Federal Court Upholds First Offshore Oil And Gas Lease Sales After Gulf Oil Spill

by Perkins Coie

On March 31, 2014, the U.S. District Court for the District of Columbia issued a memorandum opinion upholding the approval, by the Bureau of Ocean Energy Management, of the first oil and gas lease sales in the Gulf of Mexico after the Deepwater Horizon oil spill.  Oceana v. Bureau of Ocean Energy Management, No. 12-0981, 2014 WL 1281996 (D.D.C. Mar. 31, 2014).  Environmental groups had challenged the approvals of two leases in the area where the oil spill occurred under the National Environmental Policy Act and the Endangered Species Act.  The court granted the federal government’s motion for summary judgment, holding:

  • BOEM’s Supplemental Environmental Impact Statement complied with the requirements in the NEPA regulations governing incomplete or unavailable information.  The SEIS disclosed what information was unavailable and determined that the missing information could not be obtained from post-spill research studies within the project timeframe.  In addition, BOEM properly analyzed the information that was available based on theoretical approaches and research methods generally accepted in the scientific community.
  • BOEM properly considered the risk of future oil spills by incorporating information from the Deepwater Horizon oil spill into its modeling.
  • In comparing the impacts of approving the leases versus the “no action” alternative under NEPA, BOEM appropriately concluded that disapproval of the leases would not significantly change the impact to the environment because other lease sales in the same area would likely proceed.
  • Approval of the leases before the National Marine Fisheries Service has completed a new Biological Opinion did not violate the ESA.  BOEM was required only to reinitiate, not complete, its ESA consultation with NMFS, and lease sales do not represent an irreversible or irretrievable commitment of resources under section 7(d) of the ESA.  The court reasoned that the ESA applies at each of the leasing, exploration and development stages under the Outer Continental Shelf Lands Act, and BOEM retains the authority to suspend oil and gas activities at any time.  Only preliminary geological and geophysical exploration activities are allowed at the lease stage, and lease stipulations and other regulatory requirements that apply at this stage adequately minimize potential harm to endangered species. 
  • BOEM’s continued reliance on the existing Biological Opinion after the Deepwater Horizon oil spill was reasonable where BOEM also considered new information and imposed new safety and mitigation measures.
  • NMFS has not unreasonably delayed completion of the new Biological Opinion (projected to be completed in March 2015) because there is no per se rule as to what amount of time constitutes an unreasonable delay, and NMFS has acted reasonably throughout the consultation process, especially given the complexity of the issues presented.  The court declined to decide whether the delay at issue was four years (as measured from the reinitiation of consultation) or only one year (as measured from BOEM’s completion of a Biological Assessment), but it noted that an order compelling NMFS to produce the Biological Opinion immediately might undermine the process.

This decision significantly reduces the uncertainty in the offshore oil and gas leasing program engendered by the Deepwater Horizon oil spill.  Plaintiff environmental groups have not announced whether they will appeal the decision. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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