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Federal Court Dismisses NEPA Challenge to Offshore Wind Lease

The U.S. District Court for the District of Columbia recently dismissed an Administrative Procedure Act (“APA”) litigation filed by the Fisheries Survival Fund and other commercial fishing interests related to the U.S. Bureau of Ocean Management’s (“BOEM’s”) first lease auction for a wind energy area offshore of New York State. The Plaintiffs alleged that BOEM’s lease process had violated the National Environmental Policy Act (“NEPA”) and the Ocean Continental Shelf Lands Act (“OCSLA”).

Plaintiffs initially sought a preliminary injunction to prevent a December 2016 lease auction and subsequent execution of a lease, alleging that BOEM had failed to adequately analyze the environmental impacts of the proposed wind farm under NEPA and failed to adequately protect fishing interests in violation of the OCSLA. The auction proceeded after the parties reached a partial settlement, and Statoil Wind US LLC (“Statoil,” now known as Equinor) emerged as the highest bidder for the right to develop the nearly-80,000 acre lease area.

BOEM’s multi-staged, multi-year lease process for offshore wind energy areas requires numerous area studies and public participation, with the goal of identifying and minimizing potential adverse impacts. Initially, BOEM issues a Call for Information and Nominations, completes an Area Identification process, and publishes a Proposed Sale Notice and then a Final Sale Notice. For the Statoil lease, BOEM completed an environmental assessment that concluded that there would be no significant adverse environmental impact caused by the lease issuance and related activities within the area. But the initial lease—which was at issue in this litigation—only grants Statoil an exclusive right to conduct site characterization activities and, within one year of lease issuance, to propose a Site Assessment Plan (“SAP”). BOEM then will evaluate and determine whether to approve the SAP, after which Statoil must conduct further surveys and wind evaluations, subsequent to which Statoil has five years to propose a Construction and Operation Plan (“COP”). Only then—when Statoil has put forward a specific wind farm proposal for BOEM to consider—would BOEM prepare an environmental impact statement (“EIS”), requiring the solicitation of public comments. Until that process is complete, Statoil cannot commence construction.

Earlier this year, the court rejected plaintiffs’ attempt to obtain a preliminary injunction enjoining BOEM’s entry into the lease. Plaintiffs argued that even though construction of a Statoil wind farm in the lease area is years away and requires additional environmental review and approvals, the very issuance of the lease and Statoil’s significant financial investments would give Statoil increased property rights in the lease area. In February 2017, the court agreed with BOEM that plaintiffs’ concerns did not pose an imminent harm. The Statoil lease was executed soon after.

Then, in September 2017, plaintiffs moved for summary judgment and declaratory and injunctive relief based on similar arguments. Plaintiffs alleged NEPA violations based on alleged improper segmentation of the initial lease from the ultimate wind farm development, resulting in BOEM’s failure to prepare an EIS for the construction of a wind farm, and BOEM’s purported failure to consider a reasonable range of alternatives. Plaintiffs also alleged OCSLA violations based on BOEM’s alleged failure to consider relevant factors in site selection before moving forward with the lease issuance, and alleged that BOEM’s regulations exceeded its authority under the OCSLA. In essence, plaintiffs took issue with BOEM’s multi-staged leasing process, which deferred a NEPA analysis on the construction of a wind farm until Statoil proposes a specific project and submits a COP.

In their cross-motion, BOEM and Statoil challenged the plaintiffs’ standing, argued that plaintiffs’ NEPA challenge was premature and that the comprehensive NEPA analysis plaintiffs demanded would happen at the COP stage—but that at the leasing stage, such an analysis would be speculative. Statoil and BOEM further argued that BOEM had considered relevant factors through stakeholder meetings and public comment, that BOEM’s analysis of potential alternatives was adequate, and that further the OCSLA claims were procedurally barred for noncompliance with the statute’s 60-day notice period.

In its decision dated September 30, 2018, the District Court found that the plaintiffs had standing because their use of the lease area provide them with a sufficiently-concrete and particularized interest. However, the court dismissed plaintiffs’ NEPA claims. The court reasoned that “[a]n agency’s NEPA obligations mature only once it reaches a critical stage of a decision which will result in irreversible and irretrievable commitments of resources to an action that will affect the environment,” and that caselaw involving multi-staged leasing programs indicated that an agency reached this stage when it “no longer retain[s] the authority to preclude all surface disturbing activities subsequent to issuance [of the] lease.” (Slip Op. at 15, internal quotation marks omitted.) Because the leasing process dictates that Statoil ultimately will need to submit a SAP and then a COP, BOEM retains authority to preclude construction activity in the leased area, and the lease could not constitute an “irreversible and irretrievable commitment of resources” at this time.

The court further found that plaintiffs’ OCSLA claims were procedurally barred for failure to comply with the notice period.

We expect BOEM to make a determination on Statoil’s SAP in the coming months.

For more information about offshore wind, please contact Dan ChorostElizabeth KnauerJeff Gracer, or Katherine Ghilain.