Greens See Montana Ruling as Template for Oil Lease Challenges

Environmental groups challenging federal oil and gas lease sales are expecting a court ruling that vacated 287 Montana leases to serve as a model for future challenges and embolden other judges to cancel federal oil leases.

The Montana court on May 1 took the rare step of vacating oil and gas leases issued by the Trump administration because the Bureau of Land Management failed to analyze the leases’ environmental impacts.

The BLM didn’t take a hard look at the cumulative impacts leasing would have on groundwater and climate change as required by the National Environmental Policy Act, Chief Judge Brian Morris of the U.S. District Court for the District of Montana said.

“The problems the judge found are not unique to these particular leases, so it’ll serve as a template for future challenges,” said Elizabeth Forsyth, a public lands and wildlife staff attorney with Earthjustice. “We want the Trump administration to follow the law.”

Courts have found similar NEPA deficiencies in at least a dozen other cases but have generally left leases intact while agencies bolster their environmental studies.

More Than 1,000 Leases in Balance

Environmental groups are hoping the Morris decision will open the door for a Washington, D.C., court to cancel more than 1,000 leases in five states as part of separate WildEarth Guardians case alleging the BLM failed to consider greenhouse gas emissions in its NEPA analyses for 23 lease sales.

The Montana ruling affirms that the U.S. District Court for the District of Columbia is on “solid ground” to vacate those leases, said Rebecca Fischer, a WildEarth Guardians attorney. “Judge Morris made clear that this is the standard remedy: Vacate and remand.”

Federal courts are scrutinizing the BLM’s oil and gas leasing decisions for their NEPA compliance at a time when the Trump administration is removing barriers to oil, gas, coal, and other mineral development on federal lands as part of its fossil fuels-focused energy agenda.

The BLM has scheduled 20 oil and gas lease sales nationwide through the end of the year, possibly involving hundreds of thousands of acres of federal lands, mainly in the West, including land near national parks in Utah and Wyoming.

Gaining Traction

The Montana ruling follows a string of similar decisions forcing federal agencies to take a closer look at the impacts of individual fossil fuel projects on global temperature rise.

NEPA regulations require the government to weigh the direct, indirect, and cumulative impacts of major federal actions.

Environmental lawyers have argued for years that the Interior Department and other agencies routinely give short shrift to the second and third prongs by conducting narrow studies and touting minimal emissions from single projects while downplaying the overall impacts of broader fossil fuel production.

The arguments were already starting to gain traction in federal courts when President Donald Trump took office in 2017.

Conservation groups have since scored a chain of victories, forcing the feds to do more climate analysis for oil, gas, and coal development in Wyoming, New Mexico, Montana, and Colorado. Other cases are pending across the West.

Default Consequence

But judges have sometimes been reluctant to scrap the underlying agency decisions altogether, often opting instead to leave intact disputed leases, management plans, or permits while federal officials do their court-ordered homework.

In a case involving oil and gas development in Colorado’s North Fork Valley, for example, a judge declined to invalidate leases that had been issued in violation of NEPA, but did freeze permitting for oil and gas wells on the land. Judges used similar approaches in separate cases involving development in Wyoming, Montana, and Colorado.

The default consequence for NEPA violations is “vacatur,” or invalidation, of the agency action at issue in a case. But court precedent allows judges to balance other factors—including how disruptive vacatur would be, and how likely an agency is to support its original decision after additional analysis.

That’s created tension in many high-profile NEPA cases involving pipelines, transmission lines, and other projects. A federal court in Washington, D.C., is currently weighing whether to revoke permits for the Dakota Access pipeline after finding federal NEPA violations for that project.

The Trump administration has repeatedly argued in NEPA cases that challenged permits and leases should remain in place while agencies conduct additional court-ordered analysis to address what government lawyers deem “procedural errors” or “narrow deficiencies.”

Outside the courtroom, Trump officials are seeking to block similar climate arguments in future cases by drafting new NEPA regulations that don’t require a cumulative impact analysis—a part of NEPA reviews that often touches on climate change.

Limited Precedent

Some legal experts say they doubt the Montana decision will pave the way for other judges to vacate leases in similar cases, including the WildEarth Guardians case in Washington.

“They’re going to have a few more challenges in the D.C. case because of its much broader scope,” Murray Feldman, a Boise-based Holland & Hart LLP partner, said.

He said the Montana ruling was consistent with case law in the U.S. Court of Appeals for the Ninth Circuit, but it’s unclear how it will apply to cases elsewhere.

The Montana ruling is unlikely to influence or set a precedent for other courts outside the Ninth Circuit, said attorney Bob Comer, co-head of U.S. mining for Denver-based Norton Rose Fulbright US LLP and a former associate Interior Department solicitor in the George W. Bush administration.

The Montana ruling tried to second-guess the adequacy of the work the BLM conducted in looking at the environmental and climate impacts of leasing, and the court expects a level of speculative analysis that NEPA doesn’t require, Comer said.

“Are they really not going to develop any minerals because of climate change issues? I can’t believe that’s really the case,” Comer said. “Vacating leases for that reason is really extreme, especially when you’re looking at speculative impacts on a global basis.”

The Montana court’s decision to throw out the leases entirely likely stemmed from the severity of the NEPA violations, said Jayni Foley Hein, natural resources director for New York University School of Law’s Institute for Policy Integrity.

Plus, she said, “nothing’s preventing courts in other circuits from citing this as persuasive precedent,” even if it’s not binding.

The case is WildEarth Guardians v. Bureau of Land Mgmt., D. Mont., No. 4:18-cv-00073.