Ctr. for Biological Diversity v. Bureau of Land Mgmt.

937 F.Supp.2d 1140

CENTER FOR BIOLOGICAL DIVERSITY and Sierra Club, Plaintiffs,

v.The BUREAU OF LAND MANAGEMENT and Ken Salazar, Secretary of the Department of Interior, Defendant.

Case No. C 11–06174 PSG.

United States District Court,

N.D. California,

San Jose Division.

March 31, 2013.

Brendan R. Cummings, Joshua Tree, CA, David Robert Hobstetter, Nathan D. Matthews, San Francisco, CA, for Plaintiffs.

Romney Sharpe Philpott, United States Department of Justice, Washington, DC, for Defendant.

ORDER RE CROSS–MOTIONS FOR SUMMARY JUDGMENT

(Re: Docket No. 28, 32)

PAUL S. GREWAL, United States Magistrate Judge.

Plaintiffs Center for Biological Diversity and Sierra Club bring their claims for declaratory and injunctive relief under the Administrative Procedure Act, 5 U.S.C. § 701–706. They challenge the decision of Defendants Bureau of Land Management (“BLM”) and Interior Secretary Ken Salazar to sell four oil and gas leases for approximately 2,700 acres of federal land in Monterey and Fresno counties. Plaintiffs now seek summary judgment that the leases were sold in violation of the National Environmental Policy Act and the Mineral Leasing Act of 1920. Defendants oppose the motion and seek a summary judgment of their own. The court has jurisdiction under 28 U.S.C. § 1331. On January 15, 2013, the parties appeared for hearing.

Having considered the evidence of record and the arguments of counsel, the court holds that the BLM violated NEPA in its environment assessment of the leases by unreasonably relying on an earlier single-well development scenario. That scenario did not adequately consider the development impact of hydraulic fracturing techniques popularly known as “fracking” when used in combination with technologies such as horizontal drilling. Not only was the environment assessment erroneous as a matter of law, the BLM's finding of no significant impact based on the assessment and resulting decision not to prepare an environmental impact statement also was erroneous as a matter of law. The court further holds that although the leases were issued in violation of NEPA, the lease terms do not separately violate the MLA. Accordingly, the court GRANTS–IN–PART and DENIES–IN–PART the parties' motions.

I. BACKGROUND

A. The Monterey Shale Formation and Hydraulic Fracturing

Central California's Monterey Shale Formation is a massive sedimentary rock formation estimated to contain over 15 billion barrels of oil, equal to 64 percent of the nation's total shale oil reserve, most of which is not retrievable through conventional drilling techniques.¹ Oil previously produced from the formation was dubbed “easy” oil, because it was released from the shale into other permeable formations and then pooled near the surface, where it could be extracted with conventional drilling techniques. ² What largely remains of the shale oil remains locked deep within the impermeable shale itself, which is currently only economically accessible through fracking.³

Fracking is the artificial propagation of fractures in a rock layer by injecting large quantities of water and fracturing fluids at high volume and pressure.⁴ This fractures the geological formation, creating passages through which gas and liquids can flow and an overall increased permeability. ⁵ Fracking typically uses “slick water,” which is a mixture of water, sand, and a cocktail of chemical ingredients with a number of purposes, including increasing viscosity of the fluid and impeding bacterial growth or mineral deposition.⁶ Although fracking itself is not a new technology, it did not become a feasible means of deep shale gas production until the late 2000s.⁷ Whereas before fracking only increased permeability in a limited zone radiating from the well bore, more recently engineers have honed the fracking process by incorporating horizontal drilling, multi-stage fracturing, slick-water, and improved equipment to allow the operator to fracture and extract resources from a larger volume from a single well. ⁸ Modern fracking involves drilling vertically into shale formations up to hundreds of thousands of feet deep, and horizontally from 1000 to 6000 feet away from the well.⁹

The effect of fracking on the oil and gas economies has been tremendous. An April 2011 Congressional report notes that “[a]s a result of hydraulic fracturing and advances in horizontal drilling technology, natural gas production in 2010 reached the highest level in decades.” ¹⁰ In some areas, the rate of drilling increased by more than an order of magnitude. For example, in the Marcellus Shale, “[d]rilling companies were issued roughly 3,300 Marcellus gas-well permits in Pennsylvania [in 2010], up from just 117 in 2007.” ¹¹

