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August 17, 2010

Salazar puts new brakes on deepwater drilling

Secretary of the Interior Ken Salazar and Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) Director Michael R. Bromwich appear to have taken another step to slow the pace of offshore deepwater drilling activity. They announced that the department will restrict its use of categorical exclusions for offshore oil and gas development to activities involving limited environmental risk, while it undertakes a comprehensive review of its National Environmental Protection Act (NEPA) process and the use of categorical exclusions for exploration and drilling on the Outer Continental Shelf.

API (American Petroleum Institute) Upstream Director Erik Milito said that the announcement from the Department of the Interior that it will require more extensive environmental reviews for deepwater projects (limiting use of categorical exclusions) could delay development and job creation:

"We are concerned the change could add significantly to the department'workload, stretching the timeline for approval of important energy development projects with no clear return in environmental protection," he said. "Environmental review of offshore operations under existing rules is extensive, and decisions on categorical exclusions, which are intended to avoid repetitive analysis, require review."

"We are in favor of targeted changes to regulations that enhance safety and environmental protection, provided the changes allow for the efficient moving forward of energy development and job creation," noted Mr. Milito.

The move by the Department of the Interior comes after the release of a report by the White House Council on Environmental Quality( CEQ) on the former Minerals Management Service's National Environmental Protection Act (NEPA) program.

CEQ was established within the Executive Office of the President by Congress as part of NEPA and additional responsibilities were provided by the Environmental Quality Improvement Act of 1970. NEPA assigns CEQ the task of ensuring that Federal agencies meet their obligations under the Act.

The CEQ report on MMS found that it conducted numerous levels of extensive environmental reviews, relying upon the "tiering" process in which prior reviews should be incorporated into subsequent, site-specific analyses. When relying on tiering under NEPA, agencies must ensure that the environmental impacts are sufficiently evaluated and disclosed, says CEQ.

In the report, CEQ offers several recommendations, which BOEM has committed to using as guideposts.

Perform careful and comprehensive NEPA review of individual deepwater exploration activities, including site-specific information where appropriate.

Track and take into account all mitigation commitments made in NEPA and decision documents that are used to determine the significance of environmental impacts, from the initial Programmatic EIS through site-specific NEPA analyses and decisions.

Ensure that NEPA analyses fully inform and align with substantive decisions at all relevant decision points; that subsequent analyses accurately reflect and carry forward relevant underlying data; and that those analyses will be fully available to the public.

Ensure that NEPA documents provide decisionmakers with a robust analysis of reasonably foreseeable impacts, including an analysis of reasonably foreseeable impacts associated with low probability catastrophic spills for oil and gas activities on the Outer Continental Shelf.

Review the use of categorical exclusions for OCS oil and gas exploration and development in light of the increasing levels of complexity and risk and the consequent potential environmental impacts associated with deepwater drilling. Determine whether to revise these categorical exclusions.

Continue to seek amendments to the Outer Continental Shelf Lands Act to eliminate the 30-day decisional timeframe for approval of submitted Exploration Plans.

Evaluate supplementing existing NEPA practices, procedures, and analyses to reflect changed assumptions and environmental conditions, due to circumstances surrounding the BP Oil Spill.

Yesterday Director Bromwich and Secretary Salazar said that the Department of the Interior intends to conduct a new environmental analysis in the Gulf of Mexico that will help provide information to guide future leasing and development decisions. BOEM will publish a notice in the Federal Register of its intent to complete a supplemental environmental impact statement for the Gulf.

"In light of the increasing levels of complexity and risk and the consequent potential environmental impacts associated with deepwater drilling, we are taking a fresh look at the NEPA process and the types of environmental reviews that should be required for offshore activity," Secretary Salazar said. "We are committed to full compliance with both the letter and the spirit of NEPA. Our decision-making must be fully informed by an understanding of the potential environmental consequences of federal actions permitting offshore oil and gas development. "

"The NEPA review and Gulf environmental analysis are central elements of our ongoing reform of the nation's offshore energy development and regulatory program," Director Bromwich said. "We are building a more robust and aggressive independent oversight agency based on the development of new tools and enhanced legal and regulatory authorities, as well as on the more aggressive use of existing tools. These changes in our regulatory framework and approach will serve to hold offshore operators accountable and ensure that the industry and the country are fully prepared to deal with catastrophic blowouts and oil spills like the Deepwater Horizon."

BOEM will issue a Federal Register notice announcing a formal process for the comprehensive review and evaluation of its use of categorical exclusions in relation to offshore oil and gas exploration and drilling activities. While this review is underway, Director Bromwich noted, BOEM will be using categorical exclusions on a more limited basis. For actions that potentially involve more significant environmental risk, Interior officials intend to subject more decisions to environmental assessments.

The limited use of categorical exclusions will allow BOEM to move forward with new permits under the Secretary's NTL-05 and NTL-06, which notified offshore lessees that shallow water drilling activity could proceed as soon as they provide additional information about potential blowout scenarios and implement additional safety measures for rigs and platforms. Most deepwater drilling activities are currently prohibited by the moratorium, but Director Bromwich has instructed his staff not to use categorical exclusions to approve deepwater drilling activities similar to the Deepwater Horizon operation even after the moratorium is lifted.


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