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SIERRA CLUB v. MAINELLA

September 1, 2005.

SIERRA CLUB, et al., Plaintiffs,
v.
FRAN MAINELLA, Director of the National Park Service, et al., Defendants.



The opinion of the court was delivered by: JOHN BATES, District Judge

MEMORANDUM OPINION

Plaintiffs challenge three related actions by the National Park Service ("NPS") that implement the provisions of 36 C.F.R. Part 9, Subpart B ("9B Regulations") governing private oil and gas drilling operations within units of the National Park System. Plaintiffs contend that defendants have acted in violation of the Administrative Procedure Act ("APA"), 5 U.S.C. § 553, the National Environmental Policy Act ("NEPA"), 42 U.S.C. §§ 4321, et seq., and the National Park Service Organic Act, 16 U.S.C. § 1, by taking actions that allegedly mandate and implement a new approach limiting NPS's authority to regulate "directional" oil and gas drilling — that is, the practice of drilling at a slant adjacent to and outside of Park boundaries to extract privately owned oil and gas beneath the Park unit surface. The challenged actions consist of a guidance document issued in November 2003 discussing the criteria for obtaining an exemption from the 9B Regulations, and two site-specific NPS actions granting exemptions and finding no significant impact on the environment under NEPA.

Defendants move to dismiss for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1) on the grounds that plaintiffs lack standing and there is no final agency action before the Court.*fn1 For the reasons explained below, the motion to dismiss is granted in part and denied in part.

  BACKGROUND

  I. Statutory and Regulatory Background

  The Organic Act is the general authorizing statute for the National Park Service. It provides that:
There is created in the Department of the Interior a service to be called the National Park Service. . . . The service thus established shall promote and regulate the use of the . . . national parks . . . by such means and measures as conform to the fundamental purpose of the said parks . . . which purpose is to conserve the scenery and the natural and historic objects and the wild life therein and to provide for the enjoyment of the same in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.
16 U.S.C. § 1. The Secretary of the Interior shall issue "such rules and regulations as he may deem necessary or proper for the use and management of the parks . . . under the jurisdiction of the National Park Service."*fn2 Id. § 3. Because the Organic Act is silent as to the specifics of park management, the Secretary has broad discretion on how to implement the statute. Davis v. Latschar, 202 F.3d 359, 365 (D.C. Cir. 2000). In furtherance of its responsibilities under the Organic Act, NPS also periodically issues a "Management Policies" document "designed to provide NPS management and staff with . . . updated information on NPS policy and required and/or recommended actions." See 2001 Management Policies at 6 (Defs.' Ex. 6).

  The NPS promulgated the 9B Regulations in 1978 to address the exercise of rights to oil and gas owned by private entities where access is on, across, or through federally owned or controlled land or waters. See 36 C.F.R. § 9.30(a). Such rights arise most frequently where the land within a Park unit is owned in fee by a private party, including the right to oil and gas, or, most relevant here, "[w]hen in a transfer of the surface estate to the United States, the grantor reserved the rights to the oil and gas." Id. The regulations generally prohibit the granting of access through federal lands or waters unless the operator has an approved "plan of operations," which "serves as the operator's access permit" and sets forth information regarding, inter alia, the various "environments to be affected by operations" and "steps to be taken . . . to mitigate any adverse environmental effects." Id. §§ 9.32(a), 9.36(a)(16). Operators subject to the 9B Regulations also must take "all technologically feasible precautions" to prevent a well from blowing open or becoming wild and to prevent accidents and fires. Id. §§ 9.44, 9.46. Any operator outside the boundaries of a Park unit must comply with these requirements if he is using directional drilling techniques which result in the drill hole crossing into the unit and passing under any federal land or water. Id. § 9.32(e). However, an exemption is available where "the Regional Director is able to determine from available data, that such operations pose no significant threat of damage to park resources, both surface and subsurface, resulting from surface subsidence, fracture of geological formations with resultant fresh water acquifer contamination, or natural gas escape, or the like." Id. NEPA requires a federal agency to prepare an environmental impact statement ("EIS") for all "proposals for . . . major federal actions significantly affecting the quality of the human environment." 42 U.S.C. § 4332(2)(C). The EIS must include, among other things, "a detailed statement describing the reasonably foreseeable environmental impact both of the proposed federal action and of any feasible alternative(s) to the proposed federal action." Wyoming Outdoor Council v. U.S. Forest Service, 165 F.3d 43, 49 (D.C. Cir. 1999) (internal quotations omitted). An EIS is not required if the agency makes a determination based on an "environmental assessment" that the proposed action would not have a significant impact on the environment. 40 C.F.R. §§ 1501.4, 1501.8, and 1508.13. The Supreme Court has explained that "it is now wellsettled that NEPA itself does not mandate particular results, but simply describes the necessary process." Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 350 (1989). Thus, "NEPA merely prohibits uninformed — rather than unwise — agency action." Id. at 351.

