OFFICE OF GOVERNOR
DAVE FREUDENTHAL
State Capitol
Cheyenne, WY 82002
Ph. (307) 777-7434
1/8/2010
****** For Immediate Release ******
Contact: Press Secretary Jonathan
Green
Phone: 307-777-7437
Mobile: 307-421-0197
E-mail:
jgreen3@state.wy.us
Gov. Freudenthal
Responds to Oil and Gas Leasing Reforms
—
Governor hopes the Dept. of Interior will focus its efforts on fulfilling its
existing obligations
— The Department should avoid duplication in its leasing program
— Existing procedures, coupled with consultation with state agencies will work
CHEYENNE, Wyo. – Changes to federal oil and gas leasing
policies will lead to burdensome new requirements without solving underlying
problems, Gov. Dave Freudenthal told Interior Secretary Ken Salazar Friday.
In a
letter to the Secretary, the Governor expressed his concern with the new
leasing requirements, announced by Salazar Wednesday.
“My hope
would be for the Department to focus its energy and attention on compliance, monitoring,
inspections and implementation – rather than on a prematurely constraining
leasing program that will functionally tie a millstone around the neck of the
Department and detract from the more pressing issues of the day,” Gov.
Freudenthal said.
“In the
coming weeks I trust that further detail will be forthcoming regarding policy
changes,” Freudenthal said.
The full text of the letter follows.
# # #
January 8, 2010
The Honorable Ken Salazar
Secretary of the Interior
1849 C Street NW
Washington, DC 20240
Dear Secretary Salazar:
I write to you concerning the U.S. Department of the
Interior’s (Department) oil and gas leasing policy changes that were announced
on Wednesday. I appreciate your stated
intentions to restore balance to the leasing program. Unfortunately, the
proposed changes potentially hand significant control over oil and gas
exploration, development and production to the whims of those that profess a
“nowhere, not ever” philosophy to surface disturbance of any kind. In addition, the changes appear duplicative, do not contemplate the
significant manpower that will be required for their effective implementation
and lack important details, which might serve to alleviate – or perhaps
intensify my level of concern. As I will
detail further, my hope would be for the Department to focus its energy and
attention on compliance, monitoring, inspections and implementation – rather
than on a prematurely constraining leasing program that will functionally tie a
millstone around the neck of the Department and detract from the more pressing
issues of the day.
In terms of development, I have always been a strong
proponent of balance. In general, given
the right information and proper motivation, we have usually found our way to a
development array that meets the terms of those that understand the need for both production and protection. Frankly, we know that there will never be a
meeting of the minds of those in the “drill here, drill now” crowd and the “not
one blade of grass” crowd, mainly because neither side is willing to give
toward the middle. Unfortunately,
Washington, D.C. seems to go from pillar to post to placate what is perceived
as a key constituency. I only half-heartedly
joke with those in industry that, during the prior administration, their names
were chiseled above the chairs outside the office of the Assistant Secretary
for Lands and Minerals. With the changes
announced yesterday, I fear that we are merely swapping the names above those
same chairs to environmental interests, giving them a stranglehold on an
already cumbersome process. Meanwhile
in places like Cheyenne, Casper, Wamsutter and Cody, Wyoming, we in the middle
simply want a good job, clean air, healthy watersheds and a place to hunt, fish
and hike with our families.
With specific regard to the proposed changes, it seems
as though the Department contemplates adding up to three additional layers of
analysis into the existing leasing process.
The first would be introduced at the newly minted “Master Leasing and
Development Planning” (MLDP) phase, the second during the Interdisciplinary
Team (ID Team) evaluation and review and the third after the ID Team has
completed its review and must then identify “appropriate mitigation measures
for protection of the environment.” While
the second and third steps could practically be melded together, significant
new (and seemingly redundant) reviews will be instituted under the new policy –
before we even get to the practical realities of development. To my point, these reviews will be made
irrespective of (actually completely devoid of in most instances) substantive
seismic, exploration or other subsurface data.
Functionally, it seems that we are putting on two additional belts and
two additional pairs of suspenders without even knowing if we are going to wear
pants.
The proposed changes, as noted, are proposed in addition to the existing leasing
program, which already contemplates a land use plan, consultation with the
states and their agencies of jurisdiction regarding leasing decisions, project
specific NEPA, an application for permit to drill and compliance with state
wildlife, air, water and land quality protections. I question the need for so many reviews,
especially when leasing is such a small part of the development equation.
As you know, I
have had my own moments of angst with certain oil and gas leases, most notably
tied to development schemes in the Wyoming Range (on leases that were
ironically leased during the Clinton administration) and in Pinedale when the
industry sought to develop without appropriate mitigation. This said I still see the proposed, overly
burdensome changes as throwing the proverbial baby out with the bathwater.
In fairness, I understand that Newton’s third law of
motion is alive and well in this discussion.
