INTERIOR:

Judge nixes tighter U.S. oversight of oil and gas operations

A federal judge threw out Obama administration efforts Friday to increase environmental oversight of oil and gas development on federal land.

U.S. District Judge Nancy Freudenthal of the District of Wyoming ruled that the Bureau of Land Management and Forest Service had failed to follow the correct procedures in issuing a new interpretation of federal law that limited the use of "categorical exclusions," which exempt certain actions from full environmental oversight.

The ruling in Western Energy Alliance v. Salazar applies nationwide.

The federal law at issue is Section 390 of the 2005 Energy Policy Act, which contains a provision that generally encourages the government to use categorical exclusions in certain onshore oil and gas developments in an effort to speed up the process.

The Obama administration sought to ease the impact of the law by issuing a new interpretation of how to implement it that, among other things, introduced a screening process that could lead to further environmental oversight if certain criteria were met. BLM adopted the new procedure in a May 2010 memorandum, and the Forest Service largely followed suit in a June 2010 letter.

Freudenthal -- wife of former Wyoming Gov. Dave Freudenthal (D) -- ruled that the administration had violated the Administrative Procedure Act by failing to follow the correct public notice and comment procedure.

Rejecting government arguments that sought to downplay the importance of the documents, she wrote that they both constituted final agency action, which is reviewable by a court, because the government had "adopted a final, binding and substantive change to ... its past practices."

The memorandum and letter "are not policy statement," Freudenthal added. "They are rules which bind the agency and impose or affect individual rights and duties."

The administration now has the opportunity to try again as Freudenthal declined to reach other legal issues raised by the Western Energy Alliance, the industry group that challenged the guidance.

The alliance welcomed the ruling, with Kathleen Sgamma, director of government and public affairs, saying in a statement that it was a warning to the administration that it should not "rewrite law and policies at the behest of environmental groups."

The use of categorical exclusions should be welcomed as a way to "encourage domestic oil and natural gas production and cease requiring redundant environmental analysis that slows economic activity," she added.

An Interior Department spokesman said officials are "reviewing the ruling" but declined to comment further.

Click here to read the ruling.