WOC has won a precedent-setting victory in its ongoing campaign to ensure responsible coalbed methane development in the Powder River Basin and elsewhere in Wyoming. On August 10, the 10th Circuit Court of Appeals unanimously agreed with WOC’s argument in the Pennaco case that coalbed methane’s unique environmental impacts must be considered fully before leasing.

The court’s decision validates WOC’s position, which held that the BLM had failed to provide adequate environmental analysis before it issued three leases to Pennaco Energy for coalbed methane development in the Powder River Basin According to WOC, coalbed methane production involves new and unique impacts—specifically the quantity and quality of water released during development—that make it different from conventional natural gas development. These differences merit careful consideration in order to ensure the area’s air, land, wildlife, and quality of life are adequately protected. WOC believed the BLM had failed to do this, and now the courts have agreed.

"I always thought we had a really good case," former executive director Dan Heillig says. "It seems obvious to me that CBM’s impacts are very different from those associated with conventional gas production and need to be considered separately."

According to Heilig, once oil and gas leases have been granted to industry, the BLM no longer has the ability to regulate development. This is why, he says, the pre-leasing stage is so critical and this case so important. The BLM has the most authority and options for ensuring that the unique impacts of CBM development are adequately considered and regulated before it issues an oil and gas lease.

Inadequate environmental analysis
The National Environmental Policy Act (NEPA) requires that public land managers analyze all potential impacts of a proposed action before moving forward on that action. In the Pennaco case, the BLM used two existing documents—one a 1985 Resource Management Plan, the other, the WYODAK Draft Environmental Impact Statement—to attempt to fulfill its NEPA obligation. WOC argued that these documents were woefully inadequate.

The 1985 resource management plan does not even mention coalbed methane production. The WYODAK Draft Environmental Impact Statement does mention CBM, but in reference to leases already in place. "The key distinction is that neither of these documents ever considered whether the BLM should even grant the leases given the potential environmental impacts of coalbed methane development," Heilig says. "We asserted that these documents were inadequate and the 10th Circuit agreed."

The seesaw legal battle
The 10th Circuit was not the first to agree with WOC’s position. In April 2002, the Department of the Interior Board of Land Appeals (IBLA) also sided with conservationists against the BLM.

As Deputy Chief Judge Bruce R. Harris of IBLA wrote at the time, oil and gas leases are invalid and illegal when the leasing "[is] based on existing environmental analyses, which either did not contain any discussion of the unique potential impacts associated with coalbed methane extraction and development, or failed to consider reasonable alternatives relevant to pre-leasing environmental analysis."

Pennaco, which is now a subsidiary of Marathon Oil Corp., initially asked IBLA to reconsider its ruling. IBLA resoundingly affirmed its initial decision. Having lost twice, Pennaco appealed the IBLA decision to U.S. Federal District Court in Wyoming, and in May 2003, Judge Clarence Brimmer overruled the IBLA, siding with Pennaco and the BLM. Judge Brimmer’s ruling stated that the IBLA’s opinion "arbitrarily and capriciously elevates form over substance by separating the two documents and refusing to consider them together." He argued that the BLM could splice together studies from different environmental analyses, pre- and post-leasing, to allow CBM lease sales.

WOC, along with the Powder River Basin Resource Council, Defenders of Wildlife, and the Natural Resource Defense Council, disagreed. They appealed Judge Brimmer’s ruling. The August decision affirmed the conservationists’ position and reinstated the original IBLA decision.

What next?
"This whole thing started because we wanted to challenge the way the BLM went about granting leases without first doing the needed environmental analysis," Heilig says. "The BLM was consistently failing to consider environmental impacts with the ‘hard look’ required by our environmental laws, and effectively fast-tracking all leasing requests. It’s clear that many leases issued by the BLM suffer from this same problem, especially in the Powder River Basin. The BLM is going to have to address the validity of many leases it has granted in the Basin."

In the meantime Pennaco/Marathon has a few options. The company could request that all the judges on the 10th Circuit Court of Appeals reconsider the case, rather than the panel of three that made the August 10th decision. Or it could petition the Supreme Court to take the case. Heilig thinks it is likely that Pennaco will do neither. "It would be very hard to overturn this decision," he says.

The Pennaco victory is pivotal. It will help ensure that the BLM protects the land, air, water, and quality of life in the Powder River Basin and elsewhere in Wyoming from CBM’s environmentally damaging impacts, which has been WOC’s goal from the beginning.