Montana Wildlife Federation v. Montana Board of Oil & Gas Conservation

June 19 2012
DA 11-0537
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 128MONTANA WILDLIFE FEDERATION,
NATIONAL WILDLIFE FEDERATION,
Plaintiffs and Appellants,
v.
MONTANA BOARD OF OIL & GAS CONSERVATION,
Defendant and Appellee,
and
FIDELITY EXPLORATION & PRODUCTION COMPANY,
Defendant-Intervenor and Appellee,
and
MONTANA PETROLEUM ASSOCIATION,
Defendant-Intervenor and Appellee.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and For the County of Fallon, Cause No. DV 08-34
Honorable Joe L. Hegel, Presiding Judge
COUNSEL OF RECORD:
For Appellants:
David K. W. Wilson, Jr. (argued); Morrison, Motl, and Sherwood, PLLP;
Helena, Montana
For Appellee:
Norman C. Peterson (argued), Agency Legal Services; Helena, Montana
(Montana Board of Oil & Gas Conservation)
Dana L. Hupp (argued), Gough, Shanahan, Johnson, & Waterman, PLLP;
Helena, Montana
(Fidelity Exploration & Production Company)
Steven J. Lechner (argued), Mountain States Legal Foundation;
Lakewood, Colorado (Montana Petroleum Association)
Steven W. Jennings, Colby L. Branch; Crowley Fleck; Billings, Montana
(Montana Petroleum Association)
Argued: April 4, 2012
Submitted: April 11, 2012
Decided: June 19, 2012
Filed:
__________________________________________
Clerk
2
Justice Beth Baker delivered the Opinion of the Court.
¶1 The Montana Wildlife Federation (MWF) and National Wildlife Federation
(NWF) (collectively “Federations”) appeal the Sixteenth Judicial District Court’s order
granting summary judgment to defendants Montana Board of Oil & Gas Conservation
(Board or MBOGC), Fidelity Exploration and Production Company (Fidelity), and
Montana Petroleum Association (MPA) (collectively “Appellees”). We affirm the
District Court’s grant of summary judgment. We consider three issues on appeal:
¶2 1. Whether the District Court erred in conducting its review under § 82-11-144,
MCA, and in considering evidence that was not part of the administrative record.
¶3 2. Whether the District Court erred in determining that twenty-three individual
environmental assessments prepared by the Board for gas development in the Cedar
Creek Anticline were adequate under the Montana Environmental Policy Act.
¶4 3. Whether the District Court erred in ruling that MBOGC did not have to
prepare a programmatic environmental impact statement for oil and gas development in
the Cedar Creek Anticline area.
INTRODUCTION
¶5 At issue is the MBOGC’s issuance of twenty-three gas well permits to Fidelity in
the area known as the Cedar Creek Anticline (CCA), a major geologic feature that
extends for nearly 120 miles, from Glendive, Montana at the north, through Baker,
Montana, and into North Dakota. Its southern end is in South Dakota. The CCA is the
largest oil and gas producing structural geologic feature in Montana. Natural gas
exploration began in the CCA area in 1912, and significant gas development occurred
between 1914 and 1920. Oil was discovered in the CCA in January of 1952. The CCA
hosts a large industrial complex containing both surface and sub-surface infrastructure
3
associated with natural resource development including oil and gas drilling, windmills,
and an underground gas storage reservoir. Within the CCA are the Cedar Creek Gas
Field and the Cedar Creek Oil Field. Fields in parts of Fallon, Wibaux, Prairie, and
Dawson Counties produce oil and gas from the CCA. The Cedar Creek Gas Field is in
the highest elevation of the CCA and is approximately three to five miles wide. As of
2008, there were 1100 wells drilled in the Cedar Creek Gas Field. At the time the
Federations filed suit, Fidelity operated 926 gas wells in the field, holding leases to
approximately 62,256 acres of land.
¶6 The MBOGC was established in 1953 with the passage of the Montana Oil and
Gas Conservation Act. The MBOGC has broad authority over the issuance of permits to
drill for and the regulation of oil and gas. Section 82-11-111, MCA. On August 7, 2008,
Fidelity submitted applications for permits to drill twelve natural gas wells in the Cedar
Creek Gas Field. On October 29, 2008, Fidelity submitted applications for permits for
eleven additional natural gas wells in the field. The MBOGC prepared environmental
assessments for each application and issued Fidelity permits to drill twenty-three new
natural gas wells. Due to the nature of the gas wells, only infrequent site visits and
limited infrastructure are required. Namely, there is no need for water, improved roads,
or electric motors. As a general rule, oil wells require more monitoring and infrastructure
than do the type of gas wells at issue.
¶7 The CCA also is home to various animal species, notably here, the sage grouse.
Sage grouse depend on sagebrush to feed, breed, nest, and live. When sagebrush is
4
destroyed by human activity such as the construction of roads and power lines,
conversion of land to tillage agriculture, or is replaced with other grass to improve range
forage for livestock, sage grouse lose critical habitat. It is estimated that approximately
fifty percent of the sagebrush in the United States has been destroyed or lost. The Court
takes judicial notice, pursuant to M. R. Evid. 201, that the U.S. Fish and Wildlife Service
announced in March 2010 its finding that rangewide listing of the greater sage grouse as
a threatened or endangered species is warranted, but precluded by higher priority listing
actions. 75 Fed. Reg. 13910 (March 23, 2010). The sage grouse maintain a number of
breeding grounds (called “leks”) on the CCA. Federations’ expert opined that eight of
the proposed twenty-three wells are within two miles of an existing lek. Federations
challenge the issuance of the permits on the premise that the environmental assessments
underlying them did not adequately assess the potential impacts to the sage grouse and
their breeding grounds. They also assert that MBOGC should be required to conduct a
programmatic evaluation of the environmental impacts of gas well drilling in the CCA.
PROCEDURAL AND FACTUAL BACKGROUND
Role of the MBOGC and Other Agencies
¶8 The MBOGC and other state and federal agencies play various roles in the
protection and management of natural resources, compliance with environmental laws,
and the issuance of drilling permits. The MBOGC has regulatory control over the
drilling of oil and gas wells and is authorized to take measures to prevent waste of oil and
gas resources, to prevent contamination of or damage to surrounding land or underground
5
strata, and to promote environmentally sound development of oil and gas in Montana.
Section 82-11-111, MCA. In the exercise of its jurisdiction over oil and gas wells on
private/fee and State owned lands, § 82-11-103, MCA, the Board is required to comply
with the Montana Environmental Policy Act (MEPA). Section 75-1-101, et seq., MCA;
Admin. R. M. 36.2.524 (MEPA requires that “the agency shall determine the significance
of impacts associated with the proposed action.”).
¶9 The federal Bureau of Land Management (BLM), part of the Department of the
Interior, carries out a variety of programs for the management and conservation of
federally owned land and resources. BLM’s role in oil and gas development is limited: it
is responsible for ensuring that the federal mineral resource is conserved and developed
in a safe and environmentally sound manner. The BLM has no state-level equivalent.
The duties undertaken by BLM at the federal level are split among various agencies in
Montana: the Department of Natural Resources and Conservation (DNRC), the
Department of Environmental Quality (DEQ), Montana Fish, Wildlife, and Parks (FWP),
and the State Historical Preservation Office. The MBOGC has a more limited range of
responsibilities in evaluating environmental impacts than does the BLM. In particular,
the MBOGC relies on other agencies with applicable expertise in complying with MEPA.
