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Diné Citizens Against Ruining Our Environment v. Jewell

United States Court of Appeals, Tenth Circuit

October 27, 2016

DINÉ CITIZENS AGAINST RUINING OUR ENVIRONMENT; SAN JUAN CITIZENS ALLIANCE; WILDEARTH GUARDIANS; NATURAL RESOURCES DEFENSE COUNCIL, Plaintiffs - Appellees,
v.
SALLY JEWELL, in her official capacity as Secretary of the United States Department of the Interior; UNITED STATES BUREAU OF LAND MANAGEMENT, an agency within the United States Department of the Interior; NEIL KORNZE, in his official capacity as Director of the United States Bureau of Land Management, Defendants-Appellees, and WPX ENERGY PRODUCTION, LLC; ENCANA OIL & GAS (USA), INC.; BP AMERICA PRODUCTION COMPANY; CONOCOPHILLIPS COMPANY; BURLINGTON RESOURCES OIL & GAS COMPANY LP; AMERICAN PETROLEUM INSTITUTE; ANSCHUTZ EXPLORATION CORPORATION, Defendants Intervenors -Appellees.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO(D.C. No. 1:15-CV-00209-JB-SCY)

          Kyle J. Tisdel, Western Environmental Law Center, Taos, New Mexico (Samantha Ruscavage-Barz, WildEarth Guardians, Santa Fe, New Mexico, with him on the briefs), for Plaintiffs-Appellants.

          Emily A. Polachek, Attorney, Environmental and Natural Resources Division, U.S. Department of Justice (John C. Cruden, Assistant Attorney General, Environmental and Natural Resources Division; Clare M. Boronow, Attorney, Environmental and Natural Resources Division, U.S. Department of Justice; and Michael Williams, Office of the Solicitor, U.S. Department of the Interior, of counsel, with him on the briefs), Washington, D.C., for Defendants-Appellees.

          Hadassah M. Reimer of Holland & Hart LLP, Jackson, Wyoming (Stephen G. Masciocchi and John F. Shepherd of Holland & Hart LLP, Denver, Colorado, and Bradford Berge of Holland & Hart LLP, Santa Fe, New Mexico, with her on the briefs) for Defendants Intervenors-Appellees.

          Jon J. Indall and Joseph E. Manges of Comeau Maldegen Templeman & Indall LLP, Santa Fe, New Mexico; Steven J. Rosenbaum of Covington & Burling LLP, Washington, D.C., and Andrew D. Schau of Covington & Burling LLP, New York, New York, for Defendant Intervenor-Appellee American Petroleum Institute.

          Before KELLY, McKAY, and LUCERO, Circuit Judges.

          McKAY, Circuit Judge.

         Plaintiffs appeal the district court's denial of their request for a preliminary injunction to prevent the drilling of certain oil and gas wells in the Mancos Shale formation of the San Juan Basin in New Mexico. The district court concluded that Plaintiffs had failed to satisfy three of the four elements required to obtain a preliminary injunction: (1) Plaintiffs had not demonstrated a substantial likelihood of success on the merits of their claims; (2) the balance of harms weighed against Plaintiffs; and (3) Plaintiffs failed to show that the public interest favored an injunction. Plaintiffs challenge each of these conclusions on appeal.

         I.

         The San Juan Basin is a large geographic region in the southwestern United States, including part of New Mexico. Drilling for oil and gas has occurred in the Basin for more than sixty years, and the Basin is currently one of the most prolific sources of natural gas in the country. The Basin includes both public and private lands. Many of the public lands and resources fall under the jurisdiction of the Bureau of Land Management's Farmington Field Office in New Mexico, which manages these lands and resources under its published Resource Management Plan.

         In 2000, the BLM initiated the process of revising its existing RMP, which had been published in 1988. As part of this process, the BLM contracted with the New Mexico Institute of Mining and Geology to develop a "reasonably foreseeable development scenario, " or RFDS, to predict the foreseeable oil and gas development likely to occur over the next twenty years. Based on historic production data and available geologic and engineering evidence, the RFDS estimated that 9, 970 new oil and gas wells would be drilled on federally managed lands in the New Mexico portion of the San Juan Basin during this time period. Of these wells, the RFDS estimated that more than forty percent would be "Dakota, Mancos" gas wells-wells that could produce gas from both the Mancos geologic horizon and the Dakota geologic horizon that lies below it. (Appellees' Supplemental App. at 37.) The RFDS estimated that only 180 new oil wells would be drilled in the Mancos Shale, due to the fact that most reservoirs in the Mancos Shale were approaching depletion under then-current technologies, but it noted that "there is excellent potential for the Mancos to be further evaluated." (Joint App. at 182.)

