IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO PETITIONER S OPENING BRIEF

Transcription

1 Civil Action No.: 1:16-cv REB WILDEARTH GUARDIANS, v. Petitioner, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO U.S. BUREAU OF LAND MANAGEMENT, Respondent. PETITIONER S OPENING BRIEF

2 TABLE OF CONTENTS TABLE OF AUTHORITIES... iv GLOSSARY OF ABBREVIATIONS...vii INTRODUCTION...1 LEGAL FRAMEWORK...3 FACTUAL BACKGROUND...7 I. OZONE POLLUTION AND IMPACTS...7 II. BLM S OIL AND GAS LEASING AND DEVELOPMENT PROCESS...9 III. THE DENVER NONATTAINMENT AREA, COLORADO SIP REQUIREMENTS, AND OZONE PRECURSOR EMISSIONS FROM OIL AND GAS ACTIVITY...10 IV. BLM S 2015 OIL AND GAS LEASE SALES IN THE DENVER NONATTAINMENT AREA...13 STANDARD OF REVIEW...15 ARGUMENT...16 I. GUARDIANS HAS STANDING...16 II. BLM ARBITRARILY DETERMINED THAT IT DID NOT NEED TO MAKE CONFORMITY DETERMINATIONS FOR ITS LEASING DECISIONS...18 A. BLM s Leasing Decisions Indirectly Result in Ozone Precursor Emissions That Exceed 100 TPY...20 B. Future Indirect Emissions from BLM s Leasing Decisions are Reasonably Foreseeable C. The Exemption for Initial Outer Continental Shelf Lease Sales is Inapplicable to BLM s Onshore Lease Sales ii

3 D. The NSR Permit Exemption Does Not Apply to Lease Sale Authorizations...28 CONCLUSION...29 iii

4 TABLE OF AUTHORITIES Cases Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971)...16 City of Olmsted Falls v. FAA, 292 F.3d 261 (D.C. Cir. 2002)...15 Conservation Law Found. v. Busey, 79 F.3d 1250 (1st Cir. 1996)...15 Ctr. for Biol. Diversity v. U.S. Dept. of the Interior, 563 F.3d 466 (D.C. Cir. 2009)...28 Defenders of Wildlife v. Gutierrez, 532 F.3d 913 (D.C. Cir.2008) Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000)...16 Hunt v. Washington State Apple Advertising Comm n, 432 U.S. 333 (1977)...16 Lemon v. Geren, 514 F.3d 1312 (D.C. Cir. 2008)...17 Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)...17 McDonald v. Clark, 771 F.2d 460 (10th Cir. 1985)...18 Motor Vehicle Mfrs. v. State Farm, 463 U.S. 29 (1983)...15, 22, 25 New Mexico ex rel. Richardson, 565 F.3d 683 (10th Cir. 2009)...11 Olenhouse v. Commodity Credit Corp., 42 F.3d 1560 (10th Cir. 1994)...15 Pease v. Udall, 332 F.2d 62 (9th Cir.)...18 People of the State of Calif. ex rel. Imperial County Air Pollution Control Dist. v. U.S. Dept. of the Interior, 767 F.3d 781 (9th Cir. 2014)...15, 25 SEC v. Chenery Corp., 332 U.S. 194 (1947)...15 South Coast Air Quality Mgmt. Dist. v. F.E.R.C., 621 F.3d 1085 (9th Cir. 2010)...25, 26 Wyoming Outdoor Council v. U.S. Forest Service, 165 F.3d 43 (D.C. Cir. 1999)...28 Statutes 30 U.S.C. 226(a) U.S.C. 7401(b)(1) U.S.C. 7407(d)(1)(A)(i) U.S.C. 7407(d)(1)(A)(ii) U.S.C U.S.C. 7409(a) U.S.C. 7409(b) U.S.C. 7410(a) U.S.C. 7410(a)(1) U.S.C. 7410(a)(2)(A) U.S.C. 7410(k)(3) U.S.C. 7506(c)(1)...3, 5 42 U.S.C. 7506(c)(1)(A-B) U.S.C. 706(2)(A) U.S.C iv

5 Other Authorities 1970 U.S. Code Cong. & Admin. News CCR CCR CCR Fed. Reg. 63,214 (Nov. 30, 1993)...19, 27, Fed. Reg. 63,247 (Nov. 23, 1993) Fed. Reg. 63,206 (Nov. 19, 1999)...5, Fed. Reg. 16,436 (March 27, 2008) Fed. Reg. 17,254 (April 5, 2010) Fed. Reg. 30,088 (May 21, 2012) Fed. Reg. 65,292 (Oct. 26, 2015) Fed. Reg. 26,697 (May 4, 2016) Fed. Reg. 96,033 (Dec. 29, 2016) Fed. Reg (June 28, 2017)...9 H.R.Rep. No. 1146, 91st Cong., 2d Sess. 1,1...4 Regulations 40 C.F.R C.F.R. 153(b)(1) C.F.R C.F.R C.F.R (g) C.F.R (a) C.F.R (b) C.F.R , 6, 18, 23, C.F.R (b)(1)...18, C.F.R (c)(1) C.F.R (c)(3)(i)...26, C.F.R (d)(1)...6, C.F.R (f) C.F.R C.F.R (b) C.F.R C.F.R C.F.R C.F.R C.F.R , 19, C.F.R , C.F.R (d)...10 v

