In a recently issued opinion carrying potentially far-reaching consequences for the offshore oil and gas industry, the U.S. Court of Appeals for the District of Columbia vacated Interior's current 5-year leasing program (2007-2012) and remanded the matter back to the Secretary of the Interior for reconsideration. The case, Center for Biological Diversity v. U.S. Department of the Interior, involved a challenge to the Secretary's approval of the leasing program on various environmental and procedural grounds. Specifically, the petitioners (Center for Biological Diversity, Alaska Wilderness League, Pacific Environment, and the Native Village of Point Hope) expressed concern that the approved leasing program would adversely impact the areas surrounding the lease offerings in the Beaufort, Bering, and Chukchi Seas off the coast of Alaska.

The court's decision injects some uncertainty into the status of lease sales scheduled under the current leasing program as well as leases already awarded pursuant to the plan. In the near term, the decision may cause the August 2009 Western Gulf of Mexico lease sale to be delayed. Interior has said, however, the impact of the decision needs to be carefully evaluated before it makes any determinations with regard to leases and sales implicated by the current leasing plan. Given that the case focused on lease offerings in Alaska and that many environmental studies have been conducted related to oil and gas activities in the Gulf of Mexico, this decision could have a greater impact on future Alaska sales. In any event, the Secretary will have an opportunity to revisit aspects of the leasing plan formulated by the Bush Administration.

The Petitioners in the case argued that the leasing program violated the Outer Continental Shelf Lands Act (OCSLA) and the National Environmental Policy Act (NEPA) because it failed to account for the impact of climate change in the leased areas and was approved without conducting sufficient biological baseline research for the Alaskan Seas. The Petitioners also claimed that the program violated the Endangered Species Act (ESA) because Interior did not consult with either the U.S. Fish and Wildlife Service or the National Marine Fisheries Service about the potential harm to endangered species. The court ruled that the petitioners' NEPA and ESA claims were not yet ripe for review. The court found, however, that the OCSLA-based challenges were justiciable. Of the three OCSLA-based claims, the court ruled that the petitioners' climate change and baseline data challenges to the leasing program lacked merit.

The Petitioners did prevail on one claim, asserting that the leasing plan violated OCSLA because it irrationally relied on an study by the National Oceanographic and Atmospheric Administration (NOAA Study) when assessing the environmental sensitivity of the leasing program on OCS planning areas included in the leasing program. OCSLA requires agencies to consider "the relative environmental sensitivity of ... different areas of the [OCS]." The Petitioners argued that Interior's sole reliance on the NOAA Study to measure environmental sensitivity was improper. In short, the court held that the NOAA Study only assessed the effects of oil spills on coastal areas, it did not assess the environmental sensitivity of the leasing program on the OCS, which is required by statute. The court stated, "the law plainly requires that Interior examine and compare the environmental sensitivity of different areas of the OCS." Because the court concluded that Interior did not properly assess this impact, it found that Interior is unable to adequately balance competing environmental and commercial interests. The court ruled, therefore, that on remand the Secretary has to conduct a more complete analysis, which includes all planning areas in the current leasing plan.