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State of New Mexico ex rel Richardson v. Bureau of Land Management

April 28, 2009

STATE OF NEW MEXICO EX REL. BILL RICHARDSON, GOVERNOR, GARY KING, ATTORNEY GENERAL,*FN1 NEW MEXICO ENERGY, MINERALS AND NATURAL RESOURCES DEPARTMENT, NEW MEXICO DEPARTMENT OF GAME AND FISH, NEW MEXICO ENVIRONMENT DEPARTMENT, AND KATHERINE SLICK, NEW MEXICO STATE HISTORIC PRESERVATION OFFICER; NEW MEXICO WILDERNESS ALLIANCE; WILDERNESS SOCIETY; SIERRA CLUB; NATURAL RESOURCES DEFENSE COUNCIL; NATIONAL WILDLIFE FEDERATION; SOUTHWEST ENVIRONMENTAL CENTER; FOREST GUARDIANS; NEW MEXICO WILDLIFE FEDERATION, PLAINTIFFS--APPELLEES--CROSS-APPELLANTS,
v.
BUREAU OF LAND MANAGEMENT; MIKE POOL, DIRECTOR, BUREAU OF LAND MANAGEMENT; LINDA RUNDELL, NEW MEXICO STATE DIRECTOR, BUREAU OF LAND MANAGEMENT; BENJAMIN N. TUGGLE, IN HIS OFFICIAL CAPACITY AS THE REGIONAL DIRECTOR, REGION 2, U.S. FISH AND WILDLIFE SERVICE; ROWAN W. GOULD, IN HIS OFFICIAL CAPACITY AS THE DIRECTOR OF THE U.S. FISH AND WILDLIFE SERVICE; UNITED STATES FISH AND WILDLIFE SERVICE; KEN SALAZAR, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE INTERIOR; UNITED STATES DEPARTMENT OF THE INTERIOR,*FN2 DEFENDANTS--CROSS-APPELLEES, AND INDEPENDENT PETROLEUM ASSOCIATION OF NEW MEXICO, INTERVENOR-DEFENDANT--APPELLANT--CROSS-APPELLEE.



Appeal from the United States District Court for the District of New Mexico (D.C. No. CV-05-460 BB/RHS).

The opinion of the court was delivered by: Lucero, Circuit Judge.

PUBLISH

Before LUCERO, ANDERSON, and O'BRIEN, Circuit Judges.

This litigation concerns the environmental fate of New Mexico's Otero Mesa, the largest publicly-owned expanse of undisturbed Chihuahuan Desert grassland in the United States. From 1998 to 2004, the Bureau of Land Management ("BLM" or "the Agency") conducted a large-scale land management planning process for federal fluid minerals development in Sierra and Otero Counties, where the Mesa is located. Ultimately, the Agency opened the majority of the Mesa to development, subject to a stipulation that only 5% of the surface of the Mesa could be in use at any one time. Invoking the National Environmental Policy Act ("NEPA"), the Federal Land Management Policy Act ("FLPMA"), and the National Historic Preservation Act ("NHPA"), the State of New Mexico and a coalition of environmental organizations led by the New Mexico Wilderness Association ("NMWA") challenged in federal district court the procedures by which BLM reached this determination. NMWA also challenged BLM's decision not to consult with the Fish and Wildlife Service ("FWS") under the Endangered Species Act ("ESA") regarding possible impacts of the planned development on the Northern Aplomado Falcon.

The district court rejected these challenges, save for the plaintiffs' argument that BLM erred in beginning the leasing process on the Mesa before conducting additional analysis of site-specific environmental impacts flowing from the issuance of development leases. Discerning serious flaws in BLM's procedures, we affirm the district court's conclusion that NEPA requires BLM to conduct site-specific analysis before the leasing stage but reverse its determination that BLM's plan-level analysis complied with NEPA. Moreover, we affirm its conclusion that BLM complied with public comment provisions in FLPMA, and we vacate as moot the portion of the district court's order addressing NMWA's ESA claims.

I.

Within Sierra and Otero counties in southern New Mexico lie the northern reaches of the richly biodiverse Chihuahuan Desert. Among the several habitats comprising this desert ecosystem is the Chihuahuan Desert grassland, much of which has depleted to scrubland over the past century and a half. A New Mexico State University biology professor identifies this grassland as the most endangered ecosystem type in the United States. The Otero Mesa, which BLM seeks to open to oil and gas development upon conclusion of the planning process that is the subject of this litigation, is home to the endangered Northern Aplomado Falcon, along with a host of other threatened, endangered, and rare species. Only a few, unpaved roads traverse the Mesa. Lying beneath it is the Salt Basin Aquifer, which contains an estimated 15 million acre-feet of untapped potable water. Recognizing the importance of this valuable resource, the state of New Mexico and many citizens and environmental groups have sought to prevent development.

