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Oil and gas litigation's fate unclear under new president

As the White House prepares for a changing of the guard, federal agencies are involved in several high-profile oil and gas lawsuits that will churn on no matter what the outcome on the ballots.

But while elections have no bearing on day-to-day courtroom activity, several big cases are expected to face significant indirect effects from today's results.

On the regulatory front, the Obama administration is facing legal challenges to two major oil and gas rules: the Bureau of Land Management's hydraulic fracturing rule and U.S. EPA's new standards for methane emissions from the industry.

Meanwhile, dueling lawsuits from industry and environmentalists seek to reform BLM's oil and gas leasing practices on public lands. Finally, the fever-pitched controversy over the Dakota Access oil pipeline will likely advance in federal court next year, with the Army Corps of Engineers at the center of the battle.

The portfolio of ongoing litigation faces numerous election-related uncertainties, including how vigorously the next president defends Obama administration decisions and what actions a new leader might take that could send litigation off course.

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Neither Donald Trump nor Hillary Clinton has offered many details about plans for oil and gas policy, but analysts expect Clinton to generally extend President Obama's cautious support for domestic production and expect Trump to consider more industry-friendly policies and slackening of certain regulations.

Here's how several cases may hinge — at least indirectly — on which candidate lands in the White House.

Regulatory challenges

When it comes to lawsuits over federal regulations, the most significant action Trump or Clinton could take to affect courtroom proceedings would be to withdraw the rule at issue or fail to defend it in court.

Experts say that's an extremely unlikely scenario for contested oil and gas regulations.

"For a Trump administration, if they're going to throw the fight, they might pick it for an issue with bigger national political value than energy," ClearView Energy Partners LLC analyst Kevin Book told E&E News. "That's a one-bullet gun. I don't think they'll get away with doing that too many times."

BakerHostetler attorney Mark Barron, who is representing industry groups against the fracking rule, agreed, noting that even if Trump viewed the rule as a top priority, he would likely not have political appointees in place soon enough to keep the Justice Department from defending it.

"As long as the rule is outstanding, then regardless of the politics, DOJ is going to defend it," Barron said.

The fracking rule is currently on appeal at the 10th U.S. Circuit Court of Appeals after being thrown out by a lower court in June. Oral arguments are expected to take place in January or later. The methane litigation, meanwhile, is just heating up, with opponents and supporters of the regulation lining up at the U.S. Court of Appeals for the District of Columbia Circuit.

Book said a Trump administration most likely would dampen the effect of the fracking rule or methane rule by using discretionary enforcement. If federal courts uphold either rule, a Trump administration could decline to robustly enforce the rules' various requirements. Of course, that kind of light touch could also sprout new legal challenges from supporters of a rule.

"You don't have to go very far down the discretionary enforcement pathway before you get your first legal challenge," he said.

Barron added that congressional elections could also play a role in the fracking rule litigation, as the lawsuit centers on whether Congress has barred BLM from regulating the oil and gas production method.

"The down-ballot congressional elections could actually be more important than the presidential ones," he said. "Given that the argument that is pending in the 10th Circuit right now is an argument premised on the position that Congress has acted to specifically remove BLM's jurisdiction over hydraulic fracturing and that the power to regulate that activity ... rests with Congress, the makeup of Congress is really important. And no matter what happens in the court, both parties really could overturn that if they had a favorable Congress."

In other words, a Democrat- or Republican-controlled Congress could take control of the fracking rule's fate by passing legislation that specifies whether BLM has authority over fracking.

"I think it's high-profile enough that if the court were to go ahead and do something that whoever's the majority in Congress is unhappy with, they could correct if they want to," he said. "The whole argument is based on the intent of Congress."

Leasing lawsuits

Another potentially pliable legal front is the Obama administration's oil and gas leasing practices.

In August, the industry group Western Energy Alliance sued the administration, alleging it bowed to environmental pressure and failed to hold quarterly lease sales, as specified in the Mineral Leasing Act. Environmentalists were busy drafting their own challenge, accusing BLM later that month of ignoring the climate impacts for hundreds of thousands of acres of leases since early 2015.

Barron, who is representing WEA in its lawsuit, argued that the issue is technical, not political, and therefore is unlikely to be affected significantly by the election results.

"There are regulations that define whether or not lands are eligible, and we think that there's been times when eligible lands exist, and they still haven't had the sales," he said. "So I think that would really be up to a judge to say, 'You've got to do it.'"