         In 2003, the BLM issued its Proposed Resource Management Plan and Final Environmental Impact Statement (PRMP/FEIS). In this document, the BLM referred to the predictions and analysis contained in the RFDS in order to assess four proposed alternatives for managing federal lands in the San Juan Basin, including the "balanced approach" the agency ultimately decided to adopt. (Id. at 499.) Under this balanced approach, the BLM analyzed the cumulative impacts of an estimated 9, 942 new wells in the San Juan Basin-approximately the same number predicted in the 2001 RFDS-by looking at, for instance, the likely air quality impacts from the drilling and operation of this many new wells in the region. The PRMP/FEIS did not discuss specific sites or approve any individual wells, although it assumed the majority of new wells would be drilled in the high development area in the northen part of the managed area. The BLM issued its final RMP, adopting the Alternative D balanced approach, in December 2003.

         Although this RMP generally allows for drilling in the San Juan Basin, a new well may not be drilled unless the operator first receives specific approval of its drilling plan through the submission of an application for a permit to drill, or APD, to the BLM. When the agency receives an APD, it reviews the planned drilling activity and prepares an environmental assessment of the environmental impacts of the proposed drilling, after which the agency may approve the APD as submitted, approve it with appropriate modifications or conditions, or deny it. In preparing this environmental assessment, the agency may incorporate by reference the general but more comprehensive environmental analysis included within its published RMP and focus the APD's environmental assessment "on the issues specific to the [proposed drilling]." 40 C.F.R. § 1502.20. This process is generally referred to as tiering. See id.

         Beginning in about 2014, the BLM began receiving more APDs than anticipated for oil wells in the Mancos Shale. At the time the RMP was issued, oil and gas in the San Juan Basin were generally produced through hydraulic fracturing of vertical oil wells. However, subsequent technological advances have made it economical for oil and gas operators in the San Juan Basin to drill horizontal wells and conduct multi-stage fracturing, which enables them to tap into oil and gas reserves that are not readily accessible through traditional vertical drilling techniques and produce four times as much oil and gas per well as they could have produced from a single vertical well. Between 2010 and 2015, the BLM approved approximately 265 APDs for drilling in the Mancos Shale. In its environmental assessment of each APD or set of related APDs, the agency reviewed the site-specific and cumulative impacts likely to arise from the proposed drilling. In its assessment of some of these impacts, and particularly in its discussion of the cumulative impacts, the BLM referred to its broader but more comprehensive environmental analysis in the 2003 RMP.

         In 2014, the BLM prepared a new RFDS to better predict the Mancos Shale's potential for oil and gas development. The agency is now working on an RMP amendment to account for the estimated additional 1, 930 oil wells and 2, 000 gas wells in the Mancos Shale.

         In March 2015, Plaintiffs filed this lawsuit under the National Environmental Policy Act, challenging 260 APDs in the Mancos Shale. Plaintiffs then moved for a preliminary injunction to prevent drilling on approved wells while this litigation is ongoing.[1] The district court denied this motion in a 101-page decision, holding that Plaintiffs were not likely to succeed on the merits of their claims and that Plaintiffs' potential harm was outweighed by the economic harms which the operators and the public would suffer if drilling was enjoined. This appeal followed.

         II.

         We review the district court denial of a preliminary injunction for an abuse of discretion. Wilderness Workshop v. BLM, 531 F.3d 1220, 1223 (10th Cir. 2008). "An abuse of discretion occurs only when the trial court bases its decision on an erroneous conclusion of law or where there is no rational basis in the evidence for the ruling." Id. at 1224 (internal quotation marks omitted). "Our review of the district court's exercise of discretion is narrow, and the merits may be considered on appeal only insofar as they bear on the issue of judicial discretion." Gen. Motors Corp. v. Urban Gorilla, LLC, 500 F.3d 1222, 1226 (10th Cir. 2007) (internal quotation marks, ellipses, and citation omitted).

         "In order to receive a preliminary injunction, the plaintiff must establish the following factors: (1) a substantial likelihood of prevailing on the merits; (2) irreparable harm unless the injunction is issued; (3) that the threatened injury outweighs the harm that the preliminary injunction may cause the opposing party; and (4) that the injunction, if issued, will not adversely affect the public interest." Davis v. Mineta, 302 F.3d 1104, 1111 (10th Cir. 2002) (internal quotation marks and brackets omitted). "Because a preliminary injunction is an extraordinary remedy, the ...


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