Village of Kaktovik v. Corps of Engineers

No. A-78-305 (D. Alaska December 29, 1978)

The court denies plaintiffs' motion for a preliminary injunction to prevent Exxon Corp. from drilling an exploratory oil well on a man-made gravel pad in the Beaufort Sea less than one mile from the Alaska coast. Plaintiffs claimthat the Coprs of Engineers permit for construction of the gravel pad under § 404 of the Federal Water Pollution Control Act (FWPCA) was improperly issued because of a lack of proper public notice, that the negative determination regarding preparation of an environmental impact statement (EIS) under the National Environmental Policy Act (NEPA) was improper, that the state certification required under § 401 of the FWPCA was not obtained, and that the Corps failed to engage in formal interagency consultation as required under the Endangered Species Act (ESA). Notwithstanding plaintiffs' failure to conform to the 60-day notice requirement before filing suit under the ESA and the FWPCA, the court decides that because they are "in substantial compliance" it has jurisdiction to hear the case. The court also concludes that the plaintiff villages and the City of Barrow have standing to sue to enforce their right under NEPA to participate in the EIS review process. further, the suit is not barred by laches since defendants have not established a lack of diligence on the part of plaintiffs. In determining whether to issue the preliminary injunction, the court first looks at the plaintiffs' likelihood of success on the merits. With respect to the claims under the Endangered Species Act, the court concludes that there was sufficient consultation with the National Marine Fisheries Service to satisfy the requirements of § 7 of the Act and that the possibility of harm to bowhead whales was too speculative to support a strong likelihood of success under §§ 7 and 9 of the ESA. Regarding the Corps' determination not to prepare an EIS, the court looks past the environmental assessment to examine the entire record. Noting that plaintiffs have raised serious questions regarding whether an EIS was required for this permit, whether an EIS should have been prepared on the cumulative impacts of all oil exploration in the area, and whether defendants have taken the requisite "hard look" at the environmental consequences of this action, the court nonetheless concludes that preliminary relief would be inappropriate because they have failed to show that the balance of hardships tips in their favor. The court further concludes that a separate EIS on production activity is unnecessary until a production plan is proposed for agency approval because the exploration and production phases are sufficiently independent to be considered separately in the agency review process. The public notice provided by the Corps after the permit applications were filed was sufficient notwithstanding the failure of the notice to announce that state certification of water quality would be required. Since the state has waived such certification under § 401 of the FWPCA, preliminary relief is not appropriate on the claim that defendants illegally failed to request or obtain such approval. Finally, the court concludes that with respect to all issues raised the balance of equities favors defendants in light of the fact that possible environmental damage will be minimized by the careful design of the exploratory well.

Counsel for Plaintiffs
Donald E. Clucksin, Michael I. Jeffrey
Alaska Legal Services Corp.
524 W. Sixth Ave., Suite 204, Anchorage AK 99501
(907) 272-9431

Clifton E. Curtis
Center for Law and Social Policy
1751 N. St. NW, Washington DC 20036
(202) 872-0670

Counsel for Defendants
Alexander O. Bryner, U.S. Attorney
P.O. Box 680, Anchorage AK 99510
(907) 277-1491

James W. Moorman, Ass't Attorney General; Bruce C. Rashkow, Lawrence R. Liebesman, Margaret Strand, Donald W. Stever, Jr., Cynthia Pickering
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2701

Carl J. D. Bauman, Richard O. Gantz
Hughes, Thorsness, Gantz, Powell & Brundin
509 W. Third Ave., Anchorage AK 99501
(907) 274-7522

[9 ELR 20117]

van der Heydt, J.:

This cause comes before the court on plaintiffs' motion for a preliminary injunction to enjoin Exxon Corporation (Exxon) from drilling an exploratory well, known as the Duck Island Unit, Exxon Well No. 1, from a gravel island constructed by Exxon in the Beaufort Sea. In addition, plaintiffs seek to enjoin the Corps of Engineers from (1) allowing any construction or drilling activities on the Duck Island Unit; (2) failing to order Exxon to cease such activity; (3) failing to initiate formal consultation with the National Marine Fisheries Service regarding the effect of Exxon's project on endangered species, particularly the bowhead whale; and (4) failing to suspend or revoke the permit issued to Exxon for the Duck Island project.

Plaintiffs base their motion on claims that the Corps of Engineers permit was improperly issued to Exxon because of inadequate public notice of the permit application, an improper determination by the Corps of Engineers that an environmental impact statement (EIS) was not required, failure of the Corps of Engineers to obtain state certification under § 401 of the Federal Water Pollution Control Act, and failure of the Corps of Engineers to engage in formal consultation with the National Marine Fisheries Service under the Endangered Species Act.

Plaintiff villages, the City of Barrow, and individual Native Alaskans allege harm to the wildlife in the area of Exxon's gravel island, wildlife upon which they depend for subsistence. They claim that the hunting of seals, whales, foxes, ducks, and other animals of the North Slope is threatened by Exxon's drilling activity due to possible oil spills, blowouts, noise, and danger to the gravel island operation from winter storms, ice override, and spring breakup flooding.

The motion has been extensively briefed by all sides, and by amicus curiae Greenpeace Alaska. Testimony and oral argument were heard on December 7, 1978 and, following supplemental briefing, the motion was submitted for decision on December 15, 1978.

Factual Background

On September 14, 1977, Exxon submitted an application to the Corps of Engineers for a permit to construct a gravel island in the Beaufort Sea approximately 4,700 feet seaward of the delta of the Sagavanirktok River, east of Prudhoe Bay. The purpose of the application was to secure a permit under § 10 of the Rivers and Harbors Act¹ and § 404 of the Federal Water Pollution Control Act (FWPCA)² to allow construction of a gravel fill pad from which an exploratory oil well, "Duck Island Unit, Exxon Well No. 1," could be drilled and tested.

[9 ELR 20118]

Prior to the application, a state lease had been issued in 1969 for offshore oil and gas exploration in the Duck Island area. The lease was issued to Union Oil Company of California and Amoco Production Company. Exxon was designated the Unit operator. Additional oil companies were later included in the Unit. Unless Exxon discovers oil and gas reserves prior to the expiration date, the lease will expire on September 30, 1979.

