Pennaco Energy, Inc. v. U.S. Department of Interior

The Bureau of Land Management (BLM) sought to auction three mineral leases for the extraction of coalbed methane (CBM). Prior to auctioning the leases, BLM reviewed two existing environmental impact statements (EIS) pursuant to the National Environmental Policy Act (NEPA). The first (Buffalo EIS) analyzed potential environmental impacts of oil and gas extraction in the area of the three leases. The second (Wyodak EIS) was a study conducted after a lease was issued that analyzed potential environmental impacts of CBM extraction on a portion of the land covered by the three leases. BLM concluded that the combination of these EISs satisfied NEPA’s requirement that BLM take a “hard look” at environmental impacts of the three leases before auctioning them. BLM auctioned the leases to Pennaco Energy, Inc. (Pennaco) (plaintiff). Environmental groups appealed the decision to the Interior Board of Land Appeals (IBLA). The IBLA reversed BLM’s decision, finding that BLM’s review of the existing EISs did not meet NEPA’s standard. The IBLA relied in part on a BLM memorandum acknowledging that CBM extraction was not considered in the Buffalo EIS. The IBLA also relied on a BLM budget request that stated that “existing NEPA documents were not adequate to address the environmental impacts of CBM development.” Pennaco appealed. The United States District Court for the District of Wyoming reversed the IBLA’s decision. The U.S. Department of the Interior (defendant) appealed.