REVISED BLM WASTE PREVENTION/METHANE REGULATIONS FINALIZED

Effective November 27, 2018, the revised Bureau of Land Management (BLM) regulations pertaining to waste prevention will take effect. 83 Fed. Reg. 49,184 (Sept. 28, 2018). This final rulemaking eliminates several of the more onerous burdens imposed by the regulations adopted at the end of the previous Administration. 82 Fed. Reg. 83,008 (Nov. 18, 2016) (the “2016 Rule”). The 2016 Rule (sometimes called the methane rule) was officially effective as of January 17, 2017, although many of its provisions called for delayed implementation. The 2016 Rule has been the subject of conflicting rulings from the federal courts in the District of Wyoming (now in the Tenth Circuit Court of Appeals) and the Northern District of California (and briefly in the Ninth Circuit Court of Appeals). Although the adoption of the new final rule would appear to moot that litigation, the States of California and New Mexico, followed by Sierra Club and a number of other non-governmental organizations, filed new lawsuits challenging the 2018 final rule in the U.S. District Court for the Northern District of California. State of California, et al. v. Zinke, et al., Case No. 4:18-cv-05712-YGR (filed Sept. 18, 2018); Sierra Club, et al. v. Zinke, et al., Case No. 4:18-cv-05984-SBA (filed Sept. 28, 2018). Western Energy Alliance and Independent Petroleum Association of America have moved to intervene in the State of California case. This post describes the terms of the 2018 rule that will take effect November 27, 2018, barring an injunction or order vacating the 2018 rule from the federal court in California.

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Trump NEPA Initiatives to Expedite Energy Infrastructure: “One Federal Decision”

One of President Trump’s first actions was to issue Executive Order 13766, “Expediting Environmental Reviews and Approvals for High Priority Infrastructure Projects” (Jan. 24, 2017), directing the Council on Environmental Quality (“CEQ”) to begin efforts to identify high priority infrastructure projects and expedite federal environmental reviews required by the National Environmental Policy Act (“NEPA”). This was followed by the more detailed EO 13807, “Establishing Discipline and Accountability in the Environmental Review and Permitting Process for Infrastructure Projects” (Aug. 15, 2017) describing the “One Federal Decision” (“OFD”) policy. The CEQ, the Department of the Interior (“DOI”) and the Bureau of Land Management (“BLM”) have taken several actions to implement this presidential OFD direction.

The challenge the EO is trying to address is the integration and timely coordination of the multiple federal agencies, federal laws and permit decisions that are triggered by a major infrastructure project. Expediting NEPA is not new; Congress and prior administrations have addressed the need for permit streamlining for at least the last 15 years. For example, in 2001, President George W. Bush created a NEPA Task Force to modernize agency regulations implementing NEPA. In 2004, BLM issued a “cooperating agency” rule directing that BLM invite state, local and tribal governments to participate as cooperating agencies in the Bureau’s NEPA processes. In 2003, as part of the President’s Healthy Forest Initiative, bi-partisan legislation, the Healthy Forest Restoration Act, was enacted to expedite NEPA and court review of hazardous fuels reduction projects. Congress also created expedited NEPA for airports (Vision 100 Act of 2003), for highway and transit construction (SAFETEA-LU Act of 2005), and for oil and gas and LNG terminals (Energy Policy Act of 2005).

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Wyoming Supreme Court Punts on Potential BLM “First in Time, First in Right” Interpretation of Competing Mineral Developers

A recent case before the Wyoming Supreme Court failed to clarify what, if any, remedies are available to conflicting developers of federal mineral rights on overlapping lands. Rather, the Court’s ruling in Berenergy Corporation v. BTU Western Resources, Inc.; School Creek Coal Resources, LLC; and Peabody Powder River Mining, LLC, and BTU Western Resources, Inc.; School Creek Coal Resources, LLC; and Peabody Powder River Mining, LLC v. Berenergy Corporation1 stated it could not decide the issue, while not so subtly asking the Secretary of the Interior and Bureau of Land Management (BLM), which could decide, to no longer “sit this one out.”

Berenergy Corporation (Berenergy) owned three oil and gas leases granted by the BLM. Berenergy originally filed for a declaratory judgment that the rights under its leases were superior to those under coal leases on overlapping lands that the BLM had issued later to affiliates of Peabody Energy Corporation (Peabody). Berenergy sought to prevent Peabody from shutting down Berenergy’s wells for fifteen to twenty years while Peabody mined areas in the overlapping land, and to prevent interference with Berenergy’s operations, including plans to water-flood oil-bearing formations covered in its leases.

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A New Order Under the New Administration: The DOI Seeks to Streamline the Federal Leasing Process

On July 6, 2017, Department of the Interior (“DOI”) Secretary Ryan Zinke signed Secretarial Order No. 3354, “Supporting and Improving the Federal Onshore Oil and Gas Leasing Program and Federal Solid Mineral Leasing Program.” In an accompanying press release, Secretary Zinke touted the Order as a promise the DOI would “be a better neighbor in the new Trump Administration,” and noted that the Order is in “support [of] the President’s goal of American energy dominance.”

