Dine Citizens Against Ruining Our Env't v. Bernhardt

Decision Date07 May 2019
Docket NumberNo. 18-2089,18-2089
Citation923 F.3d 831
Parties DINE CITIZENS AGAINST RUINING OUR ENVIRONMENT; San Juan Citizens Alliance; WildEarth Guardians; Natural Resources Defense Council, Plaintiffs-Appellants, v. David BERNHARDT, in His Official Capacity as Acting Secretary of the United States Department of the Interior; United States Bureau of Land Management, an Agency Within the United States Department of the Interior; Neil Kornze, in His Official Capacity as Director of the United States Bureau of Land Management, Defendants-Appellees, and DJR Energy Holdings, LLC; BP America Production Company; American Petroleum Institute; Anschutz Exploration Corporation; Enduring Resources IV, LLC, Intervenor Defendants-Appellees, and ConocoPhillips Company; Burlington Resources Oil & Gas Company LP, Intervenor Defendants. All Pueblo Council of Governors; National Trust for Historic Preservation; Navajo Allottees; Alice Benally; Lilly Comanche; Virginia Harrison ; Samuel Harrison; Dolora Hesuse; Verna Martinez; Loyce Phoenix, Amici Curiae.
CourtU.S. Court of Appeals — Tenth Circuit

Samantha Ruscavage-Barz, WildEarth Guardians, Santa Fe, New Mexico (Kyle J. Tisdel, Western Environmental Law Center, Taos, New Mexico, with her on the briefs), appearing for Appellants.

Avi Kupfer, U.S. Department of Justice, Environment & Natural Resources Division, Washington, D.C. (Michael C. Williams, Of Counsel, Attorney-Advisor, Office of the Solicitor, U.S. Department of the Interior, Clare M. Boronow, and Mark R. Haag, U.S. Department of Justice, Environment & Natural Resources Division, Washington, D.C., on the brief), for the Defendants-Appellees.

Hadassah M. Reimer, Holland & Hart LLP, Jackson, Wyoming (Stephen G. Masciocchi, and John F. Shepherd, Holland & Hart LLP, Denver, Colorado, Bradford Berge, Holland & Hart LLP, Santa Fe, New Mexico, Rebecca W. Watson, Welborn Sullivan Meck & Tooley, P.C., Denver, Colorado, Stephen Rosenbaum, Covington & Burling, LLP, Washington, D.C., and Jon J. Indall, Comeau Maldegen Templeman & Indall LLP, Santa Fe, New Mexico, with her on the brief), appearing for Intervenors-Appellees.

Before BRISCOE, McKAY, and HOLMES, Circuit Judges.

BRISCOE, Circuit Judge.

In this case, we are asked to decide whether the Bureau of Land Management violated the National Historic Preservation Act (NHPA) and the National Environmental Policy Act (NEPA) in granting more than 300 applications for permits to drill horizontal, multi-stage hydraulically fracked wells in the Mancos Shale area of the San Juan Basin in northeastern New Mexico. Appellants1 sued the Secretary of the Department of the Interior, the Bureau of Land Management, and the Secretary of the BLM, alleging that the BLM authorized the drilling without fully considering its indirect and cumulative impacts on the environment or on historic properties. The district court denied Appellants a preliminary injunction, and we affirmed that decision in 2016. After merits briefing, the district court concluded that the BLM had not violated either NHPA or NEPA and dismissed Appellants' claims with prejudice. Appellants now appeal.

We have jurisdiction under 28 U.S.C. § 1291 and affirm in part, reverse in part, and remand with instructions.

I

We summarized the underlying facts in the prior appeal.

The San Juan Basin is a large geographic region in the southwestern United States, including part of New Mexico. Drilling for oil and gas has occurred in the Basin for more than sixty years, and the Basin is currently one of the most prolific sources of natural gas in the country. The Basin includes both public and private lands. Many of the public lands and resources fall under the jurisdiction of the Bureau of Land Management's Farmington Field Office in New Mexico, which manages these lands and resources under its published Resource Management Plan.
In 2000, the BLM initiated the process of revising its existing RMP, which had been published in 1988. As part of this process, the BLM contracted with the New Mexico Institute of Mining and Geology to develop a "reasonably foreseeable development scenario," or RFDS, to predict the foreseeable oil and gas development likely to occur over the next twenty years. Based on historic production data and available geologic and engineering evidence, the RFDS estimated that 9,970 new oil and gas wells would be drilled on federally managed lands in the New Mexico portion of the San Juan Basin during this time period. Of these wells, the RFDS estimated that more than forty percent would be "Dakota, Mancos" gas wells—wells that could produce gas from both the Mancos geologic horizon and the Dakota geologic horizon that lies below it. The RFDS estimated that only 180 new oil wells would be drilled in the Mancos Shale, due to the fact that most reservoirs in the Mancos Shale were approaching depletion under then-current technologies, but it noted that there is excellent potential for the Mancos to be further evaluated.
In 2003, the BLM issued its Proposed Resource Management Plan and Final Environmental Impact Statement ( [2003 EIS] ). In this document, the BLM referred to the predictions and analysis contained in the RFDS in order to assess four proposed alternatives for managing federal lands in the San Juan Basin, including the "balanced approach" the agency ultimately decided to adopt. Under this balanced approach, the BLM analyzed the cumulative impacts of an estimated 9,942 new wells in the San Juan Basin—approximately the same number predicted in the 2001 RFDS—by looking at, for instance, the likely air quality impacts from the drilling and operation of this many new wells in the region. The [2003 EIS] did not discuss specific sites or approve any individual wells, although it assumed the majority of new wells would be drilled in the high development area in the northern part of the managed area. The BLM issued its final RMP, adopting the Alternative D balanced approach, in December 2003.