6 43 C.F.R C.F.R C.F.R (c) C.F.R vi

7 GLOSSARY OF ABBREVIATIONS APA APD BLM EA EPA NAAQS NEPA NO x NSR OCS RFDS RMP SIP tpy VOC Administrative Procedure Act Application for Permit to Drill U.S. Bureau of Land Management Environmental Assessment Administrator, Environmental Protection Agency National Ambient Air Quality Standards National Environmental Policy Act Nitrogen Oxide New Source Review Outer Continental Shelf Reasonably Foreseeable Development Scenario Resource Management Plan State Implementation Plan Tons Per Year Volatile Organic Compound vii

8 INTRODUCTION The Denver Metro and North Front Range region is under siege by ground-level ozone pollution. The U.S. Environmental Protection Agency ( EPA ) has linked ozone to asthma, lung disease, other respiratory ailments, and heart attacks. The most recent scientific evidence compiled by EPA suggests that excessive ozone exposure contributes to premature death. Ozone is the main ingredient in smog. From Douglas County, Colorado, north to Larimer and Weld Counties, ozone levels consistently exceed allowable health limits, putting the region s health at great risk. In 2008, EPA promulgated a stricter 8-hour standard for ozone concentrations that superseded a previous limit promulgated in EPA strengthened the 8-hour ozone limit because significant new scientific research demonstrated that serious respiratory and cardiovascular effects occurred when humans were exposed to ozone concentrations below the 1997 limit. EPA strengthened the 2008 limit again in 2015 because it found the 2008 limit did not adequately protect human health. For many years, EPA has declared a nine-county region along Colorado s Front Range to be in violation of health-based ozone limits. EPA has designated this region as a Nonattainment Area for ozone. The nine counties in the ozone Nonattainment Area include all of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Jefferson Counties and portions of Larimer and Weld Counties. Hereafter, this region will be referred to as the Denver Nonattainment Area. EPA first designated the Denver Nonattainment Area because it exceeded the 1997 ozone standard. In 2008, EPA again designated the Denver Nonattainment Area as in nonattainment for violating the 2008 ozone standard. The Area remains in violation

9 of the 2008 ozone standard. In 2016, EPA reclassified the Denver Nonattainment Area from a marginal to a moderate nonattainment area due to an ongoing failure to comply with the 2008 ozone standard. In 2017, the Denver Nonattainment Area is again set to be designated as in nonattainment with the 2015 ozone standard. The ozone problem in the Denver Nonattainment Area is not getting better. It is getting worse. The elevated levels of ozone in the Denver Nonattainment Area are attributable, in part, to the significant amount of oil and gas development occurring within the Area s boundaries, particularly in and around Weld County. Oil and gas development activities, including wellhead compressors, condensate tanks, and other pollutant-emitting activities release high levels of the pollutants that contribute to the formation of ozone. Defendant U.S. Bureau of Land Management ( BLM ) has authorized much of this oil and gas activity through the sale and issuance of federal oil and gas leases. BLM recently authorized additional oil and gas activities within the Denver Nonattainment Area by authorizing, selling, and issuing 67 leases in two lease sales held in May and November of 2015, covering more than 36,000 acres. Much of this acreage is situated in the Pawnee National Grassland, an iconic expanse of public lands in northeast Colorado. Development of these new leases will contribute to ozone levels in the Denver Nonattainment Area, and will also contribute to the Area s continuing violations of the 2008 ozone standard. A conformity determination is one of the measures in the Clean Air Act designed to clean up air quality in nonattainment areas. The conformity provision requires federal agencies to ensure their actions conform (i.e., do not interfere) with state implementation plans ( SIPs ) for attaining and maintaining air quality standards 2

10 such as the ozone standard. 42 U.S.C. 7506(c)(1). A federal action conforms to a SIP if it does not: cause or contribute to any new violation of any air quality standard in the nonattainment area; increase the frequency or severity of any existing air quality standard violation; or delay timely attainment of any standard. Id. at 7506(c)(1)(A-B). EPA has promulgated regulations delineating the circumstances under which an agency must make a conformity determination. These include when a federal action will emit more than 100 tons per year of an air pollutant such as ozone, and when emissions from the federal action are reasonably foreseeable. 40 C.F.R , 153(b)(1). This case turns on whether emissions from lease development are reasonably foreseeable at the leasing stage, triggering BLM s obligation to make a conformity determination before it sells and issues leases. To protect air quality and public health within the Denver Nonattainment Area, Petitioner WildEarth Guardians ( Guardians ) brings the present action alleging that BLM s authorizations of increased oil and gas development in the Denver Nonattainment Area through the 2015 May and November leasing authorizations violate the Clean Air Act by not making a conformity determination as required by 42 U.S.C. 7506(c)(1), within the meaning of the Administrative Procedure Act, 5 U.S.C Guardians also alleges BLM arbitrarily determined that the conformity requirement did not apply at the leasing stage, and that the action of authorizing lease sales fit within one of the narrow conformity exemptions. LEGAL FRAMEWORK Congress enacted the Clean Air Act to speed up, expand, and intensify the war against air pollution in the United States with a view to assuring that the air we breathe 3

