Energy Policy Act of 2005
BLM's Use of Section 390 Categorical Exclusions for Oil and Gas Development Gao ID: GAO-11-941T September 9, 2011The Energy Policy Act of 2005 was enacted in part to expedite domestic oil and gas development. Section 390 of the act authorized the Department of the Interior's Bureau of Land Management (BLM) to use categorical exclusions to streamline the environmental analysis required under the National Environmental Policy Act of 1969 (NEPA) when approving certain oil and gas activities. Numerous questions have been raised about how and when BLM should use these section 390 categorical exclusions. In September 2009, GAO reported on BLM's first 3 years of experience-- fiscal years 2006 through 2008--using section 390 categorical exclusions. This testimony is based on GAO's September 2009 report (GAO-09-872) and updated with information on court decisions that have been reached since the report was issued. The testimony focuses on (1) the extent to which BLM used section 390 categorical exclusions and the benefits, if any, associated with their use; (2) the extent to which BLM complied with the Energy Policy Act of 2005 and agency guidance; (3) key concerns, if any, associated with section 390 categorical exclusions; and (4) how BLM has responded to GAO's recommendations and other recent developments. For its September 2009 report, GAO analyzed a nongeneralizable random sample of 215 section 390 categorical exclusion decision documents from all BLM field offices that used section 390 categorical exclusions and interviewed agency officials and others.
GAO's analysis of BLM field office data showed that section 390 categorical exclusions were used to approve almost 6,900 oil-and-gas-related activities from fiscal year 2006 through fiscal year 2008. Nearly 6,100 of these categorical exclusions were used for drilling permits and the rest for other nondrilling activities. Most BLM officials GAO spoke with said that section 390 categorical exclusions increased the efficiency of certain field office operations, but it was not possible to quantify these benefits. GAO reported that BLM's use of section 390 categorical exclusions through fiscal year 2008 often did not comply with either the law or BLM's guidance. First, GAO found several types of violations of the law, including approving projects inconsistent with the law's criteria and drilling a new well after mandated time frames had lapsed. Second, GAO found numerous examples where officials did not correctly follow agency guidance, most often by failing to adequately justify the use of a categorical exclusion. A lack of clear guidance and oversight contributed to the violations and noncompliance. Many instances of noncompliance were technical in nature, whereas others were more significant and may have thwarted NEPA's twin aims of ensuring that BLM and the public are fully informed of the environmental consequences of BLM's actions. In September 2009, GAO reported that a lack of clarity in section 390 and BLM's guidance had caused industry, environmental groups, BLM officials, and others to raise serious concerns about the use of section 390 categorical exclusions. First, fundamental questions about what section 390 categorical exclusions were and how they should be used led to concerns that BLM might have been using these categorical exclusions in too many--or too few--instances. Second, specific concerns were raised about key concepts underlying the law's description of certain section 390 categorical exclusions. Third, vague or nonexistent definitions of key terms in the law and BLM guidance that describe the conditions to be met when using a section 390 categorical exclusion led to varied interpretations among field offices and concerns about misuse and a lack of transparency. As a result, GAO suggested that Congress may want to consider amending the act to clarify section 390, and GAO recommended that BLM clarify its guidance, standardize decision documents, and ensure compliance through more oversight. The Department of the Interior concurred with GAO's recommendations. In May 2010, in response to a court settlement and GAO's recommendations, BLM issued a new instruction memorandum substantially addressing the gaps and shortcomings in BLM's guidance that GAO had identified. In addition, BLM was developing a second instruction memorandum to address GAO's recommendation that it standardize decision documents when, on August 12, 2011, a decision was reached in Western Energy Alliance v. Salazar. The court held that the May 2010 instruction memorandum constituted a regulation that BLM adopted without using proper rule-making procedures and issued a nationwide injunction blocking the memorandum's implementation. According to a BLM official, the ruling has prevented BLM from implementing key parts of the memorandum and called into question the issuance of the second memorandum aimed at further addressing GAO's recommendations. GAO is making no new recommendations at this time.
GAO-11-941T, Energy Policy Act of 2005: BLM's Use of Section 390 Categorical Exclusions for Oil and Gas Development
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United States Government Accountability Office:
GAO:
Testimony:
Before the Subcommittee on Energy and Mineral Resources, Committee on
Natural Resources, House of Representatives:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
September 9, 2011:
Energy Policy Act of 2005:
BLM's Use of Section 390 Categorical Exclusions for Oil and Gas
Development:
Statement of Mark Gaffigan, Managing Director:
Natural Resources and Environment:
GAO-11-941T:
GAO Highlights:
Highlights of GAO-11-941T, a testimony before the Subcommittee on
Energy and Mineral Resources, Committee on Natural Resources, House of
Representatives.
