Gulf Restoration Network v. Debra Haaland ( 2022 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 10, 2022 Decided August 30, 2022
No. 20-5179
GULF RESTORATION NETWORK, ET AL.,
APPELLANTS
v.
DEBRA A. HAALAND, IN HER OFFICIAL CAPACITY AS
SECRETARY OF THE INTERIOR, ET AL.,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:18-cv-01674)
Brettny E. Hardy argued the cause for appellants. With
her on the briefs were Stephen D. Mashuda and Christopher D.
Eaton.
Justin D. Heminger, Attorney, U.S. Department of Justice,
argued the cause for federal appellees. With him on the brief
were Todd Kim, Assistant Attorney General, and James A.
Maysonett, Attorney.
Steven J. Rosenbaum, Bradley K. Ervin, John C. Martin,
Susan Mathiascheck, Charles J. Engel, III, and Nikesh Jindal
2
were on the brief for appellees American Petroleum Institute
and Chevron, U.S.A., Inc.
Before: WILKINS, KATSAS, and JACKSON, * Circuit Judges.
Opinion for the Court filed by Circuit Judge KATSAS.
KATSAS, Circuit Judge: The Department of the Interior
sells offshore leases to oil and gas companies for development.
This case concerns the adequacy of an environmental impact
statement prepared in connection with two lease sales held in
2018. We hold that Interior adequately considered the option
of not leasing, reasonably refused to consider potential future
regulatory changes, and unreasonably refused to consider
possible deficiencies in environmental enforcement. Given the
one shortcoming we have identified, we remand without
vacatur.
I
A
The Outer Continental Shelf Lands Act (OCSLA) sets
forth a procedural framework for oil and gas development in
the Outer Continental Shelf, an area “between the outer
seaward reaches of a state’s jurisdiction and that of the United
States.” Ctr. for Biological Diversity v. U.S. Dep’t of the
Interior, 563 F.3d 466, 472 (D.C. Cir. 2009). In enacting the
OCSLA, Congress declared that the Shelf “should be made
available for expeditious and orderly development, subject to
environmental safeguards.” 43 U.S.C. § 1332(3).
*
Circuit Judge, now Justice, Jackson was a member of the panel
at the time the case was argued but did not participate in the opinion.
3
The OCSLA establishes a four-stage process for
development. First, Interior evaluates national energy needs to
formulate a five-year plan of proposed lease sales. 43 U.S.C.
§ 1344(a). Next, Interior sells the leases to the highest
responsible qualified bidders. Id. § 1337(a)(1). But a lease
does not confer “an immediate or absolute right to explore for,
develop, or produce oil or gas on the OCS; those activities
require separate, subsequent federal authorization.” Sec’y of
the Interior v. California, 464 U.S. 312, 317 (1984). That
comes at the third and fourth stages, when Interior reviews
lessees’ plans for exploration and then for development and
production. 43 U.S.C. §§ 1340, 1351. During this process,
Interior must prepare environmental impact statements (EISs)
as necessary. See id. § 1344(b)(3).
B
The National Environmental Policy Act governs the
preparation of EISs. NEPA establishes procedural
requirements to ensure that the government gives “appropriate
consideration” to environmental impacts before undertaking
major actions. 42 U.S.C. § 4332(2)(B)–(C). It requires the
government to “take a ‘hard look’ at the reasonably foreseeable
impacts of a proposed major federal action.” Indian River
Cnty. v. U.S. Dep’t of Transp., 945 F.3d 515, 533 (D.C. Cir.
2019) (cleaned up). NEPA also tasks the Council on
Environmental Quality with promulgating implementing
regulations. 42 U.S.C. § 4332(2)(B); Dep’t of Transp. v. Pub.
Citizen, 541 U.S. 752, 757 (2004). The statute requires that
EISs consider “alternatives to the proposed action,” 42 U.S.C.
§ 4332(2)(C)(iii), and a CEQ regulation clarifies that one such
alternative must be the possibility of taking no action, 40
C.F.R. § 1502.14(c).
4
An agency can “meet its NEPA obligations in steps.” W.
Org. of Res. Councils v. Zinke, 892 F.3d 1234, 1237 (D.C. Cir.
