CHAPTER 12 NEPA CASE LAW UPDATE

• Jurisdiction: United States

National Environmental Policy Act
(Oct 2010)
CHAPTER 12
NEPA CASE LAW UPDATE
Steven K. Imig
Ducker, Montgomery, Lewis & Bess, PC
Denver, Colorado

STEVEN IMIG is an attorney with Ducker, Montgomery, Lewis & Bess, P.C. in Denver, Colorado. Steve specializes in natural resources, public lands law, litigation, and environmental law. His practice involves oil and gas and resource development, federal land use planning, ski area development, and litigation over various types of oil and gas agreements. Steve also helps clients navigate the NEPA process and other environmental permitting and review processes. Steve has a B.A. in economics, magna cum laude, from Bates College; and a J.D., cum laude, from the Georgetown University Law Center. Steve is the author of two articles regarding NEPA compliance for projects funded by the stimulus bill, and has spoken about oil and gas surface owner issues at the Colorado Coalition of Land Trusts annual conference. Prior to law school, Steve was an economic consultant specializing in energy markets.

I. INTRODUCTION

For a procedural statute that "does not mandate particular results,"¹ the National Environmental Policy Act ("NEPA") spawns a large amount of litigation. Statistics compiled by the White House Council on Environmental Quality ("CEQ") are enlightening:²

1. Volume of Litigation. 132 NEPA cases were filed in 2008 - up from the prior year's 86 cases but on par with the average of 129 cases filed per year since 2001. These cases have produced an average of 184 judicial decisions per year for the last decade. The CEQ statistics do not include NEPA decisions issued by administrative tribunals, such as the Interior Board of Land Appeals. The CEQ statistics also do not include cases construing state environmental review laws (or "little NEPA" laws), such as the California Environmental Quality Act. ³

2. Most-Sued Agencies. As it has since the CEQ began publishing agency-specific statistics in 2001, the United States Forest Service ("Forest Service") earned the title of the "most sued" federal agency again in 2008. The Forest Service was named the lead defendant in 46 cases filed in 2008, about three times more than its closest rivals the Bureau of Land Management ("BLM") and Army Corps of Engineers (sued 14 and 15 times respectively in 2008). The Forest Service was sued about as often as its closest four rivals combined. Other agencies sued at least five times in 2008 include the Fish and Wildlife Service, the National Park Service, the National Oceanic and Atmospheric Administration, the Federal Highway Administration, and the Department of Energy.

3. Government Success. The federal government wins NEPA cases about as often as it loses them. Federal defendants earned a favorable judgment in 51% of the court decisions rendered in 2008, a slight improvement from the governments' success rate of 48% in both 2005 and 2007 and 41% in 2006.

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This paper is not intended to be a comprehensive review of every recent judicial decision regarding NEPA. The body of NEPA case law produced each year is too vast. Rather, it is a brief overview of litigation trends, certain key decisions, and interesting factual and legal issues decided by the courts over the past few years.

II. THE "NEPA TRIGGER"

NEPA applies only to "major Federal actions significantly affecting the quality of the human environment."⁴ Many courts have recently wrestled with the level of federal involvement or control over a project that is necessary to constitute "major federal action" sufficient to trigger the requirement to prepare an Environmental Impact Statement ("EIS") pursuant to NEPA.⁵ Two recent cases addressed this question in the context of proposals for private mineral development on split estate lands where the surface is owned by the federal government.

a. Minard Run Oil Co. v. U.S. Forest Service

Minard Run Oil Co. v. U.S. Forest Service involved oil and gas development on privately owned minerals underlying the Allegheny National Forest ("ANF") in Pennsylvania. The United States District Court for the Western District of Pennsylvania addressed not only the question of whether approval of private mineral development proposals on National Forest System lands triggers NEPA's requirements, but also whether the Forest Service has the discretion to conduct a NEPA review even if doing so is not required.

The ANF was acquired largely pursuant to the Weeks Act of 1911, which appropriated federal money for the acquisition of timber resources in the eastern United States.⁶ In implementing the Weeks Act, federal policy was often to acquire only the surface estate to conserve funds, foregoing acquisition of the mineral estate. As a result, the minerals underlying the ANF are over 93% privately-owned.

