In mid-March, the U.S. District Court for the Eastern District of California issued a nationwide injunction that significantly affects mining exploration activities within lands managed by the U.S. Forest Service. Until this ruling, the Forest Service has relied on a June 4, 2003 agency regulation (located at 36 C.F.R. Part 215) (the “215 Regulation”) that exempted from public notice, comment and administrative appeals activities deemed to be categorically excluded (“categorical exclusions” or “CEs”) from the National Environmental Policy Act (“NEPA”). In a March 19, 2012 summary judgment ruling in Sequoia ForestKeeper v. Tidwell, however, U.S. District Court Judge Lawrence J. O’Neill invalidated the 215 Regulation’s exemption for categorical exclusions.

Specifically, Judge O’Neill held that the exemption for categorical exclusions under the regulation violated Section 322(a) of the Forest Service Decisionmaking and Appeals Reform Act of 1992 (16 U.S.C. 1612) (“ARA”). The Judge found the exemptions under the 215 Regulations were “manifestly contrary to both the language and purpose of the ARA[,]” noting that Section 322 of the AR identifies no exclusions or exemptions from its requirement that the Forest Service provide notice, comment, and an administrative appeal for decisions implementing Forest Plans. Judge O’Neill criticized the regulations as “an attempt to circumvent the clear intent and purpose of Congress in passing the ARA, and were an impermissible construction of the ARA” and he noted that “[t]o comply with the ARA, the Forest Service should have promulgated regulations that preserved the comment, notice, and appeal for any decisions subject to administrative appeal prior to the proposed changes in 1992.”

Notably, this case was not the first challenge to the Section 215 Regulation. Earth Island Institute and Sequioa Forestkeeper successfully challenged the regulation on similar grounds, resulting in the Ninth Circuit opinion Earth Island Institute v. Ruthenbeck. On review before the Supreme Court, however, the Court found that plaintiffs lacked standing to challenge the regulations, and the ruling was reversed on standing grounds and the opinion was invalidated.

There has been no word as to whether the Obama administration intends to appeal Judge O’Neill’s ruling. Thus, for now, all categorical exclusions within National Forests are subject to the public notice, comment, and administrative appeals provisions of the 215 Regulations. As a practical matter, this means potentially 135 days of delay in implementation of exploration and related projects. The process includes: (i) public notice and a 30-day public comment period; (ii) the right to file an administrative appeal within 45 days of Forest Service approval; (iii) a 45-day period for the Forest Service to decide the appeal; and (iv) if the appeal is denied, exploration can begin 15 business days after the decision is issued.

The practical effects of the ruling are broad. Forest Service Chief Tom Tidwell stated during an April 18, 2012 Senate Appropriations subcommittee hearing that the ruling could potentially delay hundreds of Forest Service projects: “There are 600 of these projects that were ready to move forward in the next 90 days, not only some mineral operations but there are over 200 associated with oil and gas operations, primarily in North Dakota, and more than 90 hazardous fuels projects.”

A clear example of the effect of the ruling was recently reported in the Ketchikan Daily News regarding delays to the Hecla Greens Creek Mine’s plan to spend $4 million expanding known reserves on Admiralty Island in Alaska. The Forest Service published the legal notice for Hecla’s exploration project on April 8th, triggering the 30-day public comment period. Overall, the 135-day period likely will significantly impact, if not jeopardize Hecla’s 2012 surface exploration season.

Projects in the National Forests that had contemplated quick exploration or related projects this year thus now face the potential for significant delays for those projects. Pending revisions to the Forest Service regulations might have the potential to change the procedure. Under Section 428 of the Consolidated Appropriations Act of 2012, Pub. L. No. 112-74 (Dec. 23, 2011), the Forest Service is required to apply section 105(a) of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6515(a)), which provides for a pre-decisional objection process to proposed actions of the Forest Service concerning projects, in lieu of Section 322 of the ARA. In lay speak, this means that instead of a post-decisional appeal process, a pre-decisional “objection” may be filed with the Forest Service. This process appears unlikely to offer relief, however. In response to questioning from Lisa Murkowski (Alaska) during the April 18th subcommittee hearing as to whether the Consolidated Appropriations Act mandate could be used as a basis to create a pre-decisional objection process in lieu of the post-decisional notice and appeal process, Forest Service Chief Tidwell stated that the agency was considering this option, but stated “I’m not sure if it will [work]. It may not because the appropriations language was very specific to environmental assessments and [Environmental Impact Statements] and it did not mention categorical exclusions.”

While it is possible that the Obama administration may seek to appeal Judge O’Neill’s ruling, for now, projects within the National Forests now can no longer rely on an expedited path to conduct exploration and related activities that are categorically excluded under NEPA. For those operations intending to conduct exploration projects and related uses, consideration of the possible 135-day notice, review and appeal process must be factored into any such contemplated use. If the Forest Service is unable to utilize Section 428 of the Consolidated Appropriations Act of 2012 to establish a pre-decisional process for projects categorically excluded under NEPA, regulated industries may want to consider efforts to lobby for a legislative remedy.

This article was first published by Law360. © 2012 Portfolio Media, Inc.