Why GAO Did This Study:
The Energy Policy Act of 2005 was enacted in part to expedite domestic
oil and gas development. Section 390 of the act authorized the
Department of the Interior‘s Bureau of Land Management (BLM) to use
categorical exclusions to streamline the environmental analysis
required under the National Environmental Policy Act of 1969 (NEPA)
when approving certain oil and gas activities. Numerous questions have
been raised about how and when BLM should use these section 390
categorical exclusions. In September 2009, GAO reported on BLM‘s first
3 years of experience-”fiscal years 2006 through 2008”-using section
390 categorical exclusions.
This testimony is based on GAO‘s September 2009 report (GAO-09-872)
and updated with information on court decisions that have been reached
since the report was issued. The testimony focuses on (1) the extent
to which BLM used section 390 categorical exclusions and the benefits,
if any, associated with their use; (2) the extent to which BLM
complied with the Energy Policy Act of 2005 and agency guidance; (3)
key concerns, if any, associated with section 390 categorical
exclusions; and (4) how BLM has responded to GAO‘s recommendations and
other recent developments. For its September 2009 report, GAO analyzed
a nongeneralizable random sample of 215 section 390 categorical
exclusion decision documents from all BLM field offices that used
section 390 categorical exclusions and interviewed agency officials
and others.
GAO is making no new recommendations at this time.
What GAO Found:
GAO‘s analysis of BLM field office data showed that section 390
categorical exclusions were used to approve almost 6,900 oil-and-gas-
related activities from fiscal year 2006 through fiscal year 2008.
Nearly 6,100 of these categorical exclusions were used for drilling
permits and the rest for other nondrilling activities. Most BLM
officials GAO spoke with said that section 390 categorical exclusions
increased the efficiency of certain field office operations, but it
was not possible to quantify these benefits.
GAO reported that BLM‘s use of section 390 categorical exclusions
through fiscal year 2008 often did not comply with either the law or
BLM‘s guidance. First, GAO found several types of violations of the
law, including approving projects inconsistent with the law‘s criteria
and drilling a new well after mandated time frames had lapsed. Second,
GAO found numerous examples where officials did not correctly follow
agency guidance, most often by failing to adequately justify the use
of a categorical exclusion. A lack of clear guidance and oversight
contributed to the violations and noncompliance. Many instances of
noncompliance were technical in nature, whereas others were more
significant and may have thwarted NEPA‘s twin aims of ensuring that
BLM and the public are fully informed of the environmental
consequences of BLM‘s actions.
In September 2009, GAO reported that a lack of clarity in section 390
and BLM‘s guidance had caused industry, environmental groups, BLM
officials, and others to raise serious concerns about the use of
section 390 categorical exclusions. First, fundamental questions about
what section 390 categorical exclusions were and how they should be
used led to concerns that BLM might have been using these categorical
exclusions in too many-”or too few”-instances. Second, specific
concerns were raised about key concepts underlying the law‘s
description of certain section 390 categorical exclusions. Third,
vague or nonexistent definitions of key terms in the law and BLM
guidance that describe the conditions to be met when using a section
390 categorical exclusion led to varied interpretations among field
offices and concerns about misuse and a lack of transparency. As a
result, GAO suggested that Congress may want to consider amending the
act to clarify section 390, and GAO recommended that BLM clarify its
guidance, standardize decision documents, and ensure compliance
through more oversight. The Department of the Interior concurred with
GAO‘s recommendations.
In May 2010, in response to a court settlement and GAO‘s
recommendations, BLM issued a new instruction memorandum substantially
addressing the gaps and shortcomings in BLM‘s guidance that GAO had
identified. In addition, BLM was developing a second instruction
memorandum to address GAO‘s recommendation that it standardize
decision documents when, on August 12, 2011, a decision was reached in
Western Energy Alliance v. Salazar. The court held that the May 2010
instruction memorandum constituted a regulation that BLM adopted
without using proper rule-making procedures and issued a nationwide
injunction blocking the memorandum‘s implementation. According to a
BLM official, the ruling has prevented BLM from implementing key parts
of the memorandum and called into question the issuance of the second
memorandum aimed at further addressing GAO‘s recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-11-941T]. For more
information, contact Mark Gaffigan at (202) 512-3841 or
gaffiganm@gao.gov.