  II. Factual Background

  The following facts are taken from plaintiffs' amended complaint and the documents quoted therein, which plaintiffs have, as a practical matter, incorporated by reference. Private entities hold title to subsurface minerals at more than a dozen Park units. In February 1992, the Park Service issued a document entitled "NPS Procedures Governing Nonfederal Oil and Gas Rights" implementing the 9B Regulations ("1992 9B Procedures"). Defs.' Ex. 3. Plaintiffs characterize this document as containing a section entitled "Potential Threats to Park Resources and Values from Directional Drilling Operations Outside a NPS Unit," which mandates consideration of certain types of threats when reviewing an application for a § 9.32(e) exemption. Am. Compl. ¶ 31. Such potential threats include those caused by "downhole" operations — that is, the actual subsurface drilling occurring within Park boundaries — and by the drilling activity outside of the Park unit, including water and soil contamination from the surface well pad; soil erosion and surface runoff from access roads and the well pad; nuisance or safety hazards from gases; fire hazards from equipment at the well pad; and air pollution from extraction equipment, transport vehicles, and gas leaks at the well pad. Id. The scope of this mandated assessment is consistent with the NPS Management Policies issued through notice and comment rulemaking in 2001, which provide that NPS may need to carry out "[s]trategies and actions beyond Park boundaries" in order to protect park resources. Id. ¶ 32 (quoting 2001 Management Policies at §§ 1.5, 3.1).

  Mr. Ross Davis of Davis Brothers Oil Producers, Inc., contacted NPS Director Fran Mainella and other NPS officials on October 31, 2001, regarding his company's application for directional drilling at Big Thicket National Preserve, asserting that NPS lacked jurisdiction to regulate the surface location of the proposed well because it was outside of Big Thicket's boundaries. ¶ Id. ¶ 33. On December 20, 2001, a Park Service official responded to Davis's letter, stating that NPS would "streamline the process" for "all future drilling applications under § 9.32(e). . . ." Id. ¶ 34.

  On May 21, 2003, NPS issued a document without notice and comment entitled "Implementation of the Directional Drilling Provision of NPS Nonfederal Oil and Gas Regulations at 36 CFR 9B" (hereinafter "May 2003 Directive"). The document stated that:
[NPS] jurisdiction under these regulations does not extend to any activities occurring outside park boundaries, even if such activities are associated with a nonfederal oil and gas operation occurring inside a park. . . . Section 9.32(e) . . . is limited in scope to those aspects of the directional drilling operation occurring within park boundaries. As promulgated, it does not provide a means for the NPS to assert regulatory authority under the 9B regulations over surface and subsurface operations occurring outside park boundaries.
Id. at 1 (Defs.' Ex. 2). The Directive highlighted the use of the term "operations" in § 9.32(e) and noted the limitation in the definition of "operations" to "all functions, work and activities within a unit." Id. at 2 (emphasis in original). It thus concluded that "[t]he potential impacts considered [in making an exemption determination] relate only to effects on park resources from downhole activities occurring within the boundary of the park, not threats to park resources associated with the operation outside park boundaries." Id. at 1, 2 (quoted in Am. Compl. ¶ 35).

  NPS issued the "Final Guidance on Implementing the Directional Drilling Provision of the Service's Nonfederal Oil and Gas Regulations at 36 CFR 9B" ("2003 Guidance") on November 13, 2003. Defs.' Ex. 4A-4B. The 2003 Guidance reiterates the § 9.32(e) exemption process as described in the May 2003 Directive, and "describes [NPS] compliance responsibilities in evaluating a request for an exemption" with regard to NEPA and other environmental statutes. Am. Compl. ¶ 36; 2003 Guidance at 6-10. The 2003 Guidance was issued without public notice or opportunity for public comment, and was not the subject of an environmental review under NEPA. Am. Compl. ¶¶ 38, 39.