2018). When “tiering” its EISs, the agency first publishes a
programmatic EIS to assess “the broad environmental
consequences attendant upon a wide-ranging federal program.”
Id. (cleaned up). It later issues “narrower EISs analyzing the
incremental impacts of each specific action taken as part of a
program.” Id. at 1238. Supplements are required when the
agency “makes substantial changes” to its program or “[t]here
are significant new circumstances or information … bearing on
the proposed action or its impacts.” 40 C.F.R. § 1502.9(d)(1).
C
This appeal concerns Lease Sales 250 and 251, which were
among the 11 that Interior proposed in its five-year plan
covering mid-2017 to mid-2022. Interior held the sales in
2018. They involve more than 150 million acres in the Gulf of
Mexico.
Before the sales, Interior prepared three EISs. First, it
issued a programmatic EIS addressing the environmental
impacts of the five-year plan. Second, it issued a narrower
“multisale” EIS addressing the impacts of leasing in the Gulf.
Third, it issued a supplemental EIS specific to the two lease
sales at issue.
After the sales, three environmental groups asserted that
the supplemental EIS did not comply with NEPA. They sued
Interior and the Bureau of Ocean Energy Management
(BOEM), the component agency within Interior that had
prepared the EISs. They argued that BOEM failed to assess a
true “no action” alternative because it had assumed that energy
development would occur sooner or later, even if Lease Sales
250 or 251 did not. They also argued that BOEM had
unreasonably assumed two rules for protecting the
5
environment would remain in effect, despite the possibility of
future modifications. Finally, they argued that BOEM had
unreasonably assumed all such rules would be effectively
enforced, despite a report suggesting otherwise. The American
Petroleum Institute and Chevron U.S.A. Inc. intervened in
support of Interior.
The district court granted summary judgment to Interior.
In upholding BOEM’s “no action” analysis, it found the Bureau
had reasonably assumed that development was inevitable. Gulf
Restoration Network v. Bernhardt, 456 F. Supp. 3d 81, 97–99
(D.D.C. 2020). The court concluded that BOEM did not need
to consider whether the existing rules would change. Id. at 100.
And it accepted BOEM’s assumption that Interior would
adequately enforce its rules. Id. at 100–02. The environmental
groups now appeal.
II
Courts review agency compliance with NEPA through the
Administrative Procedure Act. Sierra Club v. FERC, 867 F.3d
1357, 1367 (D.C. Cir. 2017). The district court thus sat as an
appellate tribunal, reviewing BOEM’s decision under the
familiar APA standards. Am. Bioscience, Inc. v. Thompson,
269 F.3d 1077, 1083 (D.C. Cir. 2001). We, in turn, apply the
same standards. Rempfer v. Sharfstein, 583 F.3d 860, 864–65
(D.C. Cir. 2009).
Under the APA, we ask whether agency action is
“arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.” 5 U.S.C. § 706(2)(A). This review
is “highly deferential” to the agency. Defs. of Wildlife v.
Jewell, 815 F.3d 1, 9 (D.C. Cir. 2016) (cleaned up). In
particular, we “give deference to agency judgments as to how
best to prepare an EIS,” Indian River Cnty., 945 F.3d at 533, so
long as the EIS “contains sufficient discussion of the relevant
6
issues and opposing viewpoints” and “the agency’s decision is
fully-informed and well-considered,” Nevada v. Dep’t of
Energy, 457 F.3d 78, 93 (D.C. Cir. 2006) (cleaned up).
III
We first consider whether BOEM adequately considered a
“no action” alternative in the supplemental EIS.
A
In preparing an EIS, an agency must evaluate the
“reasonable alternatives to a contemplated action.” Food &
Water Watch v. FERC, 28 F.4th 277, 282 (D.C. Cir. 2022)
(cleaned up). These alternatives must include the possibility of
taking no action. 40 C.F.R. § 1502.14(c).
In the supplemental EIS, BOEM assessed environmental
impacts on the assumption that future lease sales would occur
in the Gulf even if one such sale were cancelled. Given that
assumption, the Bureau concluded the cancellation of one
proposed lease sale “would not significantly change the
environmental impacts” of development in the Shelf. J.A. 904.
This analysis was not arbitrary. Interior has a statutory
obligation to make the Shelf available for development to meet
national energy needs. 43 U.S.C. §§ 1332(3), 1334(a).