[End of section]
Chairman Lamborn, Ranking Member Holt, and Members of the Subcommittee:
I am pleased to be here today to participate in your hearing on the
categorical exclusions established by section 390 of the Energy Policy
Act of 2005. As you know, oil and natural gas production from federal
lands is critical to meeting our nation's energy needs. From fiscal
year 2006 through fiscal year 2010, the Department of the Interior's
Bureau of Land Management (BLM) approved more than 30,600 new oil and
gas drilling permits across 24 states, largely in the mountain West.
Like many projects on federal land with possible environmental
impacts, oil and gas development activities are typically subject to
environmental review under the National Environmental Policy Act of
1969 (NEPA).[Footnote 1]
Under NEPA, federal agencies evaluate the likely environmental effects
of projects they are proposing by preparing either an environmental
assessment or, if projects are likely to significantly affect the
environment, a more detailed environmental impact statement. If,
however, the agency determines that activities of a proposed project
fall within a category of activities the agency has already determined
has no significant environmental impact--called a categorical
exclusion--then the agency generally need not prepare an environmental
assessment or environmental impact statement.[Footnote 2] The agency
may instead approve projects that fit within the relevant category by
using one of the predetermined administrative categorical exclusions,
rather than carrying out a project-specific environmental assessment
or environmental impact statement.
To address long-term energy challenges, Congress enacted the Energy
Policy Act of 2005, in part to expedite oil and gas development within
the United States.[Footnote 3] This law authorizes BLM, for certain
oil and gas activities, to approve projects without preparing the new
environmental analyses that would normally be required by NEPA.
Section 390 of the Energy Policy Act of 2005 established five
categorical exclusions specifically for oil and gas development.
[Footnote 4] These categorical exclusions--referred to in this
testimony as section 390 categorical exclusions--define specific
conditions under which BLM need not prepare any new NEPA analysis,
such as an environmental assessment or environmental impact statement,
which would ordinarily be required for oil and gas projects. For a
project to be approved using an administrative categorical exclusion,
the agency must determine whether any extraordinary circumstances
exist under which a normally excluded action or project may have a
significant effect. As originally implemented, projects approved with
section 390 categorical exclusions were not subject to any screening
for extraordinary circumstances, according to BLM officials.[Footnote
5]
In September 2009, we reported on BLM's first 3 years of experience--
fiscal years 2006 through 2008--using section 390 categorical
exclusions.[Footnote 6] My testimony today will summarize the finding
of our September 2009 report, along with some recent updates.
Specifically, I will discuss (1) the extent to which BLM used section
390 categorical exclusions each fiscal year from 2006 through 2008 and
the benefits, if any, associated with their use; (2) the extent to
which BLM used section 390 categorical exclusions in compliance with
the Energy Policy Act of 2005 and internal BLM guidance; (3) key
concerns, if any, associated with section 390 categorical exclusions;
and (4) how BLM has responded to the recommendations in our September
2009 report and other recent developments.
For our report, we reviewed relevant laws, regulations, and Interior
and BLM guidance. We also reviewed BLM headquarters and field office
documents and data for each fiscal year from 2006 through 2008. We
interviewed officials in BLM headquarters and in the 11 BLM field
offices (and their associated state offices) that processed the most
applications for permit to drill (APD) from fiscal year 2006 through
fiscal year 2008. We also interviewed representatives from industry,
historic preservation groups, and environmental groups about benefits
and concerns--both actual and potential--associated with section 390
categorical exclusions. Other recent developments are based on our
review of court decisions that have been decided since we issued our
September 2009 report. The report was a performance audit conducted in
accordance with generally accepted government auditing standards. A
detailed description of our scope and methodology in presented in
appendix I of the September 2009 report.
Background:
Under the Federal Land Policy and Management Act of 1976, as amended
(FLPMA),[Footnote 7] BLM manages about 250 million acres of federal
land for multiple uses, including recreation; range; timber; minerals;
watershed; wildlife and fish; and natural scenic, scientific, and
historical values, as well as for the sustained yield of renewable
resources. In addition, the Mineral Leasing Act of 1920 charges
Interior with responsibility for oil and gas leasing on federal and
private lands where the federal government has retained mineral
rights. BLM is responsible for managing approximately 700 million
mineral onshore acres, which include the acreage leased for oil and
gas development. To manage its responsibilities, BLM administers its
programs through its headquarters office in Washington, D.C.; 12 state
offices; 45 district offices; and 128 field offices. BLM headquarters
develops guidance and regulations for the agency, while the state,
district, and field offices manage and implement the agency's
programs. Thirty BLM field offices, located primarily in the mountain
West, were involved in oil and gas development.
