VIEWS FROM THE AGENCIES AND THE HILL: INTERIOR PUBLIC LANDS AT THE END OF THE OBAMA ERA

• Jurisdiction: United States

Advanced Public Land Law - The Continuing Challenge of Managing for Multiple Use
(Jan 2017)
CHAPTER 3A
VIEWS FROM THE AGENCIES AND THE HILL: INTERIOR PUBLIC LANDS AT THE END OF THE OBAMA ERA
Matthew J. McKeown
Regional Solicitor, U.S. Department of the Interior, Office of the Solicitor
Denver, CO

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MATTHEW J. MCKEOWN is the Regional Solicitor, Rocky Mountain Region, for the U.S. Department of the Interior, Office of the Solicitor, in Lakewood, Colorado. In this capacity, Matt oversees the legal work for every Interior Department agency within his region. Prior to taking his current position, Matt was Associate Solicitor for Mineral Resources, Associate Solicitor for Land and Water, and Deputy Solicitor. Matt also served as Principal Deputy Attorney General for the Justice Department's Environment and Natural Resources Division. Before commencing federal service, Matt spent seven years as a Deputy Attorney General for the State of Idaho. Matt received his law degree from the University of Oregon and his bachelor's degree in English (with a Film and Communications focus) from McGill University in Montreal.

I. OIL AND GAS ON PUBLIC LANDS: 2010 LEASING REFORMS AND REGULATORY ACTIONS

A. Obama Oil and Gas Policies.

1. BLM 2010 Leasing Reform. On January 6, 2010, Secretary Salazar announced two reform goals: 1) improve protections for land, water and wildlife; and 2) reduce potential conflicts that can lead to "costly and time-consuming" lease protests and litigation of leases. ¹

2. Salazar Issues BLM Instruction Memorandum 2010-117 ("IM-2010-117"). IM-2010-117 has three main components: land use plan review; Master Leasing Plans; and a new process for lease parcel nominations and issuance. ²

(a) The land use plan review requires BLM field officers to consider whether the RMP "adequately protects important resource values in light of changing circumstances, updated policies and new information." ³

(b) The Master Leasing Plan ("MLP") concept directs BLM, before leasing, to "reconsider RMP decisions pertaining to leasing" by analyzing likely development scenarios and varying mitigation levels at a site-specific level in an MLP. ⁴ The MLP process considers phased leasing, phased development, and requirements to reduce or capture emissions, multiple wells on a single pad and additional mitigation for wildlife and other insects. See, e.g., 2016 Moab MLP. ⁵

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(c) The lease sale guidance requires all lease parcels to have parcel specific NEPA - typically an environmental assessment ("EA") before the parcel can be offered for sale. ⁶ In addition, each parcel must have an inter-disciplinary team review and provide for public comment. ⁷ The guidance directs a 30-day comment period for lease parcel EAs. ⁸

(d) BLM did not propose a rulemaking for these oil and gas leasing reforms.

B. BLM Oil and Gas Rulemakings.

1. BLM Hydraulic Fracturing Rule. On March 26, 2015, BLM promulgated a final hydraulic fracturing rule applicable to oil and gas operations on federal and Indian lands. ⁹ The rule revises existing BLM regulations on hydraulic fracturing from the 1980's. ¹⁰ The rule was immediately challenged by the oil and gas industry and several days later by the states of North Dakota, Wyoming and Colorado in lawsuits filed in the Federal District Court for the District of Wyoming. ¹¹ The Wyoming Federal District Court first enjoined implementation of the rule and then on June 21, 2016, ruled BLM "lacked Congressional authority to promulgate the regulations." ¹² The case has been fully briefed before the Tenth Circuit and arguments have been rescheduled for March 2016. ¹³

2. Royalty Reform, Rental, Minimum Bids, Bonding and Penalty Reform. On April 21, 2015, the BLM began a rulemaking process to update onshore oil and gas royalties and other financial requirements. ¹⁴ BLM explained it was issuing the ANPR "to solicit public comments and suggestions that may be used to update the BLM's regulations related to royalty rates, annual rental payments, minimum acceptable bids, bonding requirements, and civil penalty assessments for Federal onshore oil and gas leases." ¹⁵

(a) Royalty Rates. The royalty rate for onshore oil and gas has not changed in 29 years. In 2012, Secretary Salazar announced he

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planned to increase the 12.5 percent royalty by 50 percent to 18.75 percent to mirror the royalty on federal off-shore oil and gas, but Secretary Jewell elected to use an ANPR to gather more information.