11 throughout the Nation is wholesome once again. H.R.Rep. No. 1146, 91st Cong., 2d Sess. 1,1; 1970 U.S. Code Cong. & Admin. News 5356, The Clean Air Act s explicit goal is to, among other things, protect and enhance the quality of the Nation s air resources so as to promote the public health and welfare and the productive capacity of the population. 42 U.S.C. 7401(b)(1). Towards this end, the Clean Air Act employs a model of cooperative federalism. It starts when the U.S. Environmental Protection Agency ( EPA ) sets health, welfare and environmentally-based National Ambient Air Quality Standards ( NAAQS ) for criteria air pollutants in accordance with Section 109 of the Act. 42 U.S.C. 7409(a). EPA is required to establish NAAQS to ensure that pollution concentrations in the air that the public breathes are limited to the levels requisite to protect, with an adequate margin of safety, health, welfare and the environment. 42 U.S.C. 7409(b). Once EPA has established a NAAQS, individual states must develop state implementation plans ( SIPs ) to provid[e] for implementation, maintenance, and enforcement of the standards. 42 U.S.C. 7410(a)(1). These plans consists of emission limitations and other control measures, means, or techniques...as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the [Clean Air Act]. 42 U.S.C. 7410(a)(2)(A). States submit these plans to EPA for approval in accordance with Section 110 of the Clean Air Act. See 42 U.S.C. 7410(a). EPA reviews SIP submissions to ensure that the plan meets the minimum requirements of the Clean Air Act. If the SIP meets these requirements, EPA approves the plan or any plan revision. See 42 U.S.C. 7410(k)(3) (providing that EPA shall approve, disapprove, or partially approve or disapprove a state implementation plan). 4

12 The Clean Air Act prohibits any federal agency from authorizing activities that do not conform to the appropriate SIP. 42 U.S.C. 7506(c)(1). The Clean Air Act defines conformity to a SIP as: (A) conformity to an implementation plan s purpose of eliminating or reducing the severity and number of violations of the national ambient air quality standards and achieving expeditious attainment of such standards; and (B) that such activities will not (i) cause or contribute to any new violation of any standard in any area; (ii) increase the frequency or severity of any existing violation of any standard in any area; or (iii) delay timely attainment of any standard or any required interim emission reductions or other milestones in any area. Id. at 7506(c)(1)(A-B). The assurance of conformity to a SIP shall be an affirmative responsibility of a federal agency. Id. at 7506(c)(1). In 1993 EPA promulgated the General Conformity Rule that established criteria and procedures governing conformity determinations for all Federal actions. 58 Fed. Reg. 63,247 (Nov. 23, 1993), 40 C.F.R These rules were incorporated by reference into Colorado s SIP in See 64 Fed. Reg. 63,206 (Nov. 19, 1999). On April 5, 2010, EPA revised the General Conformity Rule. See 75 Fed. Reg. 17, (April 5, 2010). The newly promulgated 40 C.F.R. part 93, subpart B ( ), essentially duplicates the old 40 C.F.R. part 51, subpart W ( ) conformity regulations, deleting all of subpart W except for , which was revised. 75 Fed. Reg. 17,256. Any previously applicable SIP or TIP requirements relating to conformity remain enforceable until EPA approves the revision to the SIP or TIP to specifically remove them. 40 C.F.R (g). 5

13 For federal actions not related to transportation plans, a conformity determination is required for each criteria pollutant or precursor where the total of direct and indirect emissions of the criteria pollutant or precursor in a nonattainment or maintenance area caused by a Federal action would equal or exceed [tons/year.]. 40 C.F.R (b). Direct emissions are defined as those emissions of a criteria pollutant or its precursors that are caused or initiated by the Federal action... and occur at the same time and place as the action. 40 C.F.R Indirect emissions are defined as those emissions of a criteria pollutant or its precursors that [a]re caused or initiated by the Federal action... but occur at a different time or place as the action; [t]hat are reasonably foreseeable; [t]hat the agency can practically control; [f]or which the agency has continuing program responsibility. Id. Federal agencies must make a determination that a federal action that will emit one or more criteria pollutants conforms to the applicable SIP before undertaking the action. 40 C.F.R (b). To demonstrate conformity with a SIP, the agency must follow the procedures at 40 C.F.R and C.F.R There are limited exceptions to general conformity requirements under the Clean Air Act, such as when emissions from federal actions are below the 100 tons per year ( tpy ) threshold, 40 C.F.R (c)(1), and portions of federal actions that require a permit under the Clean Air Act s new source review program, id. at (d)(1). Federal actions that meet the criteria for a presumed to conform designation are also exempt from general conformity requirements. Id. at (f). 6

14 FACTUAL BACKGROUND I. OZONE POLLUTION AND IMPACTS Ozone is one of six criteria pollutants considered harmful to public health and the environment for which EPA has established a NAAQS under the Clean Air Act. See 40 C.F.R. 50.1, et seq. (setting forth NAAQS). Ground-level ozone is a dangerous pollutant that causes a variety of significant adverse impacts to human health. According to EPA, elevated levels of ozone have a causal relationship[] with a range of respiratory morbidity effects, including lung function decrements, increased respiratory symptoms, airway inflammation, increased airway responsiveness, and respiratoryrelated hospitalizations and emergency department visits Fed. Reg. 16,436, 16, (March 27, 2008). Furthermore, EPA has stated that the latest scientific evidence on ozone effects is highly suggestive that [ozone] directly or indirectly contributes to non-accidental and cardiorespiratory-related mortality, including premature mortality. Id. at 16, EPA has concluded that individuals with asthma are at particular risk from the adverse effects of ozone. Id. Ozone forms when sunlight reacts with two key air pollutants volatile organic compounds ( VOCs ) and nitrogen oxides ( NOx ). VOCs and NOx are referred to as ozone precursors. Ozone is a criteria pollutant under the federal Clean Air Act, 42 U.S.C Until 2008, the effective NAAQS for ozone was parts per million ( ppm ) over an 8-hour period. This standard is referred to as the 1997 ozone standard. On March 27, 2008, EPA published a final rule for a new ozone NAAQS that strengthened the 8-hour standard by lowering the limit to ppm. 73 Fed. Reg. 16,436 (March 27, 2008) ( 2008 ozone standard ). This new ozone standard became 7

