Recent Developments

 

BLM Leasing System Reform

On January 31, 2018, BLM issued Instruction Memorandum 2018-034, adopting measures directed at several important goals: “to simplify and streamline the leasing process to alleviate unnecessary impediments and burdens, to expedite the offering of lands for lease, and to ensure quarterly oil and gas lease sales are consistently held.”

Most significant are some long-overdue changes in the way that leasing nominations are processed.  When the current competitive leasing system was first adopted in 1987, BLM’s re-offering of lands for leasing, upon the expiration of a prior lease, was a routine matter: to verify that the lands were in fact available; obtain the consent of the surface management agency (if any); and identify any stipulations that the surface management agency and/or BLM found to be warranted — all of which could sometimes be achieved in a matter of weeks, and rarely more than a few months.  But in the years since then, the process grew increasingly protracted, as BLM policy changes, which imposed additional requirements, conspired with worsening shortages of BLM staff to carry out those requirements.  The result was that delays between the filing of an expression of interest (i.e., a leasing nomination), and BLM’s offering of the lands for leasing, commonly came to be measured in years.

If the reforms adopted by the new IM can be successfully put into effect, all of this should change.  With quarterly lease sales being held by BLM, the IM directs that the deadline for filing a nomination for lands to be included in any given sale is to be six months prior to the lease sale month” (emphasis added) — which in turn means that (all else being equal) “the timeframe for parcel review [by BLM] for a specific lease sale is to be no longer than 6 months.”  (The IM recognizes, though, that “there will be exceptions due to unforeseen circumstances, including delays associated with [surface management agency] consent.”)  To accomplish this, the IM anticipates that “staff resources may be shifted at times from other program areas to meet this high priority program area need” — although that may be no small feat, since other vital program areas, from approving lease assignments to reviewing drilling permit applications, are already short-staffed as well.

(BLM’s recent move to a new centralized system for filing nominations — the National Fluids Lease Sale System — may itself improve the process somewhat.  EOI’s may now be filed electronically on a nationwide website, at https://nflss.blm.gov. Once an EOI is filed through the website, it should automatically be routed to the appropriate BLM State Office.)

Under the IM, the steps to be taken in BLM’s parcel review, within the six months after filing of an EOI, include (1) gathering and assessing existing environmental-analysis, endangered-species, and historical-preservation information; (2) determining whether leasing of the lands would conform to the applicable resource management plan; (3) conducting a site visit — but only if necessary after considering other sources of information; (4) communicating with potentially-affected parties; and (5) providing for public participation in the environmental-review process.

Among changes being made to the land use planning process, prior to commencing parcel review, is the elimination of master leasing plans — an additional layer of environmental review that was introduced in 2013.  The IM also affirms (consistently with Board of Land Appeals precedent) that “BLM will not routinely defer leasing when waiting for an RMP amendment or revision to be signed.”  Changes that should expedite the leasing process are made after the parcel-review stage as well: returning to the statutory requirement for the posting of a lease sale notice 45 days prior to the sale (rather than the 90 days that was directed in 2010); limiting the protest period, after posting of the sale notice, to 10 days; and if possible, resolving any protests and issuing leases within 60 days from when payment is made by the successful bidder for a lease.

The IM instructs the BLM state offices to “review all lands that are identified in EOIs that were submitted before the EOI cutoff date for a particular quarterly lease sale and [to] offer all parcels determined to be eligible and available within the state office’s jurisdiction.”  (Ideally, then, the first lease sale that was held by each BLM State Office six months after issuance of the IM — i.e., in September 2018 — should have included the available lands in all of the EOI’s that, at that point, had been pending for more than six months, except in the case of “unforeseen circumstances, including delays associated with SMA consent;” but in practice, that largely has not happened.  Moreover, the requirement of SMA consent, for the extensive areas that are under the jurisdiction of other agencies such as the Forest Service, effectively excludes all of those areas from BLM’s goal of a six-month leasing process, unless and until those agencies streamline their own procedures for deciding whether and under what conditions they consent to leasing. BLM, though, can and should supplement the IM to make it clear that the possibility of an indefinite delay at the hands of an SMA does not justify a delay by the BLM State Office in its own parcel review: that BLM still has just six months after the filing of an EOI in which to complete its work, even if the six months is interrupted while awaiting SMA consent.)

