This week, a federal court overturned the Trump administration’s approval for what would have been Alaska’s first drilling project in federal waters, citing faulty analyses of how the Arctic oil and gas facility would affect the climate and polar bears.

The Department of Interior approved Hilcorp’s Liberty project in October 2018. However, months before the agency completed the project’s environmental review and issued its decision, a high-ranking Trump Interior official said he expected it would be approved and went on to praise and defend the company, despite Hilcorp’s checkered environmental and safety record in Alaska.

The official’s comments, alongside the court’s ruling, cast doubt on the integrity of the Trump administration’s approval process for oil and gas development in Alaska.

Hilcorp Alaska LLC’s Liberty project was slated for the shallow federal waters of the Beaufort Sea, off of Alaska’s North Slope. In 2014, the Houston, Texas–based company proposed building first an artificial island using gravel mined onshore and dumped into roughly 20 feet of water, and then constructing a drilling platform on the nine-acre island with a sprawling 24-acre total footprint.

This island oil production site would be connected to shore via a five-mile-long underwater pipeline. The drilling and processing facility, which would produce an estimated 65,000 barrels of oil a day, would be located five miles offshore, roughly in between the oil producing area at Prudhoe Bay and the coast of the Arctic National Wildlife Refuge (ANWR).

This crude oil site also would overlap with a highly productive and biodiverse portion of rare high-arctic kelp forest known as the Boulder Patch and is home to a number of threatened and endangered marine mammals, including polar bears, whales, and walruses.

Earthjustice attorney Jeremy Lieb, who is representing multiple conservation groups in the lawsuit against the Trump administration, celebrated the court’s decision.

“It’s really unacceptable to be developing new oil offshore in the Arctic right now. It’s not consistent with what science tells us about the need to reduce carbon emissions quickly and to protect sensitive places like the Arctic,” he told DeSmog. “This is an irresponsible project that’s going to have unacceptable impacts and the federal government shouldn’t have been considering [it] in the first place.”

A panel of federal 9th Circuit appeals court judges has rejected the Trump Administration’s approval of an offshore Arctic oil drilling project that the administration had claimed would actually *benefit* the climate. https://t.co/IgaDbgcHds

— Sabrina Shankman (@shankman) December 7, 2020

‘Supportive of That Kind of Industry’

On April 20, 2018, while the Interior’s Bureau of Ocean Energy Management (BOEM) was incorporating feedback from the public and finalizing the environmental impact statement for the Liberty project, Interior official Joe Balash gave a brief update at an Arctic-focused symposium in Seattle, Washington.

During his update he acknowledged that the symposium’s date coincided with the anniversary of BP’s Deepwater Horizon oil spill in 2010, before lamenting that that disaster, which released 3.2 million barrels of oil into the Gulf of Mexico over nearly three months, had the effect of stifling offshore oil development in his home state of Alaska.

Balash, who was appointed in 2017 as the Interior’s Assistant Secretary for Land and Minerals Management, went on to preview the coming decision for Hilcorp’s Liberty project, saying he expected a final decision later that year. “Given where oil priorities are today, I’m assuming that would be an affirmative decision,” he said, “that would be supportive of that kind of activity.”

When questioned about this comment, Balash emphasized that the decision had not yet been made on the project’s fate but that the agency would follow the law. “Ultimately, the decision on whether to go forward with the decision is going to be based on the law and regulations, not our feelings toward the applicant,” Balash said. He went on to defend Hilcorp’s record in Alaska, particularly surrounding a 2017 underwater methane gas leak from a Hilcorp pipeline in Cook Inlet that took almost four months to stop. Methane is a powerful globe-warming pollutant.

Hilcorp, during its short time operating in Alaska since 2012, has quickly amassed a list of spills and violations. By 2015, the company had raised the ire of state regulators. “The disregard for regulatory compliance is endemic to Hilcorp’s approach to its Alaska operations and virtually assured the occurrence of this violation,” the Alaska Oil and Gas Conservation Commission wrote to Hilcorp in November 2015, as first reported by Inside Climate News. “Hilcorp’s conduct is inexcusable.”

