In a case pending in the Northern District of California, the Center for Biological Diversity and the Sierra Club recently urged a federal judge to rule that the Bureau of Land Management (BLM) violated the National Environmental Policy Act (NEPA) by failing to prepare an environmental impact statement (EIS) before offering for competitive oil and gas lease auction approximately 2,700 acres of land in Monterey and Fresno counties. Center for Biological Diversity and Sierra Club v. Bureau of Land Management, Case No. CV-11-06174. The lands in question overlay the Monterey Shale, a significant California oil reserve estimated to contain more than 15 billion barrels of shale oil. The environmental groups alleged that BLM failed to analyze the environmental impacts associated with potential fracking operations on the leased properties. Fracking, short for hydraulic fracturing, involves injecting a high-pressure mix of water, sand and chemicals into hydrocarbon bearing formations to create fractures thereby increasing the flow and production of oil or gas.
NEPA requires federal agencies to prepare an EIS before undertaking any major federal action significantly affecting the quality of the human environment. If the agency determines that a project will not result in any significant environmental impacts, the agency can prepare a Finding of No Significant Impact (FONSI) instead of a more comprehensive EIS. The BLM assumed the leases in question would result in the drilling of a single exploratory well and concluded that the project would not result in significant environmental effects. As such, the BLM adopted a FONSI in connection with approval of the leases.
The plaintiffs argued that BLM violated NEPA by failing to prepare an EIS acknowledging the potential amount and impacts of drilling and fracking at the leased sites. Given the demonstrated interest in fracking of the Monterey Shale reserve, the plaintiffs alleged drilling one or more wells on each of the leased parcels was reasonably foreseeable and should have been examined in an EIS. The plaintiffs also argued that the BLM’s NEPA document failed to adequately analyze potential environmental impacts related to, among others, air quality, water quality and sensitive species. The attorneys for BLM responded that preparation of an EIS would be “premature and overbroad,” considering that the lessees had not proposed fracking on the land and noting that further federal approvals and associated environmental review would be required prior to drilling of any wells.
The hearing on the parties’ cross-motions for summary judgment was held on January 15, 2013. U.S. District Court Magistrate Judge Paul S. Grewel indicated that he would issue his ruling soon, but did not indicate which way he would rule. If Judge Grewel were to rule in favor of the plaintiffs, the leases may be set aside, thus forcing the BLM to competitively re-bid them after it has conducted NEPA review. Such a ruling would add another layer of review to an already thorough administrative process and could have a potentially chilling effect on the lease of federal lands for fracking operations.