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 has grown increasingly protracted, as BLM policy changes, imposing additional requirements, have conspired with worsening shortages of BLM staff to carry out those requirements.  The result is that delays between the filing of an expression of interest (i.e., a leasing nomination) and BLM’s offering of the lands for leasing are now commonly measured in years.

If the reforms adopted by the new IM can be 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 takes immediate effect; and it 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 is held six months after issuance of the IM — i.e., September 2018 — should include the lands in all of the EOI’s that, at that point, have been pending for more than six months.


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