MBOGC consults with and relies on FWP for information regarding the conservation and
management of wildlife and recreation resources in Montana.
¶10 Before any environmental assessments were conducted in connection with the
wells at issue in this case, state and federal agencies prepared two major environmental
6
reviews pertaining to oil and gas development in the area of the CCA. As explained
below, these reviews were critical to the Board’s decision to issue permits for natural gas
wells and provide the foundation for its review of hundreds of permit applications
annually. The parties stipulated to admission in the District Court of the underlying
Administrative Record in this case, which includes, in part, the two reviews. The
Administrative Record is composed of: the Draft Programmatic Environmental Impact
Statement—Oil and Gas Drilling Production in Montana (1989); the Technical Appendix
to the Draft; the Final Programmatic Environmental Impact Statement (EIS)—Oil and
Gas Drilling and Production in Montana (1989); Montana Final Statewide Oil and Gas
EIS and Proposed Amendment to the Powder River and Billings Resource Management
Plans (2003); MBOGC’s Record of Decision related to the EIS; MBOGC Orders related
to the Cedar Creek Gas Field and Fidelity’s 2003 Application for an Order increasing
Well Density; documentation contained in the Well Files for the wells associated with the
environmental assessments challenged by Federations; documentation contained in the
Well Log Files for the wells being challenged; Well Production reports for the wells
being challenged; and five different articles of scientific research on sage grouse
populations and energy development. The following discussion comes from information
contained in the Administrative Record, except as otherwise noted.
The 1989 PEIS
¶11 In 1989, the MBOGC undertook to prepare a Programmatic Environmental Impact
Statement on Oil and Gas Drilling Production in Montana (1989 PEIS), the goal of which
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was to establish “a quick and efficient method for [MBOGC] to follow in integrating
[MEPA] into its decision making.” The Board was required to prepare the programmatic
statement pursuant to the 1987 Legislature’s Senate Bill 184 (1987 Mont. Laws ch. 473),
which granted the Board a two-year exemption from the requirements of MEPA ending
on June 30, 1989. In January of 1989, the MBOGC, along with the DNRC, released a
draft PEIS for public comment. The 1989 Montana legislature passed Senate Bill 201,
which authorized MBOGC to complete the PEIS and adopt a process to review drill
permits in compliance with MEPA. 1989 Mont. Laws ch. 566. The 1989 PEIS presented
various alternatives for addressing environmental reviews from which the Board adopted
a review process for permitting wells. The draft 1989 PEIS concluded that for the vast
majority of wells, the only documentation necessary to show compliance with MEPA is a
brief checklist Environmental Assessment (EA) prepared by MBOGC staff. The draft
version of the 1989 PEIS analyzes areas with low to moderate impact potential for
wildlife, including a discussion on the impacts to sage grouse from oil and gas activity,
particularly the birds’ susceptibility to disturbance during strutting season. The final 1989
PEIS summarized and updated the draft, and was released in December 1989.
¶12 The 1989 PEIS sets forth the steps the MBOGC must fulfill to complete a Level 1
MEPA review. Over the Federations’ objection, the District Court admitted the affidavit
of Tom Richmond, Division Administrator for MBOGC. Richmond’s affidavit states
that, under a Level 1 Review, “it is assumed that accurate information about both the
surface and sub-surface is readily available for a proposed drilling operation, and that no
8
unusual circumstances would raise questions about its ability to comply with applicable
MBOGC rules.” For Level 1 review, the final 1989 PEIS articulated the following steps:
a desk review of data submitted by the operator or collected by the MBOGC, preparation
of an environmental checklist, and attachment of special permit conditions to address
environmental concerns. The 1989 PEIS included an example of a checklist for MBOGC
to use in evaluating the impacts associated with drilling. The form utilized by MBOGC
for the twenty-three wells in question mirrors this example and consists of a series of
requests for information and decisions about each well. Each checklist EA has ten
categories for review: (1) Operator and Well Location; (2) Air Quality; (3) Water
Quality; (4) Soils/Vegetation/Land Use; (5) Health Hazards/Noise; (6)
Wildlife/Recreation; (7) Historical/Cultural/Paleontological; (8) Social/Economic; (9)
Remarks or Special Concerns for the Site; (10) Summary: Evaluation of Impacts and
Cumulative Effects.
The 2003 FEIS
¶13 In 1999, MBOGC, along with the DEQ and the BLM, began work on a new
programmatic environmental impact statement (2003 FEIS) to analyze and disclose
reasonably anticipated impacts from coalbed natural gas (CBNG) development in
Montana. The 2003 FEIS determined that CBNG wells were not likely to be economical
if drilled and produced on a single well basis, and that, because of the need for
installation of significant water-handling infrastructure, project level permitting was
likely necessary for CBNG production. This case does not involve CBNG wells.
9
According to Richmond, however, “while the 2003 FEIS focused on the potential impacts
of CBNG exploration and production throughout the state, the effects of anticipated
conventional oil and gas development were also analyzed.” However, the planning area
in the 2003 FEIS did not include Fallon, Wibaux, Prairie, and Dawson Counties, those
counties producing the oil and gas from the CCA. Instead, the counties assessed were the
adjacent Custer and Carter Counties, along with Blaine, Gallatin, Park, Wheatland,
Golden Valley, Musselshell, Sweet Grass, Stillwater, Carbon, Yellowstone, Big Horn,
Treasure, Powder River, and Rosebud Counties.
¶14 The permitting process developed in connection with the 1989 PEIS was reviewed
by MBOGC when it, along with the other agencies, prepared the 2003 FEIS. Richmond
noted during his deposition (not part of the administrative record), that “what the 2003
EIS did allow us to do was to review the new information and make a refreshed decision
about our permitting process on conventional oil and gas.” He further explained:
The 2003 EIS, because it has an emphasis on coalbed, required us to look at
how we would permit coalbed methane and the decision that we made is
that we would permit it on a project level basis rather than an individual
well basis . . . So the process of making that decision caused us to look at
how we do individual well permits for conventional oil and gas and we
decided at that time not to change that process and try and incorporate a
greater degree of project level permitting.
The 2003 FEIS had a much greater depth of analysis than the 1989 PEIS because the
2003 FEIS reviewed land management generally, and not just oil and gas regulation.
Significantly, however, MBOGC “left the individual well permit process in place for
conventional oil and gas wells.” The 2003 FEIS included a review of impacts to wildlife,
10
including sage grouse, and considered the impacts of both CBNG development and
conventional oil and gas development. The 2003 FEIS also explicitly noted that it “may
be tiered from or incorporate by reference other documents” including the 1989 PEIS.
The MBOGC has not performed any other programmatic evaluation specific to oil and
gas development in the CCA.
The Completion of Environmental Assessments and Issuance of Permits
¶15 Steven Sasaki is the Chief Field Inspector for MBOGC and was responsible for
gathering information for, assessing, and performing the environmental assessments for
the twenty-three permits at issue in this case. In so doing, he utilized the checklist form
developed as part of the 1989 PEIS. Sasaki has been an employee of the MBOGC for
twenty-two years and has traveled the length of the CCA, making approximately ten trips
to different parts of the CCA in preparing hundreds of environmental assessments for gas
wells in the Cedar Creek Gas Field. Sasaki testified by his affidavit, over the
Federations’ objection, that each assessment required particular information and
consideration of the circumstances of each well, along with its cumulative effect.