  Since that time, NPS has approved several requests for exemption pursuant to § 9.32(e). Id. ¶ 42. In August 2004, NPS issued an environmental assessment ("EA") for a proposal by Comstock Oil and Gas, Inc. ("Comstock") to directionally drill and produce a well below the Big Sandy Creek Unit of Big Thicket, from a surface location 300 feet from the Unit, utilizing a wellpad extending within 100 feet from the Unit boundary. Id. & Pls.' Ex. 2. Consistent with the 2003 Guidance, the EA states that "potential impacts considered in the § 9.32(e) exemption process relate only to effects on park resources from downhole activities [and] not threats to park resources associated with the operation outside park boundaries." Am. Compl. ¶ 43 (quoting EA at 6). In the public comment process, plaintiffs commented that the exemption analysis improperly excluded consideration of threats from surface operations outside of Unit boundaries, and submitted that the EA must set forth alternatives beyond the no-action alternative proposed, as well as a more comprehensive evaluation of the impacts of the proposed operation. Id. ¶ 44. Without considering the impact of the nearby surface operations, NPS issued a "finding of no significant impact" ("FONSI") under NEPA, which also concluded that Comstock qualified for the § 9.32(e) exemption relying on language from the 2003 Guidance. Id. ¶ 45.

  Another Comstock directional drilling proposal at the Big Sandy Creek Unit was the subject of a separate EA in September 2004. Id. ¶ 47 & Pls.' Ex. 1. This well would also have a surface location 300 feet from the Unit, utilizing a wellpad extending within 100 feet from the Unit boundary. Am. Compl. ¶ 47. NPS applied substantially the same approach as with the first Comstock action in its § 9.32(e) exemption analysis, excluding consideration of the threats to park resources from surface operations outside of the Unit, and issued a FONSI determination that also granted this second exemption on November 4, 2004. Id. ¶¶ 48-49.

  Plaintiffs' amended complaint raises three claims for relief. First, they assert that NPS acted in violation of the APA by issuing the 2003 Guidance, and by applying the Guidance in the Comstock determinations, without providing public notice and an opportunity for public comment and, furthermore, that such actions were arbitrary and capricious. Plaintiffs next contend that NPS acted contrary to the Organic Act and NPS Management Policies in violation of the APA because the Guidance abandons a long-standing regulatory process requiring a demonstration of no impairment of park wildlife and resources. They point to the Comstock determinations as specific actions that failed to consider such impacts from surface activities. Plaintiff's last claim for relief alleges that NPS acted contrary to NEPA in violation of the APA by issuing the 2003 Guidance without conducting a NEPA environmental review and by issuing the Comstock determinations without considering whether surface activities pose a threat to Park resources.

  STANDARD OF REVIEW

  Under Fed.R.Civ.P. 12(b)(1), the plaintiff bears the burden of establishing that the court has jurisdiction. Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001) (a court has an "affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority"); see also Pitney Bowes, Inc. v. United States Postal Serv., 27 F. Supp. 2d 15, 18 (D.D.C. 1998). Although a court must accept as true all the factual allegations contained in the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), see Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164, (1993), the court need not accept legal conclusions as true, Boyd v. O'Neill, 273 F. Supp. 2d 92, 95 (D.D.C. 2003). Furthermore, "`plaintiff[s'] factual allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion' than in resolving a 12(b)(6) motion for failure to state a claim." Grand Lodge, 185 F. Supp. 2d at 13-14 (quoting 5A CHARLES ALAN WRIGHT & ARTHURR. MILLER, FEDERALPRACTICE AND PROCEDURE § 1350). Additionally, a court may consider material other than the allegations of the complaint in determining whether it has jurisdiction to hear the case. See Coalition for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003); EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 n. 3 (D.C. Cir. 1997); Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986). Thus, "where necessary, the court may consider the complaint supplemented by undisputed facts evidenced in the record." Coalition for Underground ...


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