A.

BLM manages some 1.8 million acres of surface land and 5 million acres of subsurface oil, gas, and geothermal resources in Sierra and Otero Counties. This includes the 427,275-acre Otero Mesa. Until recently, these resources were managed under the terms of a 1986 resource management plan (the "RMP"), see 43 C.F.R. § 1601.0-5(n), which contained no overall guidance on the management of fluid minerals development, leaving management decisions to be made on a case-by-case basis.*fn3 Because the area saw relatively little oil and gas exploration, BLM relied on the plan without incident for a decade and issued few development leases during this time.

This state of affairs was upended in 1997, when a Harvey E. Yates Company ("HEYCO") exploratory well struck natural gas on the Otero Mesa. The strike occurred on a parcel designated the Bennett Ranch Unit ("BRU"). Oil and gas companies quickly responded by nominating over 250,000 acres in the area for federal leases. See § 3120-3.1. BLM determined that under the terms of then-existing internal policy, the increased development interest required the Agency to issue a management plan specifically governing fluid mineral resources. See BLM Handbook H-1624-1 (1990); BLM Manual §§ 1620.06(A), 1620.2 (1986). Accordingly, BLM asked existing leaseholders to voluntarily suspend their leases and began the process of amending the RMP to address possible oil, gas, and geothermal development.*fn4 See Notice of Intent to Prepare a Resource Management Plan Amendment and Environmental Impact Statement, 63 Fed. Reg. 55404 (Oct. 15, 1998). The stated goals of the amendment process were to determine which public lands in Sierra and Otero Counties should be available for leasing and development and to direct how leased lands would be managed. Id. at 55405.

Amending a resource management plan is a "major federal action" whose potential environmental impacts must be assessed under NEPA. 42 U.S.C. § 4332(C); see also Utah Shared Access Alliance v. Carpenter, 463 F.3d 1125, 1131 (10th Cir. 2006). Consequently, in October 2000, BLM issued a "Draft Resource Management Plan Amendment and Environmental Impact Statement for Federal Fluid Minerals Leasing and Development in Sierra and Otero Counties" (the "Draft EIS"). As NEPA requires, the Draft EIS analyzed several possible alternative management schemes for oil and gas development in the area. See 42 U.S.C. § 4332(C)(iii); 40 C.F.R. § 1502.14. Of the five alternatives identified, three were fully analyzed in the Draft EIS. The other two were eliminated without further analysis.

Both eliminated alternatives would have increased the level of environmental protection for the entire plan area beyond the level provided under existing management or any of the fully analyzed alternatives. One would have done so through a blanket ban on minerals development leasing; the other, through a "no surface occupancy" ("NSO") stipulation allowing minerals development only by slant drilling from non-BLM lands. These alternatives were "considered initially but eliminated prior to further analysis" based on the conclusion that adopting a plan which so limited development would be arbitrary and capricious under FLPMA's multiple-use mandate.*fn5 See 43 U.S.C. § 1702(c).

BLM also discounted one of the three alternatives analyzed in the Draft EIS: the "No-Action Alternative," or the option of taking no new planning action. After fully analyzing its likely impacts, BLM determined that the No-Action Alternative was not in compliance with its own policies.

Thus, BLM was left with two possible management schemes, "Alternative A" and "Alternative B." Of the two, Alternative A placed fewer restrictions on development, and BLM selected it as the preferred alternative. See 40 C.F.R. § 1502.14(e). Alternative A opened 96.9% of the plan area but placed limitations on possible development, subjecting 58.9% of the area to a combination of NSO stipulations, controlled surface use stipulations, and timing stipulations. Of particular relevance to this litigation, Alternative A subjected 116,206 acres of the Otera Mesa and 16,256 acres of the adjoining Nutt Desert Grasslands to an NSO provision allowing surface disturbance only within 492 feet of existing roads. BLM crafted this NSO restriction "[t]o protect portions of the remaining desert grassland community by minimizing habitat fragmentation."*fn6

Also relevant to this litigation, the Draft EIS analyzed the potential impact on groundwater in the plan area only in general terms, without identifying or discussing specific aquifers such as the Salt Basin Aquifer. The Draft EIS concluded that in the construction phase of development:

The possibility for degradation of fresh water aquifers could result if leaks or spills occur from pits used for the storage of drilling fluids, or if cathodic protection wells associated with pipelines are installed in a manner that allows for the commingling of shallow surface aquifers. However, since impacts would occur only if the governing regulations fail to protect the resource, the impact is not quantifiable.

