Climate Change Ruling Could Affect Other Fossil Fuel Projects

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By Stephen Lee

Fossil fuel projects nationwide could be on notice after an appeals court ordered the federal government to rethink the climate change impacts of two giant coal mines, environmental lawyers and energy consultants tell Bloomberg BNA.

The decision by the U.S. Court of Appeals for the Tenth Circuit only directly affects Arch Coal and Peabody Energy, which operate the Wyoming mines in question, and only applies to five Western states. The court didn’t vacate the companies’ leases on Bureau of Land Management lands, instead remanding the case back to District Court in Wyoming ( WildEarth Guardians v. U.S. Bureau of Land Mgmt. , 2017 BL 325867, 10th Cir., No. 15-8109, 9/15/17 ).

But the Sept. 14 decision establishes an argument that could be tested nationwide in other courts to challenge any fossil fuel-related project that might have climate change effects, said Jayni Foley Hein, policy director at New York University School of Law’s Institute for Policy Integrity. These might include natural gas pipelines, oil sand pipelines, coal railroads, and coal export terminals.

“The same logic applies,” Hein told Bloomberg BNA.

Broad Application

Mark Squillace, an environmental law professor at the University of Colorado, said the decision could apply even to other agencies’ proposals—such as one by the Environmental Protection Agency to loosen fuel economy standards for cars and light trucks and another by the Energy Department to authorize natural gas exports to countries that haven’t signed free trade agreements with the United States.

“Both of these proposed actions could implicate climate change, and the Tenth Circuit would appear to require that these climate impacts be appropriately weighed before a final decision is made,” Squillace said.

The National Mining Association told Bloomberg BNA it was “disappointed with the ruling.” Interior Secretary Ryan Zinke also said he was “very disappointed” in the ruling, though the Bureau of Land Management didn’t respond to interview requests about whether it plans to appeal the decision.

Neither the American Petroleum Institute nor energy companies including Exxon Mobil Corp., Valero Energy Corp., Kinder Morgan Inc., and Energy Transfer Partners responded to interview requests.

Arch Coal spokesman Logan Bonacorsi told Bloomberg BNA that the company is reviewing the decision’s impact on future leases, but that it won’t affect the company’s current production or nearly 1 billion tons of already leased reserves.

Peabody spokesman Beth Sutton said the court had “appropriately determined that mining operations can and should continue.” She also said Peabody is “confident in the BLM’s ability to address the ‘fairly narrow’ issues identified by the court,” quoting from the opinion.

‘You Can’t Just Say That’

In its decision, the court ruled that the BLM’s draft environmental impact statement hadn’t taken into account the fact that extending the lives of the two mines—which, combined, produce nearly 20 percent of all U.S. coal—would lower the price of coal-based power, thus leading to more carbon emissions and, ultimately, climate change.

Rather, BLM said in its 2010 final environmental impact statement that even if it didn’t approve the leases, carbon emissions would stay the same because “there are multiple other sources of coal.”

“The court says, ‘You can’t just say that; you have to have some evidence to support what you’re saying. It’s not intuitively obvious that that’s the case,’” Squillace said.

Nathaniel Shoaff, senior attorney at the Sierra Club, said the same boilerplate language BLM used about “multiple other sources” of fossil fuels appears in almost every federal environmental impact statement he’s ever seen, suggesting how broad the decision’s implications could be.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, the majority owner of Bloomberg L.P., parent of Bloomberg BNA.

Longer Delays, Higher Costs

In response to the decision, companies involved in projects that emit carbon dioxide should get involved in the environmental review process as early as possible to make sure the impact statements account for climate change, Thomas Jackson, an environment attorney at Baker Botts LLP, told Bloomberg BNA.

“It’s all the more reason for an applicant to engage with discussions with whatever agency is authorizing its project, and do what it can to provide information and make sure its [National Environmental Policy Act] analysis is going to survive scrutiny,” said Jackson, who represents energy companies and other corporate clients. “Because, let’s be honest: For certain types of projects there is going to be close scrutiny.”

John S. L. Morgan, senior vice president for mining and energy at consulting firm RESPEC, said the extra time agencies spend crafting their impact statements could lead to delays for companies.

“This will incur additional costs,” Morgan told Bloomberg BNA.

He also suggested that, since coal production in the Powder River Basin is predicted to be lower than historic levels, “an applicant could argue that there is no net increase in greenhouse gas emissions, either from the mining operation or the use in the power plant.”

Persuasive Value

While the ruling only applies within the Tenth Circuit, that does include the Powder River Basin, where nearly half the nation’s coal is produced. Further, the decision will have “persuasive value” in other circuits should the issue arise, Michael Gerrard, an environmental law professor at Columbia University, told Bloomberg BNA.

Squillace was puzzled by the court’s unwillingness to vacate the leases, but surmised that that option might have been too politically loaded.

“These are active coal mines for the most part, and the court might not have wanted to shut them down,” he said. “But now there’s no pressure on the agency to act quickly in fixing the impact statements.”

Michelle Benedict Nowlin, an environmental law professor at Duke University, said the decision highlights language in the National Environmental Policy Act requiring that agencies follow the best available science. That language provides a bulwark against any given administration’s rejection of scientific consensus, Nowlin said.

“An agency can’t do a thorough assessment of impacts without looking at what the science says,” Nowlin told Bloomberg BNA. “Is there consensus? To what degree is there disagreement? What is the integrity and reliability of the different models that are used to assess that impact? That’s not something that any administration is going to get away from. The law is the law.”

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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