Pre-2008 Private Minerals Policy. A 1980 judicial decision established the respective rights of the Forest Service and private mineral owners for development proposals in the ANF. In United States v. Minard Run Oil ("Minard Run I"), the court noted that, under Pennsylvania law, the mineral estate is dominant and the mineral owner has an absolute right to occupy so much of the surface as is necessary to develop the minerals. Because a surface owner has limited authority to control development of private minerals under his land, the court held that mineral

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owners seeking to develop in the ANF had only to: (1) give the Forest Service 60 days advance notice before drilling; (2) provide the Forest Service with a plan of operations; and (3) provide limited additional information.⁷ Pursuant to Minard Run I, the Forest Service established an oil and gas development policy for the ANF whereby it did not conduct NEPA review of development proposals.

2009 Settlement and New Private Minerals Policy. In 2008 the Forest Service was sued by a coalition of environmental groups that alleged that the Forest Service practice for reviewing development proposals in the ANF violated NEPA. In 2009, the Forest Service acquiesced, settled the lawsuit, and committed to "undertake appropriate NEPA analysis" prior to authorizing development.⁸ The Forest Service then began preparing a forest-wide EIS, and put a moratorium on approval of private mineral development proposals in the ANF until the EIS was finished.

The Court's Decision. In Minard Run Oil Co. v. U.S. Forest Service ("Minard Run II"), an oil company, a trade association, and other plaintiffs sued to enjoin the implementation of the 2009 settlement. The plaintiffs argued that conducting NEPA review for private mineral proposals improperly impinged on their private rights. The court agreed, and issued a preliminary injunction barring the Forest Service from conducting NEPA review prior to approving private mineral development proposals in the ANF.⁹ The court held that the Forest Service possesses limited authority to regulate private mineral development under the Weeks Act, Pennsylvania law, and the instruments of conveyance relative to the private mineral estates, and that its limited role does not constitute "major federal action" triggering NEPA's requirements.¹⁰ Because its role is limited, and conducting a NEPA review would improperly impinge on private mineral rights, the court held that the Forest Service does not possess the "regulatory authority" to conduct NEPA review prior to authorizing development proposals.¹¹

b. San Luis Valley Ecosystem Council v. U.S. Fish and Wildlife Service

In San Luis Valley Ecosystem Council v. U.S. Fish and Wildlife Service, the court addressed a proposal to develop private mineral rights underlying the Baca National Wildlife Refuge in Colorado. When the United States Fish and Wildlife Service ("FWS") acquired the refuge in 2000, it took its surface ownership subject to an existing surface use agreement with the mineral owner.

The FWS initially determined that the requirements of NEPA do not apply to private mineral development proposals within the refuge, and permitted geophysical exploration activities to occur without preparing a NEPA document. On a motion for a preliminary

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injunction, the United States District Court for the District of Colorado disagreed. The court held that, because Colorado law granted the surface owner rights to influence the scope and timing of a mineral owner's use of the surface, "there is some likelihood of success in showing that the agency acted arbitrarily and capriciously in refusing to apply NEPA before this litigation was initiated."¹²

During the course of the lawsuit, the FWS did decide to prepare an Environmental Assessment ("EA") for a drilling proposal, but expressly limited the scope of its review to standards and guidelines it negotiates with the mineral owner. The EA did not review the full scope of the project, and did not include a full comparison of alternative drilling proposals. The court held that the EA's analysis was arbitrary and capricious because it inappropriately constrained its review of alternatives. The court held:

Colorado law permits the surface owner to impose some reasonableness requirements, as does federal regulation. The agency's refusal to consider the drilling of the exploratory wells to be the applicable federal action, thereby eliminating any alternative drilling sites or methods, may well have been arbitrary and capricious.¹³

The Minard Run II and San Luis Valley Ecosystem Council decisions are fact specific. Both courts recognized that the scope of federal authority over private mineral development depends largely on the respective rights of the surface owner and mineral owner under state law.¹⁴ Whether NEPA is required for development of private minerals underlying federal surface in other contexts will depend on the facts of the case.

III. REVIEW OF FEDERAL LAND EXCHANGES

a. National Parks Conservation Association v. Bureau of Land Management

In National Parks Conservation...