Moreover, record evidence showed that the Gulf compares
favorably to other parts of the Shelf in terms of development
opportunities, infrastructure readiness, and industry interest.
Thus, Interior’s five-year plan proposed that all but one of its
lease sales would take place in the Gulf. So BOEM reasonably
concluded that the cancellation of a single lease sale would
only postpone development in the region.
7
BOEM also reasonably concluded that such a cancellation
would not materially change overall environmental impacts. It
explained that these impacts turn on the aggregate amount of
leasing in the long run. A typical lease runs for 50 years, and
BOEM projected impacts over a 70-year timeframe. At this
scale, any single sale would make “only a small …
contribution” to overall activity in the Shelf. J.A. 550. And a
one- or two-year delay in development would have little effect
on overall environmental impacts.
B
The environmental groups argue that BOEM failed to
consider a true “no action” alternative because it assumed
future lease sales would occur. They also argue that it was
arbitrary for BOEM to predict that the postponement of a lease
sale would not significantly affect the environment. We reject
both arguments.
1
The environmental groups argue that a true “no action”
alternative would involve the cancellation of all future planned
leases. We agree that BOEM needed to consider that
alternative, but we think it did. In the programmatic EIS,
BOEM considered the effect of allowing no new leasing in the
Gulf and even in the entire Shelf. And in the supplemental EIS,
it incorporated that analysis by reference.
BOEM permissibly divided its analysis across the EISs.
Through tiering, an agency may first assess “broad
environmental consequences” in a programmatic EIS and later
supplement that analysis with “narrower EISs analyzing the
incremental impacts” of specific actions. W. Org. of Res.
Councils, 892 F.3d at 1237–38 (cleaned up). “The subsequent
analysis need only summarize, and incorporate by reference,
8
the environmental issues discussed in the programmatic EIS.”
Nevada, 457 F.3d at 91.
The environmental groups object that such tiering would
effectively “bind the agency to hold the lease sales as proposed
in the five-year plan.” Reply Br. at 4. But BOEM remained
free to reconsider its plan. It simply had no obligation to do so
where, as here, no new information had emerged since the
earlier EIS. 40 C.F.R. § 1502.9(d)(1)(ii).
2
BOEM reasonably concluded that the cancellation of a
single lease sale would have only limited environmental
effects. The environmental groups assert that delaying
development might have significant effects if key variables—
such as supply, demand, or available drilling technology—
change over time. The Bureau acknowledged that possibility,
but it made “educated assumptions about an uncertain future”
and then engaged in the “reasonable forecasting” that “NEPA
analysis necessarily involves.” Sierra Club, 867 F.3d at 1374
(cleaned up). Specifically, BOEM estimated future production
levels based on historical data and current industry trends. It
predicted impacts by analyzing a range of factors and
estimating their “frequency, duration, and geographic extent.”
J.A. 947. And it explained the scale at which it was considering
the impacts. Because BOEM disclosed its assumptions and
gave reasonable analysis, its conclusion passes muster.
IV
We next consider whether BOEM acted arbitrarily by
failing to consider potential changes to two environmental rules
designed to reduce the risk of oil and gas spills.
9
A
The Bureau of Safety and Environmental Enforcement
(BSEE), another component agency within Interior, makes and
enforces rules to reduce risks from drilling. In 2016, it adopted
two rules at issue here. The Production Safety Rule addressed
certain systems and devices required to ensure safe production
of oil and gas. See 81 Fed. Reg. 61,834 (Sept. 7, 2016). The
Well Control Rule added new requirements for equipment used
to safeguard against oil and gas blowouts. See 81 Fed. Reg.
25,888 (Apr. 29, 2016). After BOEM completed its
supplemental EIS, BSEE revised these rules to eliminate
“unnecessary regulatory burdens.” See 83 Fed. Reg. 49,216(Sept. 28, 2018); 84 Fed. Reg. 21,908 (May 15, 2019).
BOEM invoked the 2016 rules as it undertook its NEPA
analysis. It concluded that they would help minimize the risk
of future oil and gas spills. But BOEM did not consider
whether the rules might be changed, or what impact any
changes might have on environmental safety. BOEM
acknowledged the possibility of changes only in response to
comments to the supplemental EIS. Later, after proposed
changes began to take shape, BOEM discussed them when it
finalized Lease Sale 251. At that point, BOEM concluded that
the changes would not increase environmental risks because
they left key protections intact.
