United States: Self-Inflicted Wounds Hinder The Quest For Energy Dominance

Last Updated: September 26 2017
Article by Fred Wagner

Politicians overuse the catch-phrase "war on..." to describe actions alleged to be hostile toward a wide range of social institutions and public policy.  There have been declared wars on everything from drugs to marriage and Christmas.  The "war on" refrain now has been applied to all things related to domestic energy development.

To combat this war, federal agencies are rethinking and reforming approaches to the permitting and environmental review for actions such as coal leasing on public lands or approving oil and gas pipeline construction.  Unfortunately, as in any war, soldiers must be aware of their surroundings and the dangers of falling victim to friendly fire.  As several federal court decisions issued in the last month or so demonstrate, some casualties have already been suffered.

High on the list of evidence of the war on coal and all traditional energy development was guidance issued by the Obama administration's Council on Environmental Quality describing how the downstream effects of greenhouse gas (GHG) emissions of mineral or oil and gas resources should be analyzed.  That guidance was quickly rescinded after the Inauguration.  Some officials forgot, however, that this particular war is fought on multiple fronts.  While executive orders and regulatory reform address actions by the federal bureaucracy, the judicial branch still has soldiers on the battlefield.

Public interest groups have filed a long series of legal challenges to a variety of federal decisions concerning the management of energy resources, including whether and how much public land should be made available for exploration, and how and where extracted energy resources should be transported.  These challenges have one thing in common – claims that the government did not adequately assess (or failed to assess at all) indirect downstream GHG emissions from using extracted energy resources.

The government's defense against these allegations has been relatively consistent.  First, the long-term GHG emissions impacts from an individual decision are too speculative to enable an agency to make a reasonable assessment of impacts felt on a global scale.  Second, a decision not to make certain energy resources available (choosing the "no action" alternative) would have no impact on global GHG emissions, because resources from some other market would be used in place of the coal or oil and gas that would not be extracted.

In this summer's first important ruling, a district court in Montana remanded for further review the Interior Department's Office of Surface Mining and Enforcement environmental assessment of an individual application for a Mining Plan Modification.  Despite including a fairly lengthy description of climate issues and the potential for downstream impacts from GHG emissions resulting from the burning of coal that would be mined as a result of the proposed action, the agency concluded that "the state of climate change science does not allow any given level of emissions to be tied back to a quantifiable effect on climate change."

The court found this conclusion to be arbitrary and capricious, agreeing with Plaintiffs that the agency should have conducted some level of quantitative analysis regarding potential emissions.  The absence of this analysis was highlighted by a detailed quantitative analysis of the coal lease's monetary benefits, resulting from mining jobs, to coal sales revenue and royalties.  Attempting to quantify the benefits of the proposed action, but refusing to prepare a similar analysis of costs, in the court's judgment, meant that the agency failed to take a "hard look" at the potential GHG impacts.

The D.C. Circuit reached the same conclusion with respect to a challenge to FERC's environmental impact statement for construction of three new interstate natural-gas pipelines.  Like its Interior counterparts, FERC asserted that it would be impossible to know how many GHGs would be emitted as a result of the pipeline's construction.  Was this analysis truly impossible, the court asked, when the agency had estimated how much gas the pipeline would transport?  The Commission could have used available government tools to make an emissions estimate per unit of energy generated by various types of downstream plants.  Since GHG emissions are a clear "indirect effect" of the proposed action, the court told the agency to either perform the analysis or explain why it could not have done so.

The Tenth Circuit issued yet another relevant decision last week, this one remanding the Bureau of Land Management's approval of four coal leases in the Wyoming Powder River Basin.  The agency claimed that the "no action" alternative (failing to issue the leases) would not have any appreciable effect on overall GHG emissions.  Using what the court called the "perfect substitution" assumption, the BLM stated that if these particular leases did not proceed, utilities would find coal from other sources, therefore creating a net neutral quantity of GHG emissions.  Agreeing with the plaintiffs, the court's review of the record found no analysis or data supporting that key assumption.  The court found that failing to disclose the basis for its rationale led to "an uninformed agency decision" and a lack of full public disclosure.

These will not be the only opinions addressing this issue—many similar claims are in the litigation pipeline.

Why are these wounds "self-inflicted"?  In each case, the decision-maker could have included in the record some data, using widely available analytical tools, to address the question of downstream effects of GHG emissions.  None of the ultimate conclusions would have changed.  The only difference would be that those conclusions would have some basis in fact, and the public could see the agency's rationale.  This additional work would not be burdensome; it could be done in a matter of days and summarized in a few pages.  The odds of costly delays to administrative actions supporting domestic energy development would be substantially lowered, as the government would invariably prevail in any future litigation over the adequacy of those sorts of analyses.

Sometimes the key to winning a war is making rational decisions over which smaller battles should be waged, and which ones should be avoided.  With respect to the analysis of the downstream effects of GHG emissions, courts around the country are sending a clear signal to the federal government:  a "war" waged to avoid analysis of the downstream effects of GHG emissions may not be worth fighting.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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