848 F.2d 1441 (9th Cir. 1988), 85-3929, Conner v. Burford

Docket Nº:85-3929 to 85-3937.
Citation:848 F.2d 1441
Party Name:James R. CONNER, et al., Plaintiffs-Appellees, v. Robert BURFORD, Director, Bureau of Land Management, et al., Defendants- Appellants, and Placid Oil Company, Conquest Exploration Company, the Louisiana Land and Exploration Company and Anadarko Production Company, Union Oil Company of California, et al., Intervenors-Appellants.
Case Date:January 13, 1988
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1441

848 F.2d 1441 (9th Cir. 1988)

James R. CONNER, et al., Plaintiffs-Appellees,


Robert BURFORD, Director, Bureau of Land Management, et al.,

Defendants- Appellants,


Placid Oil Company, Conquest Exploration Company, the

Louisiana Land and Exploration Company and

Anadarko Production Company, Union Oil

Company of California, et al.,


Nos. 85-3929 to 85-3937.

United States Court of Appeals, Ninth Circuit

January 13, 1988

Argued and Submitted July 11, 1986.

As Amended July 1, 1988.

Page 1442

Ellen J. Durkee and Robert L. Klarquist, Dept. of Justice, Washington, D.C., for defendants-appellants.

Thomas France, Nat. Wildlife Federation, Missoula, Mont., for plaintiffs-appellees.

Laura L. Payne, Poulson, Odell & Peterson, Denver, Colo.; Philip K. Verleger, Donna R. Black, Michael A. Monahan, McCutchen, Black, Verleger & Black, Los Angeles, Cal.; Constance E. Brooks, Mountain States Legal Foundation, Denver, Colo., for intervenors-appellants.

Appeal from the United States District Court for the District of Montana.

Before GOODWIN, WALLACE and NORRIS, Circuit Judges.

NORRIS, Circuit Judge:

This appeal presents the question whether federal agencies violated the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. Sec. 4321 et seq., or the Endangered Species Act of 1973 (ESA), 16 U.S.C.

Page 1443

Sec. 1531 et seq., by selling oil and gas leases on 1,300,000 acres of national forest land in Montana without preparing either an environmental impact statement (EIS) or a comprehensive biological opinion encompassing the impact of post-leasing activities on threatened or endangered species. The district court ruled that the sale of the leases without an EIS or a comprehensive biological opinion violated both NEPA and the ESA, 605 F.Supp. 107. We affirm the judgment of the district court in part, reverse in part, and remand for further proceedings.



The Flathead National Forest in northwestern Montana is a vast tract of rugged mountainous wilderness. Its many lakes and rivers provide exceptionally pure surface water, prized for trout fishing, and its undisturbed ecosystem is a sustaining habitat not only for game animals, but also for the bald eagle, the peregrine falcon, the gray wolf, and the grizzly bear--all listed as threatened or endangered species under the ESA. 1 The Gallatin National Forest in south-central Montana provides a tremendous diversity of natural resources. Its rugged landscape of mountains, valleys, and rivers supports abundant fish and wildlife populations, while portions of the forest also provide important timber reserves for the local logging industry. Bordered on the south by Yellowstone National Park, the Gallatin is the watershed for some of the nation's most important trout waters, including the blue-ribbon Madison River. Big game populations also teem in the wilds of the Gallatin, and 30,000 acres there have been identified as essential grizzly bear habitat.

Beneath the surface of these vast and beautiful national forests lies the reason for this litigation. Both forests are located in the geologic zone known as the Overthrust Belt, a formation running north-south from Canada to Mexico and thought to be a rich source of petroleum deposits. Since 1970, preliminary seismic explorations as well as oil seeps discovered in the area have triggered an avalanche of applications to the Bureau of Land Management (BLM) for oil and gas leases within the boundaries of the two forests.

In February and March of 1981, the United States Forest Service issued environmental assessments 2 (EAs) recommending that a total of 1,300,000 acres of land in the Flathead and Gallatin National Forests be leased for oil and gas development. 3 Based on these EAs, the Forest Service also issued Decision Notices and Findings of No Significant Impact (FONSIs), 4 which conclude that the mere sale of oil and gas leases in the forests will have no significant impact on the human environment. The issuance of the FONSIs obviated the need for EISs at the lease sale phase of the project. See 40 C.F.R. Sec. 1508.13 (1985).