On October 19, 1977, the Corps of Engineers issued a Public Notice of the Exxon permit application with the preliminary determination that an environmental impact statement would not be required. The permit notice was mailed to federal and state agencies, conservation organizations, private firms, the Arctic Slope Regional Corporation at its Barrow address, the North Slope Borough, and was posted in the Prudhoe Bay and Deadhorse post offices. Notice was not sent directly to city officials at the Villages of Kaktovik and Nuiqsut, or to the City of Barrow³

Numerous comments were received on the proposed permit from state and federal agencies, as well as private organizations. Federal agencies commenting included the U.S. Coast Guard, the U.S. Environmental Protection Agency,⁴ the U.S. Fish and Wildlife Service, the Bureau of Land Management, and the National Marine Fisheries Service.⁵ State and local agencies commenting included the Alaska Department of Environmental Conservation, the Alaska Department of Fish and Game,⁶ and the State Attorney General's office. The North Slope Borough, the governing body of the North Slope region which includes plaintiff villages and the City of Barrow also commented on the proposal. The borough noted verbal objections of the Village of Kaktovik and various individuals in Barrow who are users of the delta area for subsistence hunting and fishing.

The Corps of Engineers evaluated these comments and conducted an environmental review of the project. On February 27, 1978, the permit was issued for construction of the gravel pad for the limited purpose of exploratory testing and drilling.⁷

Accompanying the permit was an Environmental Assessment and Findings of Fact. The Findings of Fact concluded that there were no identified significant adverse environmental effects related to the Duck Island Unit, and that the proposed activity would not jeopardize the continued existence of any endangered species or their critical habitat.

With respect to the environmental review conducted, the Findings referenced a final environmental impact assessment entitled "Offshore Oil and Gas Development, the Alaskan Arctic Coast" (September 1976). That document discusses the impact of potential Corps of Engineers-authorized activities on the nearshore Arctic environment. The September 1976 document was itself based upon an earlier study prepared for the Corps in June 1974, entitled "The Alaska Artic Coast — A Background Study of Available Knowledge." The June 1974 study had been followed by a document entitled "Draft EIS — Offshore Oil and Gas Development — The Alaskan Arctic Coast," submitted to the public for comment in September 1975. In September 1976, the comments were attached to a revised document designated a "final" EIS. However, the EIS was never officially finalized⁸ as such and was referred to in the Corps' findings of fact as instead, a final environmental impact assessment (EIA).

The EIA accompanying the permit in February 1978 included a final determination that preparation of a formal EIS would not be required because the issuance of the Exxon permit "is a Federal action not having a significant impact on the environment."⁹

The Exxon Plan of Operations approved by the State of Alaska provides that drilling and testing activites should be completed no later than March 31, 1979, and that all structures, including the drilling rig, must be removed prior to May 1, 1979 or spring breakup, whichever occurs first, and that the well must be abandoned below the sea floor beyond any potential depth of scour.¹⁰ State approval subject to these and other stipulations was granted on January 11, 1978.¹¹

The gravel pad from which the well is being drilled was constructed [9 ELR 20119] in March and April of 1978 by boring through the ice and depositing gravel hauled over an ice road from an upland source. The drilling rig was placed on the pad in April 1978 and remained there throughout the spring and summer, although all personnel departed the pad prior to spring breakup. Remobilization began early in September 1978 and drilling commenced on October 23, 1978.Total drilling costs to date, including construction of the gravel pad, exceed $7.0 million.

The drilling paid is situated in approximately three and a half to four feet of Beaufort Sea waters, now completely frozen. The sea floor slopes away gradually until, at approximately two and a half miles from the pad, depths first reach as much as 16 feet. Spring breakup in that area of the Beaufort Sea typically occurs during the period from mid-May to mid-June.

Although information on the migratory habits of bowhead whales and gray whales is incomplete, observations do not document the presence of any fall migrating whales within 20 miles of the Duck Island area after November 21. With respect to the spring migration, bowhead whales have been first sighted off Barrow, west of Duck Island, as early as mid-April. Bowhead whales are thought to range customarily in water depths no shallower than 16 feet, although they have been sighted in water as shallow as 10 feet during the fall migration. Although the fall migration pattern takes the whales within the nearshore area, the whales have been observed migrating further offshore in the spring, at distances of 30-100 kilmeters away from shore.

All migratory birds have now left the area and will not return until May. Nonmigratory marine life generally over-winter further seaward or in the river beds. There is a possibility, however, that ring seals, polar bears, and Artic foxes would normally be found within one mile of the gravel island.

Jurisdiction

Plaintiffs allege jurisdiction under the citizen suit provision of the Endangered Species Act¹² and the Federal Water Pollution Control Act (FWPCA).¹³ However, both of these provisions require 60 days notice prior to commencement of suit. On September 21, 1978 plaintiffs sent an intent-to-sue letter to the Corps of Engineers subsequent to receiving documents from the Corps pursuant to a September 8, 1978 Freedom of Information Act request. Plaintiffs' complaint was filed with the court in this action on November 3, 1978. Defendants have thus raised a question regarding plaintiffs' compliance with the 60-day notice requirement.

The purpose behind this requirement is to encourage agencies to enforce relevant standards, not to hinder citizen suits.¹⁴ Accordingly, the 60-day requirement has been held not to constitute an absolute bar to earlier suits by private citizens under either the FWPCA¹⁵ or the Endangered Species Act.¹⁶

I conclude that the plaintiffs have complied with the spirit of the notice requirement and are accordingly in substantial compliance with the notice provisions. Therefore, federal jurisdiction has properly been asserted under both the FWPCA and the Endangered Species Act.¹⁷

Standing

Plaintiffs include the Villages of Kaktovik and Nuiqsut, suing as second class cities, and the City of Barrow, a first class city. Herman Rexford and Ralph Ahkivgak, both Alaska Natives, sue as individual residents of Kaktovik and Barrow who hunt whales and other wildlife in the area for subsistence.

To establish standing, a plaintiff must allege that the challenged action has caused "injury in fact, economic or otherwise," and the interest sought to be protected must be "arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 152-153 (1970). The "injury in fact" test requires more than an injury to a cognizable interest. It requires that "a party seeking review be himself among the injured." Sierra Club v. Morton, 405 U.S. 727 [2 ELR 20469] (1972).

Although the individual plaintiff hunters clearly have standing under this standard, a question has been raised regarding the standing of the villages and the City to Barrow.

