This story was updated at 1:30 p.m. EST.
Major reform of federal oil and gas leasing will require more detailed environmental reviews, more public input and less use of a provision to streamline leasing, the Interior Department announced today.
"The previous administration's 'anywhere, anyhow' policy on oil and gas development ran afoul of communities, carved up the landscape, and fueled costly conflicts that created uncertainty for investors and industry," Interior Secretary Ken Salazar said in a statement. "We need a fresh look -- from inside the federal government and from outside -- at how we can better manage Americans' energy resources."
The new policy will require a more detailed environmental review prior to leasing oil and natural gas on public lands. The Bureau of Land Management will engage the public in developing master leasing and development plans before leasing areas where intensive new oil and gas development is anticipated, it said. Interior said the intent is to fully consider other important natural resource values prior to making an irreversible commitment to develop an area.
Interior will also require a comprehensive parcel review process that takes a site-specific approach to individual lease sales. Each potential lease sale will undergo increased internal and external coordination, public participation, interdisciplinary review of available information, confirmation of resource management plan conformance, and national, state and local guidance, as well as site visits to parcels when necessary to supplement or validate existing data.
State office quarterly lease sales would still occur as required by law, but BLM anticipates that the process time frames will be extended to accommodate the interdisciplinary review of lease sale parcels.
Interior said the opportunity for more public participation and better environmental documentation is expected to reduce the number of protests filed as well as enhance the state offices' ability to resolve protests prior to lease sales.
BLM will continue to accept industry expressions of interest regarding where to offer leases, it said, but will emphasize leasing in already-developed areas and will plan carefully for leasing and development in new areas.
BLM is also issuing interim draft guidance to its field offices on a provision to streamline oil and gas drilling applications on public lands. Section 390 of the 2005 Energy Policy Act allows the Bureau of Land Management to approve certain oil and gas projects without preparing new environmental analyses that would normally be required by the National Environmental Policy Act.
The draft guidance will establish a process for considering "extraordinary circumstances" when using a Section 390 categorical exclusion. Those occur when individual actions that normally would be categorically excluded are of such a nature or degree that they warrant further environmental analysis before permitting.
Under the new policy, in accordance with White House Council on Environmental Quality guidelines, BLM will not use these categorical exclusions in cases involving "extraordinary circumstances" such as impacts to protected species, historic or cultural resources, or human health and safety.
Legal, political battles
Environmentalists have challenged in court some projects approved under the measure, saying BLM failed to analyze or consider the environmental effects to the areas.
Republican lawmakers sent a letter to Salazar in November calling categorical exclusions "a valuable tool provided by Congress to the land management agencies to improve the government process of approving energy production, while at the same time ensuring protection of the environment." House Natural Resources Committee ranking member Doc Hastings of Washington sent the letter along with Reps. Rob Bishop of Utah, Doug Lamborn of Colorado and Cynthia Lummis of Wyoming (E&E Daily, Nov. 6, 2009).
The Government Accountability Office in September recommended that Congress consider amending the 2005 law to clarify Section 390 and that BLM take steps to improve implementation of the provision by clarifying agency guidance, standardizing decision documents and boosting oversight.
The GAO investigation found that BLM illegally approved some oil and gas drilling applications on public lands from 2006 to 2008. BLM used categorical exclusions to approve more than a quarter of applications during those years -- about 6,100 of 22,000 -- and to modify hundreds of existing permits, GAO said. The agency's use of the measure has "frequently been out of compliance" with both the law and BLM's own guidance and may have thwarted NEPA, it said.
Salazar also issued a secretarial order establishing a new Energy Reform Team to identify and implement important energy management reforms.
The oil and gas industry already has protested that the Obama administration has delayed domestic development. The American Petroleum Institute and the Independent Petroleum Association of Mountain States both stepped up criticism late last year, accusing the administration of slowing energy production. That led Salazar to fire back, accusing industry groups of "untruths" and politicking (Greenwire, Nov. 24, 2009).