¶16 Sasaki’s affidavit described that prior to completing the assessments, he spoke
with a FWP biologist, who directed him to consult the “Montana Heritage Tracker”
website (http://mtnhp.org), an extensive database of information on animal and plant
species in Montana. The form created in the 1989 PEIS directs that FWP is responsible
for identifying “sensitive wildlife areas.” The form contains a section for whether there
are threatened or endangered species or sensitive habitat in the geographic area subject to
11
the permitting process. Sasaki consulted the Heritage Tracker database and reviewed
topographic maps to determine whether the areas in question were close to designated
wildlife refuges, national grass lands, national parks, or similar designated areas.
Sasaki’s affidavit states that he “found there were no threatened or endangered species or
sensitive wildlife areas in the proximity of any of the proposed wells, nor were there any
state or federally designated sensitive wildlife areas.” Following his review of
information concerning the area of the newly requested permits, the previously drilled
wells and their related infrastructure, Sasaki determined that the addition of twenty-three
wells would not create new human access to wildlife habitat or lead to further cumulative
impacts.
The Current Litigation
¶17 Federations brought suit in 2008 following issuance of the twenty-three permits,
contending the environmental assessments were inadequate under MEPA. The complaint
requested that the District Court (1) declare that the twenty-three EAs are inadequate
under MEPA; (2) declare that MBOGC is in violation of MEPA for failing to perform a
programmatic review of the oil and gas development in the Cedar Creek Gas Field; and
(3) issue an order enjoining MBOGC from further issuing well drilling permits until a
programmatic review has been performed under MEPA on the Cedar Creek Gas Field. In
particular, Federations argued that “sage grouse are particularly susceptible to the
development at issue” and that oil and gas development “results in calculable impacts on
breeding populations.” The District Court granted Fidelity’s motion to intervene as a
12
defendant on February 6, 2009, and MPA’s motion to intervene on April 4, 2009. The
parties filed cross-motions for summary judgment. Appellees’ motion for summary
judgment argued that issuance of the environmental assessments was proper under
MEPA and that the MBOGC’s approval of infill gas wells was not a major state action
necessitating an EIS.
¶18 Following a motion by Appellees, the District Court concluded that § 82-11-144,
MCA, applied to the proceedings. It provides in part that for a suit challenging any rule,
order or act by the Board, “the suit shall be . . . tried de novo . . . and disposed of as an
ordinary civil suit and not upon the record of any hearing before the [MBOGC].” After a
period of discovery, the parties submitted additional material to the court, and the agency
was permitted to submit affidavits and other matters to supplement the administrative
record. The District Court also granted MBOGC’s unopposed motion to lodge the
MBOGC’s Administrative Record (as discussed above) and include it in the record of the
court.
¶19 Supplementing their motion for summary judgment, Federations offered the
affidavit of James Gore, a wildlife biologist with experience studying sage grouse and
other birds. He attested to general knowledge about sage grouse and the impacts that the
human population can have on them. In its later order on summary judgment, the District
Court concluded that, though Gore is an expert on sage grouse generally, he “is not an
expert regarding oil and gas wells and the infrastructure required to support them,” nor
did he acknowledge the relatively small impact of an infill gas well as opposed to drilling
13
and operating an oil well. Appellees also provided additional information to the court in
support of their cross-motion for summary judgment, in the form of affidavits from
MBOGC staff, Fidelity employees, and wildlife experts which supported their position
that additional impacts on sage grouse would be minimal.
¶20 After reviewing the evidence, the District Court determined it could set aside the
MBOGC’s permit issuance under § 82-11-144, MCA, if it found the action to be
“arbitrary, unreasonable, capricious and [sic] abuse of discretion or otherwise not in
accordance with the law.” The District Court found that each of the environmental
assessments at issue is “tiered” to the 1989 PEIS and the 2003 FEIS, recognizing tiering
as “an accepted practice in which an agency relies on and incorporates analysis from a
previously prepared environmental document into a subsequent analysis” as a means to
eliminate unnecessary repetitive discussions.
¶21 The court concluded that “MBOGC reasonably determined that approval of the
infill gas wells in a pre-existing gas field where the infrastructure is almost entirely in
place would be a routine action with limited environmental impact” and it was reasonable
for the MBOGC to conclude that a checklist environmental assessment, rather than an
EIS, was adequate. In granting Appellees’ motion for summary judgment, the District
Court held that the Federations failed to rebut the presumption of validity in the Board’s
decision and that the MBOGC had given a “sufficiently hard look” at the potential
environmental impact of the proposed wells. This appeal followed.
14
¶22 Over the course of the litigation, the number of contested wells has been narrowed
from the original twenty-three. Federations’ expert, Gore, in his affidavit, pointed to the
fact that any well located within two miles of active breeding leks could adversely affect
those leks. Gore identified well numbers 2863, 2864, and 2869 in the Buffalo Creek
drainage; well numbers 2257 and 2261 in the Sandstone Creek drainage; and well
numbers 2252, 2253, and 2256 in the Little Beaver Creek drainage as being within two
miles of lek sites. The District Court determined that “all parties and witnesses agreed
that . . . 15 gas wells at issue in this case are not located in close proximity of any of the
sage grouse leks and present no risk of harm to sage grouse leks.” Federations do not
dispute this finding on appeal. Fidelity’s Dennis Zander testified by affidavit that five of
the eight disputed wells were scheduled to be drilled in 2010. At oral argument,
Federations’ counsel acknowledged that some of the wells at issue already had been
drilled, and MBOGC’s counsel indicated that only three undrilled wells remain directly at
issue.
¶23 Two of the well sites, numbers 2253 and 2256, are located on surface owned by
the State of Montana. In addition to the EAs prepared by the MBOGC, the DNRC
prepared EAs addressing potential environmental impacts at these two sites. The DNRC
indicated that the sites were within one mile of active sage grouse leks and that timing
restrictions would be implemented between March 1 and June 15 of any year if permits
were issued to Fidelity. However, the DNRC indicated there would otherwise be no
significant impact on the sage grouse. There is no challenge to the EAs performed by
15
DNRC. The dispute, in essence, centers on six wells at most, and perhaps as few as
three, given recent drilling activity. No party sought a stay of the District Court’s order
on appeal, nor does the record reflect a motion in the District Court for an injunction
pending appeal. M. R. Civ. P. 62; M. R. App. P. 22.
STANDARD OF REVIEW
¶24 We review a district court’s grant of summary judgment de novo. Smith v. BNSF
Railway, 2008 MT 225, ¶ 10, 344 Mont. 278, 187 P.3d 639. Summary judgment is
appropriate under M. R. Civ. P. 56 where there is an absence of genuine issues of
material fact and a party is entitled to judgment as a matter of law. Smith, ¶ 10. No party
has argued that disputes of material fact preclude summary judgment in this case.
