tax Cuts and Jobs Act to develop fossil fuel resources within the refuge’s coastal plain.
Their challenge will likely be decided next year by the U.S. District Court for the District of Columbia.
Correction: An earlier version of this story said the 5th U.S. Circuit Court of Appeals found procedural problems with the Bureau of Ocean Energy Management’s decision to exclude acreage from Lease Sale 261. The court dismissed environmentalists’ lawsuit against the agency.