As for the production phase, the Draft EIS was equally cursory. It stated that "[p]roduction of an oil and gas well typically would not have a direct impact on groundwater resources" because regulations require that "[a]ll oil and gas wells must have a casing and cement program . . . to prevent the migration of oil, gas, or water . . . that may result in degradation of groundwater." Id.; see 43 C.F.R. § 3162.5-2(d). Finally, the Draft EIS concluded that disposal wells, which are "used for the disposal of waste [by injection] into a subsurface stratum," 40 C.F.R. § 146.3, would not lead to significant impacts because applicable casing and cement construction requirements and aquifer criteria would be followed and would prevent contamination. § 146.22 (listing construction requirements for Class II wells, including casing and cementing); see generally § 144 ("Underground Injection Control Program").

After releasing the Draft EIS, BLM accepted public comments for a 195-day period and held six public meetings to discuss it. See Notice of Availability and Public Hearings, 65 Fed. Reg. 69329 (Nov. 16, 2000); see also 40 C.F.R. § 1506.6(b) & (c) (requiring agencies to provide public notice of the availability of environmental documents and hold public meetings "whenever appropriate"). Nearly 300 oral and written comments were received, and BLM recognized that a majority of these addressed the need to protect the Otero Mesa grassland.*fn7

Numerous public comments expressed concern that the NSO stipulation, which exempted areas within 492 feet of existing roads, was insufficient to prevent fragmentation of the Otero Mesa grassland habitat. A Vice President of HEYCO commented that the resources underlying Otero Mesa would not likely be accessible via directional drilling, and thus, "Alternative A has the effect of closing 160,000 acres to fluid mineral development." In response to all of these comments, BLM announced that it would reevaluate Alternative A in the Final EIS.

B.

Among the species for which the Chihuahuan Desert grasslands provide habitat is the Northern Aplomado Falcon ("Aplomado Falcon" or "Falcon"), listed as an endangered species since 1986. See Determination of the Northern Aplomado Falcon to Be an Endangered Species, 51 Fed. Reg. 6686, 6686-88 (Feb. 25, 1986). Although Falcons have only "sporadically" been seen in the United States in recent decades, the presence of breeding Falcons just across the border in Mexico led biologists to believe that the Falcon might be poised to repopulate portions of the plan area. Repopulation by the Falcon would depend on the preservation of suitable grassland habitat.

In June 2003, during the ongoing resource management plan amendment process, BLM concluded that revisions to the management plan were "likely to adversely affect" the Falcon. Accordingly, it requested in writing that FWS begin formal consultation, pursuant to § 7 of the ESA, regarding whether BLM's proposed action might jeopardize the Falcon's continued existence. 16 U.S.C. § 1536; see also 50 C.F.R. § 402.14 (detailing formal consultation requirements). Three months later, the Agency reversed course, retracted its determination that the RMP revisions were "likely to adversely affect" the Falcon, and informed FWS of its conclusion that formal consultation was therefore unnecessary. FWS concurred in this revised determination, thus ending the formal consultation process and the agencies' study of likely effects on the Falcon.

C.

Three years after issuing the Draft EIS, in December 2003, BLM issued a Proposed Resource Management Plan Amendment ("RMPA") and Final EIS. Rather than selecting from among the alternatives analyzed in the Draft EIS, however, the abstract of the Final EIS explained that BLM had selected "a modified version (as a result of public input) of preferred Alternative A described and analyzed in the Draft RMPA/EIS."

This "modified version" of Alternative A ("Alternative A-modified") differed in a crucial respect from Alternative A: Rather than limiting surface disturbances to areas within 492 feet of existing roadways, Alternative A-modified would instead limit disturbances to any 5% of the surface area of a leased parcel at a given time, regardless of location.*fn8 In addition to the 5% disturbance cap, Alternative A-modified required "unitization," a management scheme under which different operators cooperate in exploration and well development with the goal of minimizing surface impacts. "Unitization" was a new creation, never previously used by BLM in managing surface resources.*fn9

Although the sections of the Final EIS describing the management plan itself were modified to reflect these new requirements, the sections describing the plan's impacts on vegetation and wildlife were not substantially modified, because the EIS concluded that the changes "do not significantly alter . . . the analysis of the environmental consequences."*fn10