The Secretary also highlighted the importance of compliance with the Mineral Leasing Act (“MLA”), the existing federal law governing lease sales, which states “[l]ease sales shall be held for each State where eligible lands are available at least quarterly and more frequently if the Secretary of the Interior determines such sales are necessary [emphasis added].”1 Once a parcel is leased, an Application for Permit to Drill (“APD”) is filed and there is a statutory thirty-day window to either issue the permit, or notify the applicant of a deferred decision and list the reasons for deferral.2 As Secretary Zinke stated in an interview, the current average wait for APD approval is approximately 257 days, and exceeds 500 days at certain Bureau of Land Management (“BLM”) offices.3 Although the Secretary did not mention any pending litigation as grounds for his Order, it is notable that on August 11, 2016, prior to the issuance of the Order, the Western Energy Alliance filed a lawsuit against the Secretary and the BLM centered on the agency’s lack of compliance with the MLA timing mandates discussed above.4

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Proposed Public Land Sale Falls to Public Opposition

On February 1, 2017, Representative Jason Chaffetz (UT-R) announced that he would pull a bill proposing to sell more than 3 million acres of public land.  It was easy to lose track of this sea-change proposal amidst the flurry of activity at the advent of the Trump administration, but the bill’s goal - as well as its failure - is noteworthy despite the fact that it is unlikely to become law.

Focusing first on the proposal, Mr. Chaffetz, a Republican Representative from Utah and chair of the House Oversight Committee, memorialized the argument held by some, especially in the West, that the federal government owns too much land, to the detriment of states.  In his home state of Utah, the legislature is seeking the “return” of federal lands to the state.  See http://publiclands.utah.gov/current-projects/transfer-of-public-lands-act.  Debate over federal property ownership has existed since the country’s inception, but recently the debate came to a head with Cliven Bundy and other groups claiming ownership over federally leased land.  States like Utah also challenged the extent and alleged burden of federal lands within their borders, while conservatives like Mr. Chaffetz aimed to turn that public sentiment into law.  House Republicans recently changed their internal rules to generally facilitate selling public land, and Mr. Chaffetz offered H.R. 621, which would sell 3.3 million acres of Bureau of Land Management lands spread across ten western states, and H.R. 622, which would transfer federal agencies’ policing power to local law enforcement. See http://chaffetz.house.gov/news/documentsingle.aspx?DocumentID=788.

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Amended BLM Right Of Way Regulations

The Bureau of Land Management (BLM) published amended rules governing rights of way granted under Title V of the Federal Land Policy and Management Act (“FLPMA”) and under the Mineral Leasing Act (for oil or gas pipeline rights of way) on December 19, 2016, 81 Fed. Reg. 92,122 (https://www.gpo.gov/fdsys/pkg/FR-2016-12-19/pdf/2016-27551.pdf).  The rules take effect January 18, 2017, assuming they are not affected by Congressional efforts to undo “midnight rules” promulgated by the outgoing Administration.  The amended rules are most significant for their changes to the processes for obtaining authorizations to use federal lands for solar and wind energy development.  However, the amendments will also affect, to a lesser extent, oil and gas operators who seek FLPMA rights of way for roads or water pipelines, or Mineral Leasing Act rights of way for oil and gas pipelines.  Please see our earlier blog discussing the proposed rule amending the right of way regulations at http://www.wsmtlaw.com/blog/blm-buries-change-to-mla-rights-of-way-in-wind-and-solar-leasing-change.html.  

Until now, the BLM’s policy on processing right of way applications for renewable energy projects was contained in instruction memoranda.  Those policies, as modified in the final rule, are now contained in the regulations to be codified in 43 C.F.R. Part 2800.  

The rule seeks to focus wind and solar energy development in areas called designated leasing areas or “DLAs” which BLM has determined, through the land use planning process, as areas having high energy generation potential, access to existing or proposed transmission lines, and low potential for conflict with other resources. The preamble to the rule points to solar energy zones identified in the Solar Programmatic EIS and “development focus areas” identified in the Desert Renewable Energy Conservation Plan for southern California as examples of DLAs.  Outside of the southern California desert, no DLAs for wind energy development have yet been identified and, given the long timeline for BLM planning processes, it seems unlikely that any will be developed in the near term.  With some exceptions, lands within DLAs will be offered for competitive leasing, while solar or wind energy development proposals outside DLAs will be processed for right of way grants.  BLM believes that the issuance of a competitive 30-year lease will increase certainty for developers of wind and solar energy projects as compared to 30-year right of way grants, which are not issued until well into the project development process.  

Another goal of the rule is to ensure that the government receives fair market value for solar and wind energy development on public lands.  It does so by imposing both an acreage rent based on agricultural land values and a megawatt (MW) capacity fee.  The calculation of the MW capacity fee will result in a decrease in fees to solar energy producers but an increase in fees to wind energy developers as compared to current BLM policy.  In addition, the acreage rent had not previously been imposed on wind energy developers.  The fees for linear rights of way such as pipelines and transmission lines should not be significantly affected by the rule as compared to current policy.  

