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California Court Upholds Programmatic EIR Analyzing Hydraulic Fracturing throughout the State

California Court Upholds Programmatic EIR Analyzing Hydraulic Fracturing throughout the State

The California Department of Conservation, Division of Oil, Gas, and Geothermal Resources (DOGGR) prepared a programmatic Environmental Impact Report (EIR) studying the environmental impacts of hydraulic fracturing and other well stimulation treatments throughout the state. After the Center for Biological Diversity (CBD) sued, the Court of Appeal upheld the EIR, finding that DOGGR had complied with Senate Bill No. 4 and the California Environmental Quality Act (CEQA). [Center for Biological Diversity v. California Department of Conservation, ___Cal.App.5th___, Case No. C083913 (3rd Dist. 2019).]

Factual and Procedural Background

This case regards the use of hydraulic fracturing (fracking) and other well stimulation techniques to enhance oil and gas production by increasing the permeability of an underground geological formation. Finding that these techniques had not been subject to systematic study, the California Legislature passed Senate Bill No. 4 in 2013. Senate Bill No. 4 added a number of new statutory provisions to the Public Resources Code. Among various other requirements, it contemplated that DOGGR would prepare an EIR “to provide the public with detailed information regarding any potential environmental impacts of well stimulation in the state.”

The bill clarified, however, that notwithstanding the requirement that DOGGR prepare an EIR, local agencies would not be prohibited from preparing their own EIRs.

The Environmental Impact Report

DOGGR issued a notice of preparation of an EIR in November 2013, released a draft EIR in January 2015, and certified a final EIR in July 2015. For the most part, the EIR is a “programmatic” analysis of well stimulation treatments statewide. However, the EIR also includes a “programmatic level analysis” of three specific oil and gas fields: the Wilmington and Inglewood oil fields in Los Angeles County and the Sespe oil field in Ventura County.

The Certification Statement

A certification statement signed by the State Oil and Gas Supervisor accompanied the EIR. The certification statement discussed Senate Bill No. 4 and explained as follows:

The EIR mandated by Senate Bill [No.] 4 is not an ordinary EIR, but rather is a rare, and possibly unique, CEQA document in that it was mandated by statute without any accompanying ‘proposed project’ requiring action by [DOGGR] or any other public agency. The subject of the EIR, ‘well stimulation in the state,’ is not a pending ‘project’ in any ordinary sense. Rather, the subject of the EIR is a set of ongoing activities likely to continue to be carried out throughout some parts of a huge and very diverse [s]tate.

Procedural History

CBD filed a petition for writ of mandate and complaint for declaratory and injunctive relief in July 2015. The operative petition asserted five causes of action: 1) violations of CEQA for approving or carrying out a program of well stimulation in the State of California in reliance on an inadequate EIR; 2) violations of Senate Bill No. 4 for failing to prepare an EIR that meets CEQA requirements; 3) declaratory relief for CEQA violations seeking a judicial declaration that the EIR cannot be used for subsequent project approvals; 4) declaratory relief for violations of Senate Bill No. 4 seeking a judicial declaration that the EIR cannot be used to approve subsequent projects without preparing a subsequent or supplemental EIR incorporating the information contained in the study; and 5) injunctive relief.

DOGGR demurred to the petition on grounds of ripeness, asserting that it was only an informational document, unconnected to any proposed project requiring discretionary approval by DOGGR (or any other agency). The Superior Court overruled the demurrer to CBD’s second through fifth causes of action but sustained the demurrer to CBD’s first cause of action. The Superior Court held a hearing on the merits in August 2016, after which it issued an order denying the petition. After judgment was entered, CBD timely appealed.

The Court of Appeal’s Decision

Demurrer to the CEQA Cause of Action

The Court of Appeal first addressed the demurrer, agreeing with the Superior Court that the CEQA cause of action was unripe because there was no project before DOGGR requiring approval. The court also addressed CBD’s claim that, though DOGGR may not have approved a project in reliance on the EIR, it was “carrying out” a program of regulating, overseeing, and permitting well stimulation in reliance on the EIR, and that program was itself a “project” within the meaning of CEQA. The court disagreed, finding that the fact that DOGGR regulates well stimulation activities in the state does not mean that DOGGR “directly undertake[s]” such activities.

Sufficiency of the EIR

The Court of Appeal next addressed the CBD’s claims that DOGGR violated Senate Bill No. 4 and CEQA by: 1) failing to incorporate a scientific study required in other portions of Senate Bill No. 4 into the EIR; 2) failing to analyze indirect or secondary impacts of well stimulation treatments; 3); failing to adopt enforceable mitigation measures; 4) failing to make findings and adopt a mitigation monitoring and reporting plan; and 5) failing to adequately analyze the use of well stimulation treatments at the Wilmington, Inglewood, and Sespe oil fields.

First, regarding the scientific study, the court found that nothing in Senate Bill No. 4 suggests that the California Legislature intended to link the preparation of the study to the preparation of the EIR. Section 3160, for instance, which requires the completion of the study, says nothing about the EIR. Likewise, § 3161, which requires the preparation of an EIR, says nothing about the study. The court also rejected CBD’s argument that the EIR failed to consider the first volume of the study, which was released before the EIR was certified, as well as CBD’s contention that DOGGR should have issued a subsequent or supplemental EIR in light of the second and third volumes of the study.

Second, with respect to the EIR’s analysis of indirect or secondary impacts, the court concluded that DOGGR was not required to analyze indirect impacts of well stimulation in the EIR, but nevertheless adequately analyzed them on a programmatic basis, properly deferring further analysis to later, project-level EIRs. While the court acknowledged that Senate Bill No. 4’s reference to “any” potential environmental impacts signals an intent to encompass a broad range of potential impacts, the court found that CBD’s argument gave “short shrift” to the rest of the statute, which reflects a legislative intent to limit the scope of the EIR to well stimulation treatments only.

Third, regarding mitigation measures, the court noted that, under the “peculiar circumstances” of the case, where DOGGR was direct by the Legislature to prepare an EIR for informational purposes only, in the absence of any particular project for approval, it did not believe that DOGGR had an obligation to adopt formal mitigation measures. Regardless, the court found that it need not reach this issue because: 1) DOGGR committed to specific performance criteria to mitigate the direct effects of well stimulation treatments in a Mitigation Policy Manual; and 2) DOGGR reasonably concluded that potential mitigation measures for the indirect effects of well stimulation treatments were infeasible.

Fourth, the court concluded that a mitigation monitoring and reporting plan was not required. The court noted that such a plan is required only where an agency approves or carries out a project. Because DOGGR was not carrying out a program of well stimulation treatments, there was no requirement that it make findings or adopt a mitigation and monitoring plan.

Finally, regarding the field-specific analyses of the Wilmington, Inglewood, and Sespe oil fields, the court found that CBD had not identified any evidence in the record showing that the EIR’s analysis of environmental impacts was deficient. The court also noted that nothing in the record suggests that the field-specific analyses would be used to shield future well stimulation treatment projects from further environmental review.

Conclusion and Implications

The case is significant because it provides important context for hydraulic fracturing and well stimulation treatments, which are of interest statewide, and contains a robust analysis of the standards applicable to a programmatic level EIR analysis. The decision is available online at: https://www.courts.ca.gov/opinions/documents/C083913.PDF.

(James Purvis)