To drill for oil or natural gas on leased lands, a company must submit
an APD to BLM.[Footnote 8] APDs are used to approve drilling and all
related activities on land leased by a company, including road
building; digging pits to store drilling effluent; placing pipelines
to carry oil and gas to market; and building roads to transport
equipment, personnel, and other production-related materials.[Footnote
9] After an APD is approved, operators can submit proposals to BLM, in
the form of a sundry notice, for modifications to their approved APD.
Sundry notices may involve activities like changing the location of a
well, adding an additional pipeline, or adding remote communications
equipment.
Interior and BLM have administrative categorical exclusions in place
for numerous types of activities, such as constructing nesting
platforms for wild birds and constructing snow fences for safety. To
use such an administrative categorical exclusion in approving a
project on BLM land, the agency screens each proposed project for
extraordinary circumstances, such as significant impacts to threatened
and endangered species, historic or cultural resources, or human
health and safety or potentially significant cumulative environmental
effects when coupled with other actions. When one or more
extraordinary circumstances exist, BLM guidance precludes staff from
using an administrative categorical exclusion for the project.
Section 390 of the Energy Policy Act of 2005 authorizes BLM to forgo
environmental assessments and environmental impact statements for oil
and gas projects under certain circumstances. Specifically, subsection
(a) states:
"NEPA Review--Action by the Secretary of the Interior in managing the
public lands or the Secretary of the Agriculture in managing National
Forest System Lands, with respect to any of the activities described
in subsection (b) shall be subject to a [emphasis added] rebuttable
presumption [end emphasis added] that the use of a categorical
exclusion under the National Environmental Policy Act of 1969 (NEPA)
would apply if the activity is conducted pursuant to the Mineral
Leasing Act for the purpose of exploration or development of oil and
gas."[Footnote 10]
Subsection (b) outlines five new categories of activities to be
considered categorical exclusions. These section 390 categorical
exclusions (referred to in this testimony as section 390 CX1, CX2,
CX3, CX4, and CX5) include:
"(1) Individual surface disturbances of less than 5 acres so long as
the total surface disturbance on the lease is not greater than 150
acres and site-specific analysis in a document prepared pursuant to
NEPA has been previously completed.
(2) Drilling an oil or gas well at a location or well pad site at
which drilling has occurred previously within 5 years prior to the
date of spudding the well.
(3) Drilling an oil or gas well within a developed field for which an
approved land use plan or any environmental document prepared pursuant
to NEPA analyzed such drilling as a reasonably foreseeable activity,
so long as such plan or document was approved within 5 years prior to
the date of spudding the well.
(4) Placement of a pipeline in an approved right-of-way corridor, so
long as the corridor was approved within 5 years prior to the date of
placement of the pipeline.
(5) Maintenance of a minor activity, other than any construction or
major renovation or [sic] a building or facility."
In its process for approving oil or gas projects, BLM's original
guidance provided that the agency can use a section 390 categorical
exclusion when a project meets the conditions set forth for any of the
five types of section 390 categorical exclusions. BLM guidance still
directs staff to document their decision and rationale for using a
specific section 390 categorical exclusion. Furthermore, BLM guidance
directed its staff when using section 390 categorical exclusions to
comply with the Endangered Species Act and the National Historic
Preservation Act; to conduct on-site reviews for all APDs; and to add
site-specific restrictions or conditions of approval if deemed
necessary to protect the environment or cultural resources.
BLM Field Offices Used Section 390 Categorical Exclusions for More
Than One-Quarter of Their APDs, Although Benefits of Use Varied Widely
across Field Offices:
In September 2009, we reported that 26 of the 30 field offices with
oil and gas activities used almost 6,900 section 390 categorical
exclusions to approve oil-and-gas-related activities from fiscal year
2006 through fiscal year 2008. Of these, BLM field offices used
section 390 categorical exclusions to approve nearly 6,100 APDs (about
28 percent of approximately 22,000 federal wells approved by BLM)
during this period. Three BLM field offices (Pinedale, Wyoming;
Farmington, New Mexico; and Vernal, Utah) accounted for almost two-
thirds of section 390 categorical exclusions used to approve APDs.