15 effective on May 27, 2008, superseding the prior 1997 ozone NAAQS as of that time. EPA s decision to strengthen the ozone standard was based on numerous human health studies conducted over the past decade documenting the adverse effects of ozone on public health. After examining the data from these studies, EPA concluded that the current [1997 ozone] standard is not requisite to protect public health with an adequate margin of safety because it does not provide sufficient protection and that revision of the current [ozone] standard is needed to provide increased public health protection. 73 Fed. Reg. 16,471. Ozone concentrations are measured on an hourly basis. 40 C.F.R An exceedance of the ozone standard occurs if the average of eight consecutive hourly readings exceeds the 2008 ozone standard of ppm. Id. A violation of the standard occurs when the 3-year average of the annual fourth-highest 8-hour ozone concentrations exceeds ppm. Id. When the 3-year average for ozone levels for any given region falls below ppm, the region is considered to be in attainment with the ozone NAAQS. 42 U.S.C. 7407(d)(1)(A)(ii). Conversely, when the 3-year ozone average is above ppm, the region is considered a nonattainment area for ozone. 42 U.S.C. 7407(d)(1)(A)(i). In response to evolving science and public health needs, in 2015 EPA strengthened the 2008 ozone NAAQS, setting a new, more stringent 8-hour limit of ppm. 80 Fed. Reg. 65,292 (Oct. 26, 2015). According to EPA, the new limit was necessary to provide requisite protection of public health and welfare... Id. On June 28, 2017, the EPA Administrator announced he was delaying implementation of the 2015 ozone standard by one year, to October 1, 2018, to allow him additional time to 8

16 consider ozone area designations submitted by states. 82 Fed. Reg (June 28, 2017). II. BLM S OIL AND GAS LEASING AND DEVELOPMENT PROCESS BLM manages onshore oil and gas development through a three-phase process of planning, leasing, and drilling. Each phase is distinct, serves distinct purposes, and is subject to distinct rules, policies, and procedures; although the three phases, ultimately, must ensure orderly and efficient development. 43 C.F.R In the first phase, BLM prepares a Resource Management Plan ( RMP ) in accordance with 43 C.F.R With respect to fluid minerals leasing decisions, the RMP determines which lands containing federal minerals will be open to leasing and under what conditions, and analyzes the direct, indirect, and cumulative impacts from predicted implementation-stage development in the planning area. 30 U.S.C. 226(a); 40 C.F.R , , Developing an RMP requires BLM to predict the extent to which different activities, if permitted, would foreseeably occur. For fluid minerals, this prediction is premised on a reasonably foreseeable development scenario ( RFDS ) which forecasts the pace and scope of development. BLM s regulations require development of an EIS when preparing an RMP, and that wherever possible, the proposed resource management plan shall be published in a single document with the related environmental impact statement. 43 C.F.R BLM does not identify specific leases for sale at the RMP stage. In the second phase, BLM identifies the boundaries of lands to be offered for sale and proceeds to sell and execute those leases through a lease sale and issuance. Oil and gas companies nominate the leases offered for sale through the submission of an 9

17 Expression of Interest. 43 C.F.R BLM then proceeds by preparing a list of oil and gas lease parcels to be offered for actual sale. BLM solicits bids on a specific sale day and, based on those bids, BLM awards and issues leases for the identified sale parcels. Prior to a BLM lease sale, BLM has the authority to subject leases to terms and conditions, which can serve as stipulations to protect the environment. 43 C.F.R Once issued, oil and gas leases confer the right to use so much of the leased lands as is necessary to explore for, drill for, mine, extract, remove and dispose of all the leased resource in a leasehold. 43 C.F.R The Secretary of the Interior has the authority to cancel leases that have been improperly issued. 43 C.F.R (d). The third phase occurs when the lessee applies for a permit to drill or develop the lease. 43 C.F.R (c). At this stage, BLM may condition approval of the permit (referred to as an application for permit to drill, or APD ) on the lessees adoption of reasonable measures whose scope is delimited by the lease and the lessees surface use rights. 43 C.F.R III. THE DENVER NONATTAINMENT AREA, COLORADO SIP REQUIREMENTS, AND OZONE PRECURSOR EMISSIONS FROM OIL AND GAS ACTIVITY EPA initially designated the Denver Nonattainment Area in November 2007 after the region violated the 1997 ozone NAAQS. See 40 C.F.R The Denver Nonattainment Area includes the Denver Metro Area and the Northern Front Range region, including much of Larimer and Weld Counties. According to State and federal regulations, all of Weld County south of 40 degrees, 42 minutes, 47.1 seconds north 10

18 latitude, which generally includes all of Weld County south of the town of Nunn, is within the designated nonattainment area. Id.; 5 CCR III.M; 1 and figure below. 2 1 This provision of the Code of Colorado Regulations is available at %20CCR% (last visited July 28, 2017). 2 Denver Metropolitan/North Front Range 8-hour ozone NAAQS nonattainment area, available online at (last visited July 28, 2017). The Court may take judicial notice of this report under Federal Rule of Evidence 201. See New Mexico ex rel. Richardson, 565 F.3d 683, 702 n (10th Cir. 2009) (taking judicial notice of information on agency websites). 11

