Leasing and Permitting
Before operators can begin exploring or developing oil and natural gas on federal lands, a lengthy three-step process must be completed to ensure environmental protections are in place, the public is consulted, and appropriate leasing stipulations are applied. Unlike on private and state lands, the time it takes to navigate each step of the process can create lengthy administrative delays. The Bureau of Land Management (BLM) is also subject to litigation from activist interest groups that can further impede the process.
Under the current administration, regulatory policies at BLM are being realigned to support, rather than hinder, responsible and timely access to oil and natural gas resources on federal lands. As a result, noticeable improvements are occurring in the federal onshore development process. Below, we explore each of the three major stages, examine why delays can occur, and highlight how the process is being streamlined.
The leasing process starts when federal acreage is nominated in an area designated by BLM as open for oil and gas leasing within the appropriate Resource Management Plan (RMP) process. BLM reviews expressions of interest (EOI) to determine whether the parcel is available for leasing and conducts an Environmental Assessment (EA) pursuant to the National Environmental Protection Act (NEPA). The agency then issues a Notice of Competitive Lease Sale announcing the land available to lease and the date of the lease sale.
All members of the public have the ability to comment at multiple stages in the process, including prior to the lease sale when they may formally oppose the inclusion of specific parcels in the sale, and during the subsequent environmental review of leased acreage.
BLM must respond to concerns raised in protests, and often attaches additional stipulations to the leases, or determines that the issues raised are already addressed in existing stipulations, and so informs the protesting entity. When BLM cannot resolve the issues raised, it defers leases for additional analysis.
Environmental groups frequently submit large protests that challenge all or a significant portion of the parcels BLM makes available in a lease sale. These protests typically rely on broad arguments such as the impacts of oil and natural gas development on climate change, rather than specific, local issues related to the parcels in question. Protests that rely on universal arguments can be extremely lengthy documents that include hundreds of pages. Because BLM responds to all issues addressed in the protests, the resolution period can last months, and sometimes results in the deferral of those parcels.
In previous years, leasing delays were common because BLM used a rotational schedule within each state so that leases were sold by region only once per year. As a result, nominated parcels were only available for leasing every twelve months at best. In 2018, BLM issued new guidance confirming its statutory obligation under the Mineral Leasing Act to offer all available parcels at its quarterly sales. As a result, delays have been significantly reduced, and the leasing process has become more reliable.
National Environmental Policy Act Analysis
Once a lease is issued by BLM, the environmental review process under NEPA continues. Before BLM approves any exploration or production activity on leased federal acreage, it conducts a second environmental review. BLM begins by determining the level of analysis necessary: a second environmental assessment, a more in-depth environmental impact statement (EIS), or a categorical exclusion. The level of analysis depends on the size and scope of the project and potential environmental impact.
An environmental assessment is developed for projects that are not anticipated to have a significant impact. However, should BLM determine a project’s impact is greater than originally anticipated, compliance under NEPA could require a more detailed EIS, which is a lengthy document that typically takes years to develop. Finally, projects already covered by existing NEPA documents or that meet the criteria under the Energy Policy Act of 2005 may be granted a categorical exclusion because no additional analysis is required.
For years, BLM’s typical practice required expansive NEPA analysis that exceeds statutory requirements without adding corresponding environmental benefits. As a result, projects become unnecessarily delayed. Acknowledging that these delays are an issue, the current administration issued an Executive Order and several Secretarial Orders directing BLM and other Interior agencies to streamline environmental reviews to reduce project timelines. For instance, in 2018 BLM clarified that it is appropriate to avoid redundant analysis by issuing a categorical exclusion when a detailed environmental impact statement has been conducted within the past five years.
At the final stage in the process, BLM approves an Application for Permit to Drill (APD) allowing companies to begin drilling operations. The permit must include extremely detailed information, including the type, location, and plan for drilling the well.
The Energy Policy Act of 2005 specifies that BLM must approve permits within 30 days, but in the recent past the average permit time regularly exceeded 200 days. Meanwhile, states only took about 30 days to approve their corresponding permits for federal wells.
Thankfully, the Department of the Interior has once again sought to reduce timelines at this step in the process, and recent data suggest APD processing times average about two months.
One of the chief causes of the difference between federal and state permit times is ad hoc requirements for federal permits that have no basis in regulation or law, including asking companies to perform extra cultural, wildlife, air quality, or other surveys, among other measures. Such arbitrary requirements lengthen the APD processing time, and may vary greatly across BLM field offices.
Another major contributor to overall timing delays is the practice of requiring a federal permit for wells on private or state lands even when only a minority of the oil and natural gas resources being accessed are federal. Once the federal nexus is invoked, the full gamut of BLM processes applies, resulting in long delays to the development of private and state minerals, denying individuals and states their private property rights, and requiring BLM staff time and resources to be further divided. Western Energy Alliance supports legislation to limit the federal nexus to situations only where federal lands are involved and/or there is a majority of federal minerals.
The Big Picture
Oil and natural gas development on federal lands goes through a lengthy process from initial interest to final approval for drilling. The current administration has made great strides in attempting to streamline reviews and reduce associated timelines, while ensuring adequate environmental analysis and public input remains a critical part of the process. Western Energy Alliance applauds these efforts and will continue to work to improve the federal onshore oil and natural gas program. Our comments on BLM and other federal agencies’ regulatory reform efforts are below.
- 10/15/18 - U.S. Forest Service Oil and Gas Resources Regulations
- 5/7/2018 - Bureau of Indian Affairs Categorical Exclusions
- 2/2/2018 - U.S. Forest Service NEPA Compliance
- 8/10/2017 - BLM Reform Initiative Comments
- 7/24/2017 - BLM Streamlining Planning & NEPA Comments