¶25 The standard of review for MEPA decisions is “whether the record establishes that
the agency acted arbitrarily, capriciously or unlawfully.” Ravalli County Fish & Game
Assn. v. Mont. Dept. of State Lands, 273 Mont. 371, 377, 903 P.2d 1362, 1366 (1995)
(quoting N. Fork Preservation Assn. v. Dept. of State Lands, 238 Mont. 451, 458-59, 778
P.2d 862, 867 (1989)). A review under the arbitrary and capricious standard “does not
permit a reversal merely because the record contains inconsistent evidence or evidence
which might support a different result. Rather, the decision being challenged must
appear to be random, unreasonable or seemingly unmotivated based on the existing
record.” Hobble Diamond Ranch, LLC v. State, 2012 MT 10, ¶ 24, 363 MT 310, 268
P.3d 31.
¶26 Decisions of the MBOGC may be set aside if the Court determines them to be
16
(a) arbitrary, unreasonable, capricious, [an] abuse of discretion or otherwise
not in accordance with law; (b) contrary to constitutional right, power,
privilege, or immunity; (c) in excess of statutory jurisdiction, authority, or
limitations or short of statutory right; (d) without observance of procedure
required by law; or (e) unwarranted by the facts[.]
Section 82-11-144(2), MCA.
DISCUSSION
¶27 1. Whether the District Court erred in conducting its review under § 82-11-144,
MCA, and in considering evidence that was not part of the administrative record.
¶28 Federations contend that the District Court erred in applying the standard of
review set forth in § 82-11-144, MCA. That section provides in part:
Any interested person adversely affected by any provision of this chapter or
by any rule or order adopted by the board hereunder or by any act done or
threatened thereunder may obtain court review and seek relief by a suit for
an injunction against the board as defendant. . . . The suit shall be given
preferential setting and shall be tried de novo and disposed of as an
ordinary civil suit and not upon the record of any hearing before the board.
Section 82-11-144, MCA (emphasis added). This section is contained in the part of the
Montana Code Annotated entitled “Regulation by Board of Oil and Gas Conservation,”
within the Oil and Gas Conservation chapter. Federations contend that a district court’s
review under this section does not apply to a MEPA claim but rather to other
administrative actions by the MBOGC provided for in the preceding sections of the
chapter. They contend that since the case was filed under MEPA, specifically § 75-1-
201(6)(a)(ii), MCA (2007), the court’s review is limited to the administrative record.
They argue the District Court’s consideration of evidence provided by Appellees that did
not constitute part of the administrative record was in error. Citing Skyline Sportsman’s
17
Assoc. v. Bd. of Land Commrs., 286 Mont. 108, 951 P.2d 29 (1997), Federations contend
the court’s review of the outside-the-record evidence they submitted was proper, but that
such supplementation of the record is not a two-way street.
¶29 We conclude that the District Court properly considered both parties’ evidence.
Section 82-11-111(2)(c), MCA, grants the Board authority to adopt and enforce rules to
implement its objectives. Admin. R. M. 36.22.601 requires an individual to file an
application for a permit with the Board to drill an oil or gas well. Federations’ complaint
sought to enjoin the Board from issuing well permits until it conducted a programmatic
review in accordance with MEPA on the Cedar Creek Gas Field. The language in § 82-
11-144, MCA, applies to “a suit for an injunction” challenging any act of the MBOGC
within its regulatory jurisdiction and specifically mentions actions involving “the right to
drill a well.” Though the particular act challenged in this case is the Board’s MEPA
review, the legislature has directed that “when a general and particular provision are
inconsistent, the latter is paramount to the former, so a particular intent will control a
general one that is inconsistent with it.” Section 1-2-102, MCA. Because § 82-11-144,
MCA, governs review of MBOGC actions under a statutory framework in which review
and determination of well applications is one of its primary functions, we conclude that
this provision is the more particular with respect to the review of oil and gas permitting
decisions.
¶30 Because the statute is dispositive on this issue, we do not further consider the
parties’ arguments regarding consideration of non-record evidence in other contexts. The
18
District Court did not err in applying § 82-11-144, MCA, and in considering evidence
outside the administrative record.
¶31 2. Whether the District Court erred in determining that twenty-three individual
environmental assessments prepared by MBOGC for gas development in the Cedar
Creek Anticline were adequate under the Montana Environmental Policy Act.
¶32 We note at the outset that since MEPA is modeled after the National
Environmental Policy Act (NEPA), federal case law construing parallel provisions in
NEPA is persuasive. Kadillak v. Anaconda Co., 184 Mont. 127, 137, 602 P.2d 147, 153
(1979). MEPA is “essentially procedural.” Like its federal counterpart, “it does not
demand that an agency make particular substantive decisions.” Rather, it requires “an
agency to review projects, programs, legislation, and other major actions of state
government significantly affecting the quality of the human environment in order to make
informed decisions.” Ravalli County Fish & Game Assn., 273 Mont. at 377-78, 903 P.2d
at 1367. The administrative procedures for MEPA are outlined in Title 36, Chapter 2,
Sub-chapter 5 of the Administrative Rules of Montana and are discussed in more detail
later in this opinion.
¶33 Federations raise three grounds in supporting their contention that the twenty-three
EAs are inadequate under MEPA: 1) MBOGC failed to properly tier its review to
previous studies; 2) MBOGC failed to take a “hard look” at oil and gas development in
the CCA; and 3) MBOGC failed to evaluate the cumulative impacts of increased well
approvals. First, we provide additional information on the 1989 PEIS and 2003 FEIS and
their analyses of the impacts of gas and oil development on sage grouse. We then
19
address the issue of “tiering” in our analysis of the Federations’ “hard look” and
“cumulative impacts” arguments.
1989 PEIS and 2003 FEIS’s Reviews on Wildlife Impacts
¶34 The draft 1989 PEIS included a section on impacts of oil and gas development on
wildlife. The draft indicated that “sage grouse, sharp-tail grouse, and waterfowl could be
affected by oil and gas activity in Montana,” but that a “general discussion of possible
wildlife impacts on the various oil and gas regions is difficult” because of the varied
topography and habitat statewide. Moreover, the draft 1989 PEIS included a section
analyzing the cumulative effect of oil and gas drilling on wildlife, stating “a cumulative
effect of oil and gas drilling results from the additional development that occurs if
petroleum or natural gas are found. The discovery of gas or oil in one location often
stimulates more intense exploration in that immediate area and adjacent areas.” Citing to
studies on sage grouse and resource extraction, the draft analyzed areas with low to
moderate impact potential for wildlife, including the sage grouse: “in nonmountainous
portions of Montana, sage grouse and sharptails would be vulnerable to oil and gas
activity in the spring when the birds are concentrated on strutting (mating) grounds.”
Namely, construction and use of roads and powerlines could displace birds, decrease
local reproduction, and result in birds being killed. Further, the level of impact on sage
grouse would vary, dependent on whether the oil or gas well proved productive. The
draft 1989 PEIS also addressed how cumulative impacts to wildlife could be mitigated
and suggested efforts to protect sage grouse specifically, including creating a one-quarter-
20
mile buffer strip around known strutting grounds, and restricting activities in the early
morning hours of spring when the grouse are active in strutting grounds.
¶35 The final 1989 PEIS noted specifically that in the majority of cases, the major
adverse impacts on the environment from well siting can be avoided if proper care is
taken. Notably, the final 1989 PEIS stated that other than considerations applicable to all
drilling operations, “the potential for adverse impacts is almost entirely dependent on the
sensitivity of individual drilling locations.” In the section discussing wildlife and
fisheries, the final 1989 PEIS states that “the likelihood of an adverse impact occurring in
any particular locations depends on the intensity of oil and gas activity, including length
of time that operations occur, sensitivity to the environment, cumulative disturbance that
a wildlife species has been subjected to previously, and implementation of mitigating
measures.”
