A New Order Under the New Administration: The DOI Seeks to Streamline the Federal Leasing Process

On July 6, 2017, Department of the Interior (“DOI”) Secretary Ryan Zinke signed Secretarial Order No. 3354, “Supporting and Improving the Federal Onshore Oil and Gas Leasing Program and Federal Solid Mineral Leasing Program.” In an accompanying press release, Secretary Zinke touted the Order as a promise the DOI would “be a better neighbor in the new Trump Administration,” and noted that the Order is in “support [of] the President’s goal of American energy dominance.”

The Secretary also highlighted the importance of compliance with the Mineral Leasing Act (“MLA”), the existing federal law governing lease sales, which states “[l]ease sales shall be held for each State where eligible lands are available at least quarterly and more frequently if the Secretary of the Interior determines such sales are necessary [emphasis added].”¹ Once a parcel is leased, an Application for Permit to Drill (“APD”) is filed and there is a statutory thirty-day window to either issue the permit, or notify the applicant of a deferred decision and list the reasons for deferral.² As Secretary Zinke stated in an interview, the current average wait for APD approval is approximately 257 days, and exceeds 500 days at certain Bureau of Land Management (“BLM”) offices.³ Although the Secretary did not mention any pending litigation as grounds for his Order, it is notable that on August 11, 2016, prior to the issuance of the Order, the Western Energy Alliance filed a lawsuit against the Secretary and the BLM centered on the agency’s lack of compliance with the MLA timing mandates discussed above.⁴

Under the Federal Land Policy Management Act, the BLM has authority to decide which federal lands are available for public lease, and must develop resource management plans (“RMPs”) that “serve as land management blueprints.”⁵ The RMP process includes an opportunity for public comment and the preparation of an Environmental Impact Statement pursuant to the National Environmental Policy Act (“NEPA”).⁶ In 2010, as part of his oil and gas reform effort, then-Secretary Ken Salazar added new hurdles to the leasing process under Instruction Memorandum 2010-117 (the “IM”).⁷ In addition to introducing the Master Leasing Plan (“MLP”) concept, a pre-leasing mechanism to “reconsider[s] RMP decisions pertaining to leasing . . . at a site-specific level” required when four criteria are met, the IM also required separate lease parcel NEPA analysis in addition to the RMP NEPA required before a lease sale, to be conducted by an “Interdisciplinary Parcel Review Team (IDPR Team) of resource specialists.”⁸

Further, while stating on its face that there would be continued adherence to the MLA quarterly lease sale requirement, the IM directed state BLM offices to “develop a sales schedule with an emphasis on rotating lease parcel review responsibilities among field offices throughout the year to balance the workload,”⁹ effectively allowing BLM field offices in