Sierra Club v. Peterson

Decision Date28 September 1983
Docket NumberNo. 82-1695,82-1695
Citation717 F.2d 1409,230 U.S. App.D.C. 352
Parties, 230 U.S.App.D.C. 352, 13 Envtl. L. Rep. 20,888 SIERRA CLUB, Appellant, v. R. Max PETERSON, in his official capacity as Chief Forester of the United States Forest Service, Department of Agriculture, et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 81-01230).

Karin P. Sheldon, Denver, Colo., for appellant.

Claire L. McGuire, Atty., Dept. of Justice, Washington, D.C., with whom Robert L. Klarquist, Washington, D.C., was on the brief for appellees, U.S.A.

R. Brooke Jackson, Denver, Colo., with whom John F. Shepherd, Denver, Colo., was on the brief for appellees, Wexpro Company, et al.

Gerry Levenberg, Washington, D.C., was on the brief for Bill J. Maddon, et al.

Before WRIGHT and SCALIA, Circuit Judges, and MacKINNON, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge MacKINNON.

MacKINNON, Senior Circuit Judge:

In proceedings in the district court, the Sierra Club challenged the decision by the United States Forest Service (Forest Service) and the Department of the Interior (Department) to issue oil and gas leases on lands within the Targhee and Bridger-Teton National Forests of Idaho and Wyoming. The plaintiff alleged that the leasing program violated the National Environmental Policy Act (NEPA), 42 U.S.C. Sec. 4321 et seq. (1976), because no Environmental Impact Statement (EIS) was prepared prior to the action. On cross-motion for summary judgment the district court upheld the decision to issue the leases without preparing an EIS. Sierra Club v. Peterson, No. 81-1230 (D.D.C. March 31, 1982). The plaintiff appeals from a portion of the judgment and we reverse the decision of the district court.

I.

The land originally involved in this dispute encompassed a 247,000 acre roadless area in the Targhee and Bridger-Teton National Forests of Idaho and Wyoming, known as the Palisades Further Planning Area. In its most recent Roadless Review and Evaluation, RARE II, 1 the Forest Service designated this entire area as a Further Planning Area and consequently, the land may be considered for all uses, including oil and gas exploration, as long as its potential wilderness quality is preserved.

In 1980, the Forest Service received applications for oil and gas leases in the Palisades Further Planning Area. 2 After conducting an Environmental Assessment (EA), the Forest Service recommended granting the lease applications, but with various stipulations attached to the leases. Because the Forest Service determined that issuance of the leases with the recommended stipulations would not result in significant adverse impacts to the environment, it decided that, with respect to the entire area, no Environmental Impact Statement was required at the leasing stage.

The leasing program approved by the Forest Service divides the land within the Palisades Further Planning Area into two categories--"highly environmentally sensitive" 3 lands and non-highly environmentally sensitive lands. The stipulations attached to each lease are determined by the particular character of the land. All of the leases for the Palisades contain "standard" 4 and "special" 5 stipulations. These stipulations require the lessee to obtain approval from the Interior Department before undertaking any surface disturbing activity on the lease, but do not authorize the Department to preclude any activities which the lessee might propose. The Department can only impose conditions upon the lessee's use of the leased land.

In addition, a No Surface Occupancy Stipulation (NSO Stipulation) is attached to the leases for lands designated as "highly environmentally sensitive." This NSO Stipulation precludes surface occupancy unless and until such activity is specifically approved by the Forest Service.

For leases without a No Surface Occupancy Stipulation, the lessee must file an application for a permit to drill prior to initiating exploratory drilling activities. The application must contain a surface use and operating plan which details the proposed operations including access roads, well site locations, and other planned facilities. On land leased without a No Surface Occupancy Stipulation the Department cannot deny the permit to drill; it can only impose "reasonable" conditions which are designed to mitigate the environmental impacts of the drilling operations. See Joint Appendix (JA) at 86a.

II.

Following an unsuccessful administrative challenge to the decision to issue all the leases in accord with the Forest Service's plan, the Sierra Club sought declaratory and injunctive relief in the United States District Court for the District of Columbia. The Sierra Club argued that leasing land within the Palisades without preparing an EIS violated NEPA. The federal defendants 6 responded that because of the finding of "no significant impact" contained in the Environmental Assessment, it was not necessary to prepare an EIS.