¶36 The 2003 FEIS provides further analysis of potential harm to wildlife and is not
limited to the impacts of CBNG development (also called CBM or “coal-bed methane”
development), but also includes discussion of conventional oil and gas extraction.
Chapter 3 of the 2003 FEIS, titled “Wildlife,” specifically notes that sage grouse are “a
possible candidate for listing under the [Endangered Species Act]” and discusses in detail
the sagebrush habitat the birds need to survive, along with leks. Chapter 4 of the 2003
FEIS, entitled “Environmental Consequences,” describes the effect of conventional oil
and gas production.
21
¶37 An example of the similar types of impacts caused by traditional oil and gas
development and CBM development can be found under the “Management Common to
All Alternatives” section in Chapter 4 of the 2003 FEIS (indicating the “direct and
indirect impacts of road construction and use on wildlife and wildlife habitat have been
well documented for oil and gas projects and other natural resource developments . . . the
types of impacts expected to result from oil and gas development would be similar to
those described in detail under Alternative A for [coal bed methane] development.”).
The impacts discussed for Alternative A include: “direct habitat loss and direct and
indirect impacts because of habitat disruption and wildlife disturbance caused by roads,
pipelines, and utility corridors would cause the bulk of impacts on wildlife” and that
“grouse are particularly susceptible to collision mortality (from cars) during the spring
because they often fly to and from leks near the ground.” The analysis also includes a
table outlining the anticipated impacts on sage and sharp-tailed grouse of three types of
direct impact, and nine types of indirect impact. Moreover, the chapter devotes an entire
page to a discussion highlighting that “sage grouse are extremely sensitive to human
disturbance and habitat alteration.”
A. “Tiering”
¶38 “Tiering is the process of incorporating by reference coverage of general matters
in broader environmental impact statements, such as national program or policy
statements, into subsequent narrower environmental analyses, such as site-specific
22
statements.” N. Plains Res. Council, Inc. v. Surface Transp. Bd., 668 F.3d 1067, 1088
(9th Cir. 2011); 40 C.F.R. § 1508.28.
¶39 The parties agree that the EAs in question do not explicitly reference the 1989
PEIS or 2003 FEIS. Richmond indicated in his affidavit to the District Court that the
checklist EAs at issue in this lawsuit were tiered to the 2003 PEIS and that the MEPA
review conducted in connection with the 2003 FEIS is implicitly incorporated into the
checklist EAs. He admitted, however, that it was a “big oversight” that the EAs did not
explicitly state they were tiered to the 1989 PEIS or specifically reference the 2003 FEIS.
¶40 Federations argue that the EAs did not tier to the previous analyses because there
is no mention of the 1989 or 2003 reviews in the EAs, that the documents are not on the
same issue, and that reliance on the 1989 review is suspect because it was conducted
before the vast majority of the scholarly work discussing the impacts on sage grouse by
oil and gas development was completed. Federations cite S. Or. Citizens v. Clark, 720
F.2d 1475, 1480 (9th Cir. 1983), for the proposition that agencies have a continuing duty
to evaluate new information when tiering to an EIS that is more than five years old. They
also argue that documentation of tiering must appear in the document being tiered from,
citing Village of False Pass v. Watt, 565 F. Supp. 1123, 1141 (D. Alaska 1983) (“The
adequacy of the environmental impact statement itself is to be judged solely by the
information contained in that document. Documents not incorporated in the (EIS) by
reference or contained in a supplemental (EIS) cannot be used to bolster an inadequate
discussion in the (EIS).”), aff’d 733 F.2d 605 (9th Cir. 1984). The court in Village of
23
False Pass proceeded to state that while an administrative record cannot be used to
remedy a deficiency in an EIS, a court may look at information in the administrative
record and take additional evidence to determine whether the scope of discussion in the
EIS was adequate. 565 F. Supp. at 1141.
¶41 The quotation cited by Federations is not in a section of the Village of False Pass
opinion discussing tiering. Instead, the section cited pertains to the adequacy of an
environmental impact statement and what a court may consider in determining whether
an EIS is deficient. Moreover, an EA has been described by federal courts as a
“rough-cut, low-budget environmental impact statement.” Sierra Club Northstar
Chapter v. Bosworth, 428 F. Supp. 2d 942, 957 (D. Minn. 2006) (quoting Cronin v. U.S.
Dept. of Agriculture, 919 F.2d 439, 443 (7th Cir. 1990). To the extent an EIS is judged
solely by the information it contains and its references to other documents from which it
is tiered—a question not presented in this case—an EA does not have the same
requirements as an EIS.
¶42 Despite the checklists’ lack of explicit reference, it is clear from the record that
MBOGC staff relied on these past reviews in developing the EAs at issue here. The
administrative record lodged with the District Court by agreement of the parties included
the 1989 PEIS and 2003 FEIS. Under the 1989 PEIS, MBOGC was required to evaluate
current information and entitled to rely on FWP in assessing wildlife impacts. MBOGC
fulfilled this obligation by conferring with the FWP wildlife biologist, utilizing the
Heritage Tracker database, and reviewing topographic maps for designated wildlife
24
refuges, national grass lands, national parks, or other designated wildlife areas.
Undoubtedly, an EA should make specific reference to MEPA documents from which it
is tiered so that members of the public, not just the Board and others involved in the
process, are made aware of the information utilized by MBOGC in issuing permits.
Nonetheless, remand for the sole purpose of requiring MBOGC to explicitly incorporate
by reference its prior EISs would accomplish little “save further expense and delay.”
Nevada v. DOE, 457 F.3d 78, 90 (D.C. Cir. 2006). Applying the standards of review
governing MBOGC and MEPA determinations, particularly in light of the stipulated
administrative record before the District Court, we conclude the agency implicitly tiered
the EAs to the older analyses and that its failure to articulate reference to them did not
render its actions arbitrary, capricious or unlawful.
B. MBOGC’s compliance with MEPA’s requirements.
¶43 The purpose underscoring MEPA is to “declare a state policy that will encourage
productive and enjoyable harmony between humans and their environment.” Section 75-
1-102(2), MCA. MEPA requires that an agency take a “hard look” at the environmental
impacts of a given project or proposal. Ravalli County Fish & Game Assn., 273 Mont. at
377, 903 P.2d at 1367 (agencies have the obligation “to make an adequate compilation of
relevant information, to analyze it reasonably,” and to consider all “pertinent data.”).
However, “court review of an agency decision . . . is limited . . . [and the Court] does not
take a hard look itself but requires that the agency does so. The Court focuses on the
validity and appropriateness of the administrative decision making process without
25
intense scrutiny of the decision itself.” Clark Fork Coalition v. Mont. Dept. of Envtl.
Quality, 2008 MT 407, ¶ 47, 347 Mont. 197, 197 P.3d 482. “The agency must examine
the relevant data and articulate a satisfactory explanation for its action, including a
rational connection between the facts found and the choice made.” Clark Fork Coalition,
¶ 47. Courts have held that “general statements about ‘possible’ effects and the existence
of ‘some risk’ do not constitute a ‘hard look’ absent a justification regarding why more
definitive information could not be provided.” Neighbors of Cuddy Mt. v. USFS, 137
F.3d 1372, 1380 (9th Cir. 1998) (quoting Inland Empire Pub. Lands Council v. U.S.
