EDC V. BOEM, No. 19-55526 (9th Cir. 2022)

Court Description: Environmental Law. The panel reversed the district court’s grant of summary judgment to federal defendants on plaintiffs’ National Environmental Policy Act (“NEPA”) claims, and affirmed the grant of summary judgment to plaintiffs on the Endangered Species Act (“ESA”) and Coastal Zone Management Act (“CZMA”) claims, in actions – brought by environmental groups, the State of California, and the California Coastal Commission – alleging federal agencies violated environmental laws when they authorized unconventional oil drilling methods on offshore platforms in the Pacific Outer Continental Shelf off the coast of California. Environmental groups learned through Freedom of Information Act requests that agencies within the U.S. Department of the Interior had authorized permits for offshore well stimulation treatments without first conducting the normally-required environmental review. Pursuant to settlements between the environmental groups and the federal agencies – the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE), the agencies issued an Environmental Assessment (“EA”) evaluating the use of offshore well simulation treatments and did not prepare a full Environmental Impact Statement (“EIS”). The agencies concluded that the use of these treatments would not pose a significant environmental impact and issued a finding of No EDC V. BOEM 13 Significant Impact (“FONSI”). Petroleum industry defendants intervened. The panel first concluded that that it had jurisdiction to review the challenges to the agencies’ EA and FONSI and that plaintiffs’ claims were ripe for review now. After reviewing the agencies’ EA and FONSI, the panel held that the agencies failed to take the hard look required by NEPA in issuing their EA and that they should have prepared an EIS for their proposed action. The panel reversed the summary judgment to defendants on the NEPA claims and granted summary judgment to plaintiffs on those claims; affirmed the district court’s summary judgment to plaintiffs on the ESA and CZMA claims; and held that the district court did not abuse its discretion in fashioning injunctive relief. Specifically, on the issues of jurisdiction, first, the panel held that the programmatic EA and FONSI met both prongs of the test set forth in Bennett v. Spear, 520 U.S. 154, 177– 78 (1997), for final agency action under the Administrative Procedure Act: the EA and FONSI marked the consummation of the agency’s decision-making process; and the EA and FONSI determined rights and obligations and were actions from which legal consequences would flow. Second, concerning the ripeness of the NEPA and CZMA claims, the panel held that the agencies’ action satisfied the test for prudential ripeness under Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726, 733 (1998). Delayed review would cause hardship to plaintiffs because they were alleging only procedural violations in this case; reviewing plaintiffs’ claims at this point would not inappropriately interfere with further administrative action; and there was no need for further factual development. 14 EDC V. BOEM Concerning the merits of plaintiffs’ NEPA claims, first, plaintiffs claimed that the agencies violated NEPA because the agencies’ EA was inadequate. The panel held that the EA’s findings relied on the incorrect assumption that well stimulation treatment would be infrequent, and the panel concluded that the agencies acted arbitrarily and capriciously by offering an analysis that ran counter to the evidence before the agency, and failed to take the requisite hard look in arriving at their conclusion. The panel held further that the agencies acted arbitrarily and capriciously by assuming in the EA that compliance with a permit issued by the Environmental Protection Agency under the Clean Water Act would render the impacts of well stimulation treatments insignificant. Second, plaintiffs also contended that the EA violated NEPA because the agencies failed to consider a reasonable range of alternatives and relied upon a too narrow statement of purpose and need in the EA. The panel held that in light of the discretion afforded the agencies, the EA’s statement of “purpose and need” did not unduly constrain the agencies’ consideration of alternatives regarding the use of well stimulation treatments. The panel held further, however, that the agencies did not meet their obligations under NEPA to give consideration to all reasonable alternatives. Plaintiffs also challenged the agencies’ decision not to prepare an EIS as a separate violation of NEPA. Here, the environmental impacts of extensive offshore fracking were largely unexplored. The important issues here warranted a full NEPA analysis in an EIS: offshore well stimulation treatments may adversely effect endangered or threatened species; well stimulation treatments in the Pacific Outer Continental Shelf would affect unique geographic areas; and the effects of offshore well stimulation treatments are highly uncertain and involve unknown risks. The panel held that the EDC V. BOEM 15 agencies acted arbitrarily and capriciously by not preparing an EIS, and by limiting their assessment to an EA that did not fully evaluate the environmental impacts of fracking. The panel vacated the inadequate EA, and remanded to the district court with instructions to amend its injunction to prohibit the agencies from approving permits for well stimulation treatments until the agencies have issued an EIS and have fully and fairly evaluated all reasonable alternatives. The environmental groups alleged that the federal agencies violated the ESA’s consultation requirement, and the district court granted summary judgment to plaintiffs on this issue. The panel rejected the agencies’ sole argument on appeal that the ESA claim was not ripe, and there was no agency action requiring consultation. BOEM and BSEE have advised the court that consultation with the U.S. Fish and Wildlife Service are still ongoing, which make this claim ripe for review. The panel used a two-step test to determine whether an action qualified as a sufficient “agency action” under the ESA. First, the panel held that the district court correctly held that by issuing the EA and FONSI for the proposed action of allowing well stimulation treatments offshore California, the agencies “affirmatively authorized” private companies to proceed with these treatments. Second, the panel held that the agencies had discretion to influence for the benefit of a protected species where throughout the EA, the agencies presented and dismissed alternative options that would have imposed restrictions affecting the oil companies’ subsequent applications. The programmatic analysis and approval of the use of offshore well stimulation treatments without restriction in the EA and FONSI met the definition of “agency action.” The panel affirmed the district court’s summary judgment to the environmental groups on the ESA claim. 16 EDC V. BOEM The panel next turned to California’s CZMA claim, alleging that the agencies violated the CZMA because they did not conduct a consistency review to determine whether the use of offshore well stimulation was consistent with California’s coastal management plan. The panel agreed with the district court that the agencies’ proposed action to allow well stimulation treatments in the Pacific Outer Continental Shelf qualified as a “Federal agency activity” under § (c)(1) of the CZMA. Specifically, the panel held that the proposed action met the CZMA regulations’ broadly definition of “Federal agency activity.” The panel rejected the agencies and Intervenors’ contention that the programmatic EA was a “bare NEPA analysis” document divorced from any agency action. The panel also held that the proposed action fell outside the scope of § (c)(3) of the CZMA, which would have precluded review under § (c)(1). The panel concluded that the agencies violated the CZMA by failing to conduct the requisite consistency review, and summary judgment was properly granted to California on the CZMA claims. Intervenors Exxon Mobil Corporation and DCOR, LLC challenged the injunctive relief the district court awarded to remedy the ESA and CZMA violations, which enjoined the agencies from approving any permits allowing well stimulation treatments offshore California until the agencies completed consultation with the Fish and Wildlife Service and consistency review with California. The panel held that it was reasonable for the district court to conclude that the agencies’ violations of the ESA and CZMA would result in irreparable harm if the agencies could approve well stimulation treatment permits before the protective environmental requirements of these statutes were followed. The panel also held that the district court did not abuse its discretion in its analysis of the other three factors for EDC V. BOEM 17 injunctive relief. The panel affirmed the injunctive relief previously fashioned by the district court and remanded with instructions that the district court amend its injunctions to enjoin the agencies from approving well stimulation treatment permits until the agencies issue a complete EIS, rather than the inadequate EA on which they had relied.