Section 390 CX3 accounted for more than 60 percent of the section 390
categorical exclusions used to approve APDs. BLM also used section 390
categorical exclusions to approve more than 800 nondrilling projects
from fiscal year 2006 through fiscal year 2008. These approvals were
for a wide range of activities, such as changing a well location,
adding new pipelines, and doing road maintenance. The Buffalo,
Wyoming, field office was the most prominent user of section 390
categorical exclusions for these purposes, approving more than 250
nondrilling projects with section 390 categorical exclusions.
The vast majority of BLM officials we spoke with told us that using
section 390 categorical exclusions expedited the application review
and approval process, but the amount of time saved by field offices
depended on a variety of factors and circumstances influencing the
extent to which field offices used the exclusions. A frequently cited
factor contributing to these efficiency gains was the extent to which
proposed projects fit the specific conditions set forth in each
section 390 categorical exclusion. BLM officials also identified other
factors that contributed to their ability to use section 390
categorical exclusions, including the field office resource
specialists' familiarity with the area of the proposed action, the
area's environmental sensitivity, the extent of the area's cultural
resources, and the proposed action's extent of surface disturbance.
Specifically, BLM officials told us that section 390 categorical
exclusions were regularly used to approve projects in areas where
sensitive environmental or cultural concerns were few (e.g., no
threatened or endangered species, or limited cultural resources in the
area), where the resource specialists were familiar with the location
of the proposed action, or where the proposed project was not unusual
or was likely to have minimal impact on the local environment.
Additionally, field office policies could contribute to how often
section 390 categorical exclusions were used. The differences in
office policies result from field office managers' comfort with the
use of section 390 categorical exclusions and their interpretations of
appropriate use.
Because it is not always clear how oil and gas development would have
proceeded in the absence of section 390 categorical exclusions, BLM
officials told us that estimating the amount of time saved by using
the exclusions was difficult. In field offices where section 390
categorical exclusions were seldom used to approve APDs or nondrilling
actions, officials told us that a typical section 390 categorical
exclusion approval document saved a few hours of total staff time. In
contrast, in field offices where section 390 categorical exclusions
were used more often, the time savings were cumulatively more
significant, although officials could not quantify them. Officials in
these field offices told us that while the savings for a single APD
did not by itself mean that the APD was approved in fewer calendar
days, the total number of APDs processed in the office in a given
period was probably larger because of the cumulative time saved by
using section 390 categorical exclusions.
Industry officials with whom we spoke also agreed that BLM's use of
section 390 categorical exclusions had generally decreased APD-
processing times and that this increased efficiency was more
pronounced in some field offices than in others. Acknowledging that
the type of development and the availability of NEPA documents were
both critical factors, they also stressed that differences in field
office policies, field office operations, and field management
personalities generally influenced how readily a given BLM field
office used section 390 categorical exclusions. For example, according
to industry officials, some field offices were conservative and
cautious and therefore reluctant to use section 390 categorical
exclusions if even minimal environmental or cultural resource concerns
existed. This tendency ran counter to what some industry officials
told us was their interpretation of the law--namely, that they
believed that section 390 categorical exclusions should be used
whenever a project meets the required conditions. Industry officials
told us that in some cases BLM was overly cautious in applying section
390 categorical exclusions, in part because BLM feared litigation from
environmental groups. Industry officials commented on the lack of
consistency among BLM field offices in how section 390 categorical
exclusions were used but overall told us that section 390 categorical
exclusions were a useful tool and have contributed to expedited
application processing. They applauded the exclusions for reducing
redundant and time-consuming NEPA documentation and making APD
application processing more predictable and flexible.
BLM's Use of Section 390 Categorical Exclusions from Fiscal Year 2006
through Fiscal Year 2008 Often Did Not Comply with Either the
Implementing Statute or Agency Guidance:
In September 2009, we reported that BLM's field offices used section
390 categorical exclusions to approve oil and gas activities in
violation of the law and also failed to follow agency guidance.
Specifically, we found six types of violations of the Energy Policy
Act of 2005 and fives types of noncompliance with BLM guidance (see
table 1).