Forest Serv., 88 F.3d 754, 764 (9th Cir. 1996).
¶44 The general requirements of the environmental review process under MEPA and
the means in which an agency determines the necessary level of environmental review
are contained in Admin. R. M. 36.2.523. A detailed environmental impact statement is
required for a “major action of state government significantly affecting the quality of the
human environment.” Admin. R. M. 36.2.523(1)(b). An environmental assessment
operates, in part, as an initial evaluation to determine whether an agency must prepare an
environmental impact statement. Admin. R. M. 36.2.522(9). An EA may be in checklist
form when the agency determines a routine action with limited environmental impact is
at stake. Admin. R. M. 36.2.525(2).
¶45 In determining the significance of the impacts associated with state action, and
what type of assessment is necessary, the state agency must evaluate the individual and
cumulative impacts. Admin. R. M. 36.2.524(1). An EA must include an evaluation of
26
cumulative and secondary impacts. Admin. R. M. 36.2.525(3)(d). We review whether
the agency performed an evaluation of cumulative impacts in determining whether its
compliance with MEPA was lawful. N. Fork Preservation Assn., 238 Mont. at 460, 778
P.2d at 868. An analysis of “cumulative impacts” means reviewing:
the collective impacts on the human environment of the proposed action
when considered in conjunction with other past and present actions related
to the proposed action by location or generic type. Related future actions
must also be considered when these actions are under concurrent
consideration by any state agency through pre-impact statement studies,
separate impact statement evaluation, or permit processing procedures.
Admin. R. M. 36.2.522 (emphases added).
¶46 Federations argue that the twenty-three EAs at issue are virtually identical and
contain no evaluation of the potential impacts to wildlife, in particular, sage grouse.
They further argue the 1989 PEIS and 2003 FEIS both contemplate the need for further
site specific analysis, which did not occur here. Federations point to the two EAs
prepared by the DNRC as an example of an EA appropriately acknowledging the
presence of and risk to sage grouse on the well sites at issue. They argue “the fact that
MBOGC’s parent agency identified sage grouse leks within a mile of wells 2253 and
2256, and MBOGC failed to identify these same leks when it evaluated the same wells
under the same MEPA standard demonstrates the patent inadequacy of MBOGC’s
environmental review.” Federations argue the checklist utilized by MBOGC did not
address cumulative effects because it ignored the other twenty-three wells being
concurrently permitted in the same area, and that its overall assessment did not amount to
a “hard look” at the impacts of the wells.
27
¶47 In response, MBOGC emphasizes Sasaki’s affidavit, which observes that the EA
checklist form requires consideration of the circumstances of each well and its
cumulative effect, if any. Sasaki noted in the cumulative effects section of the EAs that
the wells are being drilled in “an existing gas field.” He testified by affidavit that each
EA was completed individually, and pointed out that the forms contain distinct responses
where differences exist. Sasaki determined that because of the hundreds of existing wells
in the immediate area and their associated infrastructure, the addition of these
twenty-three wells would not create new human access to wildlife habitat. He pointed
out that, in contrast to State-owned land, the MBOGC has no authority to impose surface
restrictions upon wells drilled on private land. Sasaki also determined that the
twenty-three wells would not lead to further cumulative impacts from oil and gas drilling
in the CCA.
¶48 In both the EISs, the agency addressed cumulative impacts. The draft 1989 PEIS
includes a six-paragraph discussion under the sub-heading “cumulative impacts.” The
section identified the cumulative impacts of oil and gas drilling when coupled with other
resource extraction, such as logging, mining, hydroelectric development, and livestock
grazing. The final 1989 PEIS includes a summary of potential impacts to wildlife and
fisheries, noting specifically that “[t]he likelihood of an adverse impact occurring in any
particular location depends on the intensity of oil and gas activity, including length of
time that operations occur, sensitivity of the environment, cumulative disturbance that a
wildlife species has been subjected to previously, and implementation of mitigation
28
measures.” Moreover, the final 1989 PEIS concludes that the situation where “major
adverse environmental effects are most likely is when a wildcat drilling operation leads to
discovery of a commercially producible oil or gas reservoir and full-field production
commences in a previously undeveloped area.” In the 2003 FEIS, the “Reasonably
Foreseeable Development Scenario” analyzed the combined exploration and development
of coal bed methane and of conventional oil and gas development in various counties.
Additionally, cumulative impacts (including the impact of conventional oil and gas
development) are also analyzed in Chapter 4’s discussion on wildlife.
¶49 We agree with Federations that the simple fact that these twenty-three wells are
infill wells in an existing field does not automatically insulate them from a cumulative
impacts analysis. We conclude, however, that the Board did not ignore cumulative
impacts in its assessment of the wells authorized in this case. The agency completed the
EAs here on the basis of an extensive administrative record and an institutional body of
knowledge upon which MBOGC staff determined the additional wells at issue would
have no significant impact, individually or cumulatively. As we noted earlier, the wells
at issue are a minor fraction of the over a thousand wells in the Cedar Creek Gas Field.
Infill development may prompt the need for further analysis if the characteristics of the
location suggest the addition of new wells will increase “the collective impacts to the
human environment.” However, on the record of this case—given the few number of
well permits still in play, their minimal addition to an already significantly developed
field, and the absence of indicators that sensitive habitat was involved, we hold that the
29
EAs’ silence regarding other specific well applications under consideration did not render
them unlawful under Admin. R. M. 36.2.525 for failure to sufficiently assess cumulative
impacts.
¶50 The Dissent makes an important point which, under a different set of facts, would
be compelling. Even a checklist EA should provide sufficient environmental information
for informed public scrutiny before decisions are made. Federations’ argument in this
case, however, is that the MBOGC’s “decisions approving each of the 23 wells should be
set aside” as arbitrary and capricious because its determination of no cumulative impacts
was “made without making any analysis at all.” As Federations point out, we have
recognized that the omission of a cumulative impacts analysis is relevant to determining
whether an agency’s MEPA decision is “unlawful.” Friends of the Wild Swan v. DNRC,
301 Mont. 1, ¶ 29, 6 P.3d 972 (2000). In that case, however, as Federations
acknowledge, the district court had enjoined the agency from moving forward pending
completion of the cumulative impacts analysis, and we upheld that injunction on appeal.
Here, since no stay was sought or obtained, we did not have an opportunity to rule before
the agency’s decision took effect; thus, the question now is limited to a much smaller
number of wells. Further, as discussed above, and not disputed by the Dissent, our
examination of the sufficiency of the MBOGC’s “hard look” under the applicable statute
is to be made on the entire record before the District Court. Section 82-11-144, MCA.
On that record, and in light of the present posture of the case, we conclude that the
agency’s evaluation of cumulative effects was adequate. Federations have not
30
demonstrated that adding the three to six remaining wells under consideration to the
existing Cedar Creek Gas Field, particularly in light of DNRC restrictions on the two
wells on State-owned land, would raise the potential for cumulative impacts sufficient to
trigger additional environmental analysis. 1 Fidelity’s counsel acknowledged during oral
argument that, had sage grouse been listed as a threatened or endangered species,
significant additional analysis would have been required. We trust that MBOGC will
consider the recent pronouncements by the U.S. Fish and Wildlife Service in its future
permitting decisions.
