On September 15, 2017, the Tenth Circuit Court of Appeal issued an opinion reversing the decision of the U.S District Court to uphold four coal leases in Wyoming’s Powder River Basin. The plaintiffs’ action alleged that the approval of the coal leases by the U.S. Bureau of Land Management (BLM) violated the federal Administrative Procedure Act (APA) by failing to comply with the National Environmental Policy Act (NEPA). Specifically, the plaintiffs alleged that BLM’s analysis of greenhouse gas (GHG) emissions was flawed and that it erred by concluding that the coal leases “would not result in higher national carbon dioxide emissions than would declining to issue them.”
On review, the Tenth Circuit reversed and remanded the matter with instructions requiring the BLM to revise the portions of the Environmental Impact Statement (EIS) and Records of Decisions (RODs) related to GHG emissions. Importantly, however, the court did not vacate the four coal leases that were issued by the BLM, or enjoin the ongoing mining activities that were ongoing in accordance with the leases.[ Wild Earth Guardians, et al. v. U.S. Bureau of Land Management, 870 F.3d 1222 (10th Cir. Sep. 2017).]
Background
The Powder River Basin region in Wyoming is the county’s largest single contributor to U.S. domestic coal production. In 2008, the Basin accounted for approximately 55 percent of the country’s surface-mined coal and approximately 38 percent of the country’s total coal production. The BLM controls “much” of the region and regularly approves mining infrastructure and related mining leases. These actions occur in accordance with the following regulations: Federal Land Policy and Management Act (FLPMA), 43 U.S.C. §§ 1701-1787; the Mineral Leasing Act, 30 U.S.C. §§ 181-287; and the BLM’s own regulations and plans.
In 2009, the BLM released its Draft EIS for the four “Wright Area Leases,” which will extend the life of two existing surface mines located near Wright, Wyoming. The two existing mines account for approximately 19 percent of the country’s annual domestic coal production. The four Leases are also located near and partially within the Thunder Basin National Grassland, a national forest. Together, the four Leases contain approximately two billions of recoverable coal.
In the Draft EIS, the BLM compared its preferred action, which was referred to as “Alternative 2,” to a “no action alternative” under which the four Leases would not be issued. With regard to carbon dioxide emissions and climate change impacts, the BLM stated that:
. . .there was no appreciable difference between the United States’s total carbon dioxide emissions under its preferred alternative and the no action alternative. [Accordingly,] BLM concluded that, even if it did not approved the proposed leases, the same amount of coal would be sourced from elsewhere, and thus there was no difference between the proposed action and the no action alternative in this respect. (Slip Op., p. 6.)
Comments Regarding GHG Emissions and Climate Change
During the public review of the Draft EIS, the BLM received comments regarding GHG emissions and climate change, including comments from WildEarth Guardians (Guardians).
Guardians asserted that:
. . .the BLM’s conclusion on carbon dioxide emissions under the no action alterative was ‘at best a gross oversimplification, and at worst entirely impossible.’ (Slip Op., p. 7.)
Guardians added that:
. . .if the tracts were not leased, ‘it will be very difficult for domestic coal mines,’ or international coal mines, to replace the quantity of coal at the same price, making ‘other sources of electricity,’ with lower carbon dioxide emissions rates, ‘more competitive with coal.’ (Id.)
In the BLM’s response to Guardians’ comments, BLM “stood by its conclusion regarding the comparative demand for coal and resulting carbon dioxide emissions.” (Id.) With regard to the cost of electricity generation, BLM:
. . .acknowledged that cost is one factor which ‘determine[s] the potential for switching to non-carbon based electric generation,’ and that ‘if the demand for coal decreases nationwide, then coal production and coal mining would decrease.’ . . .But [the BLM] did not acknowledge that denying the Wright Area Leases would have any effect on the price for coal or thereby demand for it. Instead, the BLM concluded that because Energy Information Administration (EIA) projections indicated that population and energy demand would rise, and that coal would remain the largest fuel in the energy mix, demand for coal would remain static even in the face of the potential reduction in supply. The BLM [also] stated that ‘[l]imiting one or even several point of fuel supply will not affect coal use because of the diverse group of national and international suppliers.’ (Id. at pp. 7-8.)
In 2010, the BLM published its Final EIS for the Wright Area Leases and issued an ROD for each lease. Each ROD included statements that outlined the reasons why the BLM disagreed with comments related to climate change impacts.
Litigation
In 2012, Guardians and the Sierra Club (collectively, the plaintiffs) filed suit alleging that the approval of the four Leases violated the APA and NEPA. One of plaintiffs’ claims challenged the adequacy of the BLM’s analysis of the “no action” alternative.
The State of Wyoming intervened, along with a group of mining interests. The New York University School of Law Institute for Policy Integrity also filed a motion for leave to file an amicus brief in support of the suit.
The U.S. District Court for the District of Wyoming denied plaintiffs’ challenge. An appeal followed, in which plaintiffs challenged only the issue of the adequacy of the BLM’s analysis of the no action alternative.
The Tenth Circuit’s Decision
On review, the Tenth Circuit framed the issue on appeal as:
. . .whether the BLM’s assumption that there was no real world difference between issuing the Wright [A]rea [L]eases and declining to issue them because third party sources of coal would perfectly substitute for any volume lost on the open market should the BLM decline to issue the leases was arbitrary and capricious. (Id. at p. 17.)
In the opinion, the Tenth Circuit agreed with plaintiffs’ contention that the BLM failed to:
. . .point to any information [in the administrative record] (other than its own unsupported statements) indicating that the national coal deficit of 230 million tons per year incurred under the no action alternative could be easily filled from elsewhere, or at a comparable price. It did not refer to the nation’s stores of coal or the rates at which those stores may be extracted. Nor did the BLM analyze the specific difference in price between [Powder River Basin] coal and other sources; such a price difference would effect substitutability. (Id. at p. 20.)
As a result, the Tenth Circuit found:
. . .it was an abuse of discretion to rely on an economic assumption, which contradicted basic economic principles, as the basis for distinguishing between the no action alternative and the preferred alternative. (Id. at p. 29.)
Accordingly, the Court of Appeals reversed and remanded the matter to the District Court with instructions requiring the BLM to revise the portions of the EIR and RODs related to GHG emissions.
Despite this holding, the court did not vacate the four coal leases that were issued by the BLM, or enjoin the ongoing mining activities that were ongoing in accordance with the leases, because the parties did not address this question in their briefs.
Conclusion and Implications
This case is another example of how the litigation of issues related to GHG emissions and climate change continues to heat up in state and federal courts. Climate change practitioners should expect this trend to continue and, therefore, should be sure to bolster the portions of administrative records that analyze these issues with adequate evidence to support the ultimate conclusions. The Court’s opinion is accessible online at: https://www.ca10.uscourts.gov/opinions/15/15-8109.pdf
(Martin P. Stratte)