19 In 2012, EPA designated this same region as nonattainment over violations of the 2008 ozone NAAQS. 77 Fed. Reg. 30,088, 30,110 (May 21, 2012). In 2016, EPA reclassified the Denver Nonattainment Area as a moderate nonattainment area due to the failure of the region to attain the 2008 ozone NAAQS by Fed. Reg. 26,697, 26,714 (May 4, 2016). EPA s reclassification to moderate bumped up the Denver Nonattainment Area so that the State of Colorado is now required to revise its SIP and impose more stringent emission reductions in order to restore healthy air in accordance with the Clean Air Act. EPA will not approve a new SIP until In November 1999, EPA approved a revision to the Colorado SIP that incorporated by reference the Clean Air Act s General Conformity Rule. 64 Fed. Reg. 63,206 (Nov. 19, 1999). This action made the federal conformity requirement part of the Colorado Air Quality Control Commission regulations. See 5 CCR , Part A. 3 Therefore, Colorado s SIP includes the regulatory structure that prohibits a federal agency from undertaking any activity in a nonattainment area that does not conform to an applicable SIP. 5 CCR , Part A; 40 C.F.R (a). Oil and gas development has been identified as a significant source of the ozone precursor emissions VOCs and NOx in the Denver Nonattainment Area. Recent inventories show that within the Area, stationary sources of air pollution related to oil and gas development operations release more than 50 percent of all VOC emissions and 30 percent of all NOx emissions in the Denver Nonattainment Area. 4 The State of 3 This provision of the Code of Colorado Regulations is available at %20CCR% (last visited July 28, 2017). 4 See State of Colorado, Moderate Area Ozone SIP for the Denver Metro and North Front Range Nonattainment Area at ES-3, available at (last 12

20 Colorado estimates that by 2017 stationary sources of air pollution associated with oil and gas development will release 44 percent of all VOC emissions and 28 percent of all NOx emissions in the Denver Nonattainment Area. Id. IV. BLM S 2015 OIL AND GAS LEASE SALES IN THE DENVER NONATTAINMENT AREA On May 15, 2015, BLM sold 73 oil and gas leases in the Royal Gorge Field Office. Of these leases, 31 are located within the Denver Nonattainment Area. 5 On November 12, 2015, BLM sold 106 oil and gas leases in the Royal Gorge Field Office. Of these lease, 36 are located within the Denver Nonattainment Area. 6 In the Environmental Assessments ( EAs ) for the May and November 2015 lease sales, BLM acknowledged that leases included in the sales were within the Denver Nonattainment Area. BLM (May 2015 EA), BLM (November 2015 EA). BLM also recognized that, as a federal agency, it must demonstrate that it has complied with the requirements of the General Conformity Rule. BLM , BLM However, in both EAs BLM ultimately concluded that it was not required to make conformity determinations for leasing authorizations within the Denver Nonattainment Area. BLM , BLM In both EAs, BLM provided the following justifications for its conclusions: [l]easing does not authorize emissions generating activities, and therefore does not directly result in an emissions increase ; onshore lease sales are the same as Outer Continental Shelf lease sales, which are expressly exempt from conformity analysis; emissions from the leasing were not visited July 28, 2017). 5 See Exhibit A attached to the Petition for Review (Dkt. 1) for a list of lease parcels from the May 2015 lease sale that are located in the Denver Nonattainment Area. 6 See Exhibit B attached to the Petition for Review for a list of parcels from the November 2015 lease sale that are located in the Denver Nonattainment Area. 13

21 reasonably foreseeable ; and that the Clean Air Act new source review program exemption would likely apply to several features of any subsequent development. BLM , BLM Guardians filed timely protests of each lease sale on March 16, 2015, and September 11, 2015, respectively. BLM , BLM In each protest, Guardians alleged that BLM had specifically failed to demonstrate compliance with the Clean Air Act s general conformity requirements, and provided detailed responses to BLM s arguments as to why the agency was not required to make a conformity determination for each lease sale. BLM , BLM Guardians also raised conformity issues in its comment letters for both Leasing EAs. BLM , BLM On May 13, 2015, BLM dismissed Guardians protest of the May 2015 lease sale. BLM On November 12, 2015, BLM dismissed Guardians protest of the November 2015 lease sale. BLM In the May 2015 dismissal decision, BLM reiterated its justifications from the Leasing EAs for not doing a conformity analysis for leases within the Denver Nonattainment Area that were included in the May 2015 sale. BLM BLM did not address conformity in the November 2015 dismissal decision. On May 14, 2015, BLM sold 73 oil and gas lease parcels in the Royal Gorge Field Office, including 31 leases in the Denver Nonattainment Area. BLM These 31 leases total 10, acres. BLM issued all of these leases between June 3 and June 30, On November 12, 2015, BLM sold 106 oil and gas lease parcels in the Royal Gorge Field Office, including 36 leases in the Denver Nonattainment Area. 14

22 These 36 leases total 25, acres. BLM issued all of these leases on December 15, STANDARD OF REVIEW Courts review agency compliance with the Clean Air Act s conformity requirement pursuant to the Administrative Procedure Act ( APA ). People of the State of Calif. ex rel. Imperial County Air Pollution Control Dist. v. U.S. Dept. of the Interior, 767 F.3d 781, (9th Cir. 2014); City of Olmsted Falls v. FAA, 292 F.3d 261, 269 (D.C. Cir. 2002); Conservation Law Found. v. Busey, 79 F.3d 1250, (1st Cir. 1996). The APA provides that a reviewing court shall hold unlawful and set aside agency action, findings, and conclusions found to be... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. 5 U.S.C. 706(2)(A). Arbitrary and capricious review requires a court to determine whether the agency considered all relevant factors and whether there has been a clear error of judgment. Olenhouse v. Commodity Credit Corp., 42 F.3d 1560, 1574 (10th Cir. 1994). Accordingly, agency action will be set aside if: the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. Motor Vehicle Mfrs. v. State Farm, 463 U.S. 29, 43 (1983). A reviewing court may not supply a reasoned basis for the agency s action that the agency itself has not given. Id. (citing SEC v. Chenery Corp., 332 U.S. 194, 196 (1947)). Instead, [a]n agency s action must be upheld, if at all, on the basis articulated by the agency itself. Id. at 50. Though this standard of review is ultimately narrow and agency action is entitled to a 15