The new rule contains extensive provisions on bond requirements which will be codified in 43 C.F.R. §2805.20.  Solar and wind energy producers must post a performance and reclamation bond, which will be based on a reclamation cost estimate (RCE) but shall be no less than $10,000 per disturbed acre for solar projects or $10,000 per authorized wind turbine with less than 1 MW nameplate capacity or $20,000 per turbine with a nameplate capacity of 1 or more MW.  Although bonds are required for wind and solar projects, the BLM retains the discretion whether to require a performance and reclamation bond for other rights of way, including for oil and gas pipelines (§2885.11(b)(7)).  As in the existing regulation covering oil and gas pipeline rights of way, the BLM can require a bond, or an increased bond amount, either as a condition to the right of way grant or at any time during the term of the grant.  Amended §2885.11(b)(7) states that all “other provisions in §2805.12(b) of this chapter regarding bond requirements for grants and leases issued under FLPMA also apply to grants or [temporary use permits] for oil and gas pipelines issued under this part.”  The reference to §2805.12(b) appears to be in error; the preamble to the new rule notes that this sentence references “new section 2805.20” and §2805.20 is the regulation on bonding requirements.  Among those “other provisions” in §2805.20 is one that provides the bond amount will be determined based on the preparation of a RCE, which the BLM may require the applicant or grant holder to submit.  The RCE is defined as the estimate of costs to restore the land to a condition that will support pre-disturbance land uses, including the cost to remove all improvements made under the right of way authorization, return the land to approximate original contour, and establish a sustainable vegetative community.  The RCE must also include the cost to BLM to administer a reclamation contract.  It is likely that these requirements will result in larger bonds being required for linear rights of way, including oil and gas pipelines. 

The new rule provides that not only transfers of rights of way by assignment be submitted to BLM for approval but also “changes in ownership or other related change in control transactions,” including corporate mergers or acquisitions but not transactions within the same corporate family.  §2807.21.  This change also applies to Mineral Leasing Act rights of way for oil and gas pipelines, §2887.11.  BLM’s rationale for this requirement is that a merger or other corporate acquisition can result in material changes to corporate structure which could affect the financial or technical capability of the grant holder.  Because a change of control is not an “assignment,” we suspect that many grant holders may overlook this requirement to obtain BLM approval for “transfers” of right of way grants in cases of mergers or change of control by a stock transaction.

Operators of wind and solar energy projects on public lands will need to review the new rules in detail.  Because this rulemaking process focused on the changes to the right of way regulations that apply to wind and solar energy projects, it is likely that other current or prospective right of way holders such as pipeline, transmission line or communications facilities operators may not realize the effect of the revised rules on their projects. 

 

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Weighing the Scales: Master Leasing Plan Aims to Balance Oil, Natural Gas and Mining with Conservation of Arches and Canyonlands National Parks

Internationally known for rugged landscapes and stunning views, the treasured Arches and Canyonlands National Parks now have a plan, that is, a Master Leasing Plan.  

The Bureau of Land Management (“BLM”) introduced the concept of Master Leasing Plans (“MLPs”) as part of a suite of federal onshore oil and gas leasing reforms rolled out by Secretary Salazar in early 2010.  The MLP’s intended purpose is to harmonize competing resources, i.e., the balancing of oil and gas development with conservation of natural and cultural resources.  MLPs provide BLM with an additional land use planning tool, allowing it to amend a governing resource management plan (“RMP”) to include new terms and conditions imposed by the MLP.  The goal, but not necessarily the reality, is to reduce risk of litigation and community protests over oil and gas leasing by enlisting early stakeholder input about where energy development is appropriate and how to protect other resources.

According to BLM, the purpose of an MLP is to allow for “more in depth review” of areas that are or may be opened to oil and gas leasing than would typically be found in the governing RMP.  Under the framework, BLM can designate certain areas of public lands located as “sensitive landscapes,” or areas containing a “high level of potential resource concerns” as MLP areas. The MLP area is then analyzed on a landscape level, where competing resource values are evaluated. The result is a comprehensive plan for long term oil and gas development in the area, rather than the straightforward designation of “open,” “closed,” or “open with stipulations” as typically found in RMPs.  Because amendments to RMPs must comply with the National Environmental Policy Act (“NEPA”), the MLP analysis and review first takes the form of an Environmental Impact Statement (“EIS”) or an Environmental Analysis (“EA”), the final version of which then modifies the relevant RMP.

In a Record of Decision (“ROD”) signed December 15, 2016, BLM Utah State Director Ed Roberson finalized the multi-year NEPA effort to complete the Moab Master Leasing Plan, the first MLP to be approved in the state.  The agency expressed confidence that the plan “will guide responsible mineral development . . . while also protecting important natural resources, iconic scenery, and recreational opportunities.”

The Moab MLP identifies where oil, gas and minerals development will be allowed within the 785,000-acre planning area.  Notably, the Moab MLP applies only to new leases and aims to provide certainty by informing the oil and gas and mining industries about where development can occur in a region dotted with Native American cultural sites, popular hiking trails, spires, mesas, natural bridges and arches that draw over 2 million visitors a year.

The Moab MLP also closes 145,000 acres of BLM lands near the Arches and Canyonlands National Parks to future mineral leasing, caps well densities on projects in sensitive areas, and places “no surface occupancy” restrictions on about 306,000 acres “that are highly valued for scenery and recreation.”

According to Secretary Jewell, “This plan takes a landscape-level approach to balancing the protection of the iconic scenery in and around Moab with access to the rich energy resources found there.”

Expectedly, conservation groups enthusiastically embrace MLPs as adding what they view as a necessary layer of environmental analysis focused on issues related to oil and gas development and trust that the MLP process is an appropriate addition to BLM’s toolbox.  In response to the announced Moab ROD, conservationists appear to appreciate a planned vision of where energy development can be managed and where other values, like wilderness and recreation, need to be protected.  

