Opinion ID: 170930
Heading Depth: 1
Heading Rank: 5

Heading: The alleged NEPA violation

Text: Plaintiffs also allege they are entitled to preliminary injunctive relief on the basis of their complaint's second claim for relief, which alleges that defendants, in issuing their ROD, violated NEPA by failing to consider the impacts of future natural gas development [i.e., the installation of additional gas wells] as a connected action. Parties' Proposed Scheduling Order at 4. [7] NEPA requires federal agencies to examine and disclose the environmental impacts of their proposed actions in the form of an environmental impact statement (EIS). Utah Envtl. Cong. v. Richmond, 483 F.3d 1127, 1133 (10th Cir.2007). Relevant to this case, NEPA's implementing regulations require federal agencies, in conducting such examinations, to take into consideration connected actions. 40 C.F.R. § 1508.25(a)(1). Actions are [deemed to be] connected [for purposes of NEPA] if they: (i) Automatically trigger other actions which may require environmental impact statements. (ii) Cannot or will not proceed unless other actions are taken previously or simultaneously. (iii) Are interdependent parts of a larger action and depend on the larger action for their justification. Id. § 1508.25(a)(1)(i)-(iii). [8] The purpose of this requirement is to prevent an agency from dividing a project into multiple actions, each of which individually has an insignificant environmental impact, but which collectively have a substantial impact. Great Basin Mine Watch v. Hankins, 456 F.3d 955, 969 (9th Cir.2006) (internal quotation marks omitted). Reviewing courts apply an `independent utility' test to determine whether multiple actions are so connected as to mandate consideration in a single EIS. Id.; see Utahns for Better Transp. v. U.S. Dep't of Transp., 305 F.3d 1152, 1183 (10th Cir.2002) (noting that this circuit applies the independent utility test). The crux of the test is whether each of two projects would have taken place with or without the other and thus had independent utility. Great Basin, 456 F.3d at 969 (internal quotation marks omitted); see Utahns for Better Transp., 305 F.3d at 1183 (An inquiry into independent utility reveals whether the project is indeed a separate project, justifying the consideration of the environmental effects of that project alone.). It is important to note that `projects', for the purposes of NEPA, are described as `proposed actions', or proposals in which action is imminent. O'Reilly v. U.S. Army Corps of Eng'rs, 477 F.3d 225, 236 (5th Cir.2007) (citing 40 C.F.R. § 1508.23). [T]he mere contemplation of certain action is not sufficient to require an impact statement. Id. (internal quotation marks omitted). While a cumulative impact analysis requires the [reviewing agency] to include `reasonably foreseeable' future actions in its review, improper segmentation is usually concerned with projects that have reached the proposal stage. Id. In this case, the defendants concluded in their FEIS, in response to public comments, that it was unnecessary to analyze potential natural gas well development as a connected action: [SG] notes that their development of the Bull MT lease unit may result in 55-60 [natural gas] wells over 10 years. Those estimates are speculative and are dependent on market conditions and other factors. This information is best addressed as potential foreseeable actions in the [cumulative effects] analysis. The direct action is the installation of the pipeline. The connected action that would have to happen for use of a new pipeline is the installation of the Compressor site on private ground. The # of wells that would result on the Bull MT lease unit or on other leases in the larger area is entirely speculative in nature. App. at 620. To the extent possible, [we] have included for the purposes of cumulative effects analysis the number of wells that could reasonably be serviced by the Bull Mountain pipeline. Although the presence of the Bull Mountain pipeline would create a situation in which the area is more attractive for natural gas production operations, there are no assurances that other leases in the area would be developed by drilling. Projecting number of wells based on amount of leased acreage is not meaningful because development of specific lease holds depends on gas price and demand, among many other variables. Thus, there are too many variables to predict future activities with any certainty.... To the extent feasible to facilitate cumulative effects analysis, [we] have projected the number of wells that may be serviced by the [Bull Mountain Natural Gas Pipeline].... The scope of cumulative error analysis was carefully considered and it is unreasonable to expect the EIS to include the analysis of impact associated with speculative oil and gas development. Further, we believe that an increasing nationwide demand for natural gas is the primary driving force behind the growing level of exploration and development in the Rocky Mountain region during the