By Hina Gupta
On February 1, 2023, the Tenth Circuit for the United States Court of Appeals barred the United States Department of the Interior’s Bureau of Land Management (BLM) from issuing fracking permits in New Mexico’s Mancos Shale formationin Diné Citizens Against Ruining Our Environment et al. v. Bernhardt et al. because BLM failed to adequately examine climate change and air pollution impacts of these permits under the National Environmental Policy Act (NEPA). The Court found that the BLM analysis, preceding its drilling permit approvals, was “arbitrary and capricious” because it failed to take a hard look at the environmental impacts from greenhouse gas (GHG) emissions and hazardous air pollutant emissions. [Diné Citizens Against Ruining Our Environment et al. v. Bernhardt et al., ___F.4th___, Case No. 21-2116(10th Cir. Feb. 1, 2023).]
Background
NEPA “requires agencies to consider the environmental impact of their actions as part of the decisionmaking process and to inform the public about these impacts.” (Citizens’ Committee to Save Our Canyons v. U.S. Forest Services (10th Cir. 2002) 297 F.3d 1012, 1021.) Specifically, NEPA requires agencies to “take a hard look at environmental consequences” of a proposed action by considering the direct, indirect, and cumulative environmental impacts of the proposed action. (40 C.F.R. §§ 1502.16 (environmental consequences), 1508.7 (cumulative impact), 1508.8 (direct and indirect effects).) When an agency is unsure if an action will significantly affect the environment, it prepares an Environmental Assessment (EA) to determine whether an Environmental Impact Statement (EIS) is necessary. (See 40 C.F.R. § 1501.5.) But if the EA determines that a proposed project will not significantly impact the human environment, the agency issues a Finding of No Significant Impact (FONSI), and the action may proceed without an EIS. (Id.; see also Citizens’ Committee to Save Our Canyons, 297 F.3d at 1022–23.)
In 2003, BLM prepared a Resource Management Plan Amendment and an Associated Environmental Impact Statement(RMP/EIS) that considered the New Mexico’s Mancos Shale and Gallup Sandstone zones in the San Juan Basin to be “a fully developed oil and gas play.” (79 Fed. Reg. 10548, 10548 (Feb. 25, 2014).) Since then, advanced hydraulic fracturing technologies, “made it economical to conduct further drilling for oil and gas in the area,” and BLM started issuing applications for permits to drill (APDs) in the shale formation using individual, site-specific EAs tiered to the 2003 RMP/EIS. But in 2019, several citizen groups challenged the site-specific EAs for hundreds of APDs approved by BLM from 2012 through 2016. (See Dine Citizens Against Ruining Our Environment v. Bernhardt, 923 F.3d 831 (10th Cir. 2019).) While most of the EAs were affirmed by the Tenth Circuit, the Court of Appeals remanded to the lower court “with instructions to vacate five EAs analyzing the impacts of APDs in the area because BLM had failed to consider the cumulative environmental impacts as required by [NEPA for APDs associated with these EAs],” by failing to consider the water needs of new oil and gas wells from fracking in the shale formation.
Following that decision, BLM prepared an EA Addendum to correct the deficiencies in those five EAs and the potential defects in 81 other EAs supporting the approvals of 370 APDs in the shale formation. BLM allowed the previously approved APDs to remain in place while it conducted additional analysis in EA Addendum to consider the air quality, GHG emissions, and groundwater impacts of issuing the APDs. Based on the EA Addendum analysis, BLM then certified the 81 EAs and the EA Addendum and issued the FONSIs. But the citizens groups sued BLM again for these 81 EAs and the EA Addendum alleging NEPA violations:
. . .because BLM (1) improperly predetermined the outcome of the EA Addendum [by approving APDs before completing the EA Addendum and failing to suspend approvals while gathering additional information] and (2) failed to take a hard look at the environmental impacts of the APD approvals related to [] GHG [] emissions, water resources, and air quality.
