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 Jan. 6.

“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 coming weeks I trust that further detail will be forthcoming regarding policy changes,” Freudenthal said.

Excertpts from the letter follow.

Dear Secretary Salazar:

… 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.

… 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.

… 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 naďve given the realities of the citizen suit provisions of the Equal Access to Justice Act and the ever-present “not in my backyard” interests…

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?

... 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.

… 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.

Best regards,

Dave Freudenthal, Governor

For the complete article see the 01-29-2010 issue.

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