State v. U.S. Bureau of Land Mgmt., Related Case Nos. 17–cv–03804–EDL

• Decision Date: 04 October 2017
• Docket Number: Related Case Nos. 17–cv–03804–EDL,17–cv–3885–EDL
• Parties: STATE of California, et al., Plaintiffs, v. UNITED STATES BUREAU OF LAND MANAGEMENT, et al., Defendants. Sierra Club, et al., Plaintiffs, v. Ryan Zinke, et al., Defendants.
• Court: U.S. District Court — Northern District of California

277 F.Supp.3d 1106

STATE of California, et al., Plaintiffs,

v.UNITED STATES BUREAU OF LAND MANAGEMENT, et al., Defendants.

Sierra Club, et al., Plaintiffs,

v.Ryan Zinke, et al., Defendants.

Related Case Nos. 17–cv–03804–EDL

17–cv–3885–EDL

United States District Court, N.D. California.

Signed October 4, 2017

George Matthew Torgun, Office of the Attorney General, Oakland, CA, Joel Minor, Robin L. Cooley, Denver, CO, Stacey P. Geis, San Francisco, CA, for Plaintiffs.

Clare Marie Boronow U.S. Department of Justice Denver, CO, for Defendants.

ORDER GRANTING PLAINTIFFS' MOTIONS FOR SUMMARY JUDGMENT

ELIZABETH D. LAPORTE, United States Magistrate Judge

The State of California, together with the State of New Mexico, and a coalition of seventeen conservation and tribal citizens groups, brought suit against the Bureau of Land Management (the "Bureau"), Secretary of the Department of the Interior Ryan Zinke, and Acting Assistant Secretary for Land and Minerals Management, Department of the Interior Katharine S. MacGregor (collectively, "Defendants"), alleging that Defendants violated the Administrative Procedures Act ("APA") when the Bureau published a notice in the Federal Register postponing the compliance dates for certain sections of the Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule after the rule's effective date had already passed. Before the Court are Plaintiffs' motions for summary judgment. For the following reasons, the Court GRANTS both motions.

I. BACKGROUND

On November 18, 2016, the Bureau, an agency within the U.S. Department of the Interior, issued the Waste Prevention, Production Subject to Royalties, and Resource Conservation Rule (the "Rule"). See 81 Fed. Reg. 83,008. The Rule's purpose was to "reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian (other than Osage Tribe) leases ... [and] also clarify when produced gas lost through venting, flaring, or leaks is subject to royalties, and when oil and gas production may be used royalty-free on-site." Id. The Rule was promulgated to replace the then-existing regulations related to venting, flaring, and royalty-free use of gas contained in the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL–4A). Id. The Rule's effective date was January 17, 2017. Id.

The Bureau began developing the Rule in 2014 in response to reviews from the Government Accountability Office and the Department of the Interior's Office of the Inspector General which concluded that the Bureau's then-existing regulations regarding waste and royalties were "insufficient and outdated." Id. at 83,009 –10. The regulations in place in 2014 had not been revisited in at least three decades. Id. at 83,008. After receiving input from various stakeholders and the public, the Bureau released its proposed rule in February 2016. See 81 Fed. Reg. 6,616 (Feb. 8, 2016) (the "Proposed Rule"). To assist in gathering stakeholder comment before publishing the Proposed Rule, the Bureau conducted a series of forums in Colorado, New Mexico, North Dakota, and Washington, D.C., and held numerous meetings and calls with state representatives, individual companies, trade associations, and non-governmental organizations. Id. at 6,617. The Bureau received approximately 330,000 public comments on the Proposed Rule. See 81 Fed. Reg. 83,021.

At the time the Bureau finalized the Rule in November 2016, two industry groups and the States of Wyoming and Montana (later joined by North Dakota and Texas as intervenors) filed legal challenges to the validity of the Rule in federal court in Wyoming. See Western Energy Alliance et al. v. Secretary of the U.S. Dep't of the Interior et al., Case No. 16–cv–00280–SWS (D. Wyo. filed Nov. 15, 2016); State of Wyoming et al. v. United States Dep't of the Interior et al., Case No. 16–cv–00285–SWS (D. Wyo. filed Nov. 18, 2016). They alleged that the Bureau did not have statutory authority to regulate air pollution and that the Rule was arbitrary and capricious.¹ The plaintiffs moved for entry of a preliminary injunction to prevent the Rule from going into effect, which the court denied on January 16, 2017. See State of Wyoming et al. v. United States Dep't of the Interior et al., 2017 WL 161428 (D. Wyo. Jan. 16, 2017).