¶51 We affirm the District Court’s conclusion that the MBOGC took a sufficient “hard
look” under MEPA. Sasaki relied on the information in the 1989 PEIS and 2003 FEIS,
his communications with FWP, his review of the Heritage Tracker database, and his
analysis of topographic maps of the area. In his affidavit to the District Court, Sasaki
rationally explained these steps, and the facts upon which he relied, to come to the
conclusion that the additional wells would not lead to further cumulative impacts. He
also relied on his own knowledge of the area, having previously prepared 325 EAs for the
Cedar Creek Gas Field and conducted multiple site visits. The administrative record
contains hundreds of pages of documentation of the Board’s analysis of gas well drilling
in the area in question over many years. The compilation of data from the two major
environmental studies in 1989 and 2003, along with other Board documentation and
1
Even under the Ninth Circuit’s relatively low standard of proof, a plaintiff alleging that an
agency should have analyzed the cumulative impacts of a proposed project along with other
projects must show “the potential for cumulative impact.” Te-Moak Tribe of Western Shoshone
of Nev. v. U.S. DOI, 608 F.3d 592, 605 (9th Cir. 2010).
31
scientific literature, coupled with the institutionalized knowledge of MBOGC staff,
provides an extensive information base upon which the Board could draw in concluding
that the addition of twenty-three wells in a heavily-developed field would have limited
impact. Our role is not to say whether the Court would have granted the permits in this
instance. N. Fork Preservation Assn., 238 Mont. at 465, 778 P.2d at 871. Rather, we
must determine if the MBOGC was sufficiently thorough and discerning in its
decision-making process to meet applicable MEPA requirements. We conclude it was.
¶52 3. Whether the District Court erred in ruling that MBOGC did not have to
prepare a programmatic environmental impact statement for oil and gas development in
the Cedar Creek Anticline area.
¶53 A “programmatic review” is “an analysis (EIS or EA) of the impacts on the quality
of the human environment of related actions, programs, or policies.” Admin. R. M.
36.2.522(15). As noted above, an EIS is required for “major actions of state government
significantly affecting the quality of the human environment.” Section 75-1-
201(1)(b)(iv), MCA. An “action” is defined in part as “a project or activity involving the
issuance of a lease, permit, license, certificate or other entitlement.” Admin. R. M.
36.2.522(1). An EIS is not required if an agency, after evaluating the factors in Admin.
R. M. 36.2.524(1), determines that the adverse effects are not significant. Those factors
are:
(a) the severity, duration, geographic extent, and frequency of occurrence of
the impact;
(b) the probability that the impact will occur if the proposed action occurs;
or conversely, reasonable assurance in keeping with the potential severity
of an impact that the impact will not occur;
32
(c) growth-inducing or growth-inhibiting aspects of the impact, including
the relationship or contribution of the impact to cumulative impacts;
(d) the quantity and quality of each environmental resource or value that
would be affected, including the uniqueness and fragility of those resources
or values;
(e) the importance to the state and to society of each environmental
resource or value that would be affected;
(f) any precedent that would be set as a result of an impact of the proposed
action that would commit the department to future actions with significant
impacts or a decision in principle about such future actions; and
(g) potential conflict with local, state, or federal laws, requirements, or
formal plans.
Admin. R. M. 36.2.524. An EA is highly specific to the project and locale, “thus creating
no binding precedent.” Barnes v. U.S. Dept. of Trans., 655 F.3d 1124, 1140 (9th Cir.
2011).
¶54 Environmental review under NEPA (and therefore MEPA) is not retroactive.
Activity existing prior to enactment of the law and not potentially undergoing “further
major [] action” does not require an EIS. Westside Property Owners v. Schlesinger, 597
F.2d 1214, 1223-24 (9th Cir. 1979). “If an ongoing project undergoes changes which
themselves amount to ‘major [state] actions,’ the operating agency must prepare an EIS.”
Ravalli County Fish & Game Assn., 273 Mont. at 378-79, 903 P.2d at 1367 (quoting
Upper Snake R. Chapter of Trout Unlimited v. Hodel, 921 F.2d 232, 234 (9th Cir. 1990)).
Where a proposed action would not change the status quo, the MEPA review process is
not triggered. Ravalli County Fish & Game Assn., 273 Mont. at 378-79, 903 P.2d at
1367; Upper Snake R. Chapter of Trout Unlimited, 921 F.2d at 235. “An EIS need not
discuss the environmental effects of continuing to use land in the manner in which it is
presently being used.” Sabine R. Authority v. U.S. Dept. of Interior, 951 F.2d 669, 679
33
(5th Cir. 1992) (citing Upper Snake R. Chapter of Trout Unlimited, 921 F.2d at 235)
(holding that an agency’s acquisition of an easement did not effectuate any change to the
environment that would trigger an EIS).
¶55 If the changes are “substantial enough to constitute a ‘major federal [or state]
action’” or have the potential to significantly affect the quality of the human
environment, then MEPA—like NEPA—requires the agency to evaluate those changes
for significant impacts. Compare Westside Property Owners, 597 F.2d at 1223
(post-NEPA agreement for military training exercises not a “major federal action” in light
of longstanding approval of design for training program) with Ravalli County Fish &
Game Assn., 273 Mont. at 379-80, 903 P.2d at 1368 (change in grazing permit from
grazing cattle to grazing sheep adjacent to bighorn range did not constitute maintaining
the status quo and further MEPA analysis was triggered).
¶56 In 2003, the MBOGC issued an order granting Fidelity’s application to increase
well density in the CCA. Though it might have been an opportune time to do so,
Federations did not seek a programmatic EIS when that order was issued.
¶57 Richmond explained in a letter to NWF in 2008, submitted by Federations as an
exhibit to their motion for summary judgment, that the order authorizing increased well
density was issued as a means to address inequities between adjoining landowners. He
explained that its effect was both to serve as a determination that the well spacing did not
constitute waste by promoting unnecessary wells and to promote conservation by
maximizing the recovery of existing gas resources. Richmond advised that it was
34
unlikely the number of wells authorized by the Board Order “will be drilled
immediately.” He noted that the average five-year net increase in producing gas wells for
the Montana portion of the Williston Basin is seventy-one new wells per year. Through
the affidavit of Bruce Bowman, Fidelity confirmed in the District Court that it anticipated
drilling approximately 40-100 wells per year in 2009 and 2010.
¶58 At the time the permits were issued in this case, much of the infrastructure already
was in place with only minor improvements needed. Fidelity employee Dennis Zander
described in his affidavit to the court Fidelity’s attempt to minimize the impact of the gas
wells at issue. Noting Gore’s concerns that eight of the wells could adversely impact
sage grouse, Zander explained that “the infrastructure Fidelity will install with respect to
these eight wells is minimal.” Zander provided specific comments about the limited
impacts of the wells, including their virtually silent operation and Fidelity’s ability to
access the wells’ electronic metering equipment remotely. Once a well is completed,
there is little vehicular traffic associated with its operation, with most wells being
accessed by vehicle less than once a week. He stated that this method of production
operations has been commended by BLM biologists for minimizing noise that might
impact sage grouse.
