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

GAO-09-872: Published: Sep 16, 2009. Publicly Released: Sep 16, 2009.

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The Energy Policy Act of 2005 was enacted in part to expedite 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 when approving certain oil and gas activities. Numerous questions have been raised about how and when BLM should use these section 390 categorical exclusions. GAO was asked to report on (1) the extent to which BLM has used section 390 categorical exclusions and the benefits, if any, associated with their use; (2) the extent to which BLM has complied with the act and agency guidance; and (3) key concerns, if any, associated with section 390 categorical exclusions. GAO analyzed documents from all 26 BLM field offices that have used this new tool, including a nongeneralizable random sample of 215 section 390 categorical exclusion decision documents.

GAO's analysis of BLM field office data shows that section 390 categorical exclusions were used to approve approximately 6,100 of 22,000 applications for drilling permits (about 28 percent) and about 800 other actions--mostly modifications to existing permits--from fiscal years 2006 to 2008. GAO is reporting about 1,150 more instances in which BLM approved section 390 categorical exclusions than had been reported by BLM headquarters, largely because many field offices erroneously used single decision documents to approve multiple oil and gas wells. While section 390 categorical exclusions increased the efficiency of certain operations, some BLM field offices benefited more than others. The differences in benefits stem from a variety of factors and circumstances, such as whether an office had recent and site-specific National Environmental Policy Act (NEPA) documentation. BLM's use of section 390 categorical exclusions has frequently been out of compliance with both the law and BLM's guidance. First, GAO found several types of violations of the law, including approving more than one oil or gas well under a single decision document, approving projects inconsistent with the law's criteria, and drilling a new well after time frames had lapsed. Second, GAO found numerous examples--in 85 percent of the field offices sampled--where officials did not correctly follow 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. While many of these are technical in nature, others are 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. A lack of clarity in section 390 and BLM's guidance has raised serious concerns about the use of section 390 categorical exclusions. (1) First, fundamental questions about what section 390 categorical exclusions are and how they should be used have led to concerns that BLM may be using these categorical exclusions in too many--or too few--instances. For example, there is disagreement as to whether BLM must screen section 390 categorical exclusions for extraordinary circumstances which would preclude their use, whether their use is mandatory, and how the public can challenge their use and on what grounds. (2) Second, specific concerns have arisen about key concepts underlying the law's description of certain section 390 categorical exclusions. For example, some have raised concerns that section 390 categorical exclusions allow BLM to exceed development levels--such as number of wells to be drilled--analyzed in supporting NEPA documents without conducting further analysis. (3) 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--such as "individual surface disturbances" or "maintenance of a minor activity"--have led to varied interpretations among field offices and concerns about misuse and a lack of transparency.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: As of December 2016, no legislation has been enacted to address this issue.

    Matter: This report has identified a number of significant issues with respect to section 390 of the Energy Policy Act of 2005 that have become a source of confusion for BLM and its field offices as they implement the law. Congress should consider amending section 390 to clarify and resolve some of the key issues identified in this report, 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.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: In May 2010, BLM issued "Instruction Memorandum No. 2010-118," 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. However, on August 12, 2011, a decision was reached in Western Energy Alliance v. Salazar that affected the implementation of the instruction memorandum. 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. In September 2011, we reported that, according to a BLM official, the ruling has prevented BLM from implementing the parts of the May 2010 instruction memorandum and it also called into question the issuance of the second instruction memorandum aimed at further addressing our recommendations (see GAO-11-941T). As of November 2016, we are not aware of any further actions by BLM to address this issue.

    Recommendation: To improve BLM field offices' implementation of section 390 categorical exclusions--to reduce noncompliance and clarify how and when section 390 categorical exclusions are to be used-- the Secretary of the Interior should direct the Director of BLM to issue detailed and explicit guidance that addresses the gaps and shortcomings in its present guidance.

    Agency Affected: Department of the Interior

  2. Status: Closed - Not Implemented

    Comments: In September 2011, we reported that, according to BLM officials, the agency developed an 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 (see GAO-11-941T). This draft instruction memorandum was undergoing review by the department when, on August 12, 2011, a decision was reached in Western Energy Alliance v. Salazar. 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. In September 2011, we reported that, according to a BLM official, the ruling has called into question the issuance of the draft instruction memorandum aimed at further addressing our recommendations. As of November 2016, we are not aware of any further actions by BLM to address this issue.

    Recommendation: To improve BLM field offices' implementation of section 390 categorical exclusions--to reduce noncompliance and clarify how and when section 390 categorical exclusions are to be used-- the Secretary of the Interior should direct the Director of BLM to 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.

    Agency Affected: Department of the Interior

  3. Status: Closed - Not Implemented

    Comments: The court's decision in Western Energy v. Salazar--in which the court held that BLM's May 2010 instruction memorandum addressing the first recommendation in GAO-09-872 constituted a regulation that BLM adopted without following proper rule-making procedures and issued a nationwide injunction blocking implementation of BLM's May 2010 instruction memorandum--has, according to BLM, called into question the issuance (timing and scope) of future instruction memorandums aimed at further addressing our recommendations. As a result, no plan has been released for overseeing the use of section 390 categorical exclusions to ensure compliance with its guidance.

    Recommendation: To improve BLM field offices' implementation of section 390 categorical exclusions--to reduce noncompliance and clarify how and when section 390 categorical exclusions are to be used-- the Secretary of the Interior should direct the Director of BLM to develop and implement a plan for overseeing the use of section 390 categorical exclusions to ensure compliance with both law and guidance.

    Agency Affected: Department of the Interior

 

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