The United States District Court in New Mexico has upheld decisions by the Bureau of Land Management (BLM) approving hundreds of applications for permit (APDs) to drill into the Mancos Shale formation in the San Juan Basin, which contains one million acres of public land and three million acres of federal minerals.1  The area overlying the Mancos Shale formation is culturally important for various tribes in northern New Mexico.   Since 2000, the BLM granted 265 APD approvals for both directional drilling and hydraulic fracturing (HF) operations in the Mancos Formation.   Plaintiffs, the Dine Citizens and various environmental groups, petitioned the court for a preliminary injunction to nullify all 265 APD approvals and enjoin the BLM from issuing new applications for permits to drill (APDs) to operators in the Mancos Shale.  The Plaintiffs alleged that the BLM had failed to adhere to the National Environmental Policy Act (NEPA)2 when issuing the APDs by (1) tiering the NEPA documents to the BLM's 2003 Resource Management Plan (RMP), which Plaintiffs alleged insufficiently addressed the impacts of directional drilling and HF Operations in the Mancos, and (2) utilizing boilerplate Environmental Assessments (EAs) when issuing the APDs.3 The court ultimately denied the preliminary injunction  despite recognizing that Plaintiffs' evidence had cast some doubt on the thoroughness of BLM's actions, and that the harms Plaintiffs' sought to prevent would be irreparable. 

The NEPA Documents: In 2000 the BLM began drafting its Reasonably Foreseeable Development Scenario Report (RFDS)4 in which the BLM analyzed oil and gas prospects for the succeeding twenty years in the San Juan Basin,5 including the surface and subsurface impact of oil and gas development.6 Although the RFDS focused on the larger San Juan Basin, it briefly and specifically addressed the impact of drilling in the Mancos Shale. The RFDS described the Mancos as "marginally economic," stating most reservoirs were "not currently considered candidates for increased density development or further enhanced oil recovery operations."7 The RFDS further predicted, based on "then-existing drilling technology," that the Basin's Dakota Pool—as opposed to the Mancos Formation—would likely undergo the majority of development in the next twenty years.8 The RFDS contained a section entitled "impacts of future technology" that specifically addressed impacts from directional drilling and HF operations over the next twenty years.9 This section's focus was basin-wide, rather than specific to the Mancos Formation. The 2001 RFDS, in total, contained  fewer than two pages of analysis regarding the impact of directional drilling or HF advancements, and concluded that the such techniques are "currently complex and costly, and therefore typically inappropriate for most onshore U.S. reservoirs."10

In December 2003, the BLM adopted alternative D of the RMP—which utilized the BLM's 2001 RFDS analysis and findings. For NEPA purposes, the RMP served as the BLM's Environmental Impact Statement (EIS).11 Importantly, the adopted version of the RMP made no specific mention of drilling in the Mancos Shale Formation (only in the broader San Juan Basin), estimated that 9, 942 new wells would be drilled, and addressed the cumulative impacts based on that estimation.

In 2010, the BLM received and approved APDs for directionally drilled and fracked wells in the San Juan Basin and the Mancos Shale.  In approving the APDs, the BLM conducted EAs specific to each proposed APD that analyzed the individual impacts of that APD on the Basin, and did not analyze the aggregate effects of drilling on the Basin. Additionally, the BLM approved every APD with a Finding of No Significant Impact (FONSI) that was tiered to the RMP. From 2003 until May 2015, 3,860 new wells of the projected 9, 942 were drilled in San Juan Basin, with 185 of those wells in Mancos Shale.

In 2014, the BLM announced that it would be amending the 2003 RMP to address development possibilities that previously did not exist due to technological restraints, but which now exist or could exist very shortly. Because this RMP would be an amendment to the 2003 RMP, significant portions of the previous document would be left unchanged. The BLM Scoping Report, released November 2014, identified its purpose as reviewing the impacts from additional new development that was possible due to new technology.Significantly, the Scoping Report indicated that the BLM initiated the amendment process because of technological trends in drilling, rather than challenges to APDs issued for any particular site. The amended RMP is expected to be completed in 2017 or 2018.

