On March 31, 2013, the District Court for the Northern District of California filed its decision in Center for Biological Diversity v. Bureau of Land Management (Case No. C 11-06174 PSG). Plaintiffs Center for Biological Diversity and Sierra Club challenged a decision by the Bureau of Land Management (BLM) to sell oil and gas leases on federal land in Monterey and Fresno counties. Plaintiffs argued BLM failed to comply with the National Environmental Policy Act (NEPA) and the Mineral Leasing Act (MLA) of 1920 and moved for summary judgment. The court determined that the leases violated NEPA, but not the MLA.
The leases were for proposed oil and gas extraction from the Monterey Shale Formation. Oil and gas trapped in these shale formations was not accessible until improvements in hydraulic fracturing (fracking) techniques in the late 2000’s made extraction from these types of formations economically feasible. Previously, fracking only allowed oil and gas to be extracted in a limited zone radiating from wells drilled vertically into shale formations. Advances in drilling techniques have facilitated horizontal drilling at distances of 1,000 to 6,000 feet from a vertical extraction well.
Before approving oil or gas development on public lands, federal agencies must comply with both the MLA and the Federal Land Policy Management Act (FLPMA) and undergo a “three phase decision-making process.” First, an agency prepares a Resource Management Plan. Second, the agency leases specific parcels, and third, the lessee submits an application for a drilling permit.
In 2006, the BLM prepared a proposed Resource Management Plan/Final Environmental Impact Statement (PRMP/FEIS) regarding management of the Southern Mountain Diablo Range and Central Coast of California (subject area). The PRMP/FEIS included a “Reasonably Foreseeable Development Scenario for Oil and Gas” (RFD), which projected no more than 15 new wells over the next 15-20 years. The PRMP/FEIS addressed potential impacts of oil and gas development in the subject area.
In 2011, BLM proposed a competitive oil and gas lease sale for approximately 2,700 acres in the area and prepared a corresponding draft environmental assessment (EA). Numerous comments submitted during the public review period expressed concerns surrounding fracking and climate change, but the BLM asserted that these issues were outside the scope of the EA. The EA considered air quality, water quality and special status species issues and evaluated three alternatives to the proposed leases. The EA did not discuss fracking in detail, arguing it was not relevant to its analysis of impacts. BLM asserted that site-specific impacts of fracking would be analyzed when permits to drill were submitted. Based on this EA, the BLM released a finding of no significant impact (FONSI) regarding the proposed leases. Plaintiffs protested the lease sale, but BLM dismissed the protest and the plaintiffs sued.
BLM argued that NEPA analysis was not required for at least two of the leased parcels because these leases contained no surface occupancy provisions (NSO leases) that courts have previously determined function as a “right of refusal” rather than an actual lease for drilling. Therefore, the NSO leases did not constitute an “irretrievable commitment of resources.” However, two of the leases sold by BLM did not contain NSO provisions, and the court determined that BLM lacked the authority to unilaterally deny a permit based on any surface activity. As a result, the court found BLM was required to conduct a thorough NEPA analysis to determine if the sale would have a substantial environmental impact.
BLM argued that its previously prepared EA and FONSI sufficiently concluded that the lease sales would not have a substantial environmental impact. The court noted, however, that BLM based its analysis of the lease sale on the projection that only one well would be drilled across the four parcels to be leased. BLM reached this conclusion based on past data indicating that in the previous 20 years, none of the lease sales in the subject area had production wells drilled on them. Therefore, BLM reasoned that only one exploratory well would result from the leases. The court determined this approach failed to take into account all “reasonably foreseeable” possibilities as required by NEPA. The court noted evidence in the record indicated BLM’s approach was not reasonable due to the recent, dramatic advances in fracking technology. The court criticized the BLM for simply ignoring the potential for fracking by claiming it was outside the authority or jurisdiction of the agency. The court concluded that BLM unreasonably refused to consider the effects of fracking, due to the “reasonably close causal relationship” to the agency action (lease sales of federal land) at issue.
BLM also asserted that the EA was tiered from the regional management plan for the general subject area. The court rejected this argument because it determined that the 2006 PRMP/FEIS did not consider the potential concerns raised by fracking, having made no mention of fracking at all. BLM argued the PRMP/FEIS implicitly considered fracking in its projection of how many wells would be drilled on BLM land. The court determined, however, that BLM’s own statement that it lacked jurisdiction to consider the impacts of fracking in the EA contradicted its assertion that the PRMP/FEIS considered fracking. Further, the court found that evidence in the record demonstrated that the PRMP/FEIS did not address the scale of fracking resulting from newly developed techniques.
Finally, BLM argued that because the exact scope and extent of potential fracking that would occur on the subject property was unknown, NEPA analysis was appropriate for site-specific proposals. The court rejected this argument, noting that NEPA requires agencies to consider the range of possible environmental effects prior to committing resources. The court determined, based on the record, that it was unreasonable for BLM not to consider the potential for fracking operations resulting from the lease sales not including NSO provisions.
The court also found that the BLM’s refusal to consider the potential impacts of fracking on leased parcels tainted the assessment of “intensity factors” in its FONSI. For example, the BLM held that the project was not highly controversial, but the record included numerous comments from environmental groups and federal and state agencies raising serious concerns regarding the potential environmental impacts of fracking. BLM declined to acknowledge these concerns. Next, the court found BLM erroneously analyzed the potential effect of leases on public health and safety, particularly with regards to contamination of drinking water sources, as the record demonstrated that the proposed leases were located in close proximity to important freshwater sources. Finally, the court determined BLM unreasonably “discounted the uncertainty from fracking” that could have been resolved by further data collection. The court faulted BLM for failing to collect any data particular to the areas that would be affected by the leases. Instead, BLM merely summarized general data about fracking before dismissing the issue. Ultimately, these deficiencies in the environmental analysis of the lease sales led the court to conclude BLM had failed to take the requisite “hard look” at the issue that NEPA requires.
As a separate issue, the plaintiffs argued the BLM violated the MLA, which requires that all leases of lands for oil or gas production be subject to a condition requiring the lessee to “use all reasonable precautions to prevent waste of oil or gas developed in the land…” The BLM leases included a provision requiring the lessees to use “reasonable precautions” to prevent waste, but the plaintiffs argued the leases also should have incorporated specific requirements to minimize waste. The court disagreed and determined that the MLA does not require lessees to use specific technologies, even if reasonable or economically viable. BLM therefore satisfied the MLA requirement. (John Wheat)