Diné Citizens Against Ruining Our Env't v. Jewell (Diné II ), 839 F.3d 1276, 1279–80 (10th Cir. 2016) (citations omitted).

Although the 2003 EIS analyzed oil and gas drilling in the San Juan Basin generally, operators wanting to drill new wells in the area must seek and receive approval for specific drilling via an application for a permit to drill (APD) submitted to the BLM. When the BLM receives an APD, it prepares an environmental assessment (EA) examining the environmental impacts of the proposed drilling. The EA must include an analysis of the direct, indirect, and cumulative effects of the proposed drilling. See 40 C.F.R. §§ 1508.7, 1508.8. The EA process results in one of three outcomes: (1) a conclusion that the proposed action would result in a significant environmental impact, necessitating an EIS, (2) a conclusion that the proposed action would not result in a significant environmental impact—a "finding of no significant impact" (FONSI), or (3) a conclusion that the proposed action will not go forward. 43 C.F.R. § 46.325. Even if a proposed action will have significant effects, the EA may still result in a FONSI if it is tiered to a broader environmental analysis that fully analyzed those significant effects. Id. § 46.140(c).

Beginning in 2010, the BLM began receiving APDs for drilling in the Mancos Shale. Development interest in the area increased quickly, and between early 2012 and April 2014, seventy new wells were completed in the Mancos Shale area. In 2014, recognizing the potential for additional Mancos Shale development, the BLM had a new RFDS prepared to evaluate the Mancos Shale's potential for oil and gas development. The 2014 RFDS estimates that full development of the Mancos Shale would result in 3,960 new wells.

The 2014 RFDS predicts that new drilling in the Mancos Shale will be done largely, if not entirely, by horizontal drilling and multi-stage hydraulic fracturing. "A horizontally drilled well starts as a vertical or directional well, but then curves and becomes horizontal, or nearly so, allowing the wellbore [i.e., drilled hole] to follow within a rock stratum for significant distances and thus greatly increase the volume of a reservoir opened by the wellbore." Wyoming v. Zinke, 871 F.3d 1133, 1137 (10th Cir. 2017) (alteration in original) (quotations omitted). Hydraulic fracturing is a process designed to "maximize the extraction" of oil and gas resources. JA1912. Fluids, usually water with chemical additives, "are pumped into a geologic formation at high pressure." Id. When the pressure "exceeds the rock strength," it creates or enlarges fractures from which oil and gas can flow more freely. Id. After the fractures are created, a "propping agent (usually sand) is pumped into the fractures to keep them from closing." Id.

As we noted previously,

These new drilling techniques have greatly increased access to oil and gas reserves that were not previously targeted for development and have given rise to much higher levels of development in the Mancos Shale than the BLM previously estimated and accounted for. Moreover, horizontal drilling and multi-stage fracturing may have greater environmental impacts than vertical drilling and older fracturing techniques.

Diné II, 839 F.3d at 1283.

Hydraulic fracturing is common in the San Juan Basin and has been used there in some form since the 1950s. Horizontal drilling, however, is relatively new. At the time the 2003 EIS issued, "[h]orizontal drilling [wa]s possible but not [then] applied in the San Juan Basin due to poor cost[-]to[-]benefit ratio." JA746. The environmental impacts considered in the 2003 EIS were therefore based on the impacts associated with vertical drilling, not horizontal drilling. But the 2003 EIS noted that "[i]f horizontal drilling should prove economically and technically feasible in the future, the next advancement in horizontal well technology could be drilling multi-laterals or hydraulic fracturing horizontal wells." Id.

Since the 2003 EIS issued, 3,945 of the 9,942 contemplated...

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