Whatever one view's of the virtue and vices of fracking, it is undisputed that fracking's potential—both good and bad—has not gone unnoticed. Advocates herald the technology as an economic method to meet our nation's energy needs by extracting vast amounts of formerly inaccessible hydrocarbon supplies. ¹² Opponents, however, warn of devastating environmental impacts, including contamination of ground water, deteriorating air quality, the flowbacks of gases and slick water, and surface pollution from spills. The Congressional Committee on Energy and Commerce launched an investigation to examine the chemicals used in hydraulic fracturing from 2005 to 2009 and identified 29 chemicals that are known or possible human carcinogens, regulated under the Safe Drinking Water Act as risks to human health, or listed as hazardous air pollutants under the Clean Air Act.¹³ In recent years, fracking has come under scrutiny in federal, state, and local governments alike, with some states contemplating enacting, or having already enacted, laws banning fracking altogether.¹⁴

B. Resource Management Plan for the Hollister Field Office Area (June 2006)

BLM manages federal onshore oil and gas resources subject to the requirements of the MLA and the Federal Land Policy and Management Act (“FLPMA”).¹⁵ Under the FLPMA, BLM is required to undergo a “three phase decision-making process” in granting access to public lands for oil and gas development. ¹⁶ In the first phase, BLM must prepare a Resource Management Plan (“RMP”) covering a general regional area.¹⁷ In the second phase, BLM leases specific parcels.¹⁸ In the third phase, lessees submit applications for drilling permits to BLM.¹⁹

In June 2006, BLM's Hollister Field Office (“HFO”) prepared a Proposed Resource Management Plan/Final Environmental Impact Statement (“PRMP/FEIS”) to govern management of the Southern Mountain Diablo Range and Central Coast of California.²⁰ The PRMP/FEIS outlined the HFO's plan for managing the lands surveyed within the “planning area,” consisting of approximately 274,000 acres of lands and 588,197 acres of “split estate” ²¹ within twelve counties in central California, including the leases at issue in this litigation.²²

The PRMP/FEIS included a Reasonably Foreseeable Development Scenario for Oil and Gas (“RFD”) for the HFO area, which projected that no more than 15 wells would be drilled within the next 15–20 years, based on a survey of past oil and gas activities within the boundaries of the HFO and the very small amount of federal mineral estate within the areas of high development potential. ²³ The RFD analysis further concluded that “[t]his trend is not likely to change much,” and as a result predicted 10 development wells to be drilled over the next 15 to 20 years across the entire “planning area.” ²⁴

HFO also analyzed the environmental impacts of proposed leasing in the HFO area.²⁵ Specifically, the PRMP/EIS addressed potential impacts of oil and gas development on surrounding air quality, water resources, wildlife habitat, and special status species (including the California condor, Central Coast Steelhead, the blunt-nosed leopard lizard, and the San Joaquin Kit fox). ²⁶

After publishing the report and receiving comments from the public, BLM adopted the PRMP/FEIS in September 2007 in its Record of Decision (“ROD”).²⁷ The ROD, based on the findings in the PRMP/FEIS, established certain management requirements for activities and projects expected to take place on the lands at issue, including mitigation requirements and oil and gas stipulations that would be applied to new leases issued. ²⁸ These stipulations and conditions included measures to protect endangered, threatened, and other special status species, as well as water and air quality.²⁹

C. Environmental Assessment (June 2011)

Several years later, in response to expressions of interest from members of the oil and gas industry, BLM proposed a competitive oil and gas lease sale for approximately 35,000 acres in the HFO area.³⁰ In April 2011, BLM announced a decidedly scaled down proposed lease sale for approximately 2,700 acres and issued a corresponding draft Environmental Assessment (“EA”). ³¹ During the 36–day public comment period for the EA, BLM received comments from several individuals, agencies, and organizations, including Sierra Club, Center for Biological Diversity, Monterey County, United States Fish and Wildlife Service Ventura Field Office, Ventana Conservation and Land Trust, Grassroots Coalition, and the National Resources Defense Council (NRDC). ³² Many comments centered on the potential effects of fracking as well as climate change, but BLM noted “these issues are outside the scope of this EA because they are not under the authority or within the jurisdiction of the BLM.” ³³ In June 2011, having considered and addressed the public comments it received, BLM issued its final EA.³⁴

The final EA consists of a 125–page assessment of the proposed lease sale. After describing the purpose and need for the lease sale, the EA discussed environmental issues, including: (1) the oil and gas resources in the FIFO area; ³⁵ (2) air quality in the San Joaquin and North Central Coast Air Basins; ³⁶ (3) water quality concerns, including the fact that none of...