Many of the reforms established today follow an October review. Salazar said that an in-depth examination of 77 Utah parcels the Obama administration put on hold in February served as a "laboratory of learning" for how to reform BLM practices. The review by an 11-member interdisciplinary team showed a "headlong rush" to leasing under the Bush administration and that oil and gas management was "not done right in the past," Salazar said at the time (E&ENews PM, Oct. 8, 2009).
The report recommended that BLM take a larger role in identifying which parcels should be leased for oil and gas drilling. The agency does not have enough resources to undertake as comprehensive a review of every parcel as it did for the 77 Utah leases, the report says. As an alternative, BLM could take steps to limit the scope of oil and gas lease offerings in a way that would ensure the opportunity to complete necessary field reviews.
The Independent Petroleum Association of Mountain States said the changes will continue to delay the development of domestic natural gas on Western federal lands, creating additional layers of red tape, allow government bureaucrats to trump the expertise of geologists and engineers and ignore the Energy Policy Act of 2005.
"We are disappointed to see the DOI moving to a bureaucratic command-and-control system in which government bureaucrats -- rather than scientists with expertise in natural gas and oil development -- dictate where energy development should occur," said IPAMS director of government affairs, Kathleen Sgamma, in a statement.
American Petroleum Institute President and CEO Jack Gerard said the changes will threaten American jobs and make the country more dependent on foreign oil.
"In what has become increasingly familiar double-talk from this administration, Interior Secretary Salazar today again spoke of the importance of domestic oil and natural gas, while making it more difficult to produce American oil and gas, put more Americans back to work and help restore our nation's economy," Gerard said in a statement. "Under the guise of offering certainty for investors, Interior Secretary Salazar has taken steps to further delay and limit American energy resources for all Americans."
The Institute for Energy Research condemned the changes, saying they will make it more difficult, expensive and time-consuming to explore for and produce energy on federal, taxpayer-owned land.
"When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less," IER President Thomas Pyle said in a statement.
The changes drew praise from environmental groups.
"Today's move represents yet another significant step toward a balanced, common-sense approach to energy development on our public lands," Sierra Club executive director Carl Pope said in a statement. "The reforms announced today will help ensure that wildlife, water and our public lands receive the important protections they deserve."
Trout Unlimited officials called the moves a "good start."
"For too long, leasing has occurred with minimal thought given to the impacts on fish and wildlife, water resources, and hunting and fishing opportunity," said Chris Wood, Trout Unlimited's chief operating officer, in a statement. "Secretary Salazar is not announcing comprehensive reforms long advocated by sportsmen. He is, however, bringing a better sense of balance and review to a government leasing process that has been out of control."
House Natural Resources Chairman Nick Rahall (D-W.Va.) called the changes "common-sense proposals" that are "a step in the right direction and move us closer to balancing the scales after a decade in which oil and gas companies had free reign to run roughshod on America's public lands."
"Through greater coordination between agencies, and by providing the oil and gas industry needed certainty and clarity up front, we will ensure that America's domestic energy resources are developed in a fiscally sound and environmentally sensitive manner," Rahall said in a statement.
Likewise, Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) applauded the "thoughtful and strategic actions that will both boost energy production on public lands and maintain the integrity of these lands for all of the other multiple uses."
Bingaman also praised the categorical exclusion changes, saying they will "return to practices that are consistent with Section 390 as Congress actually passed it and that will lead to the best outcome for energy development and the environment."
But Robert Dillon, spokesman for ranking member Lisa Murkowski (R-Alaska), said the changes will drive more production overseas.
"This is simply another step by the administration to decrease domestic oil and gas production and increase our dependency on foreign nations," Dillon said in a statement. "You don't get more production by restricting development to depleted fields and increasing regulation."
Click here to read a comparison of current Interior policy with the new changes.