The District Court affirmed BLM’s action determining: (1) citizen groups’ claims based on APDs that had not been approved were not ripe for judicial review, (2) BLM did not unlawfully predetermine the outcome of the EA Addendum, and (3) BLM took a hard look at the environmental impacts of the APD approvals. The citizen groups appealed.
The Tenth Circuit’s Decision
In Dine Citizens, the Tenth Circuit panel affirmed the District Court ruling that out of the 370 APDs considered by BLM, 161 APDs were in non-final status and were not ripe for judicial review. The Court also agreed with the District Court in holding that BLM did not improperly predetermine the outcome of the EA Addendum when it did not withdraw the prior approved APDs because BLM acted in good-faith by maintaining status quo and taking no new actions on the APDs pending the completion of its voluntary EA addendum analysis. The petitioners here did not meet the high burden of showing that agency engaged in unlawful predetermination by irreversibly and irretrievably committing itself to the action “ that was dependent upon the NEPA environmental analysis producing a certain outcome.”
The Analysis in the EA Addendum was Arbitrary and Capricious
But, the Tenth Circuit reversed the District Court to hold that BLM’s analysis in the EA Addendum and 81 EAs was arbitrary and capricious because it failed to take a hard look at the environmental impacts from GHG emissions and hazardous air pollutant emissions. The Court found the BLM’s decision to use the estimated annual GHG emissions from the construction and operations of the drilling wells to calculate the estimated direct emission emissions for all 370 wells over 20 year lifespans was unreasonable, arbitrary and capricious. BLM unreasonably used one year of direct emissions from the wells to represent twenty years’ worth of total emissions of the well in the EA Addendum. BLM’s justification for not calculating the direct GHG emissions over the lifetime of the wells that it was not possible to estimate the total lifespan of an individual well or “to incorporate the decline curve into results from declining production over time,” was inconsistent with the record.
Cumulative Impacts Analysis Defective
Furthermore, the Court found BLM’s cumulative impacts analysis of GHG emissions tied to the APDs was defective because “[t]he deficiencies identified in the EAs and EA Addendum necessarily render any new APDs based on those documents invalid.” The BLM’s cumulative analysis of comparing the wells’ emissions to all New Mexico and U.S. emissions rather than comparing the wells’ total GHG emissions to the global carbon budget—a widely accepted method of analysis—rendered the EA and EA Addendum to conclude the cumulative GHG impacts as relatively small. The Court found that this comparative analysis only showed that:
. . .there are other, larger sources of [GHG emissions], and did not show that these APDs, ‘which [are] anticipated to emit more than 31 million metric tons of carbon dioxide equivalents, will not have a significant impact on the environment.’
While the BLM need not use a particular methodology:
. . .it is not free to omit the analysis of environmental effects entirely when an accepted methodology exists to quantify the impact of GHG emissions from the approved APDs.
The Tenth Circuit also found that BLM similarly failed to sufficiently consider the cumulative impacts of the wells’ hazardous air pollutant emissions on air quality and human health by only accounting for short-term emissions from a small number of wells, and not the multiyear reality. However, the Court held that BLM’s analysis of the cumulative impacts to water resources and methane emissions was sufficient under NEPA.
Conclusion and Implications
As a result of the court’s findings, the Tenth Circuit reversed the District Court and remanded the case back to them to consider the appropriate remedy, including if vacatur and injunction is necessary moving forward. The panel also blocked the BLM from issuing any further APDs until the District Court renders a decision.
This NEPA decision provides a good overview of how the courts apply the hard look doctrine to the agency’s decision and the record supporting the agency decision, and how a court’s analysis can vary based on the record. The decision also underlines the importance for the agencies to carefully select the methodologies used to analyze the GHG and hazardous air pollutants emissions, as well as ensuring the record includes proper evidence to support the agency conclusions, particularly for fossil fuels-related projects. The court’s opinion is available online at: https://ca10.washburnlaw.edu/cases/2023/02/21-2116.pdf