In 2017, as Hilcorp was proposing the project, I did a deep-dive into the company’s track-record in Alaska, which raised some red flags. I found several instances where the company had harmed the environment or put workers in danger. https://t.co/q2KMeNO7U9

— Sabrina Shankman (@shankman) December 7, 2020

Less than three years later, at the Arctic symposium in 2018, Balash boasted about his role in bringing Hilcorp to Alaska when he was working as commissioner for the Alaska Department of Natural Resources (DNR). “I’m familiar with Hilcorp,” he said. “As DNR commissioner, I helped bring them to Alaska.”

In Balash’s job with the Department of Interior, he was responsible for overseeing policy development and implementation for BOEM, among other bureaus. That sometimes meant being “personally responsible,” as he told the Alaska Oil and Gas Association in May 2018, for rolling out new oil and gas leasing programs and even ushering select environmental impact statements across the finish line.

He described his work in Alaska as being hands-on in a way that’s atypical for an official of his rank. “I’m involved day-to-day in the work that’s being done here,” Balash told the group of Alaska oil and gas industry representatives, according to a transcript of the event DeSmog reviewed, “which is a little unusual for an assistant secretary to spend this amount of time on.”

Months later, Balash was featured prominently in the Department of Interior’s press release announcing the green light for Hilcorp’s Liberty drilling project in Arctic waters. That press release touted the government’s “rigorous evaluation process based on the best and most recent science available.”

“Using input from North Slope communities, tribal organizations, and the public, we have developed a robust set of environmental mitigation measures and safety practices that will be applied to this project,” Balash said in the statement.

Assistant Interior Secretary Joe Balash says the quiet part out loud. https://t.co/ExjkQxAlsI pic.twitter.com/CAZ8k8PgpE

— Western Priorities (@WstrnPriorities) March 16, 2019

‘Major Errors’ Made by Interior

Several conservation groups, including the Center for Biological Diversity, took issue with the Interior’s assessment of the Liberty project’s expected impacts to the climate and wildlife, and in 2019, filed a lawsuit against Interior Secretary David Bernhardt, BOEM, and the Fish and Wildlife Service (FWS) that challenged the decision.

Lieb, the Earthjustice attorney, told DeSmog, “Here, it was clear that the agency had made major errors and not taken the hard look that it’s required to take under the National Environmental Policy Act at the impacts of this project. And that it failed to comply with the Endangered Species Act in considering the potential impacts to polar bears here.”

On Monday, December 7, 2020, the Ninth Circuit Court of Appeals ruled in agreement with the conservation groups, overturning Liberty’s approval and directing the federal government to redo certain analyses in the environmental review process before granting Hilcorp’s permit.

One of these analyses centered on the way BOEM calculated the Arctic drilling project’s greenhouse gas emissions. Instead of adding up the direct emissions from constructing and running the facility along with the indirect emissions from burning the oil produced there, the agency used an economic model that is trying to predict how the project would affect global energy supply and demand, and then calculating the net balance of climate pollution, according to Lieb.

A “big flaw” with this model, Lieb said, is that it overstates the climate pollution released if the Liberty project isn’t built and understates the emissions if it is. “BOEM was essentially not considering the emissions from this oil if it’s burned outside the United States,” Lieb said, leading the agency to argue that this oil drilling project would actually have a net benefit to the climate.

A polar bear seen on Alaska’s Barter Island in the Beaufort Sea in 2015. Credit: Arthur T. LaBar, CC BY–NC 2.0

The other major part of this lawsuit focused on the Fish and Wildlife Service’s determination that the project would not jeopardize the area’s polar bears, which are protected under both the Endangered Species Act and Marine Mammal Protection Act.