Alternative A-modified did offer greater protection of the Otero and Nutt grasslands in one respect: It prohibited development on 35,790 acres of "core habitat" for five years pending further study and development of an adaptive management strategy. Thus, BLM presented the new alternative as responsive to the concerns of both industry and the environmental community. The Agency reiterated in response to public questions that it was unnecessary to analyze the impacts of A-modified because the overall "impact assessment," judged based on the "anticipated level of surface disturbance," "remained essentially the same" as under Alternative A. Based on this conclusion that the same or less surface acreage would be disturbed under Alternative A-modified, BLM reasoned, there was no substantial change from an environmental standpoint. Regarding groundwater concerns, the Final EIS added a discussion of the effects of leasing on specific basins, including the Salt Basin Aquifer, but again concluded that "the impacts on groundwater resources are expected to be minimal," adding that "[t]ypically, natural gas wells make little water and the water produced can be disposed through the use of evaporation ponds."

D.

In response to these changes, three New Mexico state agencies, a group of environmental organizations, and more than twenty-five members of the public filed formal protests with BLM. See 43 C.F.R. § 1610.5-2 ("Any person who participated in the planning process and has an interest which is or may be adversely affected by the . . . amendment of a resource management plan may protest such . . . amendment."). Of those protests reflected in the record, nearly all expressed concern regarding the changes to the Otero and Nutt grassland NSO stipulation. The New Mexico Energy, Mineral and Natural Resources Department, Earthjustice, and several citizens also objected to the level of assessment of likely impacts on groundwater. All protests were reviewed by BLM and ultimately dismissed.

Not long after these protests were filed, New Mexico Governor Bill Richardson released a review of the consistency of the Final EIS with state law.

See 43 C.F.R. § 1610.3-2(e) (giving governors of affected states 60 days in which to "identify inconsistencies and provide recommendations in writing" to the BLM State Director); Governor Bill Richardson's Consistency Review of and Recommended Changes to the U.S. Dep't of the Interior, Bureau of Land Mgmt.'s Proposed Resource Mgmt. Plan Amend. and Final Envtl. Impact Statement for Fed. Fluid Minerals Leasing and Dev. in Sierra and Otero Counties, March 5, 2004, available at http://www.emnrd.state.nm.us/MAIN/ Administration/News/GovsPlanforOteroMesa.pdf [hereinafter "Consistency Review"]. Governor Richardson concluded that the proposed management of the Otero Mesa was inconsistent with "numerous . . . state laws, rules, policies, programs, and plans, particularly those that relate to protecting the Chihuahuan Desert and New Mexico's ground water." The Governor accordingly proposed an alternate management plan. His plan closed roughly the same areas to leasing and imposed roughly the same NSO, controlled surface use, and timing stipulations as those proposed in Alternative B, along with some increases in protection compared to that alternative. Most important to this appeal, the Governor proposed NSO stipulations that, unlike those proposed in Alternative B, would cover large portions of the Otero Mesa and Nutt grasslands. The governor also proposed the imposition throughout the entire plan area of various surface use limitations not considered by BLM.

BLM declined to adopt the majority of the Governor's suggested modifications to the Final EIS and concluded that the EIS was consistent with "officially approved and adopted resource-related [state] policies and programs." However, the Agency did accept one major alteration proposed by the Governor, making the closure of 35,790 acres of core habitat on the Otero Mesa and Nutt grasslands permanent rather than temporary. The Agency announced this modification in a 23-page "supplement" to the Final EIS (the "SEIS"), issued on May 19, 2004. In response to the public outcry over the adoption of Alternative A-modified in the Final EIS, the SEIS provided a summary of changes between the Draft and Final EIS and some explanation of the reasons for the switch to Alternative A-modified. First, a segment addressing the Otero Mesa and Nutt grasslands explained that public comments led BLM to conclude that directional drilling-as required to access resources beneath the Mesa under either Alternative A or B-would not be feasible in the area, and accordingly, "there was a need to reevaluate the No Surface Occupancy stipulation, and consider a different approach that would similarly meet the resource objectives." Moreover, "BLM analysis indicates the grassland areas could be adequately protected utilizing a 5 percent maximum surface disturbance stipulation." Second, a subsection entitled "Further Analysis of Existing Data" concluded that because BLM predicted that the "reasonable foreseeable development" acreage would be 1,600 acres under any management scheme, the impacts of Alternatives A and A- modified on habitat would not appreciably differ. Notably, BLM based its prediction of likely development solely on the exploration history and current lease status of lands in the plan area, without accounting for the management scheme in effect. Because BLM anticipated the same habitat impacts under either alternative, the SEIS concluded that the adoption of A-modified was within "the scope and analysis of the Draft RMPA/EIS and d[id] not significantly alter the alternatives or analysis of the environmental consequences."

