Wyoming v. U.S. Dep't of the Interior

493 F.Supp.3d 1046

State of WYOMING and State of Montana, Petitioners,

State of North Dakota and State of Texas, Intervenor-Petitioners,

v.UNITED STATES DEPARTMENT OF THE INTERIOR, et al., Respondents,Wyoming Outdoor Council, et al.; Earthworks; State of California and State of New Mexico, Intervenor-Respondents.

Western Energy Alliance, and the Independent Petroleum Association of America, Petitioners,

v.Sally Jewell, in her official capacity as Secretary of the United States Department of the Interior; and Bureau of Land Management, Respondents.

Case No. 2:16-CV-0285-SWS (Lead Case)

Case No. 2:16-CV-0280-SWS

United States District Court, D. Wyoming.

Signed October 8, 2020

James C. Kaste, Erik Edward Petersen, Wyoming Attorney General's Office, Cheyenne, WY, for Petitioner State of Wyoming.

Brandon Lee Jensen, Budd-Falen Law Offices, Cheyenne, WY, Melissa Schlichting, Pro Hac Vice, Timothy C. Fox, Pro Hac Vice, Montana Department of Justice, Helena, MT, for Petitioner State of Montana.

David P. Garner, Pro Hac Vice, Hope Hogan, Pro Hac Vice, Wayne Stenehjem, Pro Hac Vice, North Dakota Attorney Generals Office, Bismarck, ND, Paul M. Seby, Pro Hac Vice, Greenberg Traurig LLP, Denver, CO, Robert John Walker, HICKEY & EVANS, Cheyenne, WY, for Intervenor-Petitioner State of North Dakota.

Daniel B. Frank, Frank Law Office, Cheyenne, WY, David J. Hacker, Pro Hac Vice, Attorney General of Texas, Austin, TX, for Intervenor-Petitioner State of Texas.

Erik Schlenker-Goodrich, Pro Hac Vice, Western Environmental Law Center, Taos, NM, Laura Helen King, Pro Hac Vice, Melissa A. Hornbein, Pro Hac Vice, Shiloh Hernandez, Pro Hac Vice, Western Environmental Law Center, Helena, MT, Lisa Dardy McGee, Wyoming Outdoor Council, Lander, WY, Robin Cooley, Earthjustice, Denver, CO, for Intervenor-Respondents Wyoming Outdoor Council, Citizens for a Healthy Community, Dine Citizens Against Ruining Our Environment, Montana Environmental Information Center, San Juan Citizens Alliance, Wilderness Workshop, WildEarth Guardians.

Erik Schlenker-Goodrich, Pro Hac Vice, Western Environmental Law Center, Taos, NM, Laura Helen King, Pro Hac Vice, Shiloh Hernandez, Pro Hac Vice, Western Environmental Law Center, Helena, MT, Lisa Dardy McGee, Wyoming Outdoor Council, Lander, WY, Robin Cooley, Earthjustice, Denver, CO, for Respondent Center for Biological Diversity.

Lisa Dardy McGee, Wyoming Outdoor Council, Lander, WY, Robin Cooley, Earthjustice, Denver, CO, Susannah L. Weaver, Pro Hac Vice, Donahue, Goldberg & Weaver LLP, Washington, DC, for Intervenor-Respondent Environmental Defense Fund.

Lisa Dardy McGee, Wyoming Outdoor Council, Lander, WY, Rachel Leigh Granneman, Pro Hac Vice, Environmental Law & Policy Center Chicago, IL, Robin Cooley, Earthjustice, Denver, CO, for Intervenor-Respondent Environmental Law and Policy Center.

Ann Brewster Weeks, Pro Hac Vice, Darin T. Schroeder, Pro Hac Vice, Clean Air Task Force, Boston, MA, Erik Schlenker-Goodrich, Pro Hac Vice, Western Environmental Law Center, Taos, NM, Laura Helen King, Pro Hac Vice, Melissa A. Hornbein, Pro Hac Vice, Shiloh Hernandez, Pro Hac Vice, Western Environmental Law Center, Helena, MT, Lisa Dardy McGee, Wyoming Outdoor Council, Lander, WY, Robin Cooley, Earthjustice, Denver, CO, for Intervenor-Respondent National Wildlife Federation.

Lisa Dardy McGee, Wyoming Outdoor Council, Lander, WY, Michael S. Freeman, Pro Hac Vice, Robin Cooley, Rumela Roy, Pro Hac Vice, Earthjustice, Denver, CO, for Intervenor-Respondents Natural Resources Defense Council, Sierra Club, Wilderness Society, Western Organization of Resource Councils.

David A. Zonana, Pro Hac Vice, George Torgun, Pro Hac Vice, Mary S. Tharin, Pro Hac Vice, California Department of Justice Office of the Attorney General, Oakland, CA, Reed Zars, Laramie, WY, for Intervenor-Respondent State of California.

Reed Zars, Laramie, WY, William G. Grantham, Pro Hac Vice, New Mexico Office of The Attorney General, Sante Fe, NM, for Intervenor-Respondent State of New Mexico.

