In April 2011, the BLM decided to sell four oil and gas leases for approximately 2,700 acres of federal land in the Central California Monterey Shale Formation and issued a draft Environmental Assessment (EA). During the 36-day public comment period, the BLM received comments from citizens, agencies, and environmental groups, such as the Center for Biological Diversity and the Sierra Club, who expressed concerns about the oil and gas development. After receiving these comments, the BLM issued its final EA and, on June 16, 2011, a Finding of No Significant Impact (FONSI), meaning that “the proposed action would not result in any significant environmental impact requiring further analysis under NEPA.”
On December 8, 2011, the Center for Biological Diversity and the Sierra Club filed a lawsuit against the BLM, complaining that the final EA did not adequately and fully analyze the impacts of oil and gas development on the surrounding area and the effects of hydraulic fracturing in particular. The environmental groups asserted that a detailed environmental impact study (EIS) was needed in order to consider the endangered species living in the area (e.g., San Joaquin kit fox, blunt-nosed leopard lizard, steelhead trout, and the California condor), the “highly controversial and dangerous drilling method” of hydraulic fracturing, and the impacts of oil spills, habitant contamination, and methane leaks. The BLM countered that it was premature to evaluate the impacts at this stage, that the impacts must be evaluated in the site-specific assessments conducted in relation to applications for permits to drill.
Disagreeing with the BLM, Magistrate Judge Grewal stated that NEPA required federal agencies to conduct the impact review at the earliest possible time to allow for proper consideration of environmental values. The court found that the BLM unreasonably relied on an earlier single-well development scenario and failed to take into account all reasonably foreseeable effects of its actions in categorically refusing to consider the effects of hydraulic fracturing. According to the court, the BLM could not shirk its NEPA responsibilities by labeling discussion of hydraulic fracturing as a “crystal ball” inquiry. Therefore, Magistrate Judge Grewal ruled that the BLM failed to conduct the “hard look” analysis required by NEPA by dismissing any development scenario involving hydraulic fracturing when used in combination with technologies such as horizontal drilling. The court further found the EA and the FONSI to be erroneous as a matter of law.
The ruling may be a setback for oil and gas development in central California and could cast into doubt a recent and much larger lease sale of 18,000 acres in the same region, which the BLM reportedly approved in a similar fashion.
View the 30-page Opinion and Order.
This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.
This post was prepared by Barclay Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice and Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.