The environmental groups argue that BOEM should have
discussed in its supplemental EIS the possibility that the 2016
rules would be changed.
B
We conclude that BOEM permissibly declined to consider
the potential rule changes, which were too inchoate to require
discussion in the supplemental EIS.
10
1
At the outset, we reject two threshold arguments raised by
the intervenors. They contend that the environmental groups’
criticism of the supplemental EIS amounts to a collateral attack
on BSEE’s decision to amend the rules, which is not cognizable
under NEPA. City of Olmsted Falls v. FAA, 292 F.3d 261, 273
(D.C. Cir. 2002). But the groups do not challenge BSEE’s
regulatory amendments, only BOEM’s failure to account for
them. Because their theory “would have no effect on the
validity” of BSEE action, they did not mount a collateral attack.
Snoqualmie Valley Pres. Alliance v. U.S. Army Corps of
Eng’rs, 683 F.3d 1155, 1160 (9th Cir. 2012).
The intervenors also argue that this dispute is unripe
because the BSEE rules have no bite until after the leasing
stage. But we have held that a NEPA challenge is ripe once
leases have been issued, which is when Interior’s decision “will
result in irreversible and irretrievable commitments of
resources to an action that will affect the environment.” Ctr.
for Biological Diversity, 563 F.3d at 480 (cleaned up). Because
Interior has reached this point of inevitability, “it is irrelevant
to the existence of a justiciable controversy that there will be a
time delay before the [rules] come into effect.” Reg’l Rail
Reorganization Act Cases, 419 U.S. 102, 143 (1974).
2
The district court said BOEM did not need to consider
potential rule changes that, by definition, lacked the force of
law. Gulf Restoration Network, 456 F. Supp. 3d at 100. We
rest on a narrower rationale: An agency need not consider
regulatory developments that are so inchoate as to be “not
meaningfully possible” to analyze. Del. Riverkeeper Network
v. FERC, 753 F.3d 1304, 1310 (D.C. Cir. 2014) (cleaned up).
11
In this case, BOEM finalized its supplemental EIS on
December 5, 2017. See 82 Fed. Reg. 59,644, 59,645 (Dec. 15,
2017). Nothing in the record suggests that it had any specific
information about the possible rule changes at that time.
BSEE’s earliest relevant action did not take place until
December 6, when it completed its own draft environmental
assessments. J.A. 1028–29. Although BSEE completed those
assessments before BOEM published a notice of its
supplemental EIS in the Federal Register, the relevant question
is what BOEM knew “at the time the EIS was being prepared.”
Habitat Educ. Ctr. v. U.S. Forest Serv., 609 F.3d 897, 898 (7th
Cir. 2010). Nothing before us establishes that the draft
assessments were available to BOEM before December 6—or,
for that matter, at any point before they were published in
connection with BSEE’s proposed regulatory changes. See 82
Fed. Reg. 61,703, 61,717 (Dec. 29, 2017); 83 Fed. Reg. 22,128,
22,147 (May 11, 2018).
As of December 5, BOEM appears to have known only
that rule changes might be forthcoming. Earlier in 2017, the
President had ordered agencies to modify any regulations that
burdened energy development unnecessarily, and the Secretary
of the Interior had directed BSEE to review the Well Control
Rule accordingly. 82 Fed. Reg. 16,093 (Mar. 31, 2017); J.A.
1079. But a general awareness that change might come is
hardly the same as knowing its likelihood or contours. And
NEPA does not require an agency to work through every
“remote and speculative possibilit[y].” NRDC, Inc. v. Morton,
458 F.2d 827, 837–838 (D.C. Cir. 1972). So BOEM
permissibly declined to consider in its supplemental EIS the
potential for rule changes.
Because the environmental groups contest only what
BOEM should have considered in its supplemental EIS, we
need not address whether post-EIS developments, such as
12
publication of the proposed changes, constitute the kind of
“significant new circumstances or information” that might
warrant an additional EIS. 40 C.F.R. § 1502.9(d)(1)(ii). But
we note that, before holding Lease Sale 251, BOEM explained
its view that the proposed amendments would not undermine
environmental safety because they left “critical safety
provisions intact.” J.A. 1073.