By contrast, industry believes that by restricting access to the region’s mineral resources through the Moab MLP, the negative consequence will be $2 billion in lost economic opportunity for surrounding local communities.  Industry estimates that the Moab MLP planning area contains 145 billion cubic feet of natural gas and 32.5 million barrels of recoverable oil.  Industry has serious concerns that BLM has departed from its Federal Land Policy and Management Act of 1976’s multiple use mandate--whereby many uses co-exist, from ranching to energy to recreation on public lands--to managing for a single “use,” preservation. 

Although the Moab plan can be legally challenged, it cannot be undone by the stroke of the presidential pen alone.  

BLM approved, or is or in the process of developing, more than a dozen MLPs across millions of acres of public lands in Colorado, Utah and Wyoming.  In fact, on December 20, 2016 BLM announced its formal commitment to develop a southwestern Colorado MLP for about 71,000 acres in La Plata and Montezuma counties, including parcels near Yucca House National Monument and Mesa Verde National Park. 

For additional background on MLPs, see the firm’s 2014 blog post: So what is a Master Leasing Plan anyway?

 

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Wyoming Tangles With BLM Over Wild Horses

What is the “law of the land” and how should it be enforced? These questions drive the interplay between state and federal governments, particularly in the Rocky Mountain West. This is especially true when you consider that the federal government owns vast areas of the surface of Colorado (35.9%), Wyoming (48.1%) and the other 10 public land states as well as 700 million acres of federal minerals throughout the U.S. See “Federal Land Ownership: Overview and Data,” by the Congressional Research Service dated December 29, 2014.i This state/federal tension regularly leads to conflicts over oil and gas, mining, environmental regulation … and wild horses?

The Wild Free-Roaming Horses and Burros Act was enacted by Congress in 1971 to protect wild horses and burros from “capture, branding, harassment, or death” and, significantly, declares wild horses and burros to be an “integral part of the natural system of the public lands.” The law was enacted in response to a campaign led by “Wild Horse Annie” and has proved to be one of the most difficult management challenges for the Bureau of Land Management (“BLM”). Caught between wild horse lovers, state governments and ranchers, the BLM is spending close to $75 million a year, primarily to feed and care for the bulk of the “wild” horse population off the range in leased pasture. BLM recently testified that there are 67,000 WHB in 10 states and 47,000 are in leased pasture because the population is 2.5 times more than the range can sustain.ii 

On August 21, 2014, the State of Wyoming wrote to the Secretary of the Interior and the Acting Director of the Bureau of Land Management (“BLM”) demanding the BLM take action to remove excess wild horses from seven BLM herd management areas (“HMAs”) in southwestern Wyoming. After what it considered to be an inadequate response by the BLM, Wyoming filed suit on December 8, 2014, in Federal District Court to force the BLM to take immediate action to bring the numbers down to the HMA carrying capacity. On April 21, 2015, the District Court dismissed the State’s claims, and now the Tenth Circuit Court of Appeals has affirmed that decision. See Opinion in State of Wyoming v. United States Department of the Interior, et al. Case No. 15-8041 filed October 11, 2016 (10th Cir.). The question the Tenth Circuit addressed was “whether … Section 3 [of the Wild Free-Roaming Horses and Burros Act (the “Act”)] obligated the BLM to gather or otherwise remove excess wild horses from each of the seven HMAs once it learned that the wild horse population in each of those HMAs exceeded the upper limit of their respective AMLs [“appropriate management level”].” Id. at page 9.

In construing the provisions of the Act, the Tenth Circuit held:

As noted, the Act does not define the phrase “appropriate management level” and thus does not equate it with any requirement to remove excess animals from a particular HMA. Nor does the BLM itself define the phrase as equivalent to a determination that removal is necessary. Further, and most importantly, the language of Section 3, as discussed above, clearly requires both a determination by the BLM that “an overpopulation exists on a given area of the public lands and that action is necessary to remove excess animals ….” 16 U.S.C. § 1333(b)(2) (emphasis added). Because only the first of these determinations has been made, the BLM is under no statutory duty to remove animals from the seven HMAs at issue. Moreover, there is nothing in the statute that obligates the BLM to make an immediate determination regarding the second requirement.

Id. at pages 14-15. Thus, until the BLM determines there is both an excess of horses and action is necessary to remove those excess animals, the State of Wyoming cannot force the BLM to act.

In a statement issued after the Tenth Circuit released its opinion, Wyoming Governor Matt Mead said, “The BLM is not managing wild horse populations as required … Wyoming wildlife and wild horses are treasured assets. Mismanagement adversely affects all species and rangelands necessary for their health and survival.” See “In major decision, 10th Circuit rules Wyoming can’t force BLM to remove wild horses,” by Arno Rosenfeld, Casper Star-Tribune dated October 11, 2016.iii While the State of Wyoming considers its options, several other cases are pending in Wyoming, at the Tenth Circuit and in other western states, including Nevada which has the largest population of wild horse, regarding the proper management of wild horse populations on public lands.

