William Perry Pendley

In the mid-1980s, environmental groups challenged oil and gas leasing proposals by the U.S. Department of the Interior and the Forest Service along the Overthrust Belt in Montana and Wyoming. They argued that the federal agencies had not obeyed the National Environmental Policy Act (NEPA) because, instead of Environmental Impact Statements (EISs), which often run hundreds of pages, the agencies wrote Environmental Assessments (EAs). After all, the agencies reasoned, there would be no physical impact from the leasing. Later, when the lessees decided where to drill, full-blown EISs would be prepared.

In 1987, the U.S. Court of Appeals for the Tenth Circuit in Denver, ruling as to the Wyoming plan, held that the agencies were right: NEPA did not require them to engage in a purely hypothetical examination of possible impacts at yet to be determined drilling sites. In 1988, however, the U.S. Court of Appeals for the Ninth Circuit in San Francisco, addressing the Montana plan, disagreed: NEPA demanded that the agencies engage in an intensive examination of the 1.3 million acres of land to be leased even though no one knew where on the 2000-acre leases the drilling pads, which each occupy less than 5 acres, would be located.

Oil and gas operators recognized the impact of the Ninth Circuit’s ruling: preparation of full-blown EISs takes years; worse yet, the length and detail of those documents present easy targets for lawsuits by environmental groups, which lead to more studies, delay, and lawsuits. The heavier onus, some called it a “multi-million dollar burden,” fell on federal agencies that must research, write, and defend those documents. The operators filed a petition for certiorari with the U.S. Supreme Court, calling the Court’s attention to the conflict between the rulings of the Ninth and Tenth Circuit as well as the precedent provided by the Court when it ruled, in 1984, that extensive environmental review at the lease sale stage is “inefficient, and at worst impossible!” Legal experts anticipated that the Solicitor General would join in urging the Court to hear the case; instead, he refused. As a result, the Supreme Court rejected the appeal, leaving the Ninth Circuit’s ruling intact.

Then, the Ninth Circuit’s ruling became the law of the land when the Interior Department decided to prepare a complete EIS each time it proposed oil and gas leasing. The cost to prepare and defend each of these documents, in money, resources, and time, far exceeded all expectations; however, eventually leases were issued and the search for oil and gas was allowed, usually over objections by environmental groups. One example is in south-central New Mexico’s Otero and Sierra Counties.

William Perry Pendley

William Perry Pendley is President and Chief Legal Officer at the Mountain States Legal Foundation.

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