Erik Schlenker-Goodrich, Western Environmental Law Center, Taos, NM, Laura Helen King, Pro Hac Vice, Shiloh Hernandez, Western Environmental Law Center, Helena, MT, for Intervenor-Respondent Earthworks.

C. Levi Martin, United States Attorneys Office, Cheyenne, WY, Clare M. Boronow, Pro Hac Vice, United States Department of Justice, Denver, CO, Marissa A. Piropato, Pro Hac Vice, Carter Thurman, Pro Hac Vice, United States Department of Justice, Washington, DC, for Respondents United States Department of the Interior, United States Department of Interior Secretary, United States Bureau of Land Management, United States Bureau of Land Management Director.

ORDER ON PETITIONS FOR REVIEW OF FINAL AGENCY ACTION

Scott W. Skavdahl, United States District Judge This matter is before the Court on the Petitions for Review of Final Agency Action filed separately in each of these consolidated actions, challenging the Bureau of Land Management's issuance of new regulations with the stated intent of reducing waste of natural gas during oil and gas production activities on Federal and Indian leases and clarifying when "lost" gas is subject to royalties. The Court, having considered the briefs and materials submitted in support of the petitions and the oppositions thereto, including the Administrative Record ("AR"), and being otherwise fully advised, FINDS that the Bureau of Land Management exceeded its statutory authority and acted arbitrarily in promulgating the new regulations.

PROCEDURAL HISTORY

On November 18, 2016, the Department of the Interior ("DOI"), Bureau of Land Management ("BLM") issued its final rule "promulgating new regulations to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian (other than Osage Tribe) leases" and "clarify[ing] when produced gas lost through venting, flaring, or leaks is subject to royalties, and when oil and gas production may be used royalty-free on-site." Waste Prevention, Production Subject to Royalties, and Resource Conservation , 81 Fed. Reg. 83,008 (Nov. 18, 2016) (the "Waste Prevention Rule" or "Final Rule" or "Rule"). Petitioners contemporaneously initiated this litigation, contending the Rule represents unlawful agency action because it exceeds BLM's statutory authority and is otherwise arbitrary and capricious. Subsequently, the States of North Dakota and Texas intervened as additional petitioners challenging the legality of the Rule, and the California Attorney General's Office, the State of New Mexico, and several environmental organizations intervened to defend the Rule. The Rule's effective date was January 17, 2017. Id.

On January 16, 2017, following briefing and oral argument, this Court denied Petitioners' motions for preliminary injunction. Because Congress has indisputably vested DOI with the authority to prescribe rules for the prevention of undue waste of mineral resources, the Court determined that, "at this stage and applying the deference as required under Chevron , this Court cannot conclude the Rule enacted exceeds the Secretary's authority or is arbitrary and capricious." (Order on Mot. for Prelim. Inj. at 28, ECF No. 92.) The Court further found Petitioners had not demonstrated irreparable harm was likely in the absence of an injunction. Id. at 27. Thus, Petitioners had not established a clear and unequivocal right to relief. Id. at 28. The Court then established an expedited schedule for briefing on the merits, with opening briefs to be filed March 23, 2017. And so began the roller coaster ride.

On February 3, 2017, the U.S. House of Representatives passed a Congressional Review Act resolution to disapprove the Waste Prevention Rule, which would have voided the Rule. H.R.J. Res. 36, 115th Cong. (2017-2018).¹ On March 3, 2017, Petitioners requested an extension of the briefing schedule "to allow for review of the administrative record and preparation of a merits brief and for Congress to consider whether to exercise its authority under the Congressional Review Act." (ECF No. 97 at 3.) The Court granted the extension on March 6, 2017. The U.S. Senate voted against consideration of the House's resolution on May 10, 2017, leaving the Rule in effect. Then on June 15, 2017, in compliance with a directive from the President to review the Rule for consistency with the policies of the new administration,² the BLM announced it was postponing the January 17, 2018 compliance dates for certain phase-in provisions of the Rule, pending judicial review in this Court, pursuant to its authority under 5 U.S.C. § 705. See 82 Fed. Reg. 27,430 (June 15, 2017) ("Postponement Notice"). The BLM further stated its intention to conduct notice-and-comment rulemaking to suspend or extend the compliance dates of those sections affected.³ Id. The Rule's provisions with compliance dates that had already passed were unaffected by the Postponement Notice.

Five days later, and in light of BLM's plan to propose revision or rescission of the Rule, the Federal Respondents requested another extension of the briefing deadlines (ECF No. 129) which this Court granted, making the opening merits briefs due October 2, 2017 and response briefs due November 6, 2017 (ECF No. 133). In granting the extension, this Court determined: "To move forward on the present schedule would be inefficient and a waste of both the judiciary's and the parties' resources in light of the shifting sands surrounding the Rule and certain of its provisions, making it impossible to set a foundation upon which the Court can base its review under the Administrative Procedures Act." Id. at 3. Then on July 5th and 10th, 2017, several of the Intervenor-Respondents in this case, along with the elected Attorney Generals from the States of California and New Mexico, challenged the BLM's Postponement Notice in a Federal District Court in the Northern District of California. See California and New Mexico, et al. v. BLM , No....