On January 17, 2017, the Rule went into effect. Approximately two months later, on March 28, 2017, the President issued Executive Order No. 13783, which instructed each executive agency to review all agency actions to identify those that:

potentially burden the development or use of domestically produced energy resources and appropriately suspend, revise, or rescind those that unduly burden the development of domestic energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law.

82 Fed. Reg. 16,093. On March 29, 2017, Secretary Zinke issued Secretarial Order No. 3349 to implement the executive order as it pertains to the regulatory actions of the Department of the Interior. See Secretarial Order No. 3349, available at https://www.doi.gov/sites/doi.gov/files/uploads/so_3349_-american_energy_independence.pdf.

On June 15, 2017, the Bureau issued a notice in the Federal Register that it was postponing the compliance dates for certain sections of the Rule. See Waste Prevention, Production Subject to Royalties, and Resource Conservation; Postponement of Certain Compliance Dates, 82 Fed. Reg. 27,430 (the "Postponement Notice"). The postponed sections of the Rule were subject to a compliance date of January 17, 2018. Id. The Postponement Notice invoked Section 705 of the APA and concluded that "justice requires [the Bureau] to postpone the future compliance dates for [certain] sections of the Rule" in light of "the substantial cost that complying with these requirements poses to operators ... and the uncertain future these requirements face in light of the pending litigation and administrative review of the Rule." Id. at 27,431. The "pending litigation" referred to the legal challenges in the District of Wyoming. Id. The Postponement Notice stated that the Bureau interpreted the January 17, 2018 compliance date for these sections of the Rule to be "within the meaning of the term ‘effective date’ as that term is used in Section 705 of the APA." Id. It further explained that the Bureau "believes the [Rule] was properly promulgated," but determined that "[p]ostponing these compliance dates will help preserve the regulatory status quo while the litigation is pending and the Department reviews and reconsiders the Rule." Id. The Postponement Notice did not apply to provisions of the Rule with compliance dates that had already passed. Id. It concluded by noting that the Bureau "intend[ed] to conduct notice-and-comment rulemaking to suspend or extend the compliance dates of those sections affected by the Rule." Id.

In a status report filed in the District of Wyoming litigation on September 1, 2017, the Bureau stated that it has drafted a proposed rule to suspend certain provisions of the Rule that were affected by the Postponement Notice and that proposed notice is currently under review by the Office of Information and Regulatory Affairs in the Office of Management and Budget before it is published for comment. See Western Energy Alliance et al. v. Secretary of the U.S. Dep't of the Interior et al., Case No. 16–cv–00280–SWS, Dk. No. 131; State of Wyoming et al. v. United States Dep't of the Interior et al., Case No. 16–cv–00285–SWS, Dkt. No. 136. According to the same status report, the Bureau is also developing a proposed rule to revise the Rule pursuant to Executive Order No. 13783. Id.

II. PROCEDURAL HISTORY

Plaintiffs the State of California and the State of New Mexico filed suit on July 5, 2017, alleging that the decision by Defendants to postpone certain compliance dates of the Rule violated the APA. On July 12, 2017, the Court granted Plaintiffs' unopposed motion to relate this case to another case pending before this Court, Sierra Club et al. v. Zinke et al., Case No. 17–cv–03885–EDL, which was filed by seventeen conservation and tribal organizations (the "Conservation and Tribal Citizen Groups" or the "Groups")² on July 10, 2017.

Since the filing of these lawsuits, the Court has granted motions to intervene by the State of North Dakota, the Independent Petroleum Association of America, and the Western Energy Alliance (together, the "Intervenors"). Plaintiffs and Defendants did not oppose the Intervenors' motions, so long as their intervention was subject to certain conditions. Those conditions were that Intervenors: (1) file joint briefs and abide by all existing schedules in the litigation, including the stipulated briefing schedule on the motions for summary judgment; (2) not raise new claims or otherwise expand the litigation; and (3) abide by the same constraints applicable to parties in any APA case, in which judicial review of the challenged agency decision is generally limited to the agency's administrative record. Intervenors either expressly agreed to these conditions (State of North Dakota) or expressly agreed to some conditions and did not object to others (Independent Petroleum Association of America and the Western Energy Alliance). The Court concluded that the proposed conditions were reasonable and necessary in the interests of judicial economy, sound case management, and avoiding undue delay, and granted the motions to intervene subject to those conditions.

On July 26, 2017, the State of California and the State of New Mexico filed a motion for summary judgment in State of California et al. v. U.S. Bureau of Land Management et al., Case No. 17–cv–03804–EDL. The next day, on July 27, 2017, the Conservation and Tribal Citizen Groups filed a motion for summary judgment in Sierra Club et al. v. Zinke et al., Case No....