In City of Davis v. Coleman, 521 F.2d 661 [5 ELR 20633] (9th Cir. 1975), the City of Davis was held to have standing under NEPA under the "injury in fact" test because of its proximity to the project in question:

The procedural injury implicit in agency failure to prepare an EIS — the creation of a risk that serious environmental impacts will be overlooked — is itself a sufficient "injury in fact" to support standing, provided this injury is alleged by a plaintiff having a sufficient geographical nexus to the site of the challenged project that he may be expected to suffer whatever environmental consequences the project may have.

Id. at 671 [5 ELR 20635]. The requirements of Sierra Club v. Morton, supra, also were met even though Davis' municipal interests were noneconomic or unquantifiable. Davis was thus held to be within the zone of protected interests through NEPA's express inclusion of local government participation in the EIS review process and the municipality's statutory duty to protect environmental interests. Id. at 672.

Based on the interests of the Village of Kaktovik, Village of Nuiqsut, and the City of Barrow in the permit process, their geographical proximity to the Duck Island Unit, and the fact that they are within the range of claimed adverse effects from Exxon's drilling activity in the Beaufort Sea, I conclude that plaintiff villages and the City of Barrow have standing to litigate this action.

Laches

Defendants assert the doctrine of laches as a defense to this action, maintaining that plaintiffs have delayed too long in filing suit to enjoin Exxon's exploratory drilling activity. The United States Supreme Court has enunciated a bipartite test to determine when the doctrine of laches may be invoked: (1) lack of diligence by the party against whom the defense is asserted, and (2) a showing of prejudice to the party asserting the defense. Costello v. United States, 365 U.S. 265 (1961).

Affidavits of the individual plaintiffs establish that they were not informed of Exxon's activity prior to receipt of information from the Corps of Engineers in September 1978. Although there is reason to believe that the Village of Kaktovik received notice of the proposed activity late in 1977, the failure to file suit prior to October 1978 does not show a lack of diligence on the part of the plaintiffs. Plaintiffs first obtained the information upon which they based their request for agency reconsideration in August and September 1978. Since suit was filed soon thereafter, lack of diligence has not been shown. See City of Davis v. Coleman, supra, at 677; see also Cady v. Morton, 527 F.2d 786, 793 [5 ELR 20445] (9th Cir. 1975). Accordingly, I conclude that plaintiff's suit is not barred under the doctrine of laches.

Standards for a Preliminary Injunction

Plaintiff is entitled to a preliminary injunction if the court finds that (1) the movants have established a strong likelihood of success on the merits; (2) the balance of irreparable harm favors the movants; and (3) the public interest favors granting the injunction.Sierra Club v. Hathaway, 579 F.2d 1162, 1167 [8 ELR 20736] (9th Cir. 1978).

A preliminary injunction may also issue if plaintiff establishes either (1) a combination of probable success and the possibility of irreparable injury or (2) that serious questions are raised and the balance of hardships tips sharply in the plaintiff's [9 ELR 20120] favor.¹⁸ Wm. Inglis and Sons Baking v. ITT Cont. Baking Co., 526 F.2d 86, 87 (9th Cir. 1975).

Likelihood of Success on the Merits

In determining whether plaintiffs have shown a probability of success on the merits, the court must examine issues raised under the Endangered Species Act, NEPA, and the FWPCA.

A. Endangered Species Act

Plaintiffs claim that the failure of the Corps of Engineers to adequately consider the impact of the Exxon project on the bowhead whale violates §§ 7¹⁹ and 9²⁰ of the Endangered Species Act.²¹

The standard for judicial review of a federal agency's action or decision under the Endangered Species Act is whether it was "based on a consideration of the relevant factors and whether there has been a clear error of judgment." National Wildlife Federation v. Coleman, 529 F.2d 359 [6 ELR 20344] (5th Cir. 1976), cert. denied 429 U.S. 979 (1976), quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. at 416 [1 ELR 20110] (1971). In Coleman, supra, the Fifth Circuit determined that where the Department of Transportation considered the direct impact on the endangered Mississippi Sandhill Cranes' critical habitat due to the construction of an interstate highway, but failed to consider whether the crane could survive the additional loss of habitat caused by the private development which would accompany the construction of the highway and the excavation of and drainage caused by borrow pits, the Department failed to comply with § 7 of the Endangered Species Act.

In the instant case, the question under § 7 is whether the Corps of Engineers took the necessary actions and considered relevant factors to insure that the "continued existence" of the bowhead whale would not be jeopardized by issuing a permit to Exxon.²² Section 7 has been interpreted by the United States Supreme Court in the major case of Tennessee Valley Authority v. Hill, U.S. , 98 S. Ct. 2279 [8 ELR 20513] (1978), to give the protection of endangered species the highest of priorities, priority even over the "primary missions" of federal agencies.

The Corps of Engineers concluded before issuing the permit that no endangered species would be jeopardized by the Exxon project. This determination was based in part on comments by various agencies. For instance, before the permit was issued the National Marine Fisheries Service (NMFS) (a division of the National Oceanic and Atmospheric Administration (NOAA) with jurisdiction over whales, seals, and other marine mammals) commented on the permit application on January 25, 1978. Mr. Rietze, Director of the Alaska Region, did not object to use of the gravel island for exploratory purposes, with the condition that additional authorization be required if the island be retained as a production facility. I conclude, therefore, that the Corps of Engineers considered the comments of NMFS before issuing the permit and, consistent with § 7, limited the scope of the permit to exploratory drilling.

Plaintiffs claim that new information provided to the Corps of Engineers in August and September 1978 by NMFS concerning the possible adverse impact on the bowhead whale in connection with both a permit application submitted by Sohio and the proposed December 1979 outer continental shelf oil and gas lease sale for the nearshore Beaufort Sea, required the Corps of Engineers to initiate formal consultation with NMFS for reevaluation of the Exxon permit.²³ However, I conclude that the comments submitted by NMFS and NOAA in August and September on these proposed activities did not necessitate a reevaluation of the Exxon permit. I draw this conclusion from the following facts:

(1) With regard to the Sohio application for a permit to build a gravel pad for exploratory drilling in waters seaward of the Exxon pad, NOAA requested formal consultation under the Endangered Species Act because it first appeared to NOAA that the Sohio pad might be used for full scale production operations without the opportunity for analysis of the impacts which production might have on whales. Based on the imposition of conditions similar to those imposed on the Exxon permit, NOAA determined, by letter of December 1, 1978,²⁴ that the Sohio exploratory operation would not pose a threat to whales and that continuing the § 7 consultation would therefore be unnecessary.