last several years. Additional infrastructure to transport the gas into the interstate pipeline grid is a result, not a cause, of development. Id. at 663. The district court, in denying plaintiffs' motion for preliminary injunction, acknowledged that defendants did not consider development of new gas wells that would be facilitated by the pipeline as connected actions. App. at 1034. Rather, the district court noted, [t]he only actions explicitly considered [by defendants] as connected actions ... [we]re compressor stations at the northern and southern ends of the pipeline. [9] Id. The district court ultimately concluded, however, that plaintiffs failed to demonstrate a substantial likelihood that they w[ould] succeed on their challenge to the FEIS under the NEPA. Id. at 1036. In support of this conclusion, the district court stated as follows: As with the roadless rule, there is room for debate about application of the relevant connected action criteria to anticipated gas well development. However, I conclude that the current record generally indicates that the agencies considered the relevant factors and made a rational determination based on those factors. The pipeline will transport gas from existing wells and could transport gas from future wells. The pipeline can exist without future well development, although that circumstance may be economically unwise. Future wells can exist without the pipeline. The FEIS considered other possible pipeline routes, and the agencies noted in the FEIS that gas from new wells would find other alternative means of transport from the area if the pipeline does not exist. The pipeline will not automatically trigger additional wells, drilling of additional wells can proceed without the pipeline, and the pipeline and possible additional wells are not interdependent; that is, dependent on each other. Under the applicable definition of connected action, the fact that the existence of pipeline may encourage additional gas wells, and probably will serve any additional wells, does not mean necessarily that additional wells are connected actions. Id. at 1036-37. The district court did not abuse its discretion in reaching this conclusion. To begin with, the record on appeal establishes that SG has an immediate purpose for building the Bull Mountain Pipeline that has nothing to do with future gas well development. According to SG, it has, to date, drilled or acquired a total of thirteen (13) natural gas wells in the Project area, nine of which are located in the Bull Mountain Unit. [10] Supp.App. at 3. Based on its most recent well pressure data, its thirteen wells can produce up to 8 million standard cubic feet of natural gas each day. Id. However, SG alleges, it is currently unable to transport the majority of that natural gas due to the lack of existing pipeline capacity in the Project area. Id. More specifically, SG alleges that [t]he main natural gas pipeline in the area is the 6-inch diameter Ragged Mountain Pipeline, and that [b]ecause there is only one compressor for that pipeline, it can currently transport only about 7 million standard cubic feet of natural gas each day. Id. Further, because SG only has the right to about 3.5 million standard cubic feet of the Ragged Mountain Pipeline's capacity, several million standard cubic feet of natural gas are stranded at [SG's] well sites every day. Id. Installing the Bull Mountain Pipeline and using it solely on existing gas wells to transport stranded gas, SG alleges, will result in a net income stream of 14 million dollars per year. In addition, the evidence in the record indicates that installation of the Bull Mountain Pipeline will allow SG to deliver its natural gas to the national energy markets, as opposed to only the local markets that are reached by the existing pipeline. App. at 131-32. Based upon this record evidence, it appears that the Bull Mountain Pipeline will have independent utility, and thus defendants reasonably concluded it was proper to consider its environmental impact without further consideration of potential future gas well development. To be sure, the capacity of the Bull Mountain Pipeline design is much larger than is necessary to simply serve the existing natural gas wells, and apparently by SG's own admission has been designed to accommodate `future common carrier capacity needs.' Id. at 66. In particular, the Bull Mountain Pipeline is expected to initially produce approximately 80 million cubic feet of gas per day based upon existing gas wells, but is sized to convey up to 375 million cubic feet of gas per day. Id. at 193-94. However, as defendants noted in the FEIS, the development of additional natural gas wells is entirely speculative at this point, and will ultimately depend on gas price and demand, among many other variables. Id. at 663. In other words, although SG is undoubtedly contemplating the development of additional gas wells in the area, nothing in the record on appeal suggests that such development is imminent. See O'Reilly, 477 F.3d at 236.