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U.S. District Court Concludes Federal Agencies’ Environmental Assessment of Coastal ‘Fracking’ Violated the ESA and Coastal Zone Act

The U.S. District Court for the Central District of California recently granted in part and denied in part seven cross-motions for summary judgment relating to the issuance of a final environmental assessment for fracking and acidizing in oil production off the California coast. The federal Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) issued a Final Environmental Assessment (EA) on the potential impacts of offshore well stimulation treatments, more commonly known as “fracking” or “acidizing,” on the Pacific Outer Continental Shelf. Plaintiffs claim BOEM and BSEE violated their statutory obligations under the National Environmental Policy Act (NEPA), federal Endangered Species Act, and Coastal Zone Management Act (CZMA) when they issued a Final EA. The court found the federal agencies had complied with NEPA requirements, but had violated provisions of the Endangered Species Act and CZMA. The court ordered prohibitory injunctions preventing the federal agencies from issuing any well stimulation treatments plans or permits until BOEM and BSEE 1) complete a formal consultation with Fish and Wildlife Service (FWS) pursuant to the Endangered Species Act, and 2) complete the CZMA review process. [Environmental Defense Center v. U.S. Bureau of Ocean Energy Management, ___F.Supp.3d___, Case No. CV168418PSGFFMX (C.D. Cal. Nov. 9, 2018).]


 Factual and Procedural Background

This case consolidated two successor cases which culminated in settlement agreements where BOEM and BSEE agreed to conduct an EA and withhold any future application permits for well stimulation treatments. After the agencies issued the Final EA and subsequent Finding of No Significant Impact (FONSI), three groups of plaintiffs filed separate suits challenging the EA and FONSI. All three cases were transferred to the U.S. District Court and consolidated in the present case. The parties then cross-moved for summary judgment on seven claims under NEPA, the Endangered Species Act, and CZMA.

NEPA requires federal agencies to prepare an Environmental Impact Statement (“EIS”) when federal action is proposed that will significantly affect the quality of the human environment. Alternatively, a federal agency may prepare an EA and provide a concise summary on whether an Environmental Impact Statement (EIS) is even required, and if the agency finds that there will be no significant impact, then it can forgo the EIS and issue a FONSI. BOEM and BSEE reviewed four proposed plans relating to well stimulation treatments and then issued a FONSI based on a determination that there would be no significant impact on the human environment. The federal agencies argued that they had not taken any “major federal action” to trigger the statutory requirements of NEPA. The plaintiffs disagreed, challenged the adequacy of the EA, and argued that the agencies should have prepared the more robust EIS.

Under § 7 of the Endangered Species Act, a federal agency must ensure that any action they authorize is not likely to result in the jeopardization of any endangered, or threatened species, or result in the destruction of critical habitat. 16 U.S.C. §1536(a)(2). The ESA requires procedural mandates, including at least informal consultation with Fish and Wildlife Services (FWS) and National Marine Fisheries Services (NMFS), even if a certain substantive outcome or determination is not reached. Plaintiffs allege BOEM and BSEE failed to initiate consultation with either FWS or NMFS before issuing the EA. The federal agencies argue that the consultation requirements were not triggered because they had not taken “action” within the meaning of the statute.

The CZMA gives coastal states the right to review federal agency activity and if the state finds that federal activity is inconsistent with the state’s coastal management plan, the state may seek relief in federal court. The plaintiffs allege BOEM and BSEE violated the CZMA by failing to prepare and submit a determination to the California Coastal Commission on whether the proposed use of well stimulation treatments is consistent with California’s coastal management plan. The federal agencies argued that they had not taken the required federal agency activity that would have triggered review under the CZMA.


The District Court’s Decision


The NEPA Claims

The court determined that NEPA claims were reviewable because the proposal to allow well stimulation treatments on the Pacific Outer Continental Shelf was a major federal action. The court then denied the plaintiffs’ NEPA claims because the federal agencies took the requisite “hard look” at the environmental effects of “fracking” on the Pacific Outer Continental Shelf and reasonably concluded that there would be no significant impact. The court reviewed the agencies’ action under a deferential standard that looks for agency action that is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Finding the federal agencies had made informed decision-making and satisfied public participation requirements for the EA, the court rejected the plaintiffs challenges to the substance of the EA. The court then considered whether an EIS should have been prepared instead of an EA, and found that the intensity factors required under the statute were not present. Lastly, the court found BOEM and BSEE had provided a reasonable range of alternatives in preparing the EA.


The ESA Claims

The Endangered Species Act claims were based on the federal agencies’ failure to initiate consultation with the FWS and NMFS, as required by Section 7 of the Act before issuing the Final EA. The NMFS claim was found moot because BOEM and BSEE adequately initiated and completed consultation with NMFS. NMFS issued a letter concurring with BOEM and BSEE’s determination. In contrast, BOEM and BSEE asked FSW to engage in a formal consultation given the adverse effect of an accidental oil spill on certain species. The court determined that the federal agencies violated the Endangered Species Act, however, by issuing their Final EA before the consultation was complete. The court granted the plaintiffs’ request for declaratory relief and issued an injunction prohibiting the agencies from proceeding with well stimulation treatments permitting until consultation with FWS is complete.


The Coastal Zone Managemnt Act Claims

Finally, the court granted the plaintiffs’ motion for summary judgment on the CZMA claims and issued an injunction prohibiting the agencies from approving permits until they complete the required CZMA process. The court found that the broad statutory language of “federal agency activity” included the federal action at issue and the federal proposal as described in the Final EA is reviewable under 16 U.S.C. §1456(c)(1).


Conclusion and Implications

This case illustrates that issuance of plans or permits may constitute an “action” under the Endanger Species Act or a “federal agency activity” under the CZMA, triggering interagency consultation and review requirements. Even under a deferential standard of review, federal agencies may be ordered to refrain from any further action unless and until the Endangered Species Act and CZMA consultations are completed.

(Rebecca Andrews)