February 24, 2020

February 24, 2020

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District Court Provides Guidance On Climate Change Analysis Under NEPA

A federal district court has ruled that the Bureau of Land Management (“BLM”) failed to adequately consider climate change when approving a set of oil and gas leases on public lands in Wyoming. The ruling should be of broader interest to developers and energy companies because it offers guidance on how to properly analyze a project’s effects on climate change under the National Environmental Policy Act (“NEPA”). The law in this area remains unsettled –especially since President Trump rescinded the Obama Administration’s formal guidance on NEPA and climate change in 2017. Future developments are likely, and project sponsors should monitor them closely.

At issue in the case are oil and gas leases covering 300,000 acres of public lands in Wyoming. For each lease sale, BLM prepared an environmental assessment to comply with NEPA. The environmental assessments discussed climate change on a “conceptual level,” without quantifying and analyzing the greenhouse gas emissions that would result from the lease sales. The court found the analysis inadequate under NEPA, and it halted drilling under the leases and sent the matter back to BLM for additional environmental review. In its lengthy ruling, the court offered concrete guidance to BLM on how to fix its analysis of greenhouse gas (“GHG”) emissions and climate change on remand, including that:

  • BLM should quantify GHG emissions that would result from drilling oil and gas wells on the leased parcels.

  • BLM should provide more detail about “downstream” GHG emissions that would result from the consumption of oil and gas produced under the leases.

  • BLM should better evaluate the “cumulative” effect of the leases together with other projects, including by comparing GHG emissions from the leases against available emissions forecasts and other BLM programs.

This guidance may also serve as a useful roadmap to NEPA compliance for other projects, particularly other energy projects. And development opponents are likely to use the court’s reasoning to challenge future NEPA documents. Below we break down the court’s direction on three categories of GHG emissions, each requiring a different level of detail.

I. Direct GHG Emissions from Drilling

The court found that BLM should have quantified the GHG emissions that would result from drilling oil and gas wells on the leased parcels. The court acknowledged that BLM was not required to conduct a site-specific analysis at the leasing stage, as the precise number and locations of wells were unknown. But, per the court, BLM should have forecasted the aggregate GHG emissions from the approved leases, based on the available data. This data included estimates of the number of wells to be drilled, the GHG emissions to be produced by each well, and the GHG emissions being produced by existing wells within the region and the state.

Under this court’s analysis, NEPA documents should provide a quantitative analysis of GHG emissions whenever possible. Even if specific project details have not been determined, the agency should make reasonable forecasts and projections based on the available data. As appropriate, the agency may express the forecasts as ranges and explain any underlying uncertainties. But the agency may not, as the court put it, “simply throw up its hands and ascribe any effort at quantification to a ‘crystal ball inquiry.’”

II. Indirect GHG Emissions from Oil and Gas Consumption

The court also found that BLM should have provided more detail about “downstream” GHG emissions that would result from the consumption of oil and gas produced under the leases. Although BLM was not required to analyze downstream emissions at the same level of detail as drilling emissions, it should have provided more than the “sparse discussion” it did. The court did not “require” BLM to quantify the downstream emissions on remand, but it ordered BLM to consider whether doing so is reasonably possible, and if not, to thoroughly explain its decision.

Under this court’s analysis, NEPA documents should provide a robust analysis of all reasonably foreseeable indirect or downstream GHG emissions. If possible, the analysis should be quantitative, and if not, the agency should thoroughly explain on the record why it is not. In addition, if third parties or project opponents provide their own quantitative emissions estimates, the agency should assess them and, if it decides not to use them, explain why they are unreliable or otherwise inappropriate.

III. Cumulative Effects of GHG Emissions

Finally, the court found that BLM had failed to adequately analyze the “cumulative” effect of the leases together with other past, present, and reasonably foreseeable future projects. In particular, BLM should have compared the GHG emissions from the leases against available state, regional, and national emissions forecasts, as well as other regional and national BLM programs. The court, however, disagreed with environmental groups that BLM was required to use any specific methodology, such as the “social cost of carbon” or “global carbon budget” protocols.

Under this court’s analysis, NEPA documents should evaluate project emissions in the context of regional and national emissions. This analysis should specifically account for any relevant emissions forecasts or climate plans, and for the agency’s other related projects. For now, NEPA documents need not use the carbon protocols favored by environmental groups, although project sponsors should monitor for future developments in this area.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.


About this Author

S. Keith Garner, Sheppard Mullin, Legal Specialist, environmental laws

Keith Garner, AICP, is a partner in the Real Estate, Land Use, Natural Resources and Environmental Practice Group in the firm's San Francisco office.

Areas of Practice

Mr. Garner's practice focuses on state and federal environmental laws, land use planning and entitlement procedures, and natural resources permitting issues for large residential, commercial and mixed use communities and energy generation and transmission projects, including wind and solar facilities. He provides legal and strategic planning advice to clients at every stage of the complex...

Alexander L. Merritt, Real Estate Attorney, Sheppard Mullin

Alex Merritt is an associate in the Real Estate, Environmental, and Land Use and Natural Resources practice group in the firm's San Francisco office.

Areas of Practice

Mr. Merritt’s practice focuses on land use matters and real estate litigation. He assists developers and property owners in complying with CEQA and planning and zoning regulations; obtaining development entitlements and regulatory approvals; drafting transactional real estate documents and conservation easements; and litigating land use and real estate cases involving CEQA, planning and zoning laws, development fees, and lease disputes. Mr. Merritt has worked on a variety of residential, commercial, mixed-use, and office projects throughout the Bay Area and California. He also advises clients on the National Environmental Policy Act, Federal Clean Water Act, Porter-Cologne Act, Federal Endangered Species Act, Subdivision Map Act, Brown Act, and Public Records Act.