472 F.Supp.3d 573
N.D. Cal.2020Background
- BLM issued a 2016 "Waste Prevention Rule" to limit venting, flaring, and leaks from oil and gas operations on federal and Indian lands; the rule followed extensive review and used an interagency "social cost of methane" analysis and an RIA/EA.
- After the 2016 Rule, a new Administration directed reviews; BLM proposed and finalized a 2018 "Rescission" that largely repealed the 2016 Rule, adopting a new economic-limited definition of "waste" (no waste where capture cost > resource value), relying on an "interim domestic" social-cost metric, and deferring to state/tribal rules.
- Plaintiffs (California, New Mexico, and citizen groups) challenged the Rescission under the APA and NEPA; multiple related suits and preliminary rulings (including in this district) had already addressed interim suspension actions.
- The administrative record showed BLM reversed many prior factual findings, did not hold public hearings for the Rescission, and relied on post‑proposal analyses (e.g., marginal‑well spreadsheets and the interim methane metric) that were not made available for public comment.
- BLM issued a short EA and FONSI concluding no significant environmental impact; plaintiffs contend BLM failed to take a "hard look" at public‑health, environmental‑justice, climate, and cumulative impacts and that the Rescission violated APA notice‑and‑comment and reasoned‑explanation requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Interpretation of "waste" under the Mineral Leasing Act (MLA) | BLM misread the MLA by adopting an "economic limitation" that excludes as "waste" losses where capture costs exceed the gas value; this narrows BLM's statutory duty to prevent "undue waste." | BLM (and intervenors) argued Chevron deference applies and the economic limitation is a permissible reading, consistent with prior case law and with deference to state regimes. | Court: MLA is ambiguous (Chevron step 1) but BLM's economic‑only definition fails Chevron step 2 and is arbitrary and capricious under the APA; BLM must not cabin "waste" to individual operator economics or abdicate federal duties to states/tribes. |
| APA notice, reasoned explanation, and change of course | Plaintiffs: BLM failed to provide a reasoned explanation for reversing the 2016 factual findings, relied on post‑proposal analyses not disclosed for comment, inflated costs, and ignored oversight reports and prior agency determinations. | Defendants: BLM had discretion to revise the rule, relied on Executive Orders and interagency review, and should receive deference for technical judgments. | Court: BLM violated APA — inadequate notice/meaningful comment on key analyses (marginal wells spreadsheet), failed to justify reversal (Fox/State Farm), misstated administrative and compliance costs, and ignored prior record. |
| NEPA adequacy (EA vs EIS; public health, environmental justice, climate, cumulative impacts) | Plaintiffs: EA/FONSI is inadequate—BLM did not take a "hard look" at localized public‑health and tribal impacts, climate effects, or cumulative impacts with BLM’s fossil fuel program and other deregulatory actions; an EIS was warranted. | Defendants: BLM relied on incorporation by reference to the 2016 EA, impacts are dispersed or speculative, and EPA actions were not reasonably foreseeable at the time. | Court: NEPA violated — incorporation insufficient, BLM failed to analyze disproportionate tribal and low‑income impacts, did not adequately assess climate and cumulative impacts of BLM’s fossil‑fuel program; an EIS was required. |
| Remedy (vacatur vs remand without vacatur; scope/timing) | Plaintiffs seek vacatur of the Rescission to reinstate the 2016 Rule (or otherwise prevent unlawful deregulation). | Defendants urged remand without vacatur or a long stay to avoid disruption; argued equities favor leaving the Rescission in place pending reconsideration. | Court: Vacatur is appropriate (serious legal and environmental defects); vacatur stayed 90 days to allow orderly implementation steps. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (two‑step framework for reviewing agency statutory interpretation)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) (agency must provide a reasoned explanation for rule changes; arbitrary and capricious standard)
- FCC v. Fox Television Stations, Inc., 556 U.S. 502 (2009) (agency changing course must supply more detailed justification than for initial policy)
- Encino Motorcars, LLC v. Navarro, 136 S. Ct. 2117 (2016) (agency reversal without reasoned explanation is unlawful)
- Center for Biological Diversity v. National Highway Traffic Safety Admin., 538 F.3d 1172 (9th Cir. 2008) (NEPA and climate‑related analysis principles; monetization of greenhouse‑gas benefits)
- Kake v. United States Dep't of Agriculture, 795 F.3d 956 (9th Cir. en banc 2015) (agency must explain disregarding prior factual findings)
- California v. Azar, 911 F.3d 558 (9th Cir. 2018) (district court must set aside agency action when APA procedures not followed)
- Wyoming v. United States Dep't of the Interior, 366 F. Supp. 3d 1284 (D. Wyo. 2018) (related litigation addressing timing and stays of implementation)