Wednesday, February 28, 2018

Shale Law in the Spotlight: Overview of BLM Oil and Gas Leasing Program Reform

Written by Chloe Marie – Research Fellow

On March 28, 2017, President Donald Trump released Executive Order No. 13783 directing federal agencies to immediately review “all existing regulations, orders, guidance documents, policies, and  any other similar agency actions … that potentially burden the development or use of domestically produced energy resources, with particular attention to oil, natural gas, coal, and nuclear energy resources.”

In this regard, the U.S. Department of Interior Secretary Ryan Zinke ordered the Bureau of Land Management (BLM) to undertake oil and gas leasing program changes for the purpose of promoting the exploration and development of both federal onshore oil and gas resources and federal solid mineral resources, as a “corrective action … to strengthen American energy security and create American jobs.”

Consequently, BLM published a new Instruction Memorandum 2018-034 on January 31, 2018, amending and revising oil and gas leasing measures issued in Instruction Memorandum No. 2010-117. BLM declares that “this Instruction Memorandum (IM) sets out the policy of the Bureau of Land Management (BLM) 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 …”

This article will address the main changes relating to oil and gas leasing observed in the new Instruction Memorandum compared to the previous one.

Land use planning

The new Instruction Memorandum, like the prior one, stressed the importance of conducting a Resource Management Plan (RMP) for each fluid mineral leasing decision and the need to continuously update it in accordance with policy changes and new information relating to land use and management. In general, the RMP process allows BLM to better reflect the specific characteristics of land with potential for oil and gas development in the lease stipulations.

In the present memorandum, however, BLM highlights the fact that the amendment or revision of a RMP should not delay the oil and gas leasing process, and that BLM should “exercise its discretion consistent with existing RMPs and the State Director should consult with the Washington Office (WO) before deciding to defer leasing of any parcels.”

Master Leasing Plans

One of the most significant changes concerns the termination of the Master Leasing Plans (MLPs).
In the 2010 Instruction Memorandum, BLM introduced a new mechanism called the Master Leasing Plan that complements the RMP process by providing “additional planning, analysis, and decision-making” for certain areas. BLM pointed out that besides implementing the RMP process, additional planning and analysis may be needed prior to new oil and gas leasing “because of changing circumstances, updated policies, and new information” relating to land use and management.

The areas requiring a MLP include areas open for new leasing, areas whose mineral interests are federally-owned, areas having strong oil and gas development potential, and areas whose environment could become seriously impacted due to oil and gas development. BLM also authorized the Field Manager, District Management, or State Director to conduct additional planning and analysis in other areas, at their discretion.

However, following review of the MLPs carried out under Executive Order 13783, BLM found that MLPs “have created duplicate layers of NEPA review.” BLM thus decided to rescind the MLP procedures contained in Chapter V of BLM Handbook H-1624-1.

Lease Parcel Review

The new Instruction Memorandum references the need to hold quarterly lease sales as required in the Mineral Leasing Act and, in order to ensure the quarterly sales, BLM terminates the rotating schedule for lease sales implemented by the 2010 Instruction Memorandum. This rotating schedule was aimed to better distribute the lease parcel review responsibilities among field offices allowing them additional time to implement the parcel review policy.

Now, BLM states that the timeframe for parcel review for a specific lease sale cannot exceed 6 months before adding that “each state office will review all lands that are identified in [Expression of interests] that were submitted before the [Expression of interests] cutoff date for a particular quarterly lease sale and will offer all parcels determined to be eligible and available within the state office’s jurisdiction.”

Lease Sales and Lease Issuance

While the 2010 Instruction Memorandum instructed the state office to post the final sale notice at least 90 days prior to the sale date, the new Instruction Memorandum shorten the notification time period to 45 days prior to the start of the lease sale.

In addition, the new Instruction Memorandum reduces the allowable time to protest the lease sale to 10 days from the day the sale notice is posted in place of 30 days. BLM also clarifies that “if a state office is unable to resolve all protests before the date of a sale, the sale should proceed, and the state office should resolve the protests and decide whether to issue the affected leases within 60 days after the BLM receives full payment from the successful bidder for the bonus bids, first year rentals, and administrative fees.”

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