23 presumption of regularity, review must nevertheless be searching and careful, and thorough, probing, and in-depth. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, (1971). ARGUMENT I. GUARDIANS HAS STANDING Guardians has standing to bring this action. Standing under Article III of the Constitution requires a plaintiff to show: (1) an injury in fact due to defendants allegedly illegal conduct, (2) which can fairly be traced to the challenged conduct of the defendants, and (3) which can be redressed by a favorable decision. Defenders of Wildlife v. Gutierrez, 532 F.3d 913, (D.C. Cir. 2008); Friends of the Earth v. Laidlaw, 528 U.S. 167, (2000). Guardians has standing as an organization because: its member Mr. Nichols has standing to sue in his own right; the interests at stake are germane to Guardians purpose; and neither the claim asserted, nor the relief sought requires Mr. Nichols to participate directly in this lawsuit. Hunt v. Washington State Apple Advertising Comm n, 432 U.S. 333, 343 (1977). [E]nvironmental plaintiffs adequately allege injury in fact when they aver that they use the affected area and are persons for whom the aesthetic and recreational values of the area will be lessened by the challenged activity. Laidlaw, 528 U.S. at 183 (citations omitted). Actual environmental harm from complained-of activity need not be shown, as reasonable concerns that harm will occur are enough. Id. Here, Guardians meets this standard. Guardians members are directly harmed from BLM s unlawful authorizations of two lease sales in the Denver Nonattainment Area and issuance of the subject oil and gas leases. Guardians members have extensively 16

24 visited and recreated in the proximity of the lease tracts, and they have plans to continue to do so regularly. Nichols Declaration 24 (Exhibit 1). On such visits, Guardians members have enjoyed the aesthetic and recreational qualities of public lands in the Pawnee National Grassland National Grassland by hiking and appreciating the area s remoteness and open skies, and by viewing wildlife. Nichols Decl Guardians members have observed the effects of existing oil and gas development already occurring around the challenged leases, including drilling rigs spewing exhaust, the smell of oil in the air, endless truck traffic, haze and dust, and air pollution from engines and flaring. Nichols Decl Development of the challenged leases will degrade the air quality, scenic beauty, and solitude in the areas used by Guardians members, and result in harm to the landscapes, resources, and wildlife enjoyed and visited by Guardians members, ultimately reducing their enjoyment of these areas and likelihood of returning in the future. Nichols Decl. 19. Guardians members injuries can be traced to BLM s leasing authorizations. Lease development will degrade local air quality by producing air pollution from engines and other sources. Nichols Decl. 19, 22. Guardians injuries would be redressed by a favorable result in this suit because BLM would then be made to properly analyze conformity. This analysis could lead to a denial of some or all of the leases in the Denver Nonattainment Area, or to modifications that would lessen ozone impacts and emissions. See Lujan v. Defenders of Wildlife, 504 U.S. 555, n.7 (1992); Lemon v. Geren, 514 F.3d 1312, 1315 (D.C. Cir. 2008) ( [I]f the agency s eyes are open to the environmental consequences of its actions... it may be persuaded to alter what it proposed. ). 17

25 II. BLM ARBITRARILY DETERMINED THAT IT DID NOT NEED TO MAKE CONFORMITY DETERMINATIONS FOR ITS LEASING DECISIONS Resolution of this case turns on whether emissions from oil and gas development on federal leases within the Denver Nonattainment Area are reasonably foreseeable at the leasing stage. BLM is required to perform a conformity determination when it proposes an action in a nonattainment area where the total of direct and indirect emissions of the criteria pollutant... caused by a Federal action will exceed 100 tons per year ( tpy ) of ozone as measured using the ozone precursors NOx and VOCs. 40 C.F.R (b)(1) (emphasis added). Direct emissions occur at the same time and place as the action and are reasonably foreseeable. 40 C.F.R Indirect emissions occur at a different time or place as the action; are reasonably foreseeable; subject to the agency s control; and [f]or which the agency has continuing responsibility. Id. Although the act of authorizing leases for sale does not cause direct emissions as these emissions are defined in the General Conformity Rule, lease sale authorizations indirectly cause emissions that occur at a different time from the act of authorization, i.e., when the leases are developed. It is undisputed that BLM can control indirect emissions at the leasing stage, and retains continuing control over lease emissions at the subsequent permitting stage. BLM can completely avoid indirect emissions by deciding not to authorize nominated leases for sale. See, e.g., McDonald v. Clark, 771 F.2d 460, 463 (10th Cir. 1985) (recognizing that the Secretary of the Interior s authority to authorize oil and gas leases under the Mineral Leasing Act is discretionary rather than mandatory ); Pease v. Udall, 332 F.2d 62 (9th Cir.) (accord). BLM can also include lease stipulations that require limits on emissions. 43 C.F.R (authority to impose lease stipulations). The agency 18

26 has continuing program responsibility for lease emissions through subsequent permitting actions at the APD stage, where BLM may condition the approval of the APD on the lessees adoption of reasonable measures whose scope is delimited by the lease and the lessees surface use rights. 43 C.F.R , (c). In the Preamble to the General Conformity Rule, EPA determined that, in the leasing context, [w]here the Federal agency has the authority to impose lease conditions controlling future activities on the leased Federal land, these emissions must be analyzed in the conformity determination. 58 Fed. Reg. 63,214, 63,223 (Nov. 30, 1993). BLM recognizes that its 2015 May and November leasing decisions are subject to the Clean Air Act s conformity requirement because both decisions authorize leases that are within the Denver Nonattainment Area and will result in indirect emissions. BLM , BLM ; BLM , BLM Despite this acknowledgment, the agency does not perform a conformity analysis or make a conformity determination for either leasing decision. Instead, BLM proffers several excuses as to why its leasing decisions are not subject to the conformity requirement, all of which rely on the false premise that development-stage emissions are not reasonable foreseeable because they are not quantifiable at the leasing stage. BLM , BLM All of these excuses lack merit either because they incorrectly interpret the General Conformity Rule or the excuses are not applicable to leasing decisions. Therefore, BLM s decisions to forgo conformity analyses for both of the challenged leasing authorizations are arbitrary. 19