Book noted, however, that a Trump administration may be likely to schedule more lease sales, rendering the industry lawsuit unnecessary.

The environmental groups' suit, meanwhile, is likely to feed an intense legal battle next year, as the case has high stakes for how the federal government weighs climate impacts for any decision.

A Trump administration is expected to vehemently defend against the lawsuit, as it would draw into question broad acreage of domestic oil and gas production. A Clinton administration's approach to the lawsuit is less clear, but environmentalists say they would not expect any major concessions if she wins.

"I'm under no illusion that a Clinton presidency is going to lead to an amazing settlement in the case and a wholesale reform of the federal oil and gas leasing program," said Jeremy Nichols, climate and energy program director for WildEarth Guardians, the group leading the lawsuit. "They're going to fight it. And the Bureau of Land Management is still dead-set on meeting industry's demands to lease, and there's a lot that still needs to fall into place if we're going to see some meaningful reform for federal leasing."

Still, he said the lawsuit could spur a Clinton administration to take some action on climate review for federal leasing.

"I think the lawsuit, under a Clinton administration, it would continue to be something that hangs over their heads, that they realize the issues involved in that case warrant some scrutiny and perhaps some policy movement," Nichols said.

But he still doesn't expect the federal government to move to settle the case because "no administration likes to have it appear as if litigants bullied them into policy reforms."

According to Nichols, the Obama administration's recent action on coal leasing could serve as a model for a Clinton administration on oil and gas leasing. Friends of the Earth sued Interior in 2014, urging increased scrutiny of coal leasing's climate impacts. The administration defended itself against the lawsuit, winning at the district court level.

But Interior then announced a moratorium on new coal leasing while it conducted a broad environmental impact statement for the leasing program. An appeal from environmentalists has been on hold ever since. A Clinton administration could take a similar approach to the oil and gas leasing program, agreeing to consider reforms without giving in to the lawsuit, Nichols said.

"It could very well be that rather than settle, they could decide to go down that path, and the lawsuit could still live as needed," he said, adding later: "It seems like a viable model. It's working on the coal side. I see no reason why it wouldn't work for oil and gas."

Dakota Access

Litigation over the Dakota Access pipeline is perhaps the most unpredictable major oil- and gas-related lawsuit the federal government is currently facing, and today's election is just a small part of that uncertainty.

"The way the court schedules are going, the Obama administration will not be around to defend this," ClearView Energy Partners analyst Christi Tezak said.

But before a new president takes the helm, supporters and opponents of the project are closely watching the administration to see if Obama makes a decision on whether the project receives a necessary Army Corps of Engineers approval to cross the Missouri River. Earthjustice attorney Jan Hasselman, who is representing the Standing Rock Sioux Tribe, said he's optimistic that decision will happen before Obama leaves the White House.

"I think the president cares deeply about these issues and would like to find a solution," he said. "He's not going to hand this off. There will be a decision in this administration of some kind. That's not going to be kicked down the road."

If the approval is granted, pipeline construction is expected to move forward rapidly — likely rendering moot the tribe's ongoing appeal over freezing construction.

Tezak said Obama could also announce a broad and unprecedented environmental impact statement for the pipeline, which could result in the litigation being put on hold while the review takes place.

If the merits of the original lawsuit — whether the Army Corps complied with consultation requirements, the National Historic Preservation Act and the National Environmental Policy Act when approving water crossings for the pipeline — are able to move forward at the U.S. District Court for the District of Columbia Circuit, all eyes will be on how the next administration defends itself.

"The Army Corps is already vehemently defending against the lawsuit," Tezak said. "You would expect a Trump administration would probably continue that storyline. Whether or not a Clinton administration would soften that in oral argument or not defend it as strenuously is something that you would look for.

"Then again," she added, "courts tend to disfavor when an administration does an obviously political 180 and runs away from its own statements in the record."

Hasselman said a Clinton administration wouldn't necessarily offer pipeline opponents any better odds than the current administration.

"It's not like we're getting any help in the litigation from the fact that this administration is more sympathetic than a different one could be, so I feel like the question is much more a political one than a legal one," he said. "I don't expect a Clinton administration to be sympathetic to us in a way that the Obama administration has not."

Join us live on Facebook Nov. 9 at 1 p.m. EST for E&E News reporters' postmortem on what election 2016 means for energy and environment issues.

Twitter: @ellengilmer Email: egilmer@eenews.net

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