A recent agreement between environmentalists and the Bureau of Land Management (BLM) may open the floodgates to challenges of the sufficiency of Environmental Assessments (EA) or Environmental Impact Statements (EIS) for oil and gas leases. Of course, this also means delays in opening up more federal lands, held in trust for U.S. citizens, to unconventional oil and gas exploration and production. In its July 17, 2014 settlement agreement with the Center for Biological Diversity (CBD) and the Sierra Club, BLM agreed to prepare an EIS analyzing the potential impacts from hydraulic fracturing on two oil and gas leases in California. The settlement of Case No. CV-11-06174-PSG in the U.S. District Court for the Northern District of California included a stay of the suit and suspended all operations and production on the two leases until completion of the EIS. After completing the EIS, BLM will determine whether the two leases should have been issued or whether revised or additional stipulations are needed. According to the settlement agreement, if BLM finds that further stipulations are required, and the lease holders decline to accept these stipulations, then CBD will be able to renew its request for vacatur of the leases. On the other hand, if BLM finds that the leases should have been issued, or the lease holders accept the stipulations, then BLM will notify CBD and the parties will file a motion with the court to dismiss the case with prejudice. But CBD may still challenge the adequacy of the EIS, or any actions taken in reliance upon it, by bringing a new civil action.

The agreement is the result of settlement discussions between the parties after the court ruled last year that BLM violated the National Environmental Policy Act (NEPA) and the Administrative Procedure Act when it approved the sale of oil and gas leases without assessing the potential contamination from hydraulic fracturing. In the July 17 agreement, BLM also agreed to assess the current state of industry practices for well completion and stimulation in California. BLM officials admit that conducting the EIS and industry assessment is an attempt to break the recent cycle of lawsuits and administrative challenges. According to an agency statement, “[t]he scoping period provides the public an opportunity to comment on the full suite of oil and gas leasing and development issues in the geographic area covered by the field office. In addition, the science review and planning effort will allow the BLM to revisit litigated, appealed, and protested lease sales at a later date.” The settlement could set a precedent that adds another layer of review to an already protracted administrative permitting process and could chill the leasing of federal lands for fracking operations. Most importantly, the settlement agreement could embolden environmental groups to challenge prior environmental assessments prepared by BLM for other leasing programs (and further stifling development).

The case docket and filings are available on the Northern District of California’s CM/ECF system under Case No. CV-11-06174-PSG.

This post was coauthored by Marissa Black (2014 BakerHostetler Summer Associate).