|
Facing the perils of regulatory risk Attorney argues for addressing permitting issues up front, using NEPA process for agency coordination and robust permit defense Alan Bailey Petroleum News
With many major permitting decisions associated with the oil and gas industry in Alaska being challenged through the courts in recent years, the troublesome and often time consuming legal defense of environmental permits has become something of a rite of passage for would-be developers of the state’s hydrocarbon resources. But, in the spirit of turning an issue into an opportunity, Svend Brandt-Erichsen, a managing partner with Marten Law PLLC, suggested to attendees at the Law Seminars International’s Energy in Alaska conference on Dec. 6 that the process for compliance with the National Environmental Policy Act, or NEPA, can provide a means of ensuring government agency cooperation and the development of a robust permitting record.
That robust record is the key to the successful defense in court of a permitting decision, Brandt-Erichsen said.
“If you bring me into a case that has a great record, I can look like a hero. If you bring me into a case with a bad record, I get to be the goat,” he said.
NEPA process The NEPA process, invoked whenever a project involves some federal action, typically results in the preparation of an environmental assessment or an environmental impact statement, documents that can certainly take months and may take years to complete. And, with completion required before a final decision on that federal action, the NEPA process often becomes the critical path on the route to project execution.
But a developer can use the NEPA process to drive communications between the various federal permitting agencies, and with state and local agencies, ensuring that the requirements and stipulations are lined up and consistent for all of the permits that a project requires, Brandt-Erichsen explained.
“I have actually seen developers have significant success, using the NEPA process for several key processes,” Brandt-Erichsen said.
And this can be of particular importance in Alaska, where almost any significant project involves a federal action, and hence a NEPA review. Federal actions can result, for example, from the need to conduct operations on federal land; or the need to obtain a federal permit or authorization under statutes such as the Clean Water Act or the Marine Mammals Protection Act.
Types of risk Brandt-Erichsen said that he sees three categories of risk that can impact a project: the commercial risk associated with questions of whether the project will ultimately result in a return on investment; the technology risk that relates to any uncertainties over the practicalities of technically carrying out the project; and the regulatory risk associated with the challenges of obtaining government permits and dealing with any litigation associated with permitting decisions.
He said that he tends to find companies particularly focusing on the commercial risk as a prime driver in project planning, with the regulatory risk viewed as a project cost. And technical risks can also play a major role. In, for example, an underground coal gasification development, a project involving new technologies for generating synthetic gas from underground coal, the need for using unproven carbon capture and storage technology to dispose of carbon dioxide generated by the process would represent a significant technical risk, potentially impacting a company’s ability to finance the project.
Regulatory risk But regulatory risk can also figure large. While the regulatory risk associated with a new natural gas-fired power station, for example, may be quite low because of the low environmental impact of the technology, a project such as the proposed hydroelectric power station at Watana in the upper reaches of Alaska’s Susitna River has high regulatory risk, with much environmental scrutiny and an extended evaluation period and permitting process, Brandt-Erichsen said.
And, while the hard requirements for a project emanate from the commercial side of the risk equation, dealing with the regulatory risk requires an understanding of how much wiggle room the project contains — an understanding of which aspects of the project might be given up and to what extent the project can be reshaped, if necessary. Understanding the level of opposition to the project is also critical, Brandt-Erichsen said.
Confront the problems With up-front work to tackle these issues really paying off, the NEPA process, executed through a really good contractor, can bring to light the key problems confronting the project, he said, emphasizing the dangers of trying to ignore any environmental problems and the importance of understanding and confronting the problems from the get go.
And, with cooperation from the lead government agency in the NEPA process, that process can drive the project’s permitting scheme and ultimately the project timeline. With multiple agencies and jurisdictions involved, the objective should be to have the various agencies mesh their efforts, so that assessments and recommendations match across multiple permitting schemes, with permits all re-enforcing each other, Brandt-Erichsen said.
Consistent permits The consequence of a successful NEPA process should, thus, be a series of permit decisions, timed so that environmental mitigation requirements are consistent both between each other and with what is said in the NEPA evaluation. In this situation, a company can end up with really solid documentation, defensible in court. On the other hand, conflicts between permits and between the permits and the NEPA results lead to documentation that is really weak, Brandt-Erichsen said.
|