Note: In the case of Western Watersheds Project v. Zinke, the U.S. District Court for the District of Idaho, on September 21, 2018, issued a preliminary injunction concerning this IM.  The court’s order was limited to lease sales within sage grouse planning areas (i.e., certain areas in Montana, Idaho, Oregon, California, Nevada, Utah, Colorado, Wyoming, South Dakota, and North Dakota); and only to lease sales in December 2018 and afterward.  But as to those sales within those areas, the court ordered BLM to follow the procedures that were in effect previously (since 2010), rather than the procedures in the 2018 IM, as to (1) public participation in the environmental review process, with a 30-day period for public review and comment, before BLM’s decision to offer lands for leasing; and (2) a public protest period of 30 days (rather than 10 days) upon posting of the lease sale notice.  (The court, on the other hand, expressly upheld the 2018 IM’s six-month parcel review timeframe, so long as the public participation requirements could be met within that time.)  BLM’s response to the court’s ruling was to withdraw the affected parcels from the December lease sales, with the possibility of re-offering them in subsequent sales upon compliance with the court’s requirements.

It should be noted, though, that there is nothing in the court’s reasoning that could not be applied equally, in other litigation, to other lease sales covering lands outside of the sage grouse areas.  But while the court’s discussion appears to check all of the boxes, some of its reasoning is unpersuasive.  In particular, the court concludes that the 2018 IM represents final agency action that affects rights and obligations and is subject to judicial review, and that it constitutes rulemaking that requires public notice and comment under the Administrative Procedure Act.  These conclusions cannot be reconciled with the function of this or any other Instruction Memorandum, however, which is to direct BLM offices in carrying out their responsibilities.  Thus the court acknowledges that the APA exempts “general statements of policy, or rules of agency organization, procedure, or practice;” but that, by definition, is exactly what an IM is.  The court, like the prior administration, might prefer the more specific comment rights and the longer protest period that were in place before the 2018 IM; but the prior protest period of 30 days — which was no more the product of an APA rulemaking than was the 10-day period in the 2018 IM — can only be legally required if the court determines that a 10-day period is per se inadequate (a determination that is possible, but difficult to justify, since any protest period at all essentially gives leasing opponents a second bite at the apple after having the opportunity to comment during the environmental review process); and the public’s participation rights in the environmental review process itself arise by virtue of the National Environmental Policy Act, and exist independently of the IM, which can neither bestow nor take away such rights.

 


Drilling Permits for Directional Wells into Federal Minerals from Non-federal Lands

BLM, on June 12, issued Instruction Memorandum No. 2018-014, revising the procedures for an application for permit to drill into federal minerals from a well pad located on lands with non-federal surface and minerals.

The biggest change made by this IM is philosophical: it acknowledges that “BLM’s regulatory jurisdiction is limited to Federal lands;” so the processing of an APD for a directional well from the non-federal tract into federal minerals should not be taken as an opportunity to influence the activities on the non-federal tract beyond what is legally required in order for BLM to carry out its obligations. For purposes of the National Environmental Policy Act, the Endangered Species Act, and the National Historic Preservation Act, the IM recognizes that “the Federal action or undertaking to be analyzed is the approval of the APD, and the BLM should focus its environmental analysis accordingly.”

Thus, where the well is to be drilled from a preexisting well pad on the non-federal tract, any environmental analysis that is needed “may be limited to a discussion of environmental effects of the downhole operations to be approved,” plus potential effects of “any additional surface disturbance (e.g., well pad expansion) [that] is anticipated as a result of development of the Federal minerals.” As the IM reminds BLM, “The pre-existing surface disturbance(s) and facilities are not the result of the Federal APD.” Moreover, the IM encourages BLM to consider whether the need for further environmental analysis may be limited through a Determination of NEPA Adequacy (DNA) for preexisting environmental analyses, or through an applicable categorical exclusion (e.g., for drilling from a location where drilling has occurred within the previous five years, or for drilling within a developed field if the drilling was analyzed within the previous five years as a reasonably foreseeable activity).

Even if the well is to be drilled from a location where there is no prior surface disturbance, BLM should consider whether the well pad is likely to be constructed for non-federal wells even if the federal APD is not approved; but if “it appears that the well pad would only be constructed if the Federal APD is approved, the environmental analysis must consider all potential environmental effects associated with construction and operation of the well,” including consideration of “a range of reasonable alternatives in the siting of the surface facilities.”

(The IM includes a reference to BLM Information Bulletin No. 2018-061, which was issued six days previously. That document is a reminder to the BLM field offices, when evaluating a proposal for mineral development, to consider the availability of a DNA or a categorical exclusion as an alternative to the preparation of an Environmental Assessment or Environmental Impact Statement.)

Among other significant points made by the IM, with regard to APD’s for wells from non-federal tracts into federal minerals, are that such an APD need not include a Surface Use Plan of Operations, nor provide for an onsite well inspection; but that, while BLM may have no right of surface access without landowner consent, if BLM’s inability to access the surface prevented it from meeting its obligations under NEPA, ESA, or NHPA, that could be grounds for denying the APD.

 


For notable recent court opinions, decisions by the Interior Board of Land Appeals, federal regulations, and BLM lease sale information, click the following links:

Court Opinions

Interior Board of Land Appeals

Regulations

BLM Lease Sales