(b) Annual Rental Payments. The Mineral Leasing Act ("MLA") requires lessees to pay an annual rent of "not less than" $1.50 per acre (years 1-5) and $2.00 per acre thereafter. ¹⁶ The rate has not been raised in 29 years. BLM stated a higher rate would incent lessees to "use" or "lose" federal leases." ¹⁷

(c) Minimum Acceptable Bid. The MLA sets the "national minimum acceptable bid" ¹⁸ at $2.00 for two years. The Secretary has the authority to raise the minimum bid if certain conditions are met and Congress is notified. The rate has not changed in 29 years.

(d) Bonding. The MLA requires a reclamation bond to be submitted. ¹⁹ In 1960, the minimum bond amounts were set in a three-tiered structure and have not been updated. Individual bonds ($10,000), state-wide ($25,000) and nationwide bonds ($150,000).

(e) Civil Penalty Assessment. BLM is authorized to assess civil penalties for several violations and provide a certain maximum per day in penalties. BLM "capped" those daily penalties in 1987.

3. Onshore Order No. 9 and NTL-4A, "Venting and Flaring." The BLM published a final rule ²⁰ to regulate the release of methane and to ensure the collection of royalty from oil and gas operations. The rule also allows BLM to raise the royalty rate. Lawsuits challenging the rule were filed by Wyoming and several other states and the oil and gas industry in Wyoming Federal District Court. ²¹ A hearing on injunctive relief was argued January 6, 2017.

4. Onshore Order 1,²² Approval of Operations. This regulation was updated to require electronic submission of APDs and Notices of Staking to speed BLM processing time, reduce the number of deficient APDs and Notices of Staking and provide the current, on-line status of submittals to operators. ²³

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5. Onshore Orders 3 (site security), 4 (oil measurement) and 5 (gas measurement). The BLM finalized these three onshore orders in November 2016. ²⁴

6. Online Oil and Gas Lease Sales. After the National Defense Authorization Act of FY 2015 amended the MLA, BLM finalized a rule that allows BLM to conduct either oral or online lease sales. ²⁵

C. Other Actions.

1. NEPA Greenhouse Gas Guidance. In August 2016, the White House Council on Environmental Quality ("CEQ") proposed new guidance on how federal agencies should consider greenhouse gas emissions ("GHG") and the impacts of climate change in agency NEPA reviews. ²⁶ The final CEQ guidance applies to BLM land and resource decisions. ²⁷

2. Federal Coal Leasing Moratorium - Secretarial Order No. 3338 (Jan. 15, 2016). A 3-year coal leasing moratorium was imposed to allow for the preparation of a programmatic NEPA analysis of the federal coal leasing program. The Draft Federal Coal Program Review PEIS was issued January 11, 2017.

3. Stream Protection Rule. The Office of Surface Management ("OSM") issued a new rule to regulate coal mining, Stream Protection Rule. ²⁸

4. Oil Shale Rule. BLM finalized the oil shale rule revision to amend 43 C.F.R. ?? 3900, 3920 and 3930 on January 11, 2017. The rule will go into effect 30 days after it is published in the Federal Register.

II. RENEWABLE ENERGY ON PUBLIC LANDS.

A. Public Land Green Energy in Obama Administration.

1. Initial Actions at Interior. Secretarial Order 3283, "Enhancing Renewable Energy Development on Public Lands" ²⁹ and Order No. 3285, "Renewable Energy Development by the Department of Interior." ³⁰ These orders

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established a Task Force on Energy and Climate Change and made the development, production and delivery of renewable energy one of the

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