In coming to this decision, the agency is required to consider how Hilcorp would reduce or offset harm from its activities to the bears and their habitat. The court found that these mitigation measures were not specific enough — or even certain to occur at all — to support FWS’s ultimate decision that the project would not threaten the continued existence of polar bears. That’s despite the agency concluding that denning mothers and their cubs would likely be affected by nearly every step of the project.

In addition, according to the federal ruling, the agency noted but failed to account for the ways in which the drilling site’s activities could harm the bears without directly killing or injuring them — such as via noise and other disturbances that affect their behavior, such as their ability to find food.

“FWS appears to conclude that the Liberty project, as a whole, will not significantly impact polar bears, with or without the mitigation measures,” the court wrote in its ruling this week.

A three-judge panel ruled that BOEM, as well as FWS, “acted arbitrarily and capriciously” in coming to their respective decisions about the Liberty project’s impacts, and as a result, it threw out the 2018 approval — and the project’s mitigation measures — which were praised by Balash.

Interior Department Press Secretary Ben Goldey told DeSmog, “Interior’s actions are based on the law and the best available science. We will continue to take actions that support our nation’s energy independence despite relentless obstruction from radical environmental special interest groups.” He did not respond to questions about whether the agency would proceed to redo the analyses as it reexamines the permit decision or whether it would challenge the court ruling.

Hilcorp did not respond to a request for comment.

Members of the Hilcorp Alaska team receive an Outstanding Partner award from Fish and Wildlife Service Regional Director Greg Siekaniec in May 2018. Credit: U.S. Fish and Wildlife Service Alaska, CC BY–NC–ND 2.0

Following Environmental Law

The downtown Seattle conference room where Balash was speaking to a diverse audience working on Arctic issues in April 2018 was perched at the edge of waters where just a few years earlier, a rainbow flotilla of “kayaktivists” and Indigenous paddlers had swarmed Shell’s Arctic drilling rig to delay its journey to Alaska.

‘Paddle in #Seattle’ protesters gather against #Shell oil rig. (Mark Harrison / ST)
Story:http://t.co/glrr6C8cit pic.twitter.com/u3tJIgm2Hv

— Seattle Times Photo (@SeaTimesPhoto) May 16, 2015

Balash told the audience he was very proud of bringing Hilcorp to Alaska. He shortly thereafter began ranting about the 50-year-old bedrock environmental law, the National Environmental Policy Act (NEPA), which he helped implement for major infrastructure projects such as Liberty, saying that it “drives me crazy, what NEPA has become.”

He said its documentation of potential environmental impacts, which can run thousands of pages long for complex projects, has turned into a “monstrosity that defies” the law, calling it “nonsensical and counterproductive.” Since these comments, the Trump administration has finalized a sweeping overhaul, and weakening, of the law, which legal experts say limits the depth and scope of environmental reviews as well as the public feedback on proposals that affect communities where those projects would be built.

That day in 2018, Balash ended his comments praising the administration’s early efforts to limit such reviews. “I think that is going to help both the agencies and the public in getting to better decisions,” he said.

According to Lieb, the federal government is now responsible for conducting a supplemental environmental impact statement and new Endangered Species Act review for Hilcorp’s Liberty project. That would open up another round of public review of the Arctic drilling effort, and likely give the incoming Biden administration the chance to weigh in on its approval.

Less than a year after the Department of Interior first approved Hilcorp’s Liberty project, Balash left the federal government. In his resignation letter, he took credit for helping pave the way for this Arctic drilling project.

His new job? Government relations in Alaska for drilling company Oil Search.

Here’s Joe Balash’s resignation letter, which he shared with me. #AKleg https://t.co/UQzrhaoOxd pic.twitter.com/qPV4LOPYZV

— Nat Herz (@Nat_Herz) August 20, 2019

Main image: Beaufort Sea coastline along Alaska’s North Slope. Credit: ShoreZone, CC BY 2.0