Pennaco Energy, Inc. v. U.S. Department of the Interior
377 F.3d 1147 (10th Cir. 2004)
The Bureau of Land Management
(BLM) held an auction for some leases to drill for oil and gas on Federal
lands in Wyoming. Pennaco won the bid and got the lease.
Before the auction was held,
BLM issued an Environmental Impact Statement (EIS) that talked in general
about oil and gas leasing on the lands, but it didn't talk specifically
about "coal bed methane" (CBM) mining, which was the kind of
mining Pennaco wanted to do.
After the auction occurred
BLM issued a second EIS that examined CBM mining.
CBM mining creates a number
of environmental issues that don't occur with other forms of mining.
The Interior Board of Land
Appeals (IBLA) reversed BLM's decision to grant the lease. Pennaco sued.
IBLA found that the
requirements of the by National Environmental Policy Act (NEPA) had not been satisfied by BLM prior to holding the auction.
IBLA found that the first
EIS was not sufficient because it didn't consider CBM mining.
IBLA found the second EIS
insufficient because it was done after the decision to grant the leases had occurred, so it couldn't
seriously consider whether granting the leases was a good idea in the
IBLA found that BLM needed to
go back and take a "hard look" at the environmental impacts of
CBM mining. Only then could they decide whether or not to auction the
The Trial Court reversed. BLM
The Trial Court found that
IBLA's decision was arbitrary and capricious.
The Appellate Court reversed
the Trial Court and affirmed IBLA's decision to deny the lease.
The Appellate Court found
that CBM poses unique environmental threats that had not been seriously
considered by either of the EISs. That's a violation of NEPA.
The Court noted that IBLA
didn't say that Pennaco couldn't do CBM mining, just that NEPA has procedural requirements that had not been
met. Until those were met, BLM could not grant a lease.
BLM unsuccessfully argued
that they until they held the auction, they didn't know if anyone would
be interested in doing CBM mining. So there was no reason to put CBM
mining into the EIS before the lease occurred.
What is the right time to
write an EIS?
Planning Stage, Leasing
Stage, Exploration by Lessee Stage, Drilling/Mining Stage.
As this case illustrates,
you want to write the EIS early enough to be able to halt the process if
need be, but if you write it too early, there aren't enough specifics
available to write an effective EIS. How do you strike a balance?