A recent Alaska Supreme Court ruling offers a mixed bag for state officials looking to streamline oil and gas approvals.
In a 26-page opinion issued March 29, the high court ruled the state Department of Natural Resources need not write more than one “best interest finding” for an oil and gas project.
The opinion reverses a lower court decision that would have required DNR to make such findings not only for lease sales, but for each subsequent project phase including exploration, development and transportation.
The Supreme Court decision comes as a relief for DNR, which didn’t relish the idea of writing multiple best interest findings. Such findings are quite involved and time-consuming.
“The court agreed with DNR that there is no constitutional requirement for best interest findings at each phase of an oil and gas project after the lease sale phase,” DNR said in a statement. “This is important because requiring best interest findings at each stage would have significantly expanded the timeline for oil and gas development on the North Slope. Best interest findings can take more than a year to finalize.”
The court, however, also ruled the state “is constitutionally required to consider the cumulative impacts of an oil and gas project at its later phases.”
This potentially could create more work for DNR, and more waiting time for industry.
Plaintiffs hail ruling
The ruling stemmed from a case brought against DNR in 2010. The plaintiffs included Resisting Environmental Destruction on Indigenous Lands, or REDOIL; the Gwich’in Steering Committee; the Alaska Wilderness League; the Center for Biological Diversity; and the Northern Alaska Environmental Center.
In November 2009, DNR had issued a final finding that planned 2009-18 lease sales on state land along the Beaufort Sea coast would be in the state’s best interest.
The challengers argued DNR, in violation of the state constitution, had made only a limited best interest finding at the lease stage, and did not intend to make further findings at later stages.
Trustees for Alaska, an environmental law representing the plaintiffs, issued an immediate press release hailing the court’s ruling with respect to cumulative impacts.
“Under DNR’s current piecemeal review of oil and gas, DNR looks only at the impacts of oil and gas leasing and fails to meaningfully consider the impacts of exploration or development,” Trustees said. “The Supreme Court’s ruling confirms that this practice is unconstitutional, and that the Alaska Constitution requires consideration of all impacts, including those to subsistence resources, fish, wildlife, and our lands and waters, as a fundamental requirement.”
“The Inupiat rely on the subsistence resources of the Beaufort Sea to live. Now, before giving permits to corporations to explore and drill, DNR will have to look at what the impacts are, including the cumulative impacts, and include the public in deciding if it’s the right thing to do,” said Robert Thompson, REDOIL chairman and a resident of the North Slope village of Kaktovik.
More public process?
Much of the case centered on Article VIII of the Alaska Constitution, and related statutes. Article VIII says in part: “It is the policy of the State to encourage the settlement of its land and the development of its resources by making them available for maximum use consistent with the public interest.”
The Supreme Court ruled DNR is obliged to do a best interest finding only for the leasing stage of oil and gas projects.
But the court rejected DNR’s position that it is not required to make cumulative impact assessments after the lease sale phase.
DNR has a duty to “take a continuing hard look at new information and changing circumstances,” the opinion said.
“Although best interest findings in future phases are not required under the constitution, DNR must continue to analyze and consider all factors material and relevant to what is in the public interest after the lease sale phase, including the cumulative impacts of the project, and to provide the public with timely and meaningful notice of its cumulative impacts assessment in order to ensure the constitutional principle of maximum use consistent with the public interest is given effect,” said Justice Craig Stowers, writing for the court.
The cumulative impacts mandate would seem to raise the potential for more work for DNR, and more hurdles for oil and gas projects to get over.
For instance, does the ruling mean the department must write regular cumulative impact summaries on oil and gas developments? Will it have to post public notices, and take public comment?
“You’re asking the exact questions that we are now looking at,” DNR Commissioner Dan Sullivan said in an April 2 interview with Petroleum News.
Legislation pending
The Supreme Court opinion is “a little bit opaque” on the cumulative impacts issue, Sullivan said.
DNR is conferring with the attorney general’s office on what the language means, he said.
Sullivan himself is a former Alaska attorney general.
DNR is happy with the way the court ruled on best interest findings, he said, noting those documents come out of a very thorough process and can be an inch and a half thick.
Sullivan found bright spots in the ruling even with respect to cumulative impacts. The court reaffirmed its prior ruling that a cumulative impacts analysis may be “less formal” than that required under the National Environmental Policy Act, or NEPA.
Further, the justices held that “it is not the court’s place to provide instruction” on how the state should analyze cumulative impacts after the lease sale phase.
The court ruling coincides with efforts by the administration of Gov. Sean Parnell to push through legislation in Juneau to “streamline” oil and gas permitting.
In particular, Senate Bill 59 would allow DNR to make oil and gas exploration and development approvals over a large area, with such approvals valid for 10 years. This could eliminate the current pattern of “repetitive” public notices and approvals for oil and gas projects, the administration says.
It’s a bill that could shave years off the time required to get oil into production and flowing through the trans-Alaska pipeline, Sullivan said.
But Pam Miller, of the Northern Alaska Environmental Center, said SB 59 “attempts to eliminate review of specific exploration and development projects in favor of blanket approvals,” and thus is unconstitutional.