To every action, there is an equal and opposite reaction. Given the overreaching that took place during
the previous administration, I understand the temptation to conjure up a
drastic remedy for what was perceived by some as a sell out to oil and gas
interests. But I would caution that while the Department may wish to right old
wrongs, it must look ahead to future elections and their implications. While today the addition of “interested
groups and individuals” to the leasing process functionally means only
conservation-minded individuals –even the most optimistic mind could easily
contemplate a world where the oil and gas industry would be the only “groups
and individuals” called to the table. In
my view, neither approach is appropriate.
Above all I am concerned with how the policy will be
implemented in practical terms. To face
facts, federal budgets continue to dwindle for land management agencies, in a
time when people like me are demanding more in terms of oversight, inspection
and implementation. Even with modest
increases in personnel and funding, the new leasing policy not only piles on
additional burdens with regard to environmental analysis (in the NEPA sense,
which is not only time consuming but, in reality, pulls energy from seemingly
every technician and their day-to-day work in the field) but adds even more
onerous and time consuming “on-the-ground reconnaissance of parcels” “in most
cases.” In Wyoming, since June of 2008,
over 1.2 million acres were sold (not offered, but sold). To provide the “on-the-ground reconnaissance”
that will probably be required (especially to placate those “interested groups
and individuals” that will now be involved in leasing decisions) will involve
thousands of new man hours in the state of Wyoming alone – man hours that
absolutely should not and in practice cannot be extracted from existing duties
and responsibilities.
One of the points of justification for the policy is the
potential to reduce the number of challenges and protests and, ultimately, the
amount of litigation emanating from these objections. With rational players, this expectation and
rationale makes sense. In reality,
though, the new technical and procedural reviews merely offer more
opportunities for challenge. Even the
most perfect review will be challenged by someone or some group – to assume
otherwise is simply naïve given the realities of the citizen suit provisions of
the Equal Access to Justice Act and the ever-present “not in my backyard”
interests. With additional litigation,
the agency range conservationist, realty specialist, wildlife biologist and
other technicians will not only be taken away from the essential work of
monitoring, inspection, compliance and implementation to complete the
additional analysis and on-site reconnaissance contemplated in the proposed
leasing changes, but now will also have to spend more time in the office
completing file reviews in preparation for litigation. This is especially true with two to three new
“decision points” that will undoubtedly be ripe for potential litigation,
requiring even more files and paperwork to bolster the record and defend the
Department’s decisions.
In the coming weeks, I trust that more detail will be
forthcoming regarding the policy changes.
Some understanding of the procedural mechanisms involved in the crafting
of the MLDP would be very helpful. Does
the MLDP require additional NEPA analysis?
If so, what level of analysis is required? Does the MLDP process supersede the existing
Resource Management Plan (RMP) allocations?
If so, is an RMP amendment required?
What level of “public involvement” will be required? Who will be involved? Will the name of the nominating entity or
company be made public? Does Cooperating
Agency Status apply? How are the “key
issues such as protection of air quality, watersheds, wilderness, wildlife and
nearby land uses” identified? How is the
protection of these resources undertaken in the absence of seismic, exploration
and other subsurface data, especially in areas that have, heretofore, been
“mostly unleased and undeveloped?” How
are leasing and development-level mitigation measures developed in the absence
of seismic, exploration and project-specific development information? If mitigation is defined, will additional
NEPA analysis be completed to allow further comment by industry and others on
the proposed mitigation? Who will be on
the ID Teams that will review parcels proposed for leasing? Will the ID Team reviews be conducted
pursuant to NEPA? Will a specific
timeframe be allotted within which the on-the-ground reconnaissance must be
completed? How will the Department
identify who is and who is not an “interested” group or individual for
involvement in the ID Team process? Will
“non-interested” parties have an opportunity to request a participatory
role? Will the “environmental review
document” prepared by the field offices after the ID Team completes its review
be prepared pursuant to NEPA? If lease
stipulations are added or amended by the field office following the ID Team
review, will an RMP amendment be required?
How long will the public review and comment period be for the draft
environmental review document prepared to evaluate existing, revised, and/or
new stipulations? Before the parcel is
finally offered, how will the BLM determine what mitigation measures are
required in the absence of seismic, exploration and project-specific
development information? Including all
reviews, both existing and new, what is the expected timeframe to move from
nomination to final offering? After the
leases have been sold, will the site-specific and/or project level NEPA be
attenuated to account for the analysis that has theoretically already been
completed and the additional protections that have theoretically be
instituted?
All said, it seems that the pre-lease safeguards are
well intentioned, but are also duplicative of one another and of existing
procedures, including RMP prescriptions, project-level NEPA and site-specific
application for permit to drill analysis.
I am not suggesting that, as applied, these existing procedures have
always been applied correctly or are, in themselves, sufficient. However, I will say that the new pre-lease
procedures seem to ignore the realities involved with traditional oil and gas
leasing, exploration, development and production – especially in those areas
that are mostly unleased and undeveloped.