(2) With regard to the proposed December 1979 oil and gas lease sale, that sale involves the potential of future extensive exploratory and development activity in the Beaufort Sea and therefore threatens to pose an impact on the environment significantly greater that that presented by the instant Exxon permit application. Accordingly, I conclude that the result²⁵ of the threshold examination of the proposed sale undertaken by NMFS under formal consultation with the Bureau of Land Management (BLM) does not require the Corps of Engineers to initiate consultation with NMFS on the Exxon project due to the marked difference in scope between the two activities.

The question under § 9 of the Endangered Species Act is whether Exxon's exploratory operation will harm or disburb an endangered species. See Tennessee Valley Authority v. Hill, supra, at 2297 n.30 [8 ELR at 20520 n. 30]. Plaintiffs have alleged that the construction of the gravel island and any drilling-related activities on it will disturb bowhead and gray whales by frightening them, altering their migration routes, disrupting breeding, [9 ELR 20121] feeding, and calving activities, and, should there be an oil spill, result in actual death of whales.

First, the effect of noise from drilling activity must be examined. Although it is unknown what effect drilling noise would have on bowhead whales, there is reason to believe that drilling noise could affect migration routes because of the whales' sensitivity to sound. However, because bowhead whales are not in the area of the Exxon project from December through March, and since Exxon's drilling and testing activity must cease by March 31, 1979, bowhead whales will not be disturbed by drilling noise under the present plan of operations. Furthermore, noise from the activity of removing personnel and equipment from the island in April should not disturb any early spring migrating whales because of the greater distance from shore of the spring migration.

Second, the detrimental effects of a major oil spill or blowout must be considered. Although Exxon has installed safety features²⁶ designed to prevent oil spills, an accident could still occur. The possibility of harm to bowhead whales is highly speculative, however, and has been significantly reduced by the March 31, 1979 termination date. The termination date is intended to provide Exxon an adequate period of time to contain any oil spills and to complete cleanup activities on the ice before spring breakup. Thus, there is little chance that harmful amounts of oil would enter the water after breakup.

In summary, the approved plan of operations takes into account the bowhead whales' migratory pattern and effects of possible accidents. Plaintiffs have not shown that the exploratory drilling activity will harm or disturb the whales.

Upon the above examination, I conclude that plaintiffs have not shown a strong likelihood of success on the merits under either § 7 or § 9 of the Endangered Species Act, or even that their claims raise serious questions concerning compliance with the Act.

B. EIS Negative Determination

Section 102(2)(C) of the National Environmental Policy Act (NEPA), 42 U.S.C. § 4332(2)(C), requires preparation of an EIS as a procedural obligation of federal agencies for "all major Federal actions significantly affecting the quality of [the] human environment."

Based on the District Engineer's finding that the review had not identified any potentially significant adverse affects, and that the issuance of the permit to Exxon was "not a Federal action having a significant impact on the environment," the Corps of Engineers' permit was issued without preparation of an EIS. This negative determination was accompanied by an EIA which included reference to a programmatic EIS which was prepared, but never finalized, by the Corps of Engineers.

1. Standard of Review

The standard to be applied in reviewing the Corps of Engineers' negative determination is whether the agency has "reasonably concluded" that the project will not have significant adverse environmental consequences. City of Davis v. Coleman, 521 F.2d 661 [5 ELR 20633] (9th Cir. 1975). The Ninth Circuit Court of Appeals has cautioned, however, that an action which could have a significant impact on the environment must be covered by an EIS:

In making this determination, however, we must bear in mind the inherent danger that the most serious environmental effects of a project may not be obvious, and that the purpose of the EIS requirement is to insure that "to the fullest extent possible" agency decisionmakers have before them and take into proper account, a complete analysis of the project's environmental impact. Calvert Cliff's Coordinating Committee v. AEC, supra, 449 F.2d at 1114. Thus where substantial questions are raised as to whether a project will have significant adverse impacts it is hardly reasonable for an agency to conclude, prior to study, that an EIS is not required. Accordingly, an EIS must be prepared whenever a project "may cause a significant degradation of some human environmental factor." Save Our Ten Acres v. Kreger, 472 F.2d at 467.

Id. at 673-4 [5 ELR at 20636]

In a subsequent decision, the United States Supreme Court has stated the following with respect to judicial review of agency action on preparing an EIS:

Neither the statute (NEPA) nor its legislative history contemplates that a court should substitute its judgment for that ofthe agency as to the environmental consequences of its actions. . . . The only role for a court is to insure that the agency has taken a "hard look" at environmental consequences. (Citations omitted.)

Kleppe v. Sierra Club, 427 U.S. 390, 410 n.21 [6 ELR 20532, 20537 n.21] (1976). Thus, under the applicable standard of review, the court must examine whether the Corps of Engineers took a sufficiently "hard look" at the environmental consequences of the permit approval, i.e., whether construction of the gravel pad and exploratory drilling could have a significant adverse effect on the bowhead whale and other species critical to the Eskimo way of life.

2. The Environmental Impact Assessment

Although the Corps of Engineers issued a brief, conclusory "Environmental Assessment" in conjuction with the Findings of Fact, this court's review of the negative determination should include a review of the entire record, the evidence, and decision, rather than be limited to any single document. Hanley v. Mitchell, 460 F.2d 640, 647 [2 ELR 20216] (2d Cir. 1972), cert. denied 409 U.S. 990 (1972). Therefore, in addition to the findings of fact summarizing comments of state, local, and federal agencies, and the brief environmental assessment issued by the Corps, review of the negative determination should include review of the EIA²⁷ prepared in 1976 by the Corps on the effects of oil and gas development on the Alaska Arctic Coast.