27 A. BLM s Leasing Decisions Indirectly Result in Ozone Precursor Emissions That Exceed 100 TPY. A conformity determination is not required for federal actions that do not produce direct or indirect emissions exceeding 100 tpy of ozone precursors. 40 C.F.R (b)(1). Although BLM did not estimate NOx and VOC emission levels from leases within the Denver Nonattainment Area for each of the challenged lease sales either through a Clean Air Act conformity determination or as part of the National Environmental Policy Act ( NEPA ) analysis in the Leasing EAs, the record shows that BLM has the data to make these estimates and that indirect emissions from its leasing authorizations exceed the 100 tpy threshold. To meet the requirements of a settlement agreement between Guardians and BLM in a previous lawsuit, in 2013 BLM created an Oil and Gas Air Emissions Inventory Report predicting future oil and gas air emissions for seven lease parcels within the Denver Nonattainment Area. See BLM The Emissions Report projects the number of wells for each of the seven lease parcels for high and low development scenarios for the years , and per-well emission levels for ten different air pollutants, including NOx and VOCs. BLM (well estimates per parcel), 3340 (per-well emissions estimates). The report relies on projected oil and gas development scenarios analyzed in a 2012 RFDS for the Royal Gorge Field Office. BLM According to the Emissions Report, one oil well would result in tpy of NOx and tpy of VOCs. BLM One natural gas well would result in tpy of NOx and tpy of VOCs. Id. The Emissions Report predicts minimum emissions levels for each lease using these figures based on the minimum one well per lease requirement. BLM

28 BLM s May 2015 lease sale included 31 leases located within the Denver Nonattainment Area. Assuming one well per lease, the lease sale would, at a minimum, result in 31 new wells. Multiplying the per well emissions estimates for NOx and VOCs from the Emissions Report by 31 new wells results in: (1) tpy of NOx and tpy of VOCs for oil wells, and (2) tpy of NOx and 1, tpy of VOCs for gas wells. Accordingly, estimated NOx and VOC emissions from the May 2015 lease sale exceed the Clean Air Act s 100 tpy emission threshold for a conformity determination. BLM s November 2015 lease sale included 36 leases located within the Denver Nonattainment Area. Assuming one well per lease, the lease sale would, at a minimum, result in 36 new wells. Multiplying the per well emissions estimates for NOx and VOCs from the Emissions Report by 36 new wells results in: (1) 783 tpy of NOx and tpy of VOCs for oil wells, and (2) tpy of NOx and 1, tpy of VOCs for gas wells. As is the case for the May 2015 lease sale, estimated NOx and VOC emissions from the November 2015 lease sale exceed the Clean Air Act s 100 tpy emission threshold for a conformity determination. These emissions estimates, using BLM s own data, demonstrate that indirect emissions from each of the challenged leasing authorizations exceeds the 100 tpy threshold for triggering a conformity determination. BLM did not even attempt to use its own data to assess whether emissions from lease development within the Denver Nonattainment Area would exceed the conformity threshold. Instead, BLM cherry-picked through the General Conformity Rule for exemptions into which it could shoe-horn its leasing authorizations to defer conformity analysis to the stage where the agency 21

29 approves permits for individual wells. 7 In so doing, BLM has entirely failed to consider an important aspect of the problem and offered an explanation that runs counter to the evidence before the agency, that should result in the lease sale authorizations being set aside as arbitrary. Motor Vehicle Mfrs., 463 U.S. at 43. B. Future Indirect Emissions from BLM s Leasing Decisions are Reasonably Foreseeable. Although BLM has data available to it that it could use to determine whether each of the challenged leasing authorizations met the threshold for a conformity determination and to perform a conformity analysis for each lease sale, the agency instead attempts to defer this analysis to a subsequent stage in the oil and gas development process by claiming that indirect emissions from leasing are not reasonably foreseeable. BLM , BLM BLM argues emissions are not reasonably foreseeable because the agency cannot specifically identify, at the leasing stage, the timing or pace of drilling, what equipment will be used/excluded as subject to New Source Review permitting, what type of drilling would occur (oil or gas), and what production rates might be. BLM , BLM However, the record demonstrates that these uncertainties do not preclude BLM from making the requisite conformity determination for each lease sale because BLM does not need this type of information to estimate future emissions from lease development. EPA regulations define reasonably foreseeable emissions as projected future direct and indirect emissions that are: 7 BLM has taken the opposite tack in Wyoming s Upper Green River Basin ozone nonattainment area where the agency is seeking to have oil and gas wells exempt from the conformity requirement by designating wells to the presumed to conform to the State Implementation Plan based on emissions from a single well. 81 Fed. Reg. 96,033 (Dec. 29, 2016). 22

