In re: Oil & Gas Exploration, Development & Production Facilities Permit, No. LAG260000, 2010-1640 (La. App. 1 Cir. 6/10/11), 2011 WL 2297790

The First Circuit held that LDEQ issued a general permit in a procedural fashion without individualized consideration or a fair balancing of environmental factors.

Basic Facts

LDEQ reissued an NPDES general permit for discharges of pollutants from oil and gas production into the territorial seas of Louisiana as an LPDES general permit.  The LPDES general permit governs discharges of deck drainage, produced water, sanitary wastewater, and other such discharges from facilities into the territorial seas from exploration, development, and production facilities.

The original NPDES general permit was issued in 1997 and expired in 2002 but was administratively continued by LDEQ pending its review of the application for renewal.  In responding to public comments and in its Basis for Decision, LDEQ noted that the provisions in the draft general permit were developed primarily using the federal effluent guidelines for the offshore sub-category of the oil and gas extraction point source category and that an Environmental Impact Statement concluded in 1996 that discharges under the NPDES general permit would not cause cumulative impacts.

LDEQ also relied on what the First Circuit called “general offshore studies” to support its permit decision.  Oil & Gas Permit, p. 4.  Two studies concluded that the nutrient loading from produced water to the hypoxic zone of the Gulf of Mexico were insignificantly small compared to the degree of nutrient loading from the Atchafalaya and Mississippi Rivers.  A third study assessed the potential for bioaccumulation in marine organisms and concluded that produced water discharges into US waters did not pose an unacceptable risk.  LDEQ issued the LPDES general permit “without requiring any direct testing or studies of the impact of produced water discharges in the area of the territorial seas.”  Id.

The Decision

Opponents contended that the testing and monitoring requirements for the discharge of produced water are insufficient to adequately insure that the environmental costs are being minimized or avoided as much as possible consistent with the public welfare.  Specifically, the main concern raised by opponents was that the permit did not provide for any direct testing of the sediments and marine life of the territorial seas to verify that no significant impacts are being caused by the produced water discharges.

The First Circuit indicated that, as a public trustee, LDEQ is duty-bound to demonstrate that it properly exercise its discretion by making basic findings supported by the evidence and ultimate findings that flow rationally from the basic findings.  It must articulate a rational connection between the facts found and the order, or in this case, the permit issued.  An appellate court should not reverse a substantive decision unless the actual balance was struck arbitrarily or clearly gave insufficient weight to environmental protection.  If the decision was reached procedurally, without individualized consideration and balancing of environmental factors, the court must reverse.  The test for determining whether the action was arbitrary was whether the action was taken without reason.  Oil & Gas Permit, p. 1.

In this case, the First Circuit holds that the EIS and the three studies were not enough to support the permit decision.  Two basic reasons were provided.  First, there was no study related to the territorial sea itself, which is considerably shallower than the offshore waters that were the subject of the three off-shore studies relied on by LDEQ.  Second, even though EPA specifically approved the issuance of the LPDES general permit, EPA seemed to suggest that some follow-up testing was intended when it issued the NPDES general permit in 1997.

As a result, the First Circuit concludes that LDEQ issued its decision “procedurally, without individualized consideration or a fair balancing of environmental factors.”  Oil & Gas Permit, p. 7.  LDEQ “abused its discretion in failing to address the potential environmental impacts … as the evidence submitted has not been shown to support LDEQ’s basic fining that the discharge of produced water to the territorial seas of Louisiana will cause no significant bioaccumulative impacts.”  Oil & Gas Permit, p. 8.  Thus, the permit record does not support LDEQ’s determination that the permit minimized or avoided potential and real adverse environmental impacts to the maximum extent.

The First Circuit remanded the general permit to the LDEQ with “instructions to modify the permit in a manner consistent with this opinion, such that the permitting decision will suitably evaluate whether the existing monitoring and testing requirements adequately insure that the environmental costs of discharging produced water directly into the territorial seas of Louisiana are being minimized or avoided as much as possible consistent with the public welfare.”  Oil & Gas Permit, p. 8.

Comments

The First Circuit indicated that an appellate court should not reverse a substantive decision unless the actual balance was struck arbitrarily or clearly gave insufficient weight to environmental protection.  If the test for arbitrariness, as set forth in the opinion, is that the action was taken ‘without reason,’ LDEQ surely had some reason and basis to make its decision.  Studies in the record established that produced water discharges do not cause a bioaccumulative impact.  There was no evidence cited in the decision, other than the depth of the territorial sea, to prove that the assimilative capacity of the territorial sea is any different than other areas of the Gulf.  Like the appellant in Petroplex, LEAN merely argued and did not seem to present facts backing up its assertion that there was some real, tangible difference of such magnitude to warrant a reversal.  Also, LDEQ did not ‘clearly give insufficient weight to environmental protection.’  It did give weight to environmental protection in that all LPDES permits, including this general permit, have effluent limitations and monitoring requirements.  The First Circuit even acknowledged that this general permit contains several requirements and restrictions to diminish and guard against unreasonable degradation of the environment.

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