The tangle between state and federal governments continues amid an effort to determine the “law of the land.” The Tenth Circuit’s Opinion in the above case can be accessed on its website at https://www.ca10.uscourts.gov/opinion/search by entering the case number “15-8041” in the search field. Links to additional discussion of the Tenth Circuit’s Opinion and issues surrounding wild horse management can also be found at the links below.iv The Tenth Circuit also recently issued an opinion seeking review of the BLM’s decision to remove wild horses from public lands in Wyoming. That case can be accessed on the Tenth Circuit Court’s website listed above by entering the case number “15-8033”.


i www.fas.org/sgp/crs/misc/R42346.pdf
ii http://www.blm.gov/wo/st/en/prog/whbprogram/history_and_facts/quick_facts.html
iii http://trib.com/lifestyles/recreation/in-major-decision-th-circuit-rules-wyoming-can-t-force/article_0a3c5700-e59e-520e-aa91-c053b3c0f7d5.html
iv “Wild Horses Couldn’t Drag the Government to Act,” by Noah Feldman, Bloomberg View dated October 14, 2016 accessed at https://www.bloomberg.com/view/articles/2016-10-14/wild-horses-couldn-t-drag-the-government-to-act and “Success Spoils a U.S. Program to Round Up Wild Horses,” by Dave Philipps, New York Times dated October 14, 2016 accessed at http://www.nytimes.com/2016/10/15/us/wild-horses-us-west.html

 

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BLM Proposes “Planning 2.0” Rules

On February 11, 2016, the Bureau of Land Management (“BLM”) announced significant proposed amendments to its land use planning rules as a part of its Planning 2.0 initiative. The stated goals of the proposed rules are to: (1) improve the BLM’s ability to respond to social and environmental change in a timely manner; (2) provide meaningful opportunities for other Federal agencies, State and local governments, Indian tribes, and the public to be involved in the development of BLM resource management plans (“RMPs”); and (3) improve the BLM’s ability to address landscape-scale resource issues and to apply landscape-scale management approaches.

The Federal Land Policy and Management Act of 1976 (“FLPMA”) requires that BLM develop land use plans “which provide by tracts or areas for the use of the public lands.” The BLM has historically prepared RMPs on a field office basis, but FLPMA does not prohibit the preparation of RMPs on larger or smaller areas of the public lands. The proposed rule allows the BLM Director to designate the area that will be covered by an RMP; presumably, those areas will generally be larger than the boundaries of a BLM field office’s jurisdiction so as to accommodate “landscape-scale management approaches.” However, the proposed rule does not establish any standards or guidelines for how the BLM Director will designate an area to be covered by an RMP; it simply states that the Director will “determine” the planning area for the preparation of each RMP.

A new step in the planning process will be the preparation of a “planning assessment.” The planning assessment will be prepared on the planning area so presumably will not be relied upon for the Director’s determination of the planning area. As a practical matter, BLM already prepares a form of planning assessment under the existing rules as it begins the process of preparing a new RMP, but the proposed rule formalizes that information gathering process and requires public involvement.

While the preamble to the proposed rule mentions the need for a more nimble approach to planning that is responsive to a rapidly changing environment and conditions, the expanded public involvement requirements that would be imposed by the rule will make the process anything but nimble. Public involvement, “appropriate to the areas and people involved,” is required (1) in the preparation of the planning assessment (both during the data gathering phase and on the report that documents the planning assessment which is to be made available for public review); (2) in identifying planning issues (the BLM will notify the public and make available for public review the preliminary statement of purpose and need); (3) by making the preliminary alternatives to be analyzed in the environmental impact statement (“EIS”) for the RMP and the preliminary rationale for those alternatives available for public review before the draft RMP and draft EIS are released for comment; (4) by making available for public review, before release of the draft RMP/EIS, the preliminary procedures, assumptions, and indicators that will be used to estimate the effects of implementing each alternative to be analyzed in the draft; (5) at the time the draft RMP is released for public comment; and (6) after the proposed RMP is released by providing for protests of the proposed RMP.

Although the current planning process provides for comments in response to the scoping notice published at the commencement of the EIS on the plan, comments on the draft RMP, and protests, the proposed rule adds at least three more occasions for which public involvement must be solicited. Interestingly, the proposed rule does not contemplate public involvement in the determination of what area will be covered by an RMP. As discussed by Rebecca Watson in her article on Planning 2.0, State and local governments and Indian tribes may be dissatisfied with what they are likely to view as the dilution of their input into the BLM planning process if RMPs cover “landscape” size areas, rather than the area administered by the BLM field office. See, Rebecca W. Watson and Joshua B. Cannon, “Toward Planning 2.0: The New Landscape of BLM Planning,” 93 Denv. U. L. Rev. Online 49, Nov. 2015. Moreover, the Director’s role in determining the area to be covered by an RMP (with that determination requiring no public involvement) creates the risk that the planning process will become more centralized in Washington—a development with which the word “nimble” is rarely associated.

There will be a 60-day comment period on the proposed rules beginning as of the date of publication of the draft rule in the Federal Register. Publication is anticipated by the end of February 2016.

The text of the proposed revisions to BLM planning regulations is available here.

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Secretary of Agriculture Recommends Cancellation of Montana Oil and Gas Leases

On October 30, 2015, Secretary of Agriculture Tom Vilsack sent a letter to Secretary of the Interior Sally Jewell recommending that BLM cancel 18 long-held oil and gas leases located on Forest Service managed surface in an area of Northwestern Montana called the Badger-Two Medicine. These leases, originally issued in 1982, have been the focus of controversy for many years, largely based on their proximity to areas of cultural significance to the Blackfeet Tribe and Glacier National Park. The leases have been suspended by BLM for almost twenty years, but recent judicial decisions are forcing BLM to make a decision on the ultimate fate of the leases in the coming months.

