On May 1, the same Montana federal district court judge who recently enjoined the use of Nationwide Permit 12, halting progress on the Keystone XL pipeline, vacated 287 oil and gas leases issued by the U.S. Bureau of Land Management (“BLM”) covering 145,063 acres.  The court based its ruling on BLM’s failure to properly consider risks posed to Montana’s environment and water supply as required under the National Environmental Policy Act (“NEPA”). WildEarth Guardians v. BLM, Civ. Case No. 4:18-cv-00073-BMM (D. Mont. May 1, 2020).

The ruling came after the parties’ cross motions for summary judgment on whether BLM adhered to certain NEPA requirements that it consider (1) the impacts of issuing oil and gas leases on Montana’s groundwater caused by shallow fracturing and surface casing depth; (2) reasonable alternatives that would lessen the impacts to Montana’s groundwater supply; and (3) the combined climate impacts of the lease sales as a whole.  The court found in favor of WildEarth under each of these requirements and instructed BLM to reassess its determination of the leases’ overall impact on Montana’s environment after complying with NEPA and re-conducting its Environmental Assessments.

In concluding that BLM failed to discuss groundwater impacts with sufficient specificity, the court found that BLM’s Environmental Assessments (“EAs”) “largely fail to inform the reader whether groundwater would be unchanged, improved, or degraded and it certainly fails to explain what data would lead to these conclusions.”  Id. at 11.  Regarding certain alternatives proposed during the “protest stage” of the administrative process to better protect groundwater—namely that (1) parcels not be leased in areas overlying usable groundwater and (2) leases include a stipulation or notice requiring the lessee to perform groundwater testing prior to drilling to identify all usable water--the court found that BLM was required at a minimum to adequately explain why its decision not to consider the alternatives complied with NEPA.  BLM’s response to WildEarth’s proposals, which stated summarily that “because these parcels have stringent resources protections…, there was not need to analyze an alternative excluding such parcels,” did not meet this burden.  Id. at 19.  The court also determined that BLM’s EAs failed to consider the cumulative impact of its individual decisions, in light of the fact that the incremental impact of each of BLM’s individual leasing decisions “is added to other past, present, and reasonable foreseeable future actions.”  Id. at 22.  Finally, the court concluded that because BLM’s “findings of no significant impact” on the environment (“FONSIs”) relied on its flawed EAs, they were arbitrary and capricious.  Id. at 32.

On the issue of the remedy, the court observed that it was unable to assess the likelihood of BLM reaching the same conclusion it had initially come to on remand because BLM had largely failed to provide any analysis (as opposed to providing, for example, a faulty analysis).  Id. at 34.  Accordingly, the court chose to vacate BLM’s finding of no significant impact, vacate BLM’s issuance of the leases, and remand to BLM for further analysis.

The court’s ruling vacating the BLM leases could potentially influence other courts conducting similar reviews of BLM actions.  For example, WildEarth has also asserted NEPA challenges that BLM failed to properly consider the cumulative environmental and climate impacts of its decisions in two additional lawsuits pending in New Mexico.  See WildEarth Guardians v. Bernhardt et al, Civ. No. 1:19-cv-00505-RB-SCY (D.N.M.); Dine Citizens Against Ruining our Environment et al v. Bernhardt et al, Civ. No. 1:19-cv-00703-WJ-JFR (D.N.M.).  Nonetheless, judicial review of agency actions is highly fact-specific, and Judge Morris’s opinion may be inapplicable or distinguishable from other NEPA cases.

More broadly, last Friday’s decision reinforces the notion that courts expect government agencies to undertake a rigorous consideration of the environmental (including climate) impacts of their decision-making throughout the administrative process.  While criticizing BLM’s failure to adhere to NEPA’s procedural requirements, the Montana district court was unable to comment on the soundness of BLM’s substantive analysis because, in its judgment, BLM had failed to include hardly any analysis in the administrative record.  The influence this case will have on future NEPA-based challenges remains to be seen.

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