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August 13, 2011

Judge Freudenthal Rules in Favor of Categorical Exclusions for Oil and Gas Drilling

Judge Freudenthal Rules in Favor of Categorical Exclusions for Oil and Gas Drilling

CHEYENNE — U.S. Federal Judge Nancy Freudenthal today struck down the Interior Department’s 2010 instructional guidance meant to curtail the use of “categorical exclusions” in permitting oil and gas drilling.

The plaintiff, industry trade group Western Energy Alliance, successfully argued that the guidance was invalid, in part, because it wasn’t created under a formal process that includes public comment. Yet the “categorical exclusion” itself is a procedural tool that allows industry to bypass — at the permitting stage — a formal National Environmental Protection Act (NEPA) analysis that includes public comment.

The categorical exclusion is a provision of the 2005 Energy Policy Act. It allows the Bureau of Land Management and U.S Forest Service to issue permits to drill without site-specific environmental analysis. However, categorical exclusions are only supposed to be used within areas already included in a NEPA analysis that contemplated such activity.

Sportsmen and environmental groups argued that categorical exclusions were too broadly applied, and were folded under outdated analysis that didn’t fully contemplate the scale of development being proposed. In particular, they argued that a Resource Management Plan — which are updated every 10 or 15 years — is much too broad of a NEPA analysis to justify categorical exclusions for an activity that rapidly changes and becomes more dense.

From 2006 to 2008, the “categorical exclusion” was used to approve some 6,100 drilling permits, or 28 percent of all approved permits during that period, according to the U.S. Government Accountability Office.

As part of a package to streamline onshore oil and gas permitting, and avoid litigation over oil and gas drilling, Interior Secretary Ken Salazar in 2010 issued instructional guidance curtailing the use of categorical exclusions — which were the source of several high-profile lawsuits in the West. A new BLM report indicates that far fewer oil and gas leases are litigated today compared to the past six years.

But the oil and gas industry has big plans to drill on federal lands in the West, and they fired a preemptive strike against Salazar’s guidance without tying it to any particular drilling permit now under consideration.

“Obviously, we have members with leases. … Categorical exclusions apply in many of those cases. So she (Judge Freudenthal) found that the harm was not speculative at all. The delay, the expense and the legal consequences clearly gave a standing and did not require a particular APD (application for permit to drill) in this case,” Western Energy Alliance’s director of government and public affairs, Kathleen Sgamma, said after the ruling.

Department of Justice attorney Ted Sanford argued that no third party, or mineral lease owner, is entitled to choose among several levels of NEPA analysis. Rather, Salazar’s guidance regarding categorical exclusions was intended to clarify the intent of Section 390 of the 2005 Energy Policy Act — specifically that categorical exclusions were not intended to forgo site-specific analysis before issuing a permit to drill.

“Congressional intent was not to circumvent NEPA analysis,” said Sanford, adding that without the 2010 guidance, there existed the potential to play a regulatory shell game in which site-specific analysis never occurs.

Judge Freudenthal declined to contemplate damages the industry may have suffered due to the Interior’s guidence on categorical exclusions.

Sgamma said that since the 2010 guidance, the oil and gas industry has been neglected full use of the categorical exclusion provision.

“Sure, it’s going to slow things down,” said Sgamma. “What categorical exclusions do is eliminate a layer of NEPA … So when those types of impacts are looked at in a land use plan, then we don’t have to go in and look at them again.”

— Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

Written by Dustin Bleizeffer | Published on AUGUST 12, 2011 |

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