In his Letter, which follows and relies on the earlier findings of the Advisory Council on Historic Preservation (see link to 9/23/15 blog below) Secretary Vilsack argues that permitting oil and gas development in the area would have “adverse effects” that cannot be mitigated through site-specific requirements. Secretary Vilsack pointed out that in the time since the leases were issued, “there have been many policy developments, not only with regard to historic properties of traditional religious and cultural significance to Indian tribes, but also in Federal-tribal relations. . . . The [Forest Service] has worked diligently to comply with new requirements by pursuing oral histories and contracting supporting archeological and ethnographic work, which gradually revealed the unique and special nature of the Badger-Two Medicine.” With the information gained over the last 30 years, Secretary Vilsack concludes that the leases should not have been issued in the first place and should therefore be canceled by BLM.

Although BLM has ultimate decision-making authority under the Mineral Leasing Act of 1920 on lease cancellation, Secretary Vilsack’s letter, on behalf of the Surface Managing Agency, is likely to carry significant weight. Under an order from U.S. District Judge Richard Leon, BLM has until November 23 to either lift the suspensions or cancel the leases. If BLM cancels the leases, it is likely to face further legal challenges from the lessees.

Advisory Council on Historic Preservation Recommends Cancellation of Oil and Gas Leases in Montana

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Finally – A Policy to Streamline the BLM Communization Agreement Process – IM 2015-124

Dated and effective July 17, 2015, the Bureau of Land Management (“BLM”) issued Instruction Memorandum 2015-124 (“IM-2015-124”). This BLM guidance significantly changes the way federal Communization Agreements (“CAs”) are administered and, for the most part, eliminates some of the cumbersome issues for operators applying for CAs. CAs are used to combine isolated or small federal mineral and/or tribal parcels with fee minerals to form a spacing or proration unit that complies with state law and allows for development of tracts that could not be independently developed or operated on their own.

In addition to attempting to “clean-up” the CA Process, IM-2015-124 addresses some questionable jurisdictional issues. Before IM-2015-124 was issued, there were concerns by industry that the BLM was attempting to expand its management beyond its authorized jurisdiction over federal minerals to fee minerals. For example, in some instances, the language in approved CAs appeared to require the operator to account to the BLM not only for federal minerals but for all minerals, including fee. However, IM-2015-124 now limits the CA responsibilities of the BLM to federal minerals and the Bureau of Indian Affairs to tribal minerals. We note that many of the jurisdictional issues the IM attempts to clarify were called into question by the BLM’s recently proposed rule modifying Onshore Oil and Gas Order No. 3. For more information on these inconsistencies, see Western Energy Alliance’s comment letter on the proposed changes to Onshore Order No. 3:

http://cdn.westernenergyalliance.org/sites/default/files/FINAL%2010.9.15%20OO3%20comment%20letter.IPAA_.WEA_.pdf

In any event, until the changes proposed in Onshore Order No. 3 are made final, the components of IM-2015-124 will govern. Some of the notable changes to the CA process in IM-2015-124 include:

1. An operator may self-certify that the necessary signatures have been obtained (working interest owners and record title owners in the Federal and Indian leases). Rather than submit all of the necessary signatures, an operator can submit the certification statement, word for word from IM-2015-124, to the BLM with its CA, and the BLM will rely on that statement;

2. CA: Exhibit A – the operator may identify all non-Federal/non-Indian interests as a single tract;

3. CA: Exhibit B – An operator may aggregate all of the non-Federal/non-Indian interests into a single entry entitled “Other Interests,” with total aggregate acreages; and

4. CA: Exhibit B – Due to the revisions to non-Federal/non-Indian interests in Exhibits A and B, an operator does not need to provide the lease information for those interests.

The BLM’s goal is to have all CAs in place prior to the date of first production. In fact, the BLM has required applicants appearing before the Colorado Oil and Gas Conservation (“COGCC”) to include specific language in spacing orders that addresses CAs and timing for the operator to apply and comply with the CA process. The COGCC order language usually requires an operator to submit a CA concurrent with the filing of an APD or at least 90 days before the anticipated date of first production.

Any operators actively submitting CAs to the BLM should be well-versed in the changes addressed in IM-2015-124 affecting BLM Manual 3160-9 and be prepared to submit a CA prior to production of a well affecting Federal or Indian interests.

IM-2015-124 can be found at:  http://www.blm.gov/wo/st/en/info/regulations/Instruction_Memos_and_Bulletins/national_instruction/2015/IM_2015-124.html

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Advisory Council on Historic Preservation Recommends Cancellation of Oil and Gas Leases in Montana

On September 21, the Advisory Council on Historic Preservation (ACHP), an independent federal agency with a key advisory role in National Historic Preservation Act (NHPA) § 106 “effects” determinations, recommended that long-ago issued federal oil and gas leases should be cancelled and that future mineral development should not occur within the Badger-Two Medicine area, located in northwestern Montana. As discussed in posts from April 16 and July 27, in 1982, BLM issued 46 oil and gas leases on Forest Service-managed surface in the Badger-Two Medicine area, an area adjacent to the Blackfeet Indian Reservation. However, in spite of numerous attempts to develop these leases, the leases were indefinitely suspended by BLM. While 29 of the leases have been voluntarily relinquished, 18 leases remain. These 18 leases, held by Louisiana-based Solenex LLC, are the focus of litigation currently pending in the Washington D.C. Federal District Court for the District of Columbia.

