In the waning days of the Biden administration, two significant developments arose affecting federal onshore oil and gas leasing. First, the United States Court of Appeals for the Ninth Circuit vacated leases sold at the June 2018 Wyoming oil and gas lease sale but reversed a district court decision vacating other leases. Second, the Bureau of Land Management (BLM) announced an environmental impact statement (EIS) to analyze the greenhouse gas impacts of issuing more than 3,200 leases that have been the subject of litigation brought by the citizens’ group WildEarth Guardians.
In a Long-Awaited Decision, the Ninth Circuit Upholds Vacatur of the June 2018 Wyoming Lease Sale but Leaves Other Sales Intact
On January 17, 2025, a three-judge panel of the Ninth Circuit issued a 98-page decision on appeals of two decisions by the U.S. District Courts for the Districts of Montana and Idaho in Montana Wildlife Federation v. Haaland, No. 18cv69-BMM (D. Mont. May 22, 2020), and Western Watersheds Project v. Haaland, No. 18cv187-REB (D. Idaho Feb. 27, 2020). In those decisions, the district courts vacated oil and gas leases sold at multiple lease sales in multiple states.
The Ninth Circuit largely upheld the district courts’ decisions that BLM violated the National Environmental Policy Act (NEPA) and Federal Land Planning and Management Act (FLPMA) when selling the leases. With respect to the Montana Wildlife Federation decision, two members of the three-judge panel found that, for the June 2018 Wyoming lease sale, BLM did not properly implement an objective in the 2015 greater sage-grouse resource management plans (RMPs) to prioritize oil and gas leasing outside of greater sage-grouse habitat. One member of the panel dissented on this issue.
Then, the Ninth Circuit upheld the Montana Wildlife Federation court’s decision to vacate leases sold at the June 2018 Wyoming lease sale. The court determined that the district court appropriately vacated the leases because the seriousness of BLM’s failure to apply the prioritization objective outweighed the disruptive consequences of vacatur.
With respect to the Western Watersheds Project decision, the Ninth Circuit agreed with the district court that BLM violated FLPMA by shortening the public protest period for leases sold at the June and September 2018 Wyoming lease sales, the June and September 2018 Nevada lease sales, and the September 2018 Utah lease sale. The court further held that BLM violated NEPA by shortening the public comment period for leases sold at the September 2018 Wyoming, Utah, and Nevada lease sales.
The Ninth Circuit, however, held that the Western Watersheds Project court erred in vacating leases sold at the June and September 2018 Wyoming lease sales, the June and September 2018 Nevada lease sales, and the September 2018 Utah lease sale. The court reasoned that, with respect to the procedural NEPA and FLPMA errors, a likelihood existed that BLM could substantiate its decision. The court directed the district court to remand the leasing decisions to BLM for further proceedings in compliance with NEPA and FLPMA but to enjoin BLM from “permitting any surface disturbing activity in the interim.”
The Ninth Circuit’s decision does not necessarily mark the end of this appeal. Parties may seek en banc review of the panel’s decision (i.e., review by the full appeals court.
If no party seeks en banc review, or if en banc review does not produce a different result, then the consequences of the decision are significant with respect to the Montana Wildlife Federation litigation. Although the Ninth Circuit only upheld vacatur of one lease sale, the district court in Montana Wildlife Federation has issued a second decision finding similar error as the appealed decision due to BLM’s application of the prioritization objective in the greater sage-grouse RMPs. In the second decision, the district court vacated the December 2017, March 2018, and June 2018 Nevada lease sales, and the December 2017 and March 2018 Wyoming lease sales. The Montana Wildlife Federation plaintiffs likely will argue that vacatur of those leases should be affirmed in light of the Ninth Circuit’s decision. Furthermore, the Montana Wildlife Federation plaintiffs have brought similar challenges to leases sold at the February, September, and December 2019 and December 2020 Wyoming lease sales and the December 2017, March 2018, and March and December 2019 Montana lease sales. The district court has not yet issued a ruling on those lease sales.
With respect to the Western Watersheds Project litigation, the impacts of the decision are less significant. Although the Western Watersheds Project plaintiffs have also challenged additional lease sales in that litigation (i.e., leases in “Phases Two and Three”), their grounds for challenge differ from those at issue in the appeal. Additionally, the district court has declined to vacate the leases that were the subject of a second phase of that litigation.
Lessees who have leases that are the subject of the Montana Wildlife Federation and Western Watersheds Project litigation should assess the impacts of the Ninth Circuit’s decision on their leases and development plans.
BLM Announces an Intent to Prepare an EIS to Analyze the Impacts of Leasing on Greenhouse Gas Analysis
On January 16, 2025, BLM published in the Federal Register a Notice of Intent to prepare an EIS analyzing the potential impacts of issuing 3,224 oil and gas leases on greenhouse gas emissions. The Federal Register notice stated that the EIS may also analyze other “common impacts” to resources such as wildlife, water resources, and night skies.
The leases to be analyzed in the EIS were the subject of multiple lawsuits, including:
- WildEarth Guardians v. BLM, 19–cv–00505 (D.N.M.), 20–2146 (10th Cir.) (challenging leasing decisions in New Mexico);
- WildEarth Guardians v. Bernhardt, 16–cv–01724 (D.D.C.) (challenging leasing decisions in Colorado, Utah, and Wyoming);
- WildEarth Guardians v. Bernhardt, 20–cv–00056 (D.D.C.) (challenging leasing decisions in Colorado, Montana, New Mexico, North Dakota, South Dakota, Utah, and Wyoming);
- WildEarth Guardians v. Bernhardt, 21–cv–00175 (D.D.C.) (challenging leasing decisions in Colorado, New Mexico, Utah, and Wyoming); and
- WildEarth Guardians v. Bernhardt, 21–cv–00004 (D. Mont.) (challenging leasing decisions in Montana, North Dakota and South Dakota).
In September 2022, BLM had prepared a draft supplemental environmental assessment (EA) analyzing the potential greenhouse gas impacts from certain leasing decisions; however, BLM never finalized that EA. In the Federal Register notice, however, BLM explained that it had elected to prepare an EIS because of “new science and information related to greenhouse gas emissions, climate change, and the social cost of greenhouse gases . . . and the number of oil and gas leases under consideration.” BLM particularly pointed to the Department of the Interior’s estimates of the social cost of greenhouse gases related in October 2024.
The Federal Register notice provided a timeframe for preparation of the EIS. In total, BLM estimated the EIS would take a minimum of approximately a year and a half to complete. The Federal Register notice did not address whether BLM would approve development on the subject leases while the EIS was ongoing.
Publication of the Notice of Intent opened the scoping process for the EIS. BLM is accepting public comment until March 17, 2025.
Whether the incoming presidential administration will pursue the EIS has not been determined, although the “Unleashing American Energy” Executive Order announced yesterday calls the EIS into question. Lessees should closely watch the status of this EIS and assess its potential impact on their development activities.
Please contact Katie Schroder with any questions.