As congressional efforts to streamline the federal permitting process for energy projects have stalled, a disturbing trend is emerging: federal courts are not only slowing down the process but are actively seeking to revoke permits that have already been issued, for new reasons.
One notable example is August Decision The ruling by a federal judge, if upheld, could halt all drilling in the Gulf of Mexico. U.S. District Judge Deborah Boardman Struck Down 2020 Environmental Assessment By The National Marine Fisheries Service is assessing the risks that oil drilling poses to endangered species. (Related: David Blackmon: Fossil fuels aren't going away anytime soon)
Typically in the past, federal judges have made such decisions by sending the report back to the agency for reconsideration, but Judge Boardman went further by vacating the report, a move that could halt the issuance of new drilling permits and put existing permits in legal jeopardy.
On August 6, the D.C. Circuit Court of Appeals An extraordinary step The Federal Energy Regulatory Commission (FERC) has revoked a permit it issued more than a year ago, allowing LNG developer NextDecade to go ahead with its planned construction. Rio Grande LNG Project Near Brownsville, Texas. Sierra ClubThe plaintiff in this lawsuit is first time A federal court has quashed such permits for LNG projects.
Litigation He claimed FERC “failed to adequately consider the environmental justice impacts and greenhouse gas emissions of the three projects as required by the National Environmental Policy Act and the Natural Gas Act.” The D.C. Circuit agreed, vacating the permit for the $18 billion project, which has already been under construction for more than a year.
The DC Circuit's decision could have far-reaching implications: It will likely be appealed to the Supreme Court, but if allowed to stand, it could create uncertainty and negatively impact the future viability of all federally permitted infrastructure projects.
The question facing businesses is when they can assume that this so-called “permission” is really permission, rather than merely a suggestion subject to the whims of a judge adopting a novel new concept in the law.
This aggressive and unprecedented revocation of permits already issued Supreme Court ruling of Roper Bright Enterprises v. Raimondo The Chevron deference overturned is somewhat disturbing. Chevron's Respect The 1984 decision came in response to a series of aggressive decisions over the years in which federal courts adopted similarly novel new legal concepts to usurp powers typically reserved for federal agencies. (Related article: David Blackmon: Supreme Court strikes brutal blow to perpetual bureaucracy)
The current Supreme Court has rescinded Chevron's deference. Loper Bright's Decision In June, responding to concerns that federal regulators were overstepping their bounds and assuming too much power because of a 40-year-old principle, energy advocates hailed the decision as restoring balance and predictability to the law and permitting process.
But now the opposite seems to be happening, with aggressive federal judges stepping into the vacuum left by Chevron and reasserting their authority in unprecedented ways.
Historically, the United States has had an advantage over most other countries in attracting large-scale investment capital because of investor confidence built by a stable and predictable legal and regulatory system. Projects like Rio Grande LNG take years to develop and require the ability to secure and deploy billions of dollars of capital.
This decision could adversely affect developers' ability to raise capital for future development.
The decision to revoke Rio Grande LNG's permit after more than a year of construction could also have a chilling effect on the global market for U.S. LNG in general. Without some degree of regulatory and legal certainty, why would countries like Japan or Germany risk entering into a 20-year supply contract starting on a specific date when they cannot even assume that the “permit” is really a permit?
If the Supreme Court is not willing to step in again to restore balance to the system, the whole thing could be undone.
David Blackmon is a Texas-based energy writer and consultant who worked in the oil and gas industry for 40 years and specializes in public policy and communications.
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