The district court upheld the finding of "no significant impact" and the decision to lease without preparing an EIS. The court based its decision upon the conclusion that the lease stipulations were valid and that the government could thereby "preclude any development under the leases." Sierra Club v. Peterson, No. 81-1230, slip op. at 12 n. 5 (D.D.C. March 31, 1982). The court granted the federal defendants' motion for summary judgment, stating that "[t]he stipulations included in the leases ... will effectively insure that the environment will not be significantly affected until further analysis pursuant to NEPA." Id. at 13-14.

The Sierra Club appeals only that portion of the district court's judgment which involves lands leased without a No Surface Occupancy Stipulation. The Sierra Club concedes that the Department retains the authority to preclude all surface disturbing activities on land leased with a NSO Stipulation until further site-specific environmental studies are made. By retaining this authority, the Department has insured that no significant environmental impacts can occur from the act of leasing lands subject to the NSO Stipulation.

Approximately 80% of the Palisades was designated as highly environmentally sensitive and, therefore, leased with the NSO Stipulation. Only the remainder, approximately 28,000 acres, is at issue in this appeal. As to this smaller area, the Sierra Club contends that the Department cannot preclude surface disturbing activities, including drilling, on lands leased without the NSO Stipulation. The Department has only retained, Sierra Club asserts, the authority to "condition" surface disturbing activities in an effort to "mitigate" any environmental harm which might result from the activities. Thus, some surface disturbing activities may result from the act of issuing leases without NSO Stipulations on lands within the 28,000 acres. Appellant asserts, therefore, that the finding of "no significant impact" and the decision not to prepare an EIS, insofar as land leased within this smaller area is concerned, was improper. Because on these leases the Secretary cannot preclude surface disturbing activity, including drilling, the Sierra Club argues that the decision to lease is itself the point of irreversible, irretrievable commitment of resources--the point at which NEPA mandates that an environmental impact statement be prepared. We agree.

III.

The National Environmental Policy Act (NEPA) requires preparation of an Environmental Impact Statement whenever a proposed major federal action will significantly affect the quality of the human environment. 42 U.S.C. Sec. 4332(2)(C) (1976). To determine the nature of the environmental impact from a proposed action and whether an EIS will be required, federal agencies prepare an environmental assessment. 40 C.F.R. Sec. 1501.4(b) & (c) (1982). If on the basis on the Environmental Assessment the agency finds that the proposed action will produce "no significant impact" on the environment, then an EIS need not be prepared. Id. at Sec. 1501.4(e).

An agency's finding of "no significant impact" and consequent decision not to prepare an EIS can only be overturned if the decision was arbitrary, capricious, or an abuse of discretion. Cabinet Mountains Wilderness v. Peterson, 685 F.2d 678, 681 (D.C.Cir.1982); Committee for Auto Responsibility v. Solomon, 603 F.2d 992, 1002 (D.C.Cir.1979), cert. denied, 445 U.S. 915, 100 S.Ct. 1274, 63 L.Ed.2d 599 (1980). Judicial review of an agency's finding of "no significant impact" is not, however, merely perfunctory as the court must insure that the agency took a "hard look" at the environmental consequences of its decision. Kleppe v. Sierra Club, 427 U.S. 390, 410 n. 21, 96 S.Ct. 2718, 2730 n. 21, 49 L.Ed.2d 576 (1976).

Cases in this circuit have employed a four-part test to scrutinize an agency's finding of "no significant impact." The court ascertains

(1) whether the agency took a "hard look" at the problem;

(2) whether the agency identified the relevant areas of environmental concern;

(3) as to the problems studied and identified, whether the agency made a convincing case that the impact was insignificant; and

(4) if there was an impact of true significance, whether the agency convincingly established that changes in the project sufficiently reduced it to a minimum.

Cabinet Mountains Wilderness, supra, 685 F.2d at 682. Applying the foregoing test to this agency decision, we are satisfied that the agency has taken the requisite "hard look" and has "identified the relevant areas of environmental concern." However, in our opinion, the finding that "no significant impact" will occur as a result of granting leases without an NSO Stipulation is not supportable on this record.

The finding of "no significant impact" is premised upon the conclusion that the lease...

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