The September 1976 Environmental Impact Assessment identifies the potential environmental impact of proposed activity such as the Exxon project. The EIA describes the economic and cultural characteristics of the area and the dependence of local natives on the bowhead and gray whales for subsistence.²⁸ The assessment evaluates the impact of proposed activities in relation to storm and ice dangers,²⁹ and addresses in detail the impact of oil spills on mammal migration patterns, local economic concerns, and general land and water uses.³⁰ It briefly notes the potential impacts of islands similar to the Exxon gravel island³¹ and presents the following alternatives regarding the proposed actions: (a) to issue no permits; (b) defer issuance of permits until studies are completed in numerous areas; (c) issue permits selectively on an area basis; or (d) issue all permits.³²

3. Did the Failure to Prepare an EIS on Exxon's Exploratory Activity Violate NEPA?

One purpose of NEPA is to assure that, by following the procedures it prescribes, agencies will be fully aware of the impact of their decision when they make them. Lathan v. Brinegar, 506 F.2d 677, 693 [4 ELR 20802] (9th Cir. 1974). Under the circumstances of the negative determination in this case, the Corps of Engineers had engaged in astudy of the environmental impact of exploratory and development activity. The data in the 1976 EIA was gathered over a two-year period and distributed for comment to 125 government agencies, private organizations, and individuals. [9 ELR 20122] Comments were incorporated in the final report.The threshold determination that no EIS would be required for Exxon's permit application was therefore not based on ignorance of possible environmental consequences. Furthermore, pursuant to relevant regulations,³³ the public was given notice of the negative determination and granted an opportunity to comment on the preliminary finding that an EIS would not be necessary for the Exxon application.

As suggested by comments received on the permit application, the Corps of Engineers limited the permit to exploratory activity. Production activity will clearly require further authorization. The drilling schedule required by the plan of operations limits any effects on wildlife which Exxon's operations might otherwise have caused.³⁴

Nevertheless, plaintiffs have raised questions suggesting that a more thorough site-specific study should have been undertaken before the permit was issued. Although Exxon's plans incorporated protections against storms and ice movement, the data upon which the design was based was gathered over a limited five-year period from areas other than Duck Island. Furthermore, plaintiffs argue that the placement of the island at the mouth of the Sagavanirktok River poses special dangers from flooding.³⁵ However, the Exxon plan does provide for protection against unusual ice conditions through its emergency half-hour shutdown procedure. In addition, since all structures and equipment will be removed prior to spring breakup of the Sagavanirktok River, spring flooding should not pose a substantial danger to the operation.

Plaintiffs also raise the issue of whether the Corps should have prepared an EIS on the cumulative effects of exploratory activity in the Beaufort Sea. In granting Exxon's permit, Corps' approval was limited to the construction of one gravel island in the Duck Island area. When the Corps is faced with permit applications for the construction of additional gravel islands, it will be required to consider the cumulative effect of gravel islands on the environment of the area.³⁶ See Kleppe v. Sierra Club, 427 U.S. 390, 410 n.20 [6 ELR 20532, 20537 n.20] (1976). Thus, until presented with the proposed activity, the Corps should not be required to prepare an EIS on its effects.

In conclusion, plaintiffs have failed to demonstrate such a strong likelihood of success on the meritsof the claimed NEPA violation in the failure of the Corps to issue an EIS on the Duck Island Unit such that preliminary injunctive relief would be justified. Moreover, although serious questions have been raised in regard to this claimed violation, plaintiffs have been unable to show that the balance of hardships tips sharply in their favor. Accordingly, I conclude that preliminary relief would not be appropriate on this issue. See State of Alaska v. Andrus, 580 F.2d 465, 485 [8 ELR 20237] (D.C. Cir. 1978).

4. Was the Failure to Prepare an EIS on Production Activity a Violation of NEPA?

The next question to be considered under NEPA is whether the Corps of Engineers erred in failing to consider the environmental effects of future production activity from the island when issuing the permit to Exxon for the exploratory drilling stage without an EIS. Factors to be considered include the independence³⁷ of the proposed activity, the known dimension of the activity,³⁸ and whether the commitment of resources to exploratory drilling is so significant that approval for production activity will be difficult to deny once the exploratory activity has been completed.³⁹

Exxon maintains that it has no production plan for the well and concedes that it could not proceed into production from the island without additional Corps of Engineers approval together with the necessary environmental review. At the hearing, an Exxon official testified that it was highly unlikely that the Duck Island exploratory well would be converted to production activity. In any event, the plan of operations requires that the well be abandoned in May 1979 whether or not reserves are discovered in commercial quantities.

Based on these factors, I conclude that analysis by the Corps of environmental effects of production activity should be made when and if a production plan is proposed for agency approval because the exploratory activity is sufficiently independent from possible future production to be considered separately in the agency review process.

In regard to Exxon's commitment of resources to the exploratory well, Exxon maintains that despite the anticipated $11 million investment in drilling the Duck Island well, Exxon is not irretrievably commited to production. Compared to a cost of $8-20 million for an exploratory well in the Arctic, a company must invest approximately 50 times that amount, roughly $400 million to $1 billion, to obtain production from such a well. Industry figures indicate that less than one percent of the exploratory wells drilled on the North Slope have resulted in production operations.⁴⁰

In light of these factors, I conclude that Exxon's commitment of resources, although a substantial investment, is not so great that approval for production activity will be difficult to deny once the exploratory stage has been completed. A purpose of such exploratory activity is to provide information as to whether production activity in an area would be justified. Environmental effects of production activity and the increased impacts on the environment from production and transport facilities may be considered when a specific production plan has been proposed. Thus, plaintiffs have not shown even a fair likelihood of success on the merits of this NEPA claim.

C. Adequacy of Public Notice

Once an application for a permit under § 10 of the Rivers and Harbors Act of 1899 and § 404 of the FWPCA has been filed, a public notice must be issued.⁴¹ Public notice is the primary method of advising all interested parties of the proposed activity for which a permit is sought and of soliciting comments and information necessary to evaluate the probable impact on the public interest.

Plaintiffs claim that the failure to give notice to Kaktovik, Nuiqsut, and Barrow city councils, or postmasters, or to any individuals residing in Kaktovik or Nuiqsut, was in breach of a clear ministerial duty of the Corps of Engineers and deprived plaintiffs of their right to due process of law. Notice was sent to Deadhorse and Prudhoe Bay, communities closer to the site of the gravel island than Kaktovik, Nuiqsut, or Barrow. Notice was also sent to the Arctic Slope Regional Corporation in Barrow, of which the individual plaintiffs are members. Furthermore, notice was sent to the North Slope Borough which contains within its political boundaries all of the plaintiffs. Indeed, the North Slope Borough comment letter included reference to verbal objections from the Village of Kaktovik.