30 (1) identified at the time the conformity determination is made; (2) the location of such emissions is known; and (3) the emissions are quantifiable as described and documented by the Federal agency based on its own information and after reviewing any information presented to the Federal agency. 40 C.F.R All of this information is available to BLM at the leasing stage. First, BLM acknowledges that any future development of the leases will result in emissions of criteria, [hazardous air pollutants], and [greenhouse gas] pollutants. BLM , BLM Second, BLM is aware of the location of such emissions because each lease sale authorization includes the specific locations of leases in the sale. See BLM (May 2015 lease parcel legal descriptions), (lease parcel maps); BLM (November 2015 lease parcel legal descriptions), (lease parcel maps). Regardless of when the leases in each sale are developed, BLM knows that (1) the lease sales will result in ozone precursor emissions and (2) the locations of those emissions sources within the Denver Nonattainment Area. Therefore, lease sale emissions are reasonably foreseeable under the first two prongs of EPA s definition. The third prong of the reasonably foreseeable definition that project emissions be quantifiable is the basis for BLM s refusal to perform a conformity analysis at the leasing stage. However, the emissions from each lease sale are quantifiable using data already available to BLM and in some cases specifically generated for BLM s use in analyzing air quality impacts from lease sales. The Emissions Report discussed in the previous section, and produced for BLM, is one source of information that provides perwell emissions estimates for all phases of oil and gas development. BLM The 23

31 Emissions Report also provides a methodology for predicting the maximum number of wells for individual lease parcels: To determine the potential maximum wells developed for each lease parcel, the area of each parcel in acres was divided by the average acres disturbed for each well. If the result was greater than the maximum wells per Township, the potential maximum was set to the maximum wells per Township; otherwise, the result was used. BLM BLM could have used this method to estimate minimum and maximum lease sale emissions for conformity purposes, contradicting the agency s assertion that emissions from the leasing decisions are not reasonably foreseeable. Although BLM chose not to use the Emissions Report in either of the Leasing EAs, it did rely on two other documents predicting future emissions related to oil and gas development in the Royal Gorge Field Office that would have allowed the agency to quantify reasonably foreseeable lease sale emissions for a conformity determination. These documents include the Colorado Air Resource Management Modeling Study ( CAARMS ), and the 2012 Reasonable Foreseeable Development Scenario for Oil and Gas in the Royal Gorge Field Office ( RFDS ). The RFDS does not predict or model emissions; rather, it predicts reasonably foreseeable minimum and maximum oil and gas development scenarios for the Royal Gorge Field Office over the next 20 years. See BLM The RFDS divides the Royal Gorge Field Office into eight different categories of oil and gas development potential based on the number of wells per township that any given area could support. Id. at BLM This system allows BLM to estimate the number of future wells in the Royal Gorge Planning Area with what the agency demonstrates is a high level of precision 12,355 wells over the next 20 years. Id. at BLM BLM is then able 24

32 to break down its estimate for the number of future wells inside and outside of the nonattainment area. Id. at BLM The RFDS provides a similar breakdown of future wells for BLM and Forest Service lands. Id. at BLM In addition to estimating the number of future wells, the RFDS also estimates specific production numbers for future oil and gas wells in the Planning Area. Id. at BLM BLM has used this data to project reasonably foreseeable future NOx and VOC emissions through the CARMMS report. BLM Yet BLM offers no reasonable explanation as to why indirect emissions for all oil and gas development in the Royal Gorge Field Office are reasonably foreseeable, but indirect emissions for the 2015 May and November leasing authorizations are not. The record shows that BLM can quantify emissions. In this case, however, it simply seems that the agency did not like the results. Because BLM s explanation for its conclusion that indirect emissions from oil and gas development are not reasonably foreseeable at the leasing stage runs counter to the evidence before the agency, BLM s leasing authorizations should be set aside. Motor Vehicle Mfrs., 463 U.S. at 43. The Ninth Circuit has considered what constitutes reasonably foreseeable indirect emissions for conformity purposes, although neither case is directly on point here. In South Coast Air Quality Mgmt. Dist. v. F.E.R.C., 621 F.3d 1085, (9th Cir. 2010), the court determined that indirect emissions from gas combustion were not reasonably foreseeable for conformity purposes where FERC did not retain continuing program responsibility over the burning of gas subject to conditions imposed by FERC, and the amount of gas transported by the pipeline at issue was unknown. In Calif. ex rel. Imperial County Air Pollution Control Dist., 767 F.3d at 799, the court determined 25

33 that indirect emissions from change in a water delivery point were not reasonably foreseeable because the emissions were not practicably controlled by the Secretary of the Interior. Although the Secretary approved the change in the delivery point, Imperial Irrigation, not the Secretary, ultimately controls the allocation of water that it receives. Id. In both cases, the determinative factor was whether the emissions subject to a conformity analysis were subject to the agency s control within the meaning of 40 C.F.R , and in both cases the court found this condition was not met. As discussed above, here BLM has continuing control over emissions from oil and gas development at the subsequent permitting stage, and can impose conditions of approval on development activities. 43 C.F.R , (c). C. The Exemption for Initial Outer Continental Shelf Lease Sales is Inapplicable to BLM s Onshore Lease Sales. BLM attempts to avoid making conformity determinations for the lease sales by claiming these actions are analogous to Initial Outer Continental Shelf ( OCS ) lease sales. BLM , BLM EPA explicitly exempted OCS lease sales from the conformity requirement because emissions from this type of action are not reasonably foreseeable, given that OCS lease sales are made on a broad scale and are followed by exploration and development plans on a project level. 40 C.F.R (c)(3)(i). The only support BLM provides for its argument that this exemption shields the lease sale authorizations at issue here is that development of an onshore lease requires subsequent BLM review and NEPA analysis of a specific development proposal. BLM , BLM BLM interprets this regulatory exemption too broadly. BLM should not be afforded deference in interpreting EPA s regulations. See South Coast Air Quality Mgmt. Dist. v. F.E.R.C., 621 F.3d 1085, 1099 (9th Cir. 2010) 26