Table 1: Types of Violations of the Energy Policy Act of 2005 and BLM
Guidance:
Six types of violations of section 390 of the Energy Policy Act of
2005:
* Using a section 390 CX2 or CX3 to approve more than one well;
* Using a section 390 CX2 or CX3 to approve an activity other than
drilling an oil or gas well;
* Drilling a new well approved using a section 390 CX2, CX3, or CX4
beyond the applicable 5-year time frame;
* Approving a new oil or gas well at a site that had not yet been
drilled;
* Using section 390 CX5 for ineligible activities;
* Approving a section 390 CX3 without sufficient supporting NEPA
documentation;
Five types of noncompliance with BLM guidance:
* Using section 390 CX1 to approve more than one well;
* Using incorrect expiration dates for activities approved with a
section 390 CX2 or CX3;
* Failing to include required text defining expiration dates for APDs
or nondrilling actions approved using section 390 CX2, CX3, or CX4;
* Applying the extraordinary circumstances checklist for section 390
categorical exclusion decisions;
* Lack of adequate justification to ascertain compliance with use of
section 390 CX1, CX2, CX3, or CX4.
Source: GAO analysis of section 390 of the Energy Policy Act of 2005,
a sample of section 390 categorical exclusion decision documents, and
related follow-up interviews with BLM officials.
[End of table]
Overall, we found many more examples of noncompliance with guidance
than violations of the law. We did not find intentional actions on the
part of BLM staff to circumvent the law; rather, our findings
reflected what appear to be honest mistakes stemming from confusion in
implementing a new law with evolving guidance. Nevertheless, even
though some of the violations of law--such as approving multiple wells
with one decision document--were technical in nature, they must be
taken seriously. In some instances, violations we found may have
thwarted NEPA's twin aims of ensuring that both BLM and the public
were fully informed of the environmental consequences of BLM's
actions. For example, approval of multiple wells on one or more well
pads could have required an environmental assessment or environmental
impact statement, which would likely have provided additional
information on the environmental impacts of approving multiple wells.
According to BLM officials, the outcome of the NEPA process likely
would have yielded the same result. Nevertheless, the purpose of NEPA
is to provide better information for decision making, not necessarily
to alter the decisions ultimately made. The projects would likely have
been approved, but the specific location and conditions of approval
might have differed, and BLM and the public might have had more
detailed information on the environmental impacts of the approvals.
A lack of definitive and clear guidance from BLM, as well as lack of
oversight of field offices' actions, contributed to the violations of
law and noncompliance with BLM's existing guidance. At the time of our
report, BLM had provided several key guidance documents; we found,
however, that this guidance did not contain the specificity and
examples needed to clearly direct staff in the appropriate use and
limits of section 390 categorical exclusions. Specifically, BLM's
guidance at the time said little, if anything, about (1) the
documentation needed to support a decision to use a section 390
categorical exclusion or (2) the proper circumstances for using
section 390 categorical exclusions to approve modifications to
existing APDs through "sundry notices." Furthermore, BLM headquarters
and state offices we spoke with had generally not provided any
oversight or review of the field offices' actions in using section 390
categorical exclusions that could have ensured compliance with the law
or BLM guidance.
Lack of Clarity in the Law and in BLM Guidance Raised Serious Concerns
about Section 390 Categorical Exclusions:
We reported in September 2009 that the lack of clarity in section 390
of the Energy Policy Act of 2005 and in BLM's implementing guidance
led to serious concerns on the part of industry, environmental groups,
BLM officials, and others about when and how section 390 categorical
exclusions should be used to approve oil and gas development.
Specifically, these concerns included the following:
* Key elements of section 390 of the Energy Policy Act of 2005 were
undefined, leading to fundamental questions about what section 390
categorical exclusions were and how they should be used. This lack of
direction left these elements open to differing interpretations,
debate, and litigation, leading to serious concerns that BLM was using
section 390 categorical exclusions in too many--or too few--instances.
BLM officials, environmental groups, industry groups, and others
raised serious concerns with the law as a whole. These concerns
related to four key elements: (1) the definition of "categorical
exclusion" and whether the screening for extraordinary circumstances
was required, (2) whether the use of section 390 categorical
exclusions was mandatory or discretionary, (3) the meaning of the
phrase "rebuttable presumption," and (4) the level of public
disclosure required for section 390 categorical exclusions.
* The law's descriptions of the five types of section 390 categorical
exclusions prompted more specific concerns about how to appropriately
use one or more of the five types of section 390 categorical
exclusions. These concerns related to (1) the adequacy of NEPA
documents supporting the use of a particular section 390 categorical
exclusion, (2) consistency with existing NEPA documents, (3) the
rationale for the 5-year time frame used in some but not all types of
section 390 categorical exclusions, and (4) the piecemeal approach to
development fostered by using section 390 categorical exclusions.