[9 ELR 20123]

In light of these factors, I conclude that the public notice was sufficient and that plaintiffs were not prejudiced by distribution of the notice.

Plaintiffs also argue that the failure to give notice of the state water quality certification requirement in the public notice renders it defective.⁴² Although notice of the state certification requirement should be included in the public notice, I cannot conclude, under the circumstances of this case, that the omission renders the public notice fatally defective. At the time that the Exxon permit public notice was issued, the State of Alaska had not yet promulgated its detailed regulations for the certification programs. Thus, although a state certificate program had been in existence for several years prior to Exxon's permit application, procedures were not fully regularized until November 25, 1977. The failure to include notice of the state water quality certification requirement does not invalidate the public notice under these circumstances.

D. FWPCA Claim

Plaintiffs contend that the Exxon permit was issued unlawfully because Exxon never obtained a § 401(a) water quality certification from the Alaska Department of Environmental Conservation (ADEC). Defendants concede that a formal request for state certification was never submitted to ADEC. However, defendants maintain that state officials indicated that no certification would be required because of Exxon's plan for waste disposal and that the state therefore waived the certification requirement.⁴³

The Exxon plan of operation does not provide for any discharge of pollutants into the Beaufort Sea. All solid waste is saved and deposited at an upland disposal site in accordance with applicable state permits. All liquid waste is either similarly disposed of or will be injected down the wellbore to deep underground formations pursuant to state permits. Because the plan of operations does not call for any discharges, the EPA determined that no NPDES permit would be required for this project. Thus, the only "discharge" subject to state certification under § 401 is the placement of the gravel pad itself. Since placement of the gravel occurred during March and April, there was no open water in the area until weeks after placement was completed.

Corps of Engineers' regulations provide that state certification under § 401 is required for discharge of fill material into the waters of the United States. See 33 C.F.R. §§ 325.1(a)(3), 325.1(b)(1). A waiver may occur if the state does not act within three months after receipt of a request. 33 C.F.R. § 325.2(b)(1).

Plaintiffs argue that Exxon never requested state certification, and therefore the state's silence cannot be construed as a waiver of the requirement. See 33 C.F.R. § 325.1(b)(1). Exxon maintains that the public notice of the permit application issued by the Corps of Engineers and various informal inquiries constitute a request for certification. Exxon's position must be rejected, however, upon examination of state certification procedures.

The initial burden of seeking certification lies with the applicant under ADEC regulations. 18 A.A.C. 15.130(a). Exxon never submitted an application for certification. The certification procedure provides for substantial public involvement in determining whether the proposed activity comports with state water quality standards.⁴⁴ The comments provided by ADEC pursuant to the Exxon permit application were offered with an express disclaimer that the comments constituted any state certification under § 401. Thus, neither the public notice issued by the Corps nor informal inquiries to state officials may be viewed as an application for state certification under § 401.

I conclude, therefore, that plaintiffs have raised serious questions going to the merits of this claim. Nevertheless, since ADEC has now waived state certification,⁴⁵ and plaintiffs have been unable to show that the balance of harm is tipped sharply in their favor, the granting of preliminary relief would not be appropriate on this claim.

Does the Balance of Irreparable Harm Favor Plaintiffs?

Plaintiffs claim irreparable harm to their subsistence hunting and fishing and to their way of life if the preliminary injunction is not granted.

Defendant Exxon claims that over $7.0 million has been expended on the project to date and that daily drilling costs average $60,000. In addition, Exxon claims that if operations were suspended for 30 days or more, Exxon would not have sufficient time to evaluate the well prior to spring 1979 breakup and the fall 1979 expiration date for the Duck Island Unit lease. Exxon alleges that the nine leases comprising the Duck Island Unit were obtained at a cost in excess of $20 million. Failure to drill the exploratory well before the end of the primary term of the leases in September 1979 could result in the loss of these leases.

Plaintiffs claim of harm to the environment and to the wildlife upon which they depend for their way of life must be examined in terms of Exxon's exploratory project and not a more generalized concern about future oil and gas development and production activity in the Beaufort Sea.

Exxon's permit is clearly limited to exploratory drilling and to the conditions of its Plan of Operations approved by the State. It must stop all drilling activity by March 31, 1979 and remove the drilling rig, all facilities, equipment, and personnel prior to May 1, 1979, or spring breakup, whichever occurs first.

The permit requires additional authorization before production activity would be allowed. Thus, concerns expressed by plaintiffs in regard to production from the site would be properly addressed only in the event Exxon applies for authorization to engage in production activity.

After reviewing the testimony, exhibits, and affidavits in regard to the possibility of unusual ice movements, oil spills and cleanup, and the effect of the drilling activity on wildlife, I conclude that the balance of harm does not favor the laintiffs in the context of this carefully designed exploratory well. Unless circumstances change to alter Exxon's plan of operations which calls for cessation of drilling by March 31, I conclude that the balance of equities favors the defendants.

The public interest favors both the plaintiffs and defendants in this case. NEPA and the Endangered Species Act reflect a strong public interest in environmental concerns. Exploration for additional oil and gas resources is also an important national interest. Because possible adverse environmental effects of this single exploratory well have been studied and carefully limited, I conclude that, in the specific factual framework of this motion, the public interest favors the denial of preliminary relief.

Conclusion

Plaintiffs have raised serious questions on the merits of two claims: (1) the failure to prepare an EIS on Exxon's exploratory drilling operation, and (2) the failure to obtain state certification under § 401 of FWPCA.However, because of the difficulty in showing harm to wildlife during the winter months and the following limits on Exxon's activity, I have concluded that the balance of equities is in Exxon's favor: (1) the requirement to complete all drilling and testing by March 31, 1979; (2) the requirement to remove all structures and personnel by May 1, 1979; (3) the precautions Exxon has taken in designing the well and its emergency shut-down procedures.

Plaintiffs' motion for a preliminary injunction, as ordered earlier by this court's minute order of December 20, 1978, is therefore denied.

ORDERED ACCORDINGLY.

1. 33 U.S.C. § 403.

2. 33 U.S.C. § 1344.

