## Facts

- The Bureau of Land Management (BLM) planned to auction and issue three federal mineral leases in Wyoming’s Powder River Basin for coalbed methane (CBM) development.
- Before issuing the leases, BLM relied on existing NEPA analyses: a programmatic resource management plan EIS for the area and a project-level EIS addressing CBM development in part of the same region.
- Environmental organizations appealed the leasing decisions to the Interior Board of Land Appeals (IBLA), arguing the existing EISs did not adequately analyze CBM impacts.
- IBLA reversed BLM’s leasing approvals, relying in part on internal BLM materials suggesting CBM was not expressly analyzed in the programmatic EIS and that additional NEPA work might be needed for CBM impacts.
- Pennaco Energy, Inc., the lease purchaser, sought review under the Administrative Procedure Act (APA).
- The district court set aside IBLA’s decision as arbitrary and capricious and reinstated BLM’s leasing approvals; the Department of the Interior appealed.

## Issues

1. Whether BLM violated NEPA by issuing the three CBM leases based on tiering to existing EISs rather than preparing a new or supplemental EIS for the specific leases.
2. Whether IBLA’s decision overturning BLM’s leasing approvals was arbitrary and capricious under the APA.

## Decision

- The Tenth Circuit affirmed the district court’s judgment.
- The court held that BLM’s reliance on the existing programmatic and project-level EISs provided an adequate NEPA “hard look” for lease issuance.
- The court held that IBLA acted arbitrarily and capriciously by misreading the record and elevating internal planning and budget statements over the NEPA documents and BLM’s reasoned evaluation.
- The practical effect was to reinstate BLM’s leasing decisions and allow the leases to stand.

## Legal Principles

- NEPA’s “hard look” requirement may be satisfied through tiering to existing EISs when, viewed together, they reasonably address the environmental consequences of the agency action.
- NEPA does not require the most exhaustive analysis at every stage; an agency has discretion in structuring environmental review if its approach is reasonable and supported by the record.
- Internal agency memoranda, planning documents, and budget communications do not, by themselves, establish legal inadequacy of an otherwise sufficient NEPA analysis for a specific decision.
- Under APA arbitrary-and-capricious review, reviewing bodies must not substitute their judgment for a reasonable, record-based technical determination by the implementing agency.
- For leasing decisions, agencies may evaluate reasonably foreseeable effects at a programmatic level and defer more detailed, site-specific analysis to later development approvals, consistent with NEPA.

## Conclusion

The court upheld BLM’s use of tiered NEPA review for CBM lease issuance and set aside IBLA’s contrary determination as arbitrary and capricious, confirming that reasonable reliance on existing EISs and deference to record-based technical judgments satisfy NEPA at the leasing stage.


Pennaco Energy, Inc. v. U.S. Dep’t of Interior, 377 F.3d 1147 (10th Cir. 2004)