V
We last consider whether BOEM acted arbitrarily by
failing to address a report about deficiencies in BSEE’s
enforcement of existing safety and environmental regulations.
A
BOEM repeatedly factored BSEE’s work into its analysis.
In the programmatic EIS, it “assume[d] that BSEE would
implement requirements for safe operations and environmental
protection,” and it promised to “reconsider[] any related
environmental impacts” if that assumption proved unfounded.
J.A. 282. In the multisale EIS, it outlined BSEE’s duties and
regulations. And in response to comments to the supplemental
EIS, it credited what it described as BSEE’s “rigorous
inspection program” and “rigorous enforcement programs.”
J.A. 1021–22.
But BOEM did not consider whether BSEE’s work was in
fact rigorous, despite some evidence that it was not. After each
EIS, commenters asked BOEM to address a Government
Accountability Office report that criticized BSEE. The report
faulted BSEE for maintaining “outdated policies and
procedures” and failing to develop “criteria to guide how it uses
enforcement tools.” J.A. 434, 438. It further found that this
lack of criteria “causes BSEE to act inconsistently,” creates
uncertainty about BSEE’s “oversight approach and
13
expectations,” and risks “undermining [agency] effectiveness.”
J.A. 434, 438. After a commenter raised the report in response
to the programmatic EIS, BOEM promised to address the
asserted deficiencies at the leasing stage. J.A. 373. But it later
reneged, telling commenters that the issues were outside the
scope of the EISs at that stage. J.A. 736, 1023–24.
B
1
We agree with the environmental groups that BOEM’s
failure to address the report was arbitrary. To engage in
reasoned decisionmaking, an agency must respond to
“objections that on their face seem legitimate.” PPL
Wallingford Energy LLC v. FERC, 419 F.3d 1194, 1198 (D.C.
Cir. 2005) (cleaned up). Here, BOEM itself had repeatedly
acknowledged the importance of BSEE enforcement to its
analysis of environmental risks. And the GAO report, while
hardly conclusive on this point, raised seemingly legitimate
concerns about enforcement effectiveness.
Of course, an agency may assume effective enforcement
in the ordinary case. See United States v. Armstrong, 517 U.S.
456, 464 (1996) (discussing presumption of regularity). But it
may not reach a conclusion that “runs counter to the evidence.”
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,
463 U.S. 29, 43 (1983). So, more is required when credible
evidence seems to undercut the assumption. Here, BOEM
sidestepped the GAO report and offered only unelaborated
statements that BSEE’s enforcement was “rigorous.” In the
circumstances here, that was not good enough.
Likewise, because BOEM promised to consider the GAO
report at the leasing stage, it should have explained its later
decision not to do so. BOEM was of course free to change its
14
views, but it should have acknowledged and explained the
change. See FCC v. Fox TV Stations, Inc., 556 U.S. 502, 515–
16 (2009). Instead, BOEM merely brushed aside the report as
beyond the scope of the supplemental EIS. This unexplained
about-face was also arbitrary.
2
The district court discounted the GAO report because it did
not suggest a complete lack of enforcement. Gulf Restoration
Network, 456 F. Supp. 3d at 101. On that basis, the court
sought to distinguish Friends of Back Bay v. U.S. Army Corps
of Engineers, 681 F.3d 581 (4th Cir. 2012), which held it
arbitrary for the Corps to conclude that wetlands would be
protected by a rule that was “entirely unenforced,” id. at 588–
89. But while Friends of Back Bay may be factually
distinguishable, its reasoning applies here. The Fourth Circuit
asked whether the agency had any “reasonable basis” to
conclude that the rule “was being adequately enforced.” Id. at
589 (emphasis added). As noted above, the agency here relied
on an assumption of effective enforcement, but it declined to
address evidence undercutting the assumption.
