Salazar 'rebalancing' 5-year OCS program, MMS chief says

Delays from having to correct deficiencies in the current 5-year Outer Continental Shelf program may not keep the US Minerals Management Service from preparing the next one, the agency’s director told a House subcommittee.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Mar. 26 -- Delays from having to correct deficiencies in the current 5-year Outer Continental Shelf program may not keep the US Minerals Management Service from preparing the next one, the agency’s director told a House subcommittee. They could affect the scheduled 2011 federal lease sale off Virginia’s coast, S. Elizabeth Birnbaum added.

“The decision to go forward with the Virginia sale is tied up with responding to the court’s decision about the current 5-year plan,” she told the US House Natural Resources Committee’s Energy and Minerals Subcommittee on Mar. 25.

US Interior Secretary Ken Salazar received federal court approval to proceed with scheduled Gulf of Mexico lease sales after the 2007-12 plan was vacated, but he has had to “rebalance” the rest of it to make certain it meets the necessary environmental assessment requirements which the court said the original program lacked, Birnbaum said. “I expect the secretary to make an announcement regarding [the Virginia lease sale] once he has completed his rebalancing,” she said.

As for preparing the next 5-year OCS program, which increasingly looks as if will cover its original 2012-17 time frame instead of the 2010-15 period which Salazar’s predecessor, Dirk A. Kempthorne, proposed when he “jump-started” its development in late July 2008, Birnbaum said: “We submitted a schedule which indicated we would begin scoping a programmatic [environmental impact statement] in April. That’s still on track.”

House Republicans demanded more immediate action. Minority Leader John A. Boehner (Ohio), Minority Whip Eric Cantor (Va.) and 85 other House GOP members sent a letter to Salazar on Mar. 25 asking him to immediately implement the 2010-15 OCS schedule which was in its final comment period when Salazar took office and began a series of delays to broaden and redesign it.

Reinstating ban
“In 2008, in response to rising prices, the American people called on Congress to act by opening the OCS for exploration and development,” the letter said. “[They] should not have to wait the entire four years of the president’s term before any action is taken to explore and develop…[oil and gas] resources from these new areas. By waiting until 2012, the administration will unilaterally reinstate the ban on offshore drilling—and do it against the will of the American people.” The delays cancel “nearly a dozen” OCS lease sales which were scheduled to begin in July, it added.

“I hope the secretary will take the letter into serious consideration and realize that this administration can have a major impact on the economic future of this country,” said Doc Hastings (Wash.), the Natural Resources Committee’s ranking minority member, at the hearing. “It’s just up to them whether that impact will be positive and create jobs, or negative and harm our economy for decades.” A spokeswoman for the secretary told OGJ in an e-mail that the letter is being reviewed.

“It has been 21 months since MMS initiated development of a new 5-year OCS leasing plan,” said Doug Lamborn (Colo.), the Energy and Minerals Subcommittee’s ranking minority member who also signed the letter. “That process normally takes 2 years, and yet we appear to be years from completion of a new plan. Although the department extended the public comment period by 6 months, if media reports are accurate, [officials] have actively worked to hide and ignore the results of the public’s outcry in favor of more leasing.”

When he asked Birnbaum if Salazar might follow the letter’s recommendation, the MMS director responded that it was not likely. “We simply can’t implement the previously prepared new 5-year schedule without completing the necessary environmental assessments,” she said.

She also denied allegations that she and other DOI officials are suppressing comments from 2009 which overwhelming support expanded OCS oil and gas activity. “This has been a very transparent process. All the comments have been posted online,” she said. “We have posted them in a way which came from an individual and which came with hundreds or thousands of signatures.

Outside estimate
Her statement in an internal memorandum that comments ran 2-to-1 in favor of more OCS leasing was based on an outside organization’s estimate, Birnbaum continued. “It’s more complicated than that,” she explained. “Some of the comments addressed only parts of the proposed schedule, for example. California’s governor [Arnold Schwarzenegger] simply said he opposed any oil and gas drilling off his state’s coast. We have read and considered all of the comments.”

Birnbaum was one of 5 federal resource management agency leaders appearing before the subcommittee to discuss proposed fiscal 2011 budgets. US Bureau of Land Management Director Robert V. Abbey, US Geological Survey Director Marcia K. McNutt, US Office of Surface Mining Reclamation and Enforcement Director Joseph G. Pizarchik, and US Forest Service Associate Chief Hank Kashdan also testified.

Democrats at the hearing, in contrast to Republicans, said that the proposed budgets reflect a balanced approach. “I think the administration has tried to knit together a broad policy approach that recognizes traditional energy sources such as oil and gas will continue to play an important part as alternative and renewable technologies are developed,” said John P. Sarbanes (Md.), a subcommittee member.

Jim Costa (D-Calif.), the subcommittee’s chairman, said that the proposed budgets reflect his view that the United States needs to use every tool in its energy toolbox. “Some will try to indicate that this administration is turning its back on fossil fuels. I disagree,” he said in his opening statement. “Only 15% of the proposed budgets deal with alternatives and renewables. The other 85% deals with oil, gas, and other traditional fossil fuels.”

Republicans criticized the budget request for Abbey’s as well as Birnbaum’s agency, however. “Onshore oil and gas leasing activity has reached record low levels, and leases once issued have been withdrawn or canceled by bureaucratic whim. Meanwhile, industry waits while [DOI] considers radical changes to the current leasing process,” said Lamborn.

More active role
In his written statement, Abbey said that BLM’s policy reforms mean that the agency will take a more active role in identifying areas where new leasing and development will occur, taking into account industry expressions of interest while considering a wide range of important natural resource values before making a decision.

It also is increasing its pre-lease sale activity with more interdisciplinary preparation, public input, and site visits in response to protests which have grown dramatically, he said. “In 1998, 2% of all leases were protested. By 2009, this had grown to 40%,” Abbey told the subcommittee. Reforms will include “more of an up-front review” to improve the prospects for issued leases to withstand legal challenges, he said.

Bill Cassidy (R-La.), a member of the Insular Affairs, Oceans, and Wildlife Subcommittee who attended the hearing, told Birnbaum that her written statement “is brimming with enthusiasm for renewable energy and is neutral, or even negative, toward oil and gas.” When she responded that oil and gas is a mature industry, he interjected that technologies allowing exploration and development of ultra-deepwater oil deposits and deep onshore shale gas resources suggest otherwise.

“Certainly, it has developed technology to discover and recover deeper resources, but this is supported by substantial revenue which the companies receive,” the MMS director said. “That’s not the case with offshore wind energy projects, which do not exist outside of a few northern European countries and which require subsidies now so they can realize their full potential domestically.”

Costa told OGJ following the hearing that he could understand DOI officials’ caution. “It’s clear they’re trying to make sure all environmental questions are answered before they move ahead. I’ve seen what can happen if you don’t dot all your i’s and cross all your t’s. They could need more time,” he said.

Rob Bishop (R-Utah), the ranking minority member of the National Parks, Forests, and Public Lands Subcommittee, was less sympathetic. “They need to move ahead,” he told OGJ after the hearing. “Six months after the secretary canceled 77 leases from a BLM sale in my state, unemployment in the [Uintah] Basin went from 2 to 6%. Local governments can’t fund schools and other services with that.”

Contact Nick Snow at nicks@pennwell.com.

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