Following the preparation of the EAs and the FONSIs, the BLM sold over 700 leases for oil and gas exploration, development,

Page 1444

and production on 1,350,000 acres within the two forests. The leases fall into two basic categories depending on the nature of the stipulations written into the lease to ameliorate the environmental impact of oil and gas activities. 5 Some of the leases contain "no surface occupancy" (NSO) stipulations. On their face, these NSO stipulations appear to prohibit lessees from occupying or using the surface of the leased land without further specific approval from the BLM. Leases fully governed by an NSO stipulation are referred to herein as "NSO leases." Leases not governed by an NSO stipulation, which we refer to as "non-NSO leases," contain the Forest Service's standard stipulations for environmental protection and, in some cases, special stipulations to protect particularly sensitive areas. 6 These standard and special stipulations, which we refer to collectively as "mitigation stipulations," authorize the government to impose reasonable conditions on drilling, construction, and other surface-disturbing activities; unlike NSO stipulations, however, they do not authorize the government to preclude such activities altogether.

In addition to issuing the EAs and FONSIs under NEPA, the Forest Service also initiated formal consultations with the Fish and Wildlife Service (FWS), as required under the ESA, 16 U.S.C. Sec. 1536(b), 7 for the purpose of determining whether the surface-disturbing activities of the oil and gas lessees might jeopardize the continued existence of threatened or endangered species. Both the Forest Service and the FWS decided there was insufficient information about the nature of post-leasing oil and gas activities to render a comprehensive biological opinion considering anything more than the lease sale itself. Instead the FWS proposed ongoing consultation and preparation of additional biological opinions at various stages of post-leasing activities.

Following the issuance of the FONSIs, the EAs, and the biological opinions, administrative appeals were filed by James Conner, the Montana Wildlife Federation, and the Madison-Gallatin Alliance (appellees). See 36 C.F.R. Sec. 211.19 (1980). Protests were also filed with the BLM in order to prevent leasing before the administrative proceedings were concluded. See 43 C.F.R. Sec. 4.450-2 (1980). These appeals and protests were rejected and in 1982 leasing began in both the Flathead and Gallatin Forests.

Having exhausted their administrative remedies, the appellees then filed this action in federal district court in Montana, claiming that the sale of the leases without an EIS violated NEPA and that the sale of the leases without a biological opinion assessing the impact of post-leasing activities on the threatened and endangered species violated the ESA.

The district court granted appellees summary judgment on both their NEPA and ESA claims. Conner v. Burford, 605 F.Supp. 107 (D.Mont.1985). The court reasoned that NEPA requires a comprehensive EIS at the lease sale stage to project and analyze the cumulative effects of successive, interdependent steps culminating in oil and gas development and production. See id. at 108 (citing Thomas v. Peterson, 753 F.2d 754, 757 (9th Cir.1985)). Otherwise, the court feared, "a piecemeal invasion of the forests would occur, followed by the realization of a significant and irreversible impact." 605 F.Supp. at 109. Not even the NSO stipulations in some of the leases allayed the court's concerns: "[t]he issuance of a lease with an NSO stipulation does not guarantee an EIS before any development would occur." Id. Accordingly, the court ruled that the Forest Service's failure to prepare an EIS prior to the sale of any lease within the two national forests violated NEPA. In addition, the court ruled that the biological opinions of the FWS were inadequate to satisfy the ESA because they failed to address the effects

Page 1445

of oil and gas activities beyond the lease sale phase. The court reasoned this failure would lead to a piecemeal evaluation of the project consequences and a progressive "chipping away" of important habitat. Id. at 109.

The district court ordered all "the agency actions allowing the issuance of the oil and gas leases on the Flathead and Gallatin National Forests ... set aside" and enjoined the government from issuing or recommending any more leases until it complied with NEPA and the ESA. Id. Soon after judgment was entered, and before the original federal defendants filed a notice of appeal, a number of lessees of lands within the two forests 8 sought to intervene as necessary and indispensable parties under Fed.R.Civ.P. 19. The lessees also filed motions to vacate, reconsider, or amend the judgment, arguing that the district court had deprived them of due process by adjudicating their property interests without notice and an opportunity to be heard. The district court refused to reopen its judgment but granted the lessees' motion to intervene for the limited purpose of appeal. 9

On appeal, the federal appellants 10 and the lessees argue that both NSO and non-NSO leases were validly sold without the preparation of an EIS because the leases contain restrictions on surface-disturbing activities which protect the environment from significant effects. 11 Additionally, they continue to assert that the limited biological opinions prepared by the FWS satisfied the requirements of the ESA. The lessees separately argue that appellees' action is barred by mootness...

To continue reading