The ACHP recommendation raises challenging First Amendment issues concerning the accommodation owed to Native American traditional cultural beliefs under the NHPA. In its recommendation, ACHP stated that oil and gas development could irrevocably harm the 165,588-acre area, which encompasses lands within the Blackfeet Indian Reservation and the Lewis and Clark and Flathead National Forests designated as a “Traditional Cultural District” under NHPA. “The proposed undertaking and the entire Solenex leasehold is located within the Badger-Two Medicine TCD, a historic property of religious and cultural significance to the Blackfeet Tribe. . . The Blackfeet Tribal Business Council described the TCD in Resolution No. 260-2014 (2014) as ‘one of the most cultural and religiously significant areas to the Blackfeet People since time immemorial.’” AHCP Comments (9/21/15) at 4. While the ACHP recommendation argues that BLM should cancel the Solenex leases, none of which are located on the Blackfeet Reservation, the Council’s recommendation goes on to advise against any future oil and gas development in the entirety of the Badger-Two Medicine Area. The Council’s recommendation is not binding on federal agencies, in this case BLM and the U.S. Forest Service, or the courts, but under NHPA the agencies are required to “take into account” the Council’s findings in writing before making a decision. Moreover, given its important role under NHPA as the primary federal historic preservation policy advisor to the President and Congress, its recommendation is likely to carry significant weight as BLM and the Forest Service decide the future of oil and gas development in the area. Meanwhile, if BLM does decide to cancel the Solenex leases, it will be up to the courts to decide if this is authorized under the Mineral Leasing Act and what, if any, compensation is owed to the leaseholders.

ACHP’s recommendation can be found at: http://www.npca.org/assets/pdf/ACHP-Comments-and-Transmittal-Letters.pdf

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Gold King Mine Accident Highlights Risks Posed by Abandoned Mines

On August 5, 2015, EPA personnel were working with a private contractor on a water quality project at the Gold King Mine near Silverton, Colorado. The intent of the project was to assess ongoing mine water leakage and to identify and evaluate options for additional mine water treatment and for reduction in the amount of mine water that flows into Cement Creek. In the course of this project, workers inadvertently damaged a tailings pond that had been built to slow and treat mine water outflow. This resulted in destruction of the pond and a discharge of over 3 million gallons of mine waste water and tailings into Cement Creek, a tributary of the Animas River.

Since this event, EPA officials have engaged in ongoing water quality testing and report that contamination levels in the Animas River have decreased to pre-spill levels. The Colorado Department of Public Health and Environment has reached similar conclusions and reports that the river has returned to “stable” conditions which means that that are no human health concerns during typical recreational exposure.

The Gold King Mine was abandoned in 1923, and according to the EPA, mine tailings were directly released into the creeks and rivers in the area until the 1930s. Prior to this 2015 accident, contaminated mine water flowed from this mine at a rate of approximately 7 gallons per minute. That rate briefly increased to more than 500 gallons per minute immediately following the accident. The EPA had previously sought to list the Gold King Mine and surrounding area as a Superfund site which would have provided additional funding for environmental remediation and clean-up. Community input, however, raised concerns about the effect of Superfund status on tourism. As a result, the EPA agreed to postpone seeking Superfund status for the site as long as measurable progress could be made to improve the water quality absent such status.

The accident at the Gold King Mine emphasizes the risks posed by the legacy of mines that were opened, operated and abandoned in the western U.S decades ago during a time when neither the technology nor the regulations necessary for effective water quality protection existed. The Gold King Mine is one of approximately 23,000 such abandoned mines in Colorado, 6127 of which have been reclaimed by the Colorado Division of Reclamation, Mining and Safety. The BLM lists 3400 abandoned mines on BLM-managed lands in Colorado. In the Upper Animas Watershed, where the Gold King Mine is located, there are approximately 400 abandoned and inactive mine sites. Numerous reclamation projects have been completed in that watershed over the last 20 years.

The BLM’s Abandoned Mine Lands Program was created in 1997 to reduce dangers to the public, public lands and the environment from health and other adverse impacts related to hard rock mines at which operations ceased prior to 1981. As of 2014, this Program had over 46,000 abandoned mine sites in its inventory. Of those, approximately one-quarter are remediated, are sites that do not require remediation, or are sites at which remediation actions have commenced.

These site clean-up and remediation actions on federal lands are governed by various federal statutes including the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the federal Clean Water Act (CWA), the Federal Land Policy and Management Act (FLPMA) and the National Environmental Policy Act (NEPA). The lack of a robust federal budget for clean-up of abandoned mine sites and the liability that can attach to non-government actors who attempt clean-up of mine sites has inhibited progress towards addressing this mining legacy in Western states.

