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Appeals Court Affirms Powder River CBM Development

In a split decision, the Ninth U.S. Circuit Court of Appeals last week rejected a request to expand an injunction that would have prevented coalbed methane (CBM) development on additional lands in the Powder River Basin in Montana and Wyoming.

The three-judge panel in San Francisco upheld a district court injunction to allow development on 7% of the land in question but blocking development on 93% of the 14 million acres pending a revised environmental impact study (EIS) by the Bureau of Land Management (BLM) in The Northern Cheyenne Tribe, et al. v. Gale Norton, et al., No. 05-35408.

Intervenors for the defense include Fidelity Exploration and Production Co., Anadarko Petroleum Corp., Devon Energy Corp., Powder River Gas LLC and Pinnacle Gas Resources Inc.

The ruling revolved around a draft environmental impact statement (DEIS) issued in 2002 by BLM, together with the Montana Board of Oil and Gas Conservation and the Montana Department of Environmental Quality, which analyzed CBM development in the basin. The DEIS analyzed five alternatives in detail, and BLM's "preferred alternative" was to not permit operators to drill more than one well per 640 acres without a project plan developed in consultation with the affected surface owners and permitting agencies.

During the comment period, the DEIS was challenged by the U.S. Environmental Protection Agency, the Montana Department of Fish, Wildlife and Parks, the Northern Cheyenne Tribe and the Northern Plains Resource Council. The commenters suggested that BLM consider an additional alternative, which they called "phased development." The final EIS responded to this suggestion partly, and it also noted that "existing oil and gas leases" approved under a 1994 resource management plan included the rights to explore and develop CBM (see NGI, May 5, 2003).

The Northern Cheyenne Tribe argued that the BLM had not properly consulted with it about the impact of CBM development, and it appealed the decision. The district court concluded that the final EIS "passed muster" and was generally sufficient under the National Environmental Protection Act (NEPA). However, the court noted that the EIS improperly failed to consider the "phased development" alternative proposed by the commenters. Accordingly, it partially enjoined CBM development, prohibiting development on 93% of the resource area until BLM completed a revised EIS (see NGI, Aug. 15, 2005). The ruling permitted development on 7% of the resource area, subject to site-specific review.

"The challengers got approximately the alternative they wanted BLM to consider, while it was being considered," said Judge Andrew Kleinfeld, who wrote the opinion for the majority. "The district court did not abuse its discretion in issuing the partial injunction proposed by BLM because it provides an equitable resolution consistent with the purposes of NEPA."

Kleinfeld said his panel could not "fault the district court's exercise of its discretion to issue a partial injunction," noting it would not cause "irreparable harm, because a drilling permit cannot be issued without site-specific environmental assessment. And it considered the public interest in clean energy development as well as prevention of environmental harms."

In her dissent, Chief Circuit Judge Mary Schroeder said she agreed with some of the points made by her colleagues, but the ruling ultimately undermines NEPA, which requires federal agencies to consider the environmental impacts of their decisions.

"The whole point of NEPA is to study the impact of an action on the environment before the action is taken," wrote Schroeder. "In this case, once coalbed methane development is allowed, the impact on the environment cannot be undone, which is exactly the situation NEPA disallows." Instead of preserving the status quo pending the BLM's compliance with NEPA, the district court entered an injunctive order "that put into effect the very alternative the BLM had failed to study."

The district court's order, she wrote, "allows major new activity to be introduced into the area, potentially involving mining, road construction and water usage affecting precious underground aquifers, before NEPA has been satisfied. Allowing this activity to take place before completion of the EIS is contrary to the core purpose of NEPA, which is to ensure consideration of all alternatives before major government action is taken."

Schroeder said she understood "the desire of the district court to try to find a middle ground, but with respect to NEPA's requirements for full study of alternatives prior to implementation of new, major federal action, there is no alternative. There must be compliance."

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