Energy

Federal appeals court rejects Trump administration permit for offshore oil project in Arctic Alaska

A federal appeals court panel on Monday ruled that the Trump administration violated environmental requirements when it issued conditional approval of Hilcorp’s Liberty oil drilling project in federal Arctic waters off Alaska in 2018.

The Bureau of Ocean Energy Management “acted arbitrarily and capriciously by failing to quantify the emissions resulting from foreign oil consumption,” or at least by properly explaining its failure to do so, a three-judge panel of the U.S. Ninth Circuit Court of Appeals said in the decision.

The panel also found that the agency relied on a “flawed and unlawful” biological opinion from the U.S. Fish and Wildlife Service that in part lacked information about impacts on polar bears, the decision said.

Hilcorp has proposed building a 9-acre artificial island in the Beaufort Sea, several miles east of Prudhoe Bay, to drill for oil. Officials have said the site could yield peak production of about 70,000 barrels of oil daily.

Kara Moriarty, head of the Alaska Oil and Gas Association that includes Hilcorp as a member, called the court’s decision “disappointing.”

“(The project) will have to go back to BOEM to be reworked, adding delay and uncertainty, at a time when Alaska could use as many projects on the books as possible to get us back to some type of economic recovery,” Moriarty said.

If the project does not move forward under President-elect Joe Biden, the oil industry could possibly sue to advance the project, said Moriarty said. Biden’s campaign website says he will halt new oil and gas permits on federal lands, starting on his first day in office.

“The court remanded it back to (BOEM). It didn’t say deny the project,” Moriarty said.

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In the 1990s, BP pursued development at Liberty but sold the leases to Hilcorp.

The Center for Biological Diversity and four other conservation groups filed the lawsuit two years ago against the Interior secretary and the two agencies.

John Callahan, a spokesman for BOEM, said the agency is “aware of the court’s decision and will review it to determine possible next steps.”

Kristen Monsell with the Center for Biological Diversity said the agency “needs to go back to the drawing board and re-analyze the impacts of the project on climate change and polar bears.”

The agency has the authority to reject the project if environmental standards aren’t met, something that a proper review will show, she said.

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