American Oil and Gas Reporter - May 2019 - 25

Federal Court Decisions
Render Prospects Uncertain
For Regulatory Rollback
In today's politically charged climate, it is important to
recall the three branches that make up the federal government-
executive, legislative and judicial. One branch is unlikely to
prevail, absent a very strong foundation. This lesson is coming
home with respect to our nation's ability to harvest natural resources on federal lands. Clearly, there needs to be a balance in
allowing for productive use of federal lands while protecting
them for future generations. However, is it possible recent court
rulings have pushed too far toward preventing prudent use of
our nation's resources?
The most pressing issue surrounding production of oil and
natural gas involves greenhouse gas emissions. Those opposed
to fossil fuel development argue that these energy resources
should remain in the ground to prevent emissions from production,
transportation and eventual downstream consumption. A late
March decision from the U.S. District Court for the District of
Columbia in WildEarth Guardians v. Zinke, et al. presented a
victory for the "keep it in the ground" movement. This ruling
blocked the Bureau of Land Management from issuing new oil
and gas drilling permits on roughly 300,000 acres of federal
land in Wyoming, pending consideration of climate change
impacts from granting those leases. The court held that BLM
failed to quantify and forecast potential GHG emissions.
If this decision prevails, BLM will be placed in the untenable
position of speculating on the number of wells that companies
potentially may place on the leases. Even more specious would
be any forecast and quantification of GHG emissions from
downstream use of the oil and natural gas. Yet, according to the
court, BLM violated the National Environmental Policy Act because the bureau reasonably could have forecasted GHG
emissions from the leases. BLM argued that the leases would
not have a measurable effect, relative to national or global
GHG emissions. However, the court disagreed and also found
that BLM must "consider whether quantifying GHG emissions
from (downstream) use is reasonably possible."
This decision halts further development of 282 leases in
Wyoming until BLM complies with the court's findings. Similar
cases are pending in the same circuit court regarding BLM
leases in Utah and Colorado.
Even the threat of legal action can have significant impacts
for producers operating on federal lands.
Interior Secretary David Bernhardt announced in late April
that he would halt the revised plans to open more than 90
percent of federal waters to offshore exploration. The reticence
stems from a March federal judge's ruling that, absent congressional action, the Trump administration could not undo the
Obama administration's drilling ban for most of the Arctic
Ocean off Alaska and for a small part of the Atlantic Coast.
Also casting a pall over resource development on federal
lands is the April decision by a district judge for the Northern
District of California, which struck down the Trump administration's repeal of Obama-era federal oil and gas royalty valuation
regulations. In this case, which applied to valuation of coal pro-

"If this decision prevails, BLM will be placed
in the untenable position of speculating on
the number of wells that companies
potentially may place on the leases.

duction on federal lands, the states of California and New
Mexico challenged the repeal by the Interior Department's
Office of Natural Resources Revenue. Essentially, the court
found that ONRR had not complied with the Administrative
Procedure Act, which requires agencies to provide reasoned explanation for a change in existing policies. The court decision
focused on the stark contrast between the detailed findings presented in ONRR's issuance of the royalty valuation regulations
and the ONRR's contradiction of prior findings and "conclusory
explanation(s)" without any data or other analysis supporting
the repeal.
The degree to which courts defer to regulatory agencies is
now before the U.S. Supreme Court. In a case argued in late
April in Department of Commerce v. New York, the court will
look at the Trump administration's proposed changes to the
2020 census and whether the record adequately justifies the
proposed changes. Administrative law experts contend that
the Supreme Court's decision will affect environmental challenges to environmental regulations that have been rolled back
in some way. The census case will be a strong indicator of
what is deemed to be adequate data and documentation for an
agency's decision.
The critical role of the courts for federal lands policy will be
the subject of a special program on the second day of the Independent Petroleum Association of America's 2019 Midyear
Meeting, scheduled for June 24-26 in Colorado Springs, Co.
The afternoon will focus on Land and Legal Issues, with one
panel, "The Fight for Legal Ground." This panel of leading attorneys will examine current fights in the court system and
posture on what is to come for industry as we push back against
regulatory creep. While these topics are hard to hear and comprehend, they are critical for our industry.
❒

SUSAN GINSBERG is vice

president of crude oil and natural gas regulatory affairs for
the Independent Petroleum Association of America. She covers legislation and regulation,
focusing on the CFTC and
FERC. Her experience in natural gas regulatory affairs spans
more than three decades.
MAY 2019 25

American Oil and Gas Reporter - May 2019

Table of Contents for the Digital Edition of American Oil and Gas Reporter - May 2019