BLM's NEPA Documents and the Tenth Circuit's Four-Pronged Preliminary Injunction Test: The court applied the Tenth Circuit's four-pronged preliminary injunction test to determine whether the preliminary injunction sought by Plaintiffs would be proper.12 Tenth Circuit precedent requires that a movant conclusively establish all four prongs of the preliminary injunction test for an injunction to issue: (1) a likelihood of irreparable harm, (2) a likelihood of success on the merits, (3) balance of harms weighs in movant's favor, and (4) the requested injunction is in the public's interest, before being entitled to a preliminary injunction.13 The court found that the Plaintiffs conclusively established one of the four requirements for injunctive relief, finding that irreparable harm would occur if the court failed to grant the requested preliminary injunction, The court found Plaintiffs failed to conclusively establish the remaining three prongs of the test.

The court's consideration of the "likelihood of success on the merits" is the most central to understanding the court's determination. According to the court, "some evidence" that an agency failed to take the requisite hard look at the potential environmental effects is insufficient to obtain a preliminary injunction.14 In the context of NEPA, the "likelihood of success" prong requires the movant demonstrate that the agency's actions, such as the BLM's actions in approving APDs, were arbitrary and capricious, i.e., that the agency failed to take the requisite hard look at the environmental consequences of its actions.15In reviewing such actions, if the agency is evaluating technical and scientific data within its expertise, then the agency is entitled to an "extreme degree of deference."16 In this case, the "likelihood of success" prong required the Plaintiffs to conclusively establish that the BLM actions of (1) tiering the NEPA documents to the 2003 RMP, which analyzed the impacts of directional drilling and HF operations at the Basin level, and (2) utilizing boilerplate EAs when issuing APDs, was arbitrary and capricious.  The Court found the Plaintiffs failed to proffer enough evidence to conclusively demonstrate that the BLM failed to take the requisite hard look and, therefore, determined its actions were neither arbitrary nor capricious.

The court first examined whether the APDs were properly tiered to the RMP. Despite the fact that the RMP was basin-wide, and the APDs were site specific, the Court reasoned that this BLM action was not "arbitrary and capricious."17  The court noted that NEPA documents need only "concentrate on issues that are truly significant to the action in question, rather than amassing needless detail,"18 and found that the BLM's NEPA documents  focused on truly significant details, as opposed to needless minutia.19 The court determined that the documents, although tiered to the 2003 RMP, fully addressed the impacts of directional drilling and HF operations, technologies that existed for a long time and whose impacts on the San Juan Basin were well studied in the RFDS. 20Additionally, the Court, reasoned that, while the BLM is undertaking further study on the impacts of directional drilling and HF operations in the Basin, via the Amended RMP, the BLM's reliance on the 2003 RMP did not make its actions arbitrary and capricious.21Instead, the court held that the BLM is entitled to rely on documents like the 2003 RMP since the document was "well-reasoned."22 The court noted that an agency is not free to ignore technological advancements and continue to tier a NEPA analysis to an EIS using underpinning technology that is different than modern technology in such a way that environment impacts—such as technological advancements in directional drilling—are "quantitatively significant."23 The court found that the Plaintiffs failed to establish that the technological advancements in directional drilling and fracing that occurred after 2003 caused environmental impacts that were "significant" enough to trigger a new EIS.

Next, the court addressed the Plaintiffs' allegations that the EAs were "boilerplate" and, therefore, arbitrary and capricious.  In disagreeing with the Plaintiffs' "boilerplate" allegations, the court asserted that NEPA does not prevent "an agency from creating an EA that resembles another EA in a similar environment."24 The court reasoned that similar EAs were not only likely, but appropriate in this case given the similarities between drilling locations and the fact that the drilling technology used across all the EAs was the same.25 Also, the court noted the EAs were "robust documents" that considered both the "context" and "intensity" of the BLM's actions.  Accordingly, the court found the Plaintiffs failed to demonstrate that the BLM's EAs lacked the requisite hard look.

Take Away: The Dine Citizens court reemphasized that a preliminary injunction is an extraordinary remedy, and relief is only appropriate upon extraordinary showings. In the context of a challenge to an agency's NEPA documents, the court requires that a movant provide evidence that (1) environment effects of the agency's actions are "significant" within the meaning of NEPA and that (2) the agency failed to analyze these effects. The court reiterated that it will not indulge a movant with any assumptions about environmental effects or potential paradoxes that may arise from technological advances occurring after an initial EIS, requiring instead that a movant proffer hard data as to these effects.