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Judge Orders “Accelerated” Review of Long-Disputed Montana Oil and Gas Leases

On July 27, 2015, U.S. District Judge Richard Leon ordered the BLM to develop an “accelerated schedule” within the next 21 days to be used to decide whether to authorize development of 18 federal oil and gas leases that were originally issued in 1982, but have been suspended for several decades. As discussed earlier [insert link to NRP post from 4/16/15], while the leases were originally issued over 30 years ago, they were suspended by the BLM in 1992 following controversy over whether any development should occur in the area.

Solenex, LLC, who holds record title to the leases, filed suit in 2013, arguing that the BLM’s decades-long suspension is unlawful and violates the Mineral Leasing Act. On Monday, Judge Leon denied Solenex’s request to order BLM to lift the suspension, instead ordering the BLM and Forest Service to develop a schedule outlining when a final decision will be made. Calling the BLM’s failure to make a decision on the suspension “unreasonable,” Judge Leon stated “[n]o combination of excuses could possibly justify such ineptitude or recalcitrance for such an epic period of time.”

Judge Leon’s order requires the BLM and Forest Service to come up with an “accelerated and fixed schedule” in the next 21 days that identifies the tasks that still need to be completed before a final decision can be made and how long those tasks are expected to take. Attorneys for Solenex have stated that they are disappointed the court did not order the suspensions lifted, but are thankful that the court is taking the issue seriously.

Blackfeet tribal Chairman Harry Barnes stated that the tribe, which considers the area in which the leases are located to be a sacred cultural site, will continue to protest any oil and gas development in the area. “The tribe will never let any drilling go ahead . . . We've fought it for too long, and we're going to continue to fight it.”

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Wyoming State Geological Survey Developing Next Generation of Oil and Gas Map of Wyoming

Despite the fact that the U.S. Bureau of Land Management lease sale covering lands in Wyoming conducted on May 5, 2015, brought in a paltry $688,000, which is the lowest total since August 2009, the Wyoming State Geological Survey (“WSGS”) has begun the process of developing the next generation of the Oil and Gas Map of Wyoming.

The Oil and Gas Map of Wyoming is one of the most popular products published by the WSGS. No wonder, as Wyoming currently ranks fifth in the production of natural gas and eighth in oil production. The current version of the map, which can be downloaded from the WSGS website or purchased in a large printed format, contains information including: boundaries of producing and abandoned oil fields in Wyoming; producing formations; field designations; refinery and gas plant locations and capacities; pipeline sizes, operators and locations; basin locations; extent of shale-bearing rocks; and railroad locations.

For the next generation of the map, in addition to updating the information described above, the WSGS plans create an online version of the map, which will allow users to display and interact with various layers of the information contained in the map. More information about the Oil and Gas Map and the other projects of the WSGS can be found online at http://www.wsgs.wyo.gov/.

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Senator Tester calls for Cancellation of Long-disputed Montana Oil and Gas Leases

At the end of March 2015, Montana’s U.S. Senator Jon Tester joined the Blackfeet Nation in calling on the federal government to cancel 18 existing federal oil and gas leases located in Northwestern Montana. These leases have been the focus of controversy for several decades, and Senator Tester’s recent letter appears to signal a new chapter in the ongoing debate.

The leases (collectively referred to as the Solenex Leases) were issued by BLM in 1982. Two years later, the BLM issued an APD for one of the leases, thereby approving wellsite development. However, that development was halted and the other 46 leases were indefinitely suspended when the BLM and U.S. Forest Service (as the surface management agency) issued a series of suspensions between 1993 and 1997, finally deciding in 1998 to “indefinitely suspend” the leases. 29 of the leases have since been voluntarily relinquished, but 18 leases still remain.

The Solenex Leases are located along the Rocky Mountain Front in an area referred to by the Blackfeet as the Badger-Two Medicine. This area is bordered by the Blackfeet Reservation to the Northeast and generally lies southeast of Glacier National Park. While the area is outside of the Blackfeet Reservation boundary, it is considered spiritually significant to some tribal members. The area has now been placed off-limits to future oil and gas leasing as a result of a 2006 statue introduced by Senator Max Baucus that recognizes “valid existing rights”. Thus, the debate now centers on the fate of the remaining 18 leases.

Although the Blackfeet Nation was largely silent on the issue during the 1980’s, ‘90’s and early 2000’s, the Tribe has now publicly expressed opposition to the leases and, with the support of several environmental groups, has argued that the leases should be cancelled on the grounds that they were issued with inadequate NEPA analysis and that the Tribe was not consulted prior to lease issuance.

While the Tribe, with the support of Senator Tester, attempts to exert political pressure on the BLM and Forest Service to finally cancel the leases, Solenex, the owner of several of the remaining leases, has filed suit in federal court arguing that the BLM’s “indefinite” suspension violates the Mineral Leasing Act. Obama administration attorneys have responded that the suspension is “reasonable,” given the complexity of the issue and the fact that remedial environmental analyses are ongoing.

Given the renewed attention being paid to this issue in the courthouse, at the agencies and on Capitol Hill, it seems possible that finality may be close at hand. While it is difficult to predict what form resolution may take, it is likely to be achieved through some combination of litigation and political deal-making.

For more information on the Solenex v. BLM litigation, see the Mountain States Legal Foundation website: https://www.mountainstateslegal.org/cases/all-cases/solenex-llc-v.-jewell#.VS1s0IznaUl

Senator Tester’s letter to Secretaries Jewell and Vilsack can be found at: http://www.tester.senate.gov/?p=news&id=3864

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