Federal judge blocks President Trump's Arctic drilling plans

Jennifer A. Dlouhy and Kartikay Mehrotra March 31, 2019
Arctic drilling. Photo: ExxonMobil.

WASHINGTON and SAN FRANCISCO (Bloomberg) -- The Trump administration's attempt to restore oil and gas leasing in U.S. waters was blocked by a federal judge in Alaska, delivering a win to environmentalists who argued that offshore drilling isn’t worth the risk.

U.S. District Judge Sharon Gleason ruled late Friday that Trump didn’t have authority to resume selling drilling rights in more than 125 million acres (50.6 million hectares) of the Arctic and Atlantic oceans that former President Barack Obama had sought to protect.

The ruling is a defeat for the president as well as for oil companies eager to keep new territory open for exploration. It complicates the Trump administration’s plan to auction drilling rights in Arctic waters that are believed to hold more than 30 Bboe. It also reimposes three executive orders from Obama that had removed vast stretches of the Arctic and Atlantic from future oil and gas leasing.

Trump’s order revoking those previous Obama declarations “is unlawful, as it exceeded the president’s authority” under a federal law governing offshore oil and gas development, Gleason wrote.

Central argument

The judge sided with environmentalists’ central argument that Trump lacks the authority to strip protections for most U.S. Arctic waters as well as some 4 million acres of the Atlantic Ocean, after Obama permanently withdrew the territory from oil and gas development.

Congress offers presidents the power to withdraw lands from exploration, but Section 12(a) of the Outer Continental Shelf Lands Act doesn’t offer them the authority to reverse such withdrawals, they argued.

The Trump administration had contended that Congress gave presidents wider power to determine which U.S. coastal waters are available for oil, natural gas and mineral development, and the Justice Department asserted that courts can’t override the president’s authority under the Outer Continental Shelf law to modify prior policy actions.

Environmentalists hailed the move, saying it could thwart plans to sell new drilling rights as soon as 2020 in the Beaufort Sea north of Alaska.

“This decision shows that no one, not even Trump, is above the law,” said Gene Karpinski, president of the League of Conservation Voters, the lead plaintiff in the case.
API Response

The American Petroleum Institute, which had intervened to help defend Trump’s move, said the ruling shouldn’t stop administration efforts to sell new offshore tracts for oil development.

“Our nation still has a significant opportunity before us in the development of the next offshore leasing plan to truly embrace our nation’s energy potential and ensure American consumers and businesses continue to benefit from U.S. energy leadership,” API said in an emailed statement.

The case was the first major test of how much power presidents have to dictate when and where offshore drilling should take place under the 66-year-old Outer Continental Shelf law, which says presidents may withdraw unleased territory from leasing “from time to time.”

The LCV, the Wilderness Society, the Sierra Club and other conservation groups said that a victory for Trump would have undercut a vital tool for protecting oceans and coasts. The obscure Section 12(a) provision at issue had been used to preserve coral reefs and walrus grounds even before Obama used its power to block a new generation of oil drilling in fragile, remote Arctic waters.

Obligation to develop

But oil industry advocates said that presidents have an obligation to allow energy production in U.S. waters, given that Congress specifically directed the Outer Continental Shelf be available “for expeditious and orderly development.”

“Withdrawals are not a one-way, permanent street, but have often been either issued on a temporary or time-limited basis, or subsequently revised,” API said in a filing.

Although Congress hasn’t challenged Trump’s reversal, that appeared to carry little weight with Gleason, who noted that lawmakers haven’t fought prior revocations either.

Congress’s inaction

“Congress’s decisions not to challenge the small number of prior revocations falls far short of the high bar required to constitute acquiescence,” she wrote. “Too little information about Congress’s limited inaction exists to override the court’s interpretation of Section 12(a) based on that section’s language and legislative history prior to its enactment.”

Representatives of the Justice Department didn’t immediately respond to an email seeking comment.

The administration could appeal the ruling. Congress also could take action to codify Trump’s reversal or to limit president’s authority to withdraw territory from potential oil leasing. Those efforts are unlikely to advance in the House, where Democrats in the majority are already pushing measures to restrict new drilling, not expand it.

In the short term, the ruling complicates the Trump administration’s bid to sell new drilling rights in the Arctic and other U.S. waters. Trump in 2017 ordered his Interior Department to consider scheduling new sales of drilling rights along the U.S. coastline, with an eye on annual auctions of territory in the western and central Gulf of Mexico, the Chukchi and Beaufort seas north of Alaska, and the mid- and south-Atlantic.

Interior’s plan

In January 2018, the Interior Department issued a draft plan opening the door to selling drilling rights in more than 90% of U.S. coastal waters, including territory Obama had sought to protect. The agency now is preparing to unveil the next iteration of that five-year plan -- a formal proposed schedule for selling offshore oil leases through at least 2024 that is likely to be smaller in scope.

Environmentalists said Friday’s ruling puts the administration on notice.

“Up to now, the Interior Department has been acting as if these withdrawals didn’t exist. and this order says enough of that,” said Niel Lawrence, Alaska director at the Natural Resources Defense Council. “Were the administration to ignore this and press ahead with its plans to open up these areas to leasing, that would be an open invitation to an injunction.”

Even with litigation ongoing, oil industry leaders have urged the agency to continue pursuing lease sales in the waters that Obama ruled off-limits. Although Obama blocked the sale of drilling rights in most U.S. Arctic waters, his Atlantic withdrawals targeted 31 undersea canyons without touching territory oil companies have eyed along the mid- and south-Atlantic U.S. coast.

Existing oil leases in the Beaufort Sea aren’t affected by Friday’s ruling or by Obama’s earlier withdrawals, which targeted the sale of new drilling rights.

The case is League of Conservation Voters v. Trump, 17-cv-000101, U.S. District Court, District of Alaska (Fairbanks)

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