In
my view, the myriad of new paperwork and process could be replaced by a simple
process wherein deference is given to the RMP allocations but state game and
fish, air, water and land map overlays are subsequently applied to ensure that
such resources can be adequately protected by RMP stipulations. Following consultation with state agencies,
if conditions of approval can be applied to the lease sufficient to protect
these resources, BLM would apply them and move forward with leasing. If new stipulations are deemed necessary, BLM
should initiate an RMP amendment. To invent
new stipulations without an RMP amendment or other NEPA process opens the door
for the arbitrary and capricious exercise of authority in the face of an RMP
that was developed with the participation of the public. But it is equally egregious to rely on RMP
allocations that may or may not reflect new and emerging issues on the landscape.
One final and extremely important question: will the new policy be applied prospectively
or retroactively? If it will be applied
retroactively, in addition to the questions I have already raised, what is the
timeframe to dispense with the backlog of unissued oil and gas leases in
Wyoming? If it will only be applied
prospectively, how will the accumulation of unissued oil and gas leases in
Wyoming be treated? Needless to say, I
am very anxious to bring some resolution to the question of how the almost
2,000 parcels that have been awaiting action since June of 2008 will be
addressed. The Department needs to make
a call on those leases and get moving.
Your agency simply cannot stall the leasing program for that long
without impacting industry, and by extension, the state. As I understand it, about $26 million in
state bonus bid revenues are being held up, which would be very helpful as we
head into some fairly lean times in Wyoming, and this makes no mention of the
long term royalties that will not be generated until the leases are
conveyed. Schools, main street
businesses and other important public and private sector services are
potentially at risk in the absence of clear guidance from the Department – so I
implore your immediate attention to these unissued leases, even as you hone
your new leasing strategy. In this
regard, I have been advised that most of these leases have been reviewed by the
Wyoming Game and Fish Department and my office relative to their potential to
impact big game and other wildlife and by the Wyoming State BLM Office relative
to the new Greater Sage-Grouse Habitat
Management Policy on Wyoming BLM Administered Public Lands including the
Federal Mineral Estate Instruction Memorandum. As such, I trust that the Department can,
with great confidence, expeditiously address the existing protests and issue
all tracts deemed appropriate for issuance.
Some would say that the oil and gas industry is getting
what it deserves. But this is much too
serious an issue for such pettiness.
This involves families and jobs, schools and care for those on Medicaid
– all at a time when our national and local economy is faltering. It involves an industry that has seen the
application for permit to drill fee jump to $6500 and the exemption for intangible
drilling costs threatened. It involves
environmental interests that demand renewable energy, but neglect the reality
that natural gas will provide the backup power that will allow renewables to be
viable. We must be thoughtful and truly
fix what needs fixing. And while I think
that the proposed policy has missed the mark, I am more than willing to put my
shoulder to the wheel to help recraft it into a more functional and rational
program.
Beyond leasing, I would also like to address the proposed
changes to the Energy Policy Act of 2005 categorical exclusions. I certainly appreciate your attention to an
issue that has caused me heartburn for some time now. As I read it, the proposed change would make
the statutory categorical exclusions subject to the “extraordinary
circumstances” review required under NEPA.
While I have some question as to whether the Department can
administratively condition an act of Congress, my real concern is that even
with an “extraordinary circumstances” review, the infirmities associated with
Section 390(b)(3) still persist.
My concern with Section 390(b)(3) is not that
extraordinary circumstances will be ignored nor is my concern that
site-specific NEPA will not be completed.
My concern is that any categorical exclusion for drilling that is tiered
from an RMP and its 30,000 foot analysis has the real potential to impair our
air and impact our wildlife as no useful cumulative effects analysis
accompanies the site-specific reviews for each application for permit to drill. Functionally, we add one ton of air pollution
here and another there – and before we know it, the air is polluted. With wildlife, we add a well here and a well
there and eventually, we have a couple hundred wells and no more crucial winter
habitat for big game. We add and add and
add, without knowing where the edge of the cliff is likely to begin. Admittedly, my concerns must be addressed
through legislation, but I would hope that the proposed changes would not be
seen as a panacea for all issues tied to Section 390 categorical exclusions as
work remains to be done.
To conclude, I appreciate your willingness to engage the
outstanding questions and problems associated with oil and gas leasing and
development. While I ultimately cannot
support many of the proposed changes, I reiterate my offer to help revise the
policy to make it more acceptable. I
would also suggest that the Department’s next effort at reform be aimed at wind
leasing and development. As it stands,
the policy incentivizes the wrong things and has the potential to be more
environmentally detrimental than oil and gas leasing and development. As with the oil and gas reforms, I would
offer my help to the Department to help revamp its wind program to better
reflect modern realities.
Thank you for your time and attention to my
concerns. I look forward to working with
you on these and other issues to attempt to balance the best interests of all
of the multiple users of our public lands.
Best regards,
Dave Freudenthal
Governor
-30-