DOI curbs use of CXs offshore in wake of CEQ report

This story was updated on Aug. 17.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Aug. 16
-- The US Department of the Interior will restrict its use of categorical exclusions (CXs) to activities involving limited environmental risk as it reviews its National Environmental Policy Act (NEPA) process and use of CXs on the US Outer Continental Shelf, officials said.

Interior Sec. Ken Salazar and Michael R. Bromwich, director of DOI’s US Bureau of Ocean Energy Management, Regulation, and Enforcement (BOE), also said on Aug. 16 that the department plans to conduct a new environmental analysis in the Gulf of Mexico that will provide information for future leasing and development decisions. BOE will publish a notice in the Federal Register of its intent to complete a supplemental environmental impact statement in the gulf, they said.

Their moves came after the White House Council on Environmental Quality (CEQ) issued a report on NEPA reviews by the US Minerals Management Service, the name under which BOE previously operated. It recommended more robust environmental reviews than CXs, which the 2005 Energy Policy Act authorized in instances where the information had been gathered already and relatively recently to facilitate issuing of permits.

US House Natural Resources Committee Chairman Nick J. Rahall (D-W.Va.) and other federal lawmakers, as well as environmental organizations, have charged that the practice was abused and oil and gas projects were approved onshore and offshore without adequate environmental impact assessments.

When he announced significant onshore federal leasing reforms at the US Bureau of Land Management on Jan. 6, Salazar ordered the agency to not use CXs in cases involving “extraordinary circumstances” such as impacts to protected species, historic or cultural resources, or human health and safety in accordance with CEQ guidelines.

Macondo well’s CX
Use of CXs offshore came under fire soon after it was revealed that MMS, BOE’s predecessor agency, issued one to BP PLC for the multinational oil company’s proposed Gulf of Mexico leases on which the Macondo well was drilled. The well blew out on Apr. 20, causing the semisubmersible rig Deepwater Horizon to explode and kill 11 workers. Its undersea connection lines ruptured when the rig subsequently sank, setting off a massive crude oil leak which only recently came under control.

“In light of the increasing levels of complexity and risk—and the consequent potential environmental impacts—associated with deepwater drilling, we are taking a fresh look at the NEPA process and the types of environmental reviews that should be required for offshore activity,” Salazar said. “We are committed to full compliance with both the letter and the spirit of NEPA. Our decision-making must be fully informed by an understanding of the potential environmental consequences of federal actions permitting offshore oil and gas development.”

Bromwich said the NEPA review and gulf environmental analysis are central elements of the ongoing reform of the federal offshore energy development and regulatory program. “We are building a more robust and aggressive independent oversight agency based on the development of new tools and enhanced legal and regulatory authorities, as well as on the more aggressive use of existing tools,” he said. “These changes in our regulatory framework and approach will serve to hold offshore operators accountable and ensure that the industry and the country are fully prepared to deal with catastrophic blowouts and oil spills like the Deepwater Horizon.”

CEQ’s report found that MMS conducted numerous levels of extensive environmental reviews, relying upon a “tiering” process in which prior reviews were incorporated into subsequent, site-specific analyses. When relying on tiering under NEPA, agencies must ensure that the environmental impacts are sufficiently evaluated and disclosed, the White House council said.

In addition to recommending that BOE review its categorical exclusion policies, it urged the agency to perform a careful and comprehensive NEPA review of individual deepwater exploration activities, including site-specific information where appropriate; and track and consider all mitigation commitments made in NEPA and decision documents that are used to determine the significance of environmental impacts, from the initial programmatic EIS through site-specific NEPA analyses and decisions.

Other recommendations
CEQ also recommended that BOE ensure that NEPA analyses fully inform and align with substantive decisions at all relevant points; that subsequent analyses accurately reflect and carry forward relevant underlying data; and that those analyses be publicly available. It also said that BOE should ensure that NEPA documents provide decision-makers with a robust analysis of reasonably foreseeable impacts, including an analysis of reasonably foreseeable impacts associated with low probability catastrophic spills for oil and gas activities on the OCS.

The report also urged DOI and BOE to continue seeking amendments to the OCS Lands Act to eliminate the 30-day decisional timeframe for approval of submitted exploration plans, and consider supplementing their existing NEPA policies and procedures to reflect changed assumptions and environmental conditions, due to circumstances surrounding the BP oil spill.

“Every agency in the executive branch of the federal government has a responsibility to apply NEPA when making decisions that could impact our environment,” CEQ Chairwoman Nancy H. Sutley said. “The recommendations in this report are targeted to ensure robust environmental reviews for future oil and gas exploration and development.” CEQ proposed steps in February under which agencies would establish and use CXs, including periodic policy reviews by CEQ.

Bromwich said limited use of CXs will allow BOE to move forward with new permits under the secretary’s two notices to offshore lessees, which notified offshore operators that shallow-water drilling activity could proceed as soon as they provide additional information about potential blowout scenarios and implement additional safety measures for rigs and platforms. Most deepwater drilling activities are currently prohibited by a suspension, but Bromwich said he has instructed his staff not to use CXs to approve deepwater drilling activities similar to the Deepwater Horizon operation even after the suspension is lifted.

He said when the review is completed, BOE will announce a new approach to NEPA compliance that takes into account recommendations in CEQ’s report, statutory and regulatory constraints, and other appropriate factors. This is consistent with the council’s regulations directing all federal agencies to periodically review their NEPA policies and procedures, Bromwich indicated. 

‘No clear return’
Two major oil and gas associations immediately criticized DOI and BOE’s planned moves. “We’re concerned the change could add significantly to the department’s workload, stretching the timeline for approval of important energy development projects with no clear return in environmental protection,” American Petroleum Institute Upstream Director Erik Milito said on Aug. 16.

“Environmental review of offshore operations under existing rules is extensive, and decisions on categorical exclusions, which are intended to avoid repetitive analysis, require review,” Milito said. “We’re in favor of targeted changes to regulations that enhance safety and environmental protection, provided the changes allow for the efficient moving forward of energy development and job creation.”

“Our initial reaction is that in the short term this will cause more confusion and uncertainty for industry,” Jeff Vorberger, government relations director for the National Ocean Industries Association, said on Aug. 17. “That has certainly been the case for the current deep water moratorium and shallow water de facto moratorium.”

Moves to review data regarding exploration in deep water should be done in a manner that does not create a tailspin of exploration and development jobs, Vorberger added. “The department must dedicate sufficient resources to organize and incorporate the existing data as soon as possible; otherwise this exercise could add months and perhaps even years to the review and approval process with little environmental benefit,” he warned.

Vorberger also said DOI’s announcement that it will also conduct a supplemental EIS for the entire gulf portends even more uncertainty for the industry. “We are concerned that the current deepwater drilling suspensions could continue longer than expected while the supplemental EIS is completed, or may result in a de facto moratorium should the suspensions be lifted while it is under way,” he said. “Either way, the end result could be less domestic energy, fewer domestic jobs and little environmental benefit.”

Contact Nick Snow at nicks@pennwell.com.

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