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An evolving scene for Alaska permitting Lawyer points to the value of persistence in dealing with litigation over permits, particularly on the outer continental shelf Alan Bailey Petroleum News
With Alaska resource development, particularly on the outer continental shelf, having become a prime focus of litigation by environmental organizations, companies need to be prepared to be persistent in finding paths through the various challenges, attorney Jeffrey Leppo, a partner in law firm Stoel Rives LLP, told the Alaska Oil and Gas Congress on Sept. 21.
“Denial is not a successful strategy,’ Leppo said.
Key intersection Leppo said that Alaska sits at a key intersection between natural resource development and various federal policies in areas such as climate change; ocean usage; oil and gas; and fisheries. The state holds world-class natural resources and has an economic dependence on the development of those resources. But this is an extraordinarily litigious time in the state, Leppo said.
“The thirst for litigation in connection with natural resource projects, particularly on the OCS, is essentially insatiable at this point,” he said.
Groups that Leppo characterized as environmental nongovernmental organizations, or eNGOs, have been mounting a particularly sustained campaign of litigation in the state, he said. These organizations are knowledgeable and thorough.
“They are well funded and staffed, and very thoughtful,” Leppo said. “Their approach is in no way random or frivolous. They’re better organized, quite frankly, and have better marshaled their resources than a lot of industry, and certainly more so than the government.”
And the Deepwater Horizon disaster has helped the eNGOs pursue their agenda, he said. Every critical policy, leasing or permitting decision has been litigated in a stream of continuing lawsuits in Alaska, California and Washington, D.C.
Closer coalition On the other hand, in 2011 a closer coalition between industry, Native organizations and the State of Alaska has begun to emerge in support of a responsible development agenda, although that coalition has yet to succeed in moving any permitting decisions forward, Leppo said.
And the current cycle of eNGO litigation strategies is coming to an end, as lawsuits make their way through the courts, with some new strategies likely to appear to replace strategies that have run their course. The federal permitting program should be more stable and predictable, now that the reorganization of the old Minerals Management Service has been completed, although government agencies in general will likely remain too underfunded, understaffed and underequipped to anticipate the changing set of challenges that industry faces, Leppo said.
However, companies should anticipate some permitting success in 2012, he said.
NEPA Litigation will continue to revolve mainly around the application of the National Environmental Policy Act, the Endangered Species Act and the Marine Mammals Protection Act, Leppo said. NEPA, the statute that drives the preparation of environmental assessments and environmental impact statements for projects with federal involvement, is the single most common source of successful legal challenges to projects across the United States, he said.
“It is still a major challenge for significant progress, particularly in the OCS, and particularly for offshore oil and gas,” Leppo said. The NEPA process is time-consuming, lacks schedule discipline and is expensive, but it requires thoughtful, patient and persistent efforts in its application. And businesses operating in Alaska need to realize that the U.S. 9th Circuit Court, the court that commonly ends up dealing with federal administrative appeals from Alaska, has a strong preference for the use of an environmental impact statement rather than the much simpler environmental assessment for the analysis of the environmental consequences of a project.
Litigation against the NEPA analysis for the 2008 Chukchi Sea lease sale is one high-profile lawsuit that has been proceeding through the U.S. District Court in Alaska. Although the court rejected most of the challenges to the lease sale, the court did require modifications to the lease sale EIS. On Oct. 3 the Bureau of Ocean Energy Management issued a final supplemental EIS and associated record of decision for the lease sale, and submitted those to the court. But the environmental advocacy groups will have determined that the SEIS is inadequate, and a further briefing in the court will be the next step, Leppo said. Leppo said that he anticipates a new decision in the case in the first quarter of 2012. Meantime there is uncertainty about what will happen about an injunction that the court had placed on lease related activity until the SEIS was issued, he said.
In another NEPA related case, the Native Village of Point Hope and a number of environmental organization have appealed the conditional approval of Shell’s Beaufort Sea exploration plan and the environmental assessment associated with that plan.
The Endangered Species Act The Endangered Species Act has become another major source of litigation. Environmental organizations are using the act as a means of driving national climate change policy, while also using listings and critical habitat designations under the act as a means of delaying and blocking resource development on the outer continental shelf and on the adjacent coast. The designation of a huge area of the U.S. Arctic as polar bear critical habitat has become a prime example of the type of issue raised by the ESA, although the U.S. Fish and Wildlife Service has acknowledged that there is no conservation benefit from the designation, Leppo said. Fish and Wildlife has also acknowledged that neither the oil and gas industry, the Native communities nor the State of Alaska are responsible for any threat to the future wellbeing of the polar bear, he said.
A consolidated court case challenging the polar bear critical habitat designation involves a coalition between industry, 12 Native organizations, the North Slope Borough and the State of Alaska, he said.
Marine Mammals Protection Act The conservation requirements of the Marine Mammals Protection Act are in some ways more stringent than those of the ESA, and the MMPA has a long track record of success in supporting the health of Alaska marine mammals while also enabling responsible resource development to continue, Leppo said. Environmental groups have been trying, unsuccessfully so far, to block resource development through the use of a “trap” involving an overlap between the terms of the ESA and the MMPA, Leppo said. Essentially, a requirement under the MMPA to demonstrate a negligible wildlife impact when obtaining an authorization for wildlife interactions, if overlaid onto an ESA critical habitat designation, could result in a situation where no industrial project is possible, he said.
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