* Concerns about how to interpret and apply key terms that describe
the conditions that must be met when using a section 390 categorical
exclusion. In particular, each of the five types of section 390
categorical exclusions contain terminology that is undefined in the
law and for which BLM had not provided clear or complete guidance.
Specifically, the ambiguous terms included (1) "individual surface
disturbances" under section 390 CX1, (2) "maintenance of a minor
activity" under section 390 CX5, (3) "construction or major renovation
or [sic] a building or facility" under section 390 CX5, (4) "location"
under section 390 CX2, and (5) "right-of-way corridor" under section
390 CX4. Vague or nonexistent definitions of key terms in the law and
BLM guidance led to varied interpretations among field offices and
concerns about misuse and a lack of transparency.
In September 2009, we reported that the failure of both the law and
BLM guidance to clearly define key conditions that projects must meet
to be eligible for approval with a section 390 categorical exclusion
caused confusion among BLM officials, industry, and the public over
what activities qualified for section 390 categorical exclusions. As a
result, we suggested that Congress consider amending section 390 to
clarify and resolve some of the key issues that we identified,
including but not limited to (1) clearly specifying whether section
390 categorical exclusions apply even in the presence of extraordinary
circumstances and (2) clarifying what the phrase "rebuttable
presumption" means and how BLM must implement it in the context of
section 390. In addition, to improve BLM field offices' implementation
of section 390 categorical exclusions, we recommended that BLM take
the following three actions:
* issue detailed and explicit guidance addressing the gaps and
shortcomings in its guidance;
* provide standardized templates or checklists for each of the five
types of section 390 categorical exclusions, which would specify, at
minimum, what documentation is required to justify their use; and:
* develop and implement a plan for overseeing the use of section 390
categorical exclusions to ensure compliance with both law and guidance.
BLM Took Actions in Response to Litigation and Our Report, but These
Actions Have Been Affected by a Recent Court Decision:
While we were working on our September 2009 report, the exact meaning
of the phrase "shall be subject to a rebuttable presumption that the
use of a categorical exclusion under the National Environmental Policy
Act of 1969 (NEPA) would apply" was in dispute in a lawsuit in federal
court.[Footnote 11] In Nine Mile Coalition v. Stiewig, environmental
groups sued BLM, alleging that the phrase meant that BLM was required
to avoid using a section 390 categorical exclusion in approving a
project where extraordinary circumstances were present. BLM settled
the case in March 2010, agreeing, among other things, to issue a new
instruction memorandum stating that the agency would not use section
390 categorical exclusions where extraordinary circumstances were
present.
In May 2010, BLM issued "Instruction Memorandum No. 2010-118,"
[Footnote 12] which was the first in a series of guidance documents
BLM planned to issue to address the recommendations in our September
2009 report. BLM's May 2010 instruction memorandum announced several
key reforms to the way BLM staff can use section 390 categorical
exclusions. These reforms substantially addressed the gaps and
shortcomings in BLM's guidance that we identified in our report,
directing that, for example, section 390 CX2 or CX3 no longer be used
to approve drilling wells after the law's allowed 5-year time frame or
that section 390 CX3 not be used to approve drilling a well without
sufficient supporting NEPA documentation. The memorandum explicitly
identified the types of NEPA documents needed to adequately support
the use of section 390 categorical exclusions to approve new wells and
directed that any supporting NEPA analysis must be specific to the
proposed drilling site. The memorandum also directs BLM field offices
to ensure that all oil and gas development approved with a section 390
categorical exclusion conform to the analysis conducted in the
supporting land use plan and come within the range of environmental
effects analyzed in the plan and associated NEPA documents. In
addition, the May 2010 instruction memorandum implemented the
settlement in Nine Mile Coalition v. Stiewig by requiring BLM field
offices to screen for the presence of extraordinary circumstances--
such as for cumulative impacts on air quality or critical habitat--
whenever considering the use of a section 390 categorical exclusion.
