Lawsuit to challenge U.S. plans for selling offshore leases

WASHINGTON _ Environmentalists on Monday are set to file a lawsuit challenging the Obama administration’s plans to sell offshore drilling leases over the next five years, with a novel argument: that the government overlooked the value of waiting to harvest oil and gas from those coastal waters.

The economic-driven approach is a new one for offshore drilling critics, who have separately accused the government of moving too swiftly to approve new oil and natural gas exploration after the Deepwater Horizon disaster and ignoring the environmental effects of the work.

Lawyers with New York University’s Institute for Policy Integrity are filing the lawsuit in the United States Circuit Court for the District of Columbia on behalf of the Santa Fe, N.M.-based Center for Sustainable Economy. The lawsuit will ask the court to kick out the current program and require the Interior Department to revise it.

The legal challenge takes direct aim at the Interior Department’s plan to hold more than a dozen offshore drilling lease sales in the Gulf of Mexico and waters around Alaska before June 30, 2017.

“It’s clear to us that the new offshore leasing program was hastily prepared to score political points,” said John Talberth, the Center for Sustainable Economy’s president and senior economist. Talberth noted that federal laws require a full cost-benefit analysis as well as environmental reviews.

The crux of the challenge is that Interior’s Bureau of Ocean Energy Management rushed ahead with new sales without fully evaluating the environmental and financial effects of the drilling, including whether the government would bring in or save more money by keeping the oil and gas locked up.

According to the group’s financial reasoning, oil and gas extracted from newly leased waters could be more valuable over time, if fossil fuels become more scarce. Talberth noted a current glut of natural gas from drilling on land. Gas recovered offshore would compete with those supplies, possibly further suppressing the relatively low price for that fossil fuel.

He also insists that additional oil and gas drilling should be considered only after moves to promote conservation, improving efficiency and investing in renewable energy.

“These offshore oil and gas resources have incredible value, and the government has a responsibility from an economic and an environmental perspective to manage these resources in a reasonable way that conforms with best practices,” said Jason Schwartz, legal director at Policy Integrity.

Federal law obligates the government to establish the five-year leasing programs and conduct a net public benefit analysis of the proposed sales.

Among the factors that the Center for Sustainable Economy thinks should have been on the table: the costs of deep-water drilling disasters, government subsidies and carbon emissions tied to production and combustion of the fossil fuels.

“The law says come out with a program that best meets the needs of the American public, and that includes not developing a resource and deferring that resource to the future, especially at a time when we’re exporting (oil and gas),” Talberth said. “We’re trying to bring a rational basis to decision-making on our natural resources.”

Cost-benefit issues have surfaced in previous legal challenges to leasing plans, but those arguments were advanced decades ago.

“The balancing of cost and benefits is more than just an academic exercise,” said Mike LeVine, the Pacific senior counsel for the conservation group Oceana, which is not a party to the lawsuit. “For places like the Arctic where the risks are great and the costs are high, a fair evaluation can have a very significant impact in the water.”

“When the government is selling public resources to private companies, it has an obligation to make sure the American public is getting fair value and decisions are being made in a transparent manner,” LeVine added.

In unveiling the five-year plan, administration officials said they had conducted rigorous analysis and had adopted new approaches to safeguard important ecological resources and the subsistence lifestyle of coastal communities. For instance, the government has pledged to hold targeted lease sales of Arctic waters, rather than to widely make acreage available, as with planned area-wide auctions in the Gulf of Mexico.