3. Barrow is located approximately 200 miles from the Duck Island Unit, and Kaktovik and Nuiqsut are approximately 100 and 60 miles, respectively, from the project.

4. The U.S. Environmental Protection Agency, in its comment letter of January 13, 1978, advised the Corps of Engineers that it had no objection to the permit issuance provided that the permitee obtain additional authorization prior to production and transport of petroleum products to shore.

5. The National Marine Fisheries Service (NMFS), in its comment letter of January 25, 1978, advised the Corps of Engineers that it did not object to issuance of the permit:

. . . we do not believe the construction of a single artificial island near the mouth of the Sagavanirktok (Sag) River will have significant adverse effects on the environment of the Arctic Coast.

It is recognized that this site could be transposed into a production well should oil and gas be discovered in commercial quantities. This event would entail additional environmental impacts over those associated with a gravel island used solely for exploratory drilling.

The NMFS stipulated that additional authorizing be required if the island were retained as a production facility.

6. The Alaska Department of Fish and Game, in its comment letter of February 16, 1978, had no objection to the permit issuance provided it contained the following three stipulations: (1) that the well be abandoned below the sea floor, beyond any depth of potential scour, and that structures be removed prior to May 15, 1979 or spring breakup, whichever occurs first; (2) that all drilling and testing activities cease by March 31, 1979; and (3) that Exxon conduct no staging activities between the months of June through September 15.

7. The permit contained the following four special conditions:

a. That the permittee shall follow their approved Plan of Operation for Duck Island No. 1.

b. That the permittee shall maintain the structure for exploratory purpose. At a later date, should the intended use change to a production structure, additional Department of the Army authorization shall be required.

c. The permittee shall removal [sic] all facilities, gravel fill, well head below the depth of any potential scour, and restore the site to its preproject condition should the well be determined as nonproductive or drilling activities be abandoned. The site restoration project shall be completed prior to 1 June 1981, unless the District Engineer, after consulting the resource agencies, determines that removal of the island could adversely impact fish and wildlife resources of the area.

d. That no activities shall be conducted between 1 June and 1 September.

8. As the affidavit of Lt. Colonel Vernelle Smit, Deputy District Engineer, indicates, this report was originally circulated as a draft programmatic EIS for the specific purpose of addressing the question of offshore oil and gas exploration. The EIS was never finalized, primarily because there "were some items exclusive of the endangered species items that were considered to be outdated:"

. . . the Department of Interior, Bureau of Land Management, Office of the Alaska Outer Continental Shelf was given the responsibility of updating and conducting environmenral impact statements for coastal areas . . . . However, this study was used in evaluating and determining whether or not to issue this permit. Therefore, in light of the information that was available at the time on various wildlife species and the effect of the project on the environment, the environmental impact statement for the Arctic North Slope was considered to be the latest most available information that could be garnered on the subject area. While it was not the sole criteria for consideration in preparation of an environmental assessment for this permit, it did play a significant role in evaluation and is considered to have been more than accurate enough for consideration of the question of protection of the endangered species and control of other environmental concerns.

(Emphasis added.) U.S. Exhibit No. 24 at pp. 8-9.

9. The EIA summarized as follows the factors evaluated in making a negative determination:

Evaluation by this office considered relevant factors including conservation, economics, aesthetics, general environmental concerns, historic values, fish and wildlife values, flood damage prevention, land use, navigation, recreation, water supply, water quality, energy needs, safety, food production, and, in general, the needs and welfare of the people. This review has not identified any potentially significant adverse effects for action under the terms of the permit application. I have determined that performance of the work in accordance with the conditions of the permit will not significantly affect the quality of the human environment.

10. Although there was some confusion prior to the hearing regarding whether this plan of operations schedule was still in effect, the testimony of Robert Bright, drilling manager for Exxon's Alaska operations, established that Exxon is required to complete drilling and testing operations by April 1, 1979 so that all equipment, personnel, and structures may be removed and the well plugged by May 1, 1979. There are no present plans to convert the well to a production facility and the well is thereafter to be abandoned.

11. Although the EPA determined on January 18, 1978 that no national pollutant discharge elimination system (NPDES) permit was required other permits were obtained including a State Air Quality Control Permit (Feb. 15, 1978), a State Waste Disposal Permit for Treated Liquid Waste (April 3, 1978), and a State Waste Disposal Permit for Solid Waste (April 5, 1978). Exxon applied for a state drilling permit on December 2, 1977, and the permit was formally granted on August 31, 1978.

12. 16 U.S.C. § 1540(g).

13. 33 U.S.C. § 1365.

14. See Senate Report No 92-414, 92nd Cong., 1st Sess., 79-80 (1971); 1972 U.S. CODE CONG. & ADMIN. NEWS 3668, 3745-3746.

15. Friends of the Earth v. Carey, 535 F.2d 165 [6 ELR 20488] (2d Cir. 1976); Natural Resources Defense Council v. Callaway, 524 F.2d 79, 83 [5 ELR 20640] (2d Cir. 1976); People of State of California, Etc. v. Department of Navy, 431 F. Supp. 1271 (N.D. Cal. 1977); Montgomery Environmental Coalition v. Fri, 366 F. Supp. 261, 266 [4 ELR 20182] (D.D.C. 1973).

16. See Sierra Club v. Froehlke, 392 F. Supp. 130 [5 ELR 20456] (D.C. Mo. 1975), 534 F.2d 1289 [6 ELR 20448] (8th Cir. 1976).

17. Plaintiffs also claim jurisdiction under 28 U.S.C. § 1331 (federal question), 28 U.S.C. § 1337 (commerce), and 28 U.S.C. § 1361 (mandamus). Declaratory relief is sought under 28 U.S.C. §§ 2201-2202.

18. Plaintiffs argue that in this case a third test is applicable which authorizes an injunction without inquiry into the elements of the traditional tests where statutory violations are clearly thwarting the policies of Congress. See Tennessee Valley Authority v. Hill, 98 S. Ct. 2279 [8 ELR 20513] (1978); United States v. City and County of San Francisco, 310 U.S. 16 (1940); Lathan v. Volpe, 455 F.2d 1111 [1 ELR 20602] (9th Cir. 1971). Although a court may apply this alternative analysis in cases where a clear violation exists and the timing of relief is so crucial that a delay would render relief meaningless, this case does not fall into such a category.

