Judges Say You Can’t Build That

Two case studie—on LNG and oil drilling—in why the U.S. desperately needs permitting reform

WSJ editorial.

"Kamala Harris has walked back her support in 2019 for a nationwide fracking ban. It’s an impressive rhetorical backflip, but will she push back against her friends in the climate lobby who are using the courts to restrict oil and gas production?

Consider an August court ruling that could stop almost all offshore oil production in the Gulf of Mexico. Federal Judge Deborah Boardman struck down a 2020 environmental assessment by the National Marine Fisheries Service that had analyzed risks to endangered species in the Gulf from oil drilling.

Green lobbies claimed the agency’s “biological opinion” underestimated risks from potential spills to threatened species and lacked sufficient protections for the rice whale. The judge largely agreed, and courts typically remand environmental assessments to agencies for revisions when they find shortcomings.

Not Judge Boardman, who vacated the assessment, meaning new drilling permits and leases can’t be issued until a new biological opinion is completed and existing ones may also be legally void. The upshot? Oil production in the Gulf could grind to a halt in December when the vacatur takes effect. Will a Harris Administration appeal such verdicts by willful liberal judges?

As another example, the D.C. Circuit Court of Appeals recently vacated a Federal Energy Regulatory Commission permit for NextDecade’s Rio Grande liquefied natural gas (LNG) export project. The D.C. Circuit agreed with green lobbies that claimed FERC failed to sufficiently analyze how the project would affect “environmental justice.”

This is the first time a court has vacated a permit for an LNG export project. It creates enormous uncertainty since the project is already under construction. Work may have to stop unless the developer wins a stay. The decision also adds uncertainty for investors in other fossil-fuel projects and U.S. allies who are counting on LNG exports.

Obtaining permits for energy projects typically takes several years, but courts are putting developers on notice that they can cancel them at any time. Why would the Japanese and Europeans sign long-term supply contracts with U.S. LNG projects? Such contracts are usually needed to raise capital from investors.

Companies could now have a harder time financing fossil-fuel projects needed to keep the lights on in Europe and the U.S. The D.C. Circuit late last month also vacated a FERC permit for a gas pipeline expansion in the Northeast that is needed to ensure electric reliability in the region after nitpicking the agency’s analysis of its climate impact.

These court decisions are a cri de cœur for Congress to enact permitting reforms that limit abuses of the legal system. Yet the Biden Administration has abetted the climate lobby by stringing out environmental reviews of fossil-fuel projects and requiring CO2 emissions analyses that give opponents more ammunition for legal challenges.

This is one reason business investment has lagged under President Biden despite his $1.2 trillion Green New Deal. Ms. Harris wouldn’t need to ban fracking to limit oil and gas production. She could do what Democrats in California have done to destructive effect: Use regulation and litigation to scare away investment."