The SEIS did include a chart comparing the potential environmental impacts of Alternative B, Alternative A-modified, and the No-Action Alternative. However, the chart did not estimate likely surface impacts under the 5% and unitization requirements. Thus, the SEIS included no new environmental impacts analysis beyond that in the Final EIS-which itself simply adopted the analysis of the Draft EIS on relevant points. BLM published a notice of availability of the SEIS in the federal register and held a 30-day public comment period. Notice of Change to Proposed Resource Management Plan Amendment; Notice of Public Comment Period, 69 Fed. Reg. 30718 (May 28, 2004).

Governor Richardson appealed the rejection of the majority of his proposed modifications to BLM's National Director ("Director"). See 43 C.F.R. § 1610.3-2(e). In addition, several environmental groups sent a joint letter to the Director requesting that BLM allow public review and comment on the Governor's recommendations. See id. The Director declined to do so and issued a decision rejecting the Governor's appeal. Notice of BLM Director's Response to an Appeal From the Governor of New Mexico, 70 Fed. Reg. 3550 (Jan. 25, 2005). In the Record of Decision issued in January 2005 upon final adoption of the RMPA, BLM explained that there was no need for a separate comment period given the similarity between the Governor's proposal and Alternative B.

E.

In April 2005, the State of New Mexico filed suit against BLM,*fn11 raising claims under NEPA, FLPMA, the NHPA, and the Administrative Procedure Act ("APA"), seeking declaratory and injunctive relief (the "New Mexico suit"). On May 20, BLM scheduled for July 20 a competitive oil and gas lease auction covering a 1600-acre parcel within the Bennett Ranch Unit (the "BRU Parcel"), adjacent to the parcel on which HEYCO found natural gas triggering the cascade of lease nominations that led to the RMPA process. Six days later, a coalition of environmental groups filed a second suit (the "NMWA suit").*fn12 As amended, this suit raised claims under NEPA, the ESA and FLPMA.

BLM went ahead with the July 20 auction, and HEYCO, the sole bidder, purchased the lease. During the course of litigation, however, BLM agreed not to execute the lease until resolution of the case.*fn13 HEYCO has continued to prepare for the possibility of drilling, obtaining permits to build a pipeline to service wells on this lease and others it holds nearby.

The NMWA suit was later consolidated with New Mexico's suit. Before the two matters were consolidated, however, the Independent Petroleum Association of New Mexico ("IPANM"), an organization promoting the interests of independent oil and gas producers in the state, moved to intervene in the New Mexico suit. After consolidation, IPANM moved to intervene in the NMWA suit as well. Both motions were unopposed. On August 8, 2005, the district court granted the motion to intervene in the State's suit. Although the court later denied as moot IPANM's intervention in the NMWA suit, we now grant its request to intervene in that case from this point forward.*fn14

After oral argument and an evidentiary hearing regarding Aplomado Falcon sightings in the plan area, the district court issued a September 27, 2006, opinion rejecting the plaintiffs' NEPA, ESA, FLPMA, and NHPA challenges to the RMPA process. However, the court also held that BLM violated NEPA when it failed to conduct a site-specific environmental analysis of the likely impacts of leasing the BRU Parcel and ordered BLM to prepare such an analysis. IPANM now appeals the district court's determination regarding the necessity of site-specific analysis. The State and NMWA cross-appeal all other matters save the NHPA claim.

F.

Since the issuance of the district court's opinion, the regulatory status of the Northern Aplomado Falcon has changed in a manner that affects this litigation. At the time of BLM's decisions to adopt the RMPA and to issue the July 20 lease, the Falcon was listed as an endangered species. Accordingly, in the district court, NMWA challenged BLM's ESA consultation process regarding effects of the RMPA on the Falcon. After the district court entered its order below, rejecting NMWA's argument on the merits, FWS reclassified the Falcon population in the area. In summer 2006, FWS issued a formal ruling in which it decided to reintroduce the Falcons into New Mexico and Arizona. See Establishment of a Nonessential Experimental Population of Northern Aplomado Falcons in New Mexico and Arizona, 71 Fed. Reg. 42298 (July 26, 2006). We must address whether these changes affect the liveness of NMWA's ESA challenge.

II.

We begin, as we must, by considering jurisdictional issues.*fn15 Because no other statute confers jurisdiction, our jurisdiction must flow from 28 U.S.C. ยง 1291, which allows appeal from all "final decisions" of the district courts. BLM argues that the district court's order was not a final decision, but rather, an unreviewable remand under the administrative ...


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