According to BLM officials, the agency developed a second instruction
memorandum in 2011 to address our recommendation that it standardize
templates and checklists its field offices use in approving each of
the five types of section 390 categorical exclusions to specify, at a
minimum, the documentation required to justify their use. This draft
second instruction memorandum was undergoing review by the department
when, on August 12, 2011, a decision was reached in Western Energy
Alliance v. Salazar.[Footnote 13] In this case, an oil and gas trade
association sued BLM, alleging, among others, that the agency issued
its May 2010 instruction memorandum without following proper rule-
making procedures and that the instruction memorandum's provision
concerning extraordinary circumstances violated section 390. The court
held that the instruction memorandum constituted a regulation that BLM
adopted without following proper rule-making procedures, and the court
issued a nationwide injunction blocking implementation of the
memorandum. The court did not address whether the instruction
memorandum was consistent with section 390; neither did it address the
meaning of the phrase "rebuttable presumption" in section 390.
According to a BLM official, the ruling has prevented BLM from
implementing the parts of the May 2010 instruction memorandum directly
related to extraordinary circumstances and the use of section 390 CX2
and CX3 and also called into question the issuance of the second
instruction memorandum aimed at further addressing our recommendations.
In conclusion, it is now uncertain what actions BLM may take in
response to the most recent court decision. These actions could
include, but are not limited to, moving forward and issuing the May
2010 instruction memorandum as a regulation or possibly appealing the
decision.
Chairman Lamborn, Ranking Member Holt, and Members of the
Subcommittee, this completes my prepared statement. I would be pleased
to answer any questions that you may have at this time.
GAO Contacts and Staff Acknowledgments:
For further information about this testimony, please contact Mark
Gaffigan or Anu K. Mittal at (202) 512-3841 or gaffiganm@gao.gov and
mittala@gao.gov, respectively. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this testimony. In addition to the contact named above,
Jeffery D. Malcolm (Assistant Director), Mark A. Braza, Ellen W. Chu,
Heather E. Dowey, Richard P. Johnson, Michael L. Krafve, and Tama R.
Weinberg made key contributions to this testimony.
[End of section]
Footnotes:
[1] Pub. L. No. 91-190, 83 Stat. 852 (1970). NEPA has two principal
purposes: (1) to ensure that the agency carefully considers detailed
information concerning significant environmental impacts and (2) to
ensure that this information will be made available to the public.
See, for example, Robertson v. Methow Valley Citizens Council, 490
U.S. 332, 349 (1989). It does not, however, require any particular
substantive result. See, for example, Department of Transportation v.
Public Citizen, 541 U.S. 752, 756 (2004).
[2] Throughout this testimony, we refer to categorical exclusions
developed under the NEPA regulations as administrative categorical
exclusions.
[3] Pub. L. No. 109-58, 119 Stat. 594 (2005).
[4] Pub. L. No. 109-58, § 390, 119 Stat. 747 (2005), codified at 42
U.S.C. § 15942.
[5] Bureau of Land Management, "Instruction Memorandum No. 2005-247:
National Environmental Policy Act (NEPA) Compliance for Oil, Gas, and
Geothermal Development," attachment 2 (Sept. 30, 2005), and BLM,
National Environmental Policy Act Handbook H-1790-1 (Washington, D.C.:
2008).
[6] GAO, Energy Policy Act of 2005: Greater Clarity Needed to Address
Concerns with Categorical Exclusions for Oil and Gas Development under
Section 390 of the Act, [hyperlink,
http://www.gao.gov/products/GAO-09-872] (Washington, D.C.: Sept. 16,
2009).
[7] Pub. L. No. 94-579, 90 Stat. 2743 (1976), codified as amended at
43 U.S.C. § 1701 et seq.
[8] 43 C.F.R. § 3162.3-1(c).
[9] Companies may also be required to submit a right-of-way
application for related activities, such as adding pipelines, that
take place on land for which they do not own a lease. See 43 C.F.R. §
2881.7.
[10] Pub. L. No. 109-58, § 390(a), 119 Stat. 747 (2005), codified at
42 U.S.C. § 15942(a). Although the Energy Policy Act of 2005
authorizes both BLM and the Department of Agriculture's U.S. Forest
Service to use section 390 categorical exclusions, our September 2009
report examined only BLM's use of section 390 categorical exclusions.
[11] Nine Mile Canyon Coalition v. Stiewig, Civ. No. 08-586, D. Utah
(filed August 6, 2008).
[12] Bureau of Land Management, "Instruction Memorandum No. 2010-118:
Energy Policy Act Section 390 Categorical Exclusion Policy Revision"
(May 17, 2010).
[13] Civ. No. 10-237F (D. Wyo. 2011).
[End of section]
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