Interior further argues that BOEM did not need to address
the report until after the leasing stage because BSEE
enforcement does not begin until after leases are sold. But
having invoked BSEE enforcement to argue that environmental
concerns would be manageable, BOEM could not
simultaneously “brush off comments” about lax enforcement
“as beyond its purview.” Del. Dep’t of Nat. Res. & Env’t
Control v. EPA, 785 F.3d 1, 18 (D.C. Cir. 2015). Moreover,
we doubt that consideration of BSEE’s effectiveness can wait
so long. Only at the early OCSLA stages does the agency
“look[] ahead and assimilate[] broad issues relevant to the
program” overall. Found. on Econ. Trends v. Heckler, 756
15
F.2d 143, 159 (D.C. Cir. 1985) (cleaned up). After leases have
issued, later EISs are “site-specific” and address “more
particularized considerations.” Id. (cleaned up). As with the
issue of environmental mitigation more generally, BSEE’s
effectiveness is not merely site-specific, and so now was the
time to address it.
Before this court, Interior argues that the GAO report does
not raise significant concerns about BSEE enforcement. It
makes at least a plausible argument on that score. But given
everything we have discussed above, BOEM should have
explained its position in an EIS. We cannot affirm based on a
post hoc litigation rationalization pressed by agency counsel.
SEC v. Chenery Corp., 318 U.S. 80, 87–88 (1943).
VI
Because BOEM arbitrarily declined to consider the GAO
report, we must reverse in part the grant of summary judgment
and remand the case for further agency consideration of that
issue. But we decline to vacate the supplemental EIS, the
records of decision announcing Lease Sales 250 and 251, or the
leases issued through those sales.
Although vacatur is the typical remedy for an APA
violation, it is not inevitable. “The decision whether to vacate
depends on the seriousness of the order’s deficiencies (and thus
the extent of doubt whether the agency chose correctly) and the
disruptive consequences of an interim change that may itself be
changed.” Allied-Signal, Inc. v. U.S. NRC, 988 F.2d 146, 150–
51 (D.C. Cir. 1993). Oglala Sioux Tribe v. U.S. Nuclear
Regulatory Commission, 896 F.3d 520 (D.C. Cir. 2018), is
instructive on the appropriateness of remand without vacatur in
the NEPA context. There, we recognized the “seriousness” of
the “deficiencies” in the EIS under review. Id. at 538. But we
declined to vacate either the EIS or an associated mining
16
license because we had “not been given any reason to expect
that the agency [would] be unable to correct those deficiencies”
on remand, and we were concerned about the disruptive effects
of vacating the license in the interim. Id. In addition, we
concluded that the challenger would “not suffer harm—
irreparable or otherwise” from leaving the license in effect at
least for awhile longer. See id.The same considerations are present here. Whatever the
seriousness of BOEM’s error, its attorneys make a colorable
case that the GAO report ultimately should not change the
bottom line. While we cannot affirm on that basis, we can say
that the environmental groups have given us no reason to doubt
that BOEM itself can make the same case on remand.
Moreover, vacatur would be highly disruptive for the lessees.
They have paid millions of dollars to obtain their leases and
have acted for some four years in reliance on them—including
by investing substantial additional sums and by executing
contracts with third parties. Moreover, any redo of the lease
sales “would be tainted by prior publication of [the] lessees’
proprietary valuation of the leases” following the original sales.
Intervenors’ Br. at 33. Conversely, the environmental groups
have identified no harm that flows from leaving the sales in
place for now, when exploration and development cannot occur
absent further regulatory approvals from Interior.
We also decline to grant an intermediate remedy between
vacatur and remand without vacatur. The environmental
groups propose that we at least enjoin activity under Lease
Sales 250 and 251. We have occasionally ordered this kind of
partial relief in NEPA cases. See, e.g., Pub. Emps. for Env’t
Responsibility v. Hopper, 827 F.3d 1077, 1084 (D.C. Cir. 2016)
(declining to vacate a lease or regulatory approvals but
vacating an EIS and imposing conditions on the lessee’s
activity). But we see no reason to grant such relief here. The
17
deficiency in the supplemental EIS seems correctable, and even
partial relief would be disruptive, as the lessees risk forfeiting
their leases if they cannot timely meet certain obligations.
VII
We reverse the summary judgment in part and remand the
case to the district court with instructions to remand it to the
agency for further consideration of the GAO report. In so
doing, we decline to vacate any of the administrative orders
under review. We affirm the summary judgment in all other
respects.
So ordered.