¶59 Despite the Board’s finding of no significant impacts, Federations contend that the
MBOGC must perform a programmatic review of ongoing oil and gas development in the
CCA, pointing to Fidelity’s anticipated drilling in the future. They further argue that the
1989 PEIS was not a programmatic review, but rather a “framework” for the agency’s
35
future performance of MEPA reviews and that further area-specific review was
contemplated by the agency and is necessary. Appellees argue that the addition of
twenty-three wells (now six or fewer), is not a “major state action” requiring a
programmatic review and that speculation about future drilling does not provide a basis
for mandating an EIS in this case.
¶60 We conclude that the Board was not arbitrary or capricious in its determination
that drilling twenty-three wells in an existing field of over a thousand, with most of the
necessary infrastructure already in place and minimal anticipated impacts, was not a
major state action necessitating a programmatic EIS. Incremental infill well development
on the field may necessitate an EIS if, at some point, such development meets the factors
discussed in Admin. R. M. 36.2.524. Our holding here does not preclude the requirement
for an EIS at a future date. Barnes, 655 F.3d at 1140. On this record, Federations have
not met their burden of demonstrating that MBOGC’s decision was arbitrary, capricious,
unlawful, or unwarranted by the facts.
CONCLUSION
¶61 The District Court properly applied § 82-11-144, MCA, in considering evidence
outside the administrative record. We caution MBOGC that its use of the checklist EA
form, while permissible under the law and under the 1989 EIS, should contain sufficient
explanation to provide the public and a reviewing court with a clear statement of reasons
to explain why a project’s impacts are not significant. On the basis of the record
developed in the District Court, however, we conclude that MBOGC complied with
36
MEPA in issuing permits for the wells at issue. Under the specific facts existing at the
time these permits were issued, Federations did not demonstrate the need for further
cumulative impacts analysis or for a programmatic EIS as to oil and gas development in
the CCA. The District Court’s grant of summary judgment in favor of Appellees is
affirmed.
/S/ BETH BAKER
We concur:
/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ JIM RICE
/S/ JAMES B. WHEELIS
Hon. James B. Wheelis, District Judge
Sitting in place of Justice Nelson
Justice Michael E Wheat dissents.
¶62 I respectfully dissent.
¶63 The majority correctly notes that an EA may be in a checklist format. Opinion,
¶ 44. A checklist EA, however, must still comply with the requirements of MEPA. This
37
includes an analysis of the cumulative and secondary impacts. Opinion, ¶ 45. The
majority concludes, based on the “extensive administrative record and [the] institutional
body of knowledge” within the MBOGC, that the MBOGC did not ignore cumulative
impacts in its assessment of the wells at issue. Opinion, ¶ 49. This conclusion, however,
ignores the unambiguous intent of the Legislature and the very purpose of requiring an
environmental assessment. MEPA is procedural, but it was the intent of the Legislature
that MEPA would provide an adequate review of state actions to ensure that “the public
is informed of the anticipated impacts in Montana of potential state actions.” Section 75-
1-102(b), MCA. The Legislature additionally made it clear that the unequivocal purpose
of requiring an environmental assessment is to “inform the public and public officials of
potential impacts resulting from decisions made by state agencies.” Section 75-1-
102(3)(a); See State ex. rel. Mont. Wilderness Assn. v. Board of Nat. Resources &
Conservation, 200 Mont. 11, 30, 648 P.2d 734, 744 (1982) (“The primary function of the
EIS is to provide the decisionmaker with environmental reports sufficiently detailed to
allow a knowledgeable judgment and to allow public feedback in the development of that
information.”)
¶64 The public is not informed when an agency’s decision-making process is
concealed within the confines of its institutional knowledge, and the only way to uncover
the details is by engaging in lengthy litigation. Nor is the public benefitted by reviewing
an EA which does not explicitly set forth the actual cumulative impacts and the facts
which form the basis of the analysis. See Friends of Wild Swan v. Dept. of Nat.
38
Resources & Conservation, 2000 MT 209, ¶ 35, 301 Mont. 1, 6 P.3d 972. Because the
public has been left in the dark, I would reverse the District Court and find that the
MBOGC’s EAs are inadequate.
¶65 I believe that the EAs are inadequate because they contain only generalized
conclusory statements in the form of expert narratives – or as the majority calls it,
“institutional knowledge.” Each of the twenty-three EAs devotes a single line to
“Evaluation of Impacts and Cumulative effects.” The “answer” to this question is some
variation on the statement: “No long term impacts expected. Short term impacts will
occur but can be mitigated in time.” This explanation is inadequate because it provides
no information to the public, thereby undermining the purpose of MEPA and preventing
any meaningful public participation.
¶66 Moreover, the EAs are not properly tiered to the 1989 PEIS and the 2003 FEIS.
Tiering is not defined in MEPA or its associated administrative rules. It is, however,
defined in NEPA’s regulations:
“Tiering” refers to the coverage of general matters in broader
environmental impact statements (such as national program or policy
statements) with subsequent narrower statements or environmental analyses
(such as regional or basinwide program statements or ultimately site-
specific statements) incorporating by reference the general discussions and
concentrating solely on the issues specific to the statement subsequently
prepared.
40 C.F.R. § 1508.28 (2012) (emphasis added). The plain language under NEPA requires
the tiered document to be explicitly incorporated. This insures that the public is informed
of the documents underlying an agency decision.
39
¶67 Here, MBOGC admits that it failed to explicitly reference that the EAs were tiered
to the 1989 PEIS or the 2003 FEIS. Opinion, ¶ 39. The majority disregards this failure
and claims that it is “clear from the record that MBOGC staff relied on these past reviews
in developing the EAs at issue here.” Opinion, ¶ 42. MBOGC’s reliance on these
documents is appropriate, but it remains that the public was not informed of this reliance
at the time the EAs were published. Consequently, because the EAs were completely
devoid of any mention or reference to these EISs, they are inadequate.
¶68 Even if the agency did implicitly tier the EAs to the prior EISs, I would still find
the EAs inadequate because MBOGC’s failure to reference them in the EAs undermines
the purpose of MEPA. MEPA requires MBOGC to inform the public of not only the
documents it relies on, but also the specific information within the relied upon
documents. MBOGC did neither. As a result, the public remains uninformed and is
unable to meaningfully participate in the MEPA process.
¶69 The actions of the MBOGC are not only improper, but they undermine MEPA.
Given that MEPA is a procedural statute, I cannot condone the EAs at issue because they
are not in compliance with MEPA’s plainly articulated procedures. The cumulative
impacts and any tiered documents should have been clearly set forth to ensure an
informed public. Instead, the MBOGC’s failure to comply with MEPA has forced the
public to engage in time consuming and costly litigation. I believe that the public should
not be forced to rely on litigation to uncover information that rightly should have been
disclosed in the EAs.
40
¶70 For these reasons, I would find that the EAs at issue are unlawful. See N. Fork
Preservation Assn., 238 Mont. 451, 460-64, 778 P.2d 862, 868-70 (1989). I would
therefore reverse the District Court’s grant of summary judgment and remand this case
for entry of judgment in favor of the Federations.
/S/ MICHAEL E WHEAT
Justice Brian Morris joins in the foregoing dissent.
/S/ BRIAN MORRIS
41