19. Section 7 of the Endangered Species Act, 16 U.S.C. § 1536, provides in pertinent part as follows:

All . . . Federal departments and agencies shall . . . utilize their authorities in furtherance of the purposes of this chapter . . . by taking such action necessary to insure that actions authorized, funded, or carried out by them do not jeopardize the continued existence of such endangered species or result in the destruction or modification of habital of such species . . . determined by the Secretary . . . to be critical.

20. Section 9 of the Endangered Species Act provides that no person (including federal agencies) may "take" any endangered species within the United States or the territorial sea of the United States. 16 U.S.C. § 1538(a)(1)(B). "Take" means to "harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct." 16 U.S.C. § 1532(14).

The words "harass" and "harm" are defined as follows in the implementing regulations:

"Harass" in the definition of "take" in the Act means an intentional or negligent act or omission which creates the likelihood of injury to wildlife by annoying it to such an extent as to significantly disrupt normal behavioral patterns which include, but are not limited to, breeding, feeding or sheltering.

"Harm" in the definition of "take" in the Act means an act or omission which actually injures or kills wildlife, including acts which annoy it to such an extent as to significantly disrupt essential behavioral patterns which include, but are not limited to, breeding, feeding, or sheltering; significant environmental modifications or degradation which has such effects is included within the meaning of "harm."

50 C.F.R. § 17.3

21. Plaintiffs also maintain that the actions of Exxon violate § 9 of the Endangered Species Act. Conclusions regarding defendant Corps of Engineers' compliance with the Act are applicable to defendant Exxon and do not, therefore, require separate discussion.

22. The second clause of statute regarding the destruction or modification of habitat is inapplicable because there has been no determination under 16 U.S.C. § 1536 that any area of the Beaufort Sea is a "critical habitat" for the bowhead or gray whale. "Critical" habitat is neither the entire habitat or "range" of an endangered species, nor "areas of endangerment" cited by plaintiffs and set forth in the appendix of 50 C.F.R. § 17.11. A critical habitat is established only in limited instances under the formal requirements of the Endangered Species Act and 50 C.F.R. § 17.95 et seq.

23. See 50 C.F.R. § 402.04(h), 43 Fed. Reg. 876 (Jan. 4, 1978).

Public notice of Exxon's permit application was distributed several months prior to the promulgation of the January 4, 1978 regulations regarding a formal consultation process. The Corps received comments on the project from NMFS and the United States Fish and Wildlife Service (USFWS). Both comments were dated after the effective date of the new regulations, but neither agency requested formal consultation nor objected to the project as finally approved. The new regulations provide that if an agency decides that a program "will not affect a listed species or their habitat, consultation shall not be initiated unless requested by the Service (either USFWS or NMFS)." 50 C.F.R. § 402.04(a)(2), 43 Fed. Reg. 875 (1978). Formal consultation has not been requested by NMFS in regard to the Exxon Duck Island Project

24. U.S. Exhibit No. 3.

25. The result of the threshold examination conducted by NMFS was inconclusive. By letter of August 25, 1978, NMFS provided BLM recommendations for further research designed to furnish information sufficient for NMFS to make the determination under the Endangered Species Act.

26. Exxon has installed a reserve pit lined with a bentonite seal, a layer of oil absorbent material, and covered with reinforced plastic liner, capable of containing 85,000 gallons of fluid that may be discharged from the well if an emergency occurs. In addition, blowout preventers have been installed in the wellhead to close the wellbore in an emergency. Other safety features include an ice-monitoring system and reserve pits for fuel tanks. Affidavit of Brudge Elkin, Exxon's drilling operations manager, pp. 2-4.

27. See note 8, supra, and accompanying discussion in the text.

28. Final Environmental Impact Statement, Offshore Oil and Gas Development — The Alaskan Arctic Coast, Alaska District, Corps of Engineers (Anchorage, Alaska, September 1976) at pp. 73-89.

29. Id. at 97.

30. Id. at 102-118.

31. Id. at 120.

32. Id. at 124-135.

33. 33 C.F.R. § 325.4(b)(1).

34. Testimony regarding the impact on wildlife in the area of the Exxon project established that ring seals, arctic foxes, and polar bears could be disturbed by the noise and activity within a four-mile area of the gravel island.

35. Listed as an evaluation consideration in the 1976 EIA for denial of exploratory drilling permits is location of proposed drilling "within the mouth of a stream," P B(1) at p. 2.

36. Although I decline to comment on the adequacy of the 1976 EIA in this regard, any subsequent application review by the Corps of Engineers should include a review of data from the Exxon Duck Island Unit detailing its impact on wildlife in the area and any other data currently available.

37. Trout Unlimited v. Morton, 509 F.2d 1276 [5 ELR 20151] (9th Cir. 1974).

38. See Sierra Club v. Hathaway, 579 F.2d 1162 [8 ELR 20736] (9th Cir. 1978).

39. See Friends of the Earth v. Coleman, 513 F.2d 295 [5 ELR 20259] (9th Cir. 1975); Scientists' Institute for Public Information v. Atomic Energy Commission, 481 F.2d 1079 [3 ELR 20525] (D.C. Cir. 1973).

40. Supplemental affidavit of Crandall Jones, manager of Alaska/Pacific Exploration Division of Exxon.

41. The standard procedure for processing an application for a Corps of Engineers' permit is found in 33 C.F.R. § 325.3(c)(1):

The notice will be distributed for posting in post offices or other appropriate public places in the vicinity of the site of the proposed work and will be sent to the applicant, to appropriate city and county officials, to adjoining property owners, to appropriate State agencies, to local regional and national shipping and other concerned business and conservation organizations, and to any other interested parties.

42. See 33 C.F.R. § 325.3(a)(7).

43. In memorandum dated December 4, 1978, Mr. Mueller, Commissioner of ADEC, expressly waived certification by ADEC as to the Exxon permit at issue here.

44. Public notice is provided in all cases. 18 A.A.C. 15.140 and 18 A.A.C. 70.082. In substantial cases, ADEC may hold a public hearing on the certification request. 18 A.A.C. 15.150 and 18 A.A.C. 70.083.

45. Although I decline to comment on the effect of this waiver, it does reflect ADEC's present posture in regard to the certification requirement. See n.43, supra.