‘Fragile compromises’: Biden energy fights heat up in court

July 27, 2023

Originally published in EnergyWire. Written by Niina H. Farah.

Federal courts will spend the last half of the year weighing the fate of some of the Biden administration’s biggest climate and energy goals.

Much of the litigation targets deals the Biden administration has made with fossil fuel proponents in places like Alaska’s North Slope and the Gulf of Mexico as the White House attempts to rapidly increase renewable energy production.

Environmentalists say those negotiations have undermined the president’s professed climate goals.

“The administration is trying to hold together really fragile compromises,” said James Coleman, a law professor at Southern Methodist University.

“You could think of it almost as like the pay-for for getting the debt ceiling deal or some of the permitting reforms they’re hoping for to build clean energy infrastructure,” he said.

At the Supreme Court, the justices will have the chance to revive a long-stalled gas pipeline that became a focal point of congressional wrangling over the debt ceiling. The court could also choose to take up red states’ challenge to the Biden administration’s estimate of the societal cost of spewing greenhouse gases, as well as a fight over a federal energy rule that could ripple through a broader battle over agency powers.

In federal courts on the East and West coasts, judges will wade into thorny legal fights over two major oil and gas developments that have received a thumbs-up from the Biden administration — over the objection of environmentalists.

“The Biden administration is trying to balance what its authority is, what Congress is directing them to do and then what the case law is, as well,” said Carrie Jenks, executive director of Harvard Law’s Environmental & Energy Law Program.

Here are five courtroom energy showdowns to watch in the last half of 2023.

1. Mountain Valley pipeline

The Supreme Court could soon decide the fate of a natural gas pipeline that helped seal congressional negotiations over the debt ceiling.

Developers of the Mountain Valley pipeline have asked the justices in an emergency application to quickly reverse a lower court order blocking construction of the $6.6 billion project. If the court rebuffs the pipeline’s plea, developers say they run the risk of running out of time to complete work this year before winter weather sets in.

The justices could also choose to weigh in on whether Congress violated the Constitution when it cleared a path for the 303-mile natural gas pipeline by adding a provision in the Fiscal Responsibility Act that directed agencies to issue permits for the project — and stripped federal courts of jurisdiction to hear legal challenges to those approvals.

The 4th U.S. Circuit Court of Appeals put a temporary pause on construction of the project and will hold oral arguments July 27 to address requests from Mountain Valley developers and the Biden administration to dismiss pending lawsuits against the pipeline.

Those challenges — which were filed before President Joe Biden signed the Fiscal Responsibility Act into law — target permits allowing Mountain Valley to be built through a national forest in West Virginia and Virginia, as well as an analysis of the project’s impact on vulnerable species.

Biden officials and Mountain Valley developers argue that, under the debt deal, environmental groups’ claims that Congress acted unconstitutionally belong in front of the U.S. Court of Appeals for the District of Columbia Circuit.

Oral argument at the 4th Circuit is set to be heard by the same three-judge panel that has previously ruled overwhelmingly in favor of environmental groups opposing Mountain Valley.

Mountain Valley developers have asked the Supreme Court to act on their request by Wednesday.

2. Willow oil project

A federal judge may rule by the end of the year whether the Biden administration’s support of a controversial oil project in a remote part of Alaska’s North Slope violated environmental law.

ConocoPhillips Co.’s Willow project is expected to produce 600 million barrels of oil over its 30-year life span, sparking fierce public debate about the Biden administration’s commitment to wean off fossil fuels and the economic consequences of doing so.

The Interior Department revived a scaled-back version of the $8 billion project in March — allowing three new drilling areas in the National Petroleum Reserve-Alaska, instead of the original five approved under former President Donald Trump. The Biden approval was paired with a proposal to expand environmental protections for other parts of the Arctic.

Willow’s legal challengers — the Sovereign Iñupiat for a Living Arctic and Earthjustice — faced an early setback in April when the 9th U.S. Circuit Court of Appeals cleared the way for some initial winter construction on the project to begin.

The case is now back before the U.S. District Court for the District of Alaska, and environmentalists have raised new arguments that federal agencies arbitrarily ignored Willow’s emissions potential when reviewing the project’s impact on vulnerable species, said Kristen Monsell, senior attorney for the Center for Biological Diversity, one of the challengers in the lawsuit.

Green groups have asked the Alaska District Court to rule on the case by Nov. 10, ahead of the winter construction season. Briefing in the case will be complete in September.

3. Offshore drilling

In another battle over the Biden administration’s backing of oil and gas development, the D.C. Circuit will decide whether an environmental review should still be required for an offshore lease sale that was reinstated under Congress’ landmark 2022 climate law.

Biden officials had initially abandoned plans to move forward with Lease Sale 259 after the D.C. Circuit rejected the National Environmental Policy Act review underpinning the Gulf of Mexico sale. The sale was revived as part of a compromise by Congress in the Inflation Reduction Act, which also dedicated billions of dollars in funding to clean energy development.

Environmentalists sued, arguing that the legislation does not exempt Interior from NEPA requirements to take a “hard look” at the sale’s impact on climate change and the critically endangered Rice’s whale. The sale is expected to result in 1.12 billion barrels of oil and 4.4 trillion cubic feet of natural gas over the next half-century, according to Healthy Gulf and other challengers.

The D.C. Circuit’s ruling could affect other pending lease sales in the Gulf and Alaska’s Cook Inlet that were required to move forward under the Inflation Reduction Act.

4. Social cost metric

Republican-led states are leading a long-shot bid at the Supreme Court to stop the Biden administration from setting a price on greenhouse gas emissions.

Missouri and other red states filed a Supreme Court petition last month asking the justices to allow them to move forward with their challenge of the social cost of greenhouse gases, a formula that helps federal agencies justify the cost of robust climate rules.

The Biden administration is currently using an interim value for carbon of about $51 per metric ton, but is working on finalizing updated values. EPA has proposed adopting a significantly higher price of about $190 per metric ton of carbon emissions.

Missouri’s petition comes after two lower courts found the states could not prove they had been injured by the government’s use of the social cost metric. The high court also previously declined to intervene in a separate but related challenge led by Louisiana to block use of the metric on an emergency basis.

The Supreme Court receives thousands of petitions each year and only agrees to hear about 1 percent of cases that come its way.

Responses to Missouri’s Supreme Court petition are due Aug. 28.

5. FERC fight over agency power

The Supreme Court is also considering whether to take up a renewable energy fight that ties into a broader battle over federal agencies’ regulatory authority.

The Edison Electric Institute and NorthWestern Energy have asked the justices to reverse a D.C. Circuit ruling that said a utility could be required to buy power from a Montana solar project under a law designed to bolster renewable energy on the electric grid.

Industry challengers argue in their petition that the D.C. Circuit deferred too readily to the Federal Energy Regulatory Commission under what is known as Chevron deference. The doctrine says that courts should defer to federal agencies’ interpretation of ambiguous laws.

Responses to the petition are due Aug. 28.

Conservative lawyers have asked the justices to limit or toss out Chevron in a separate case to be argued this fall. A ruling to overturn the doctrine would upend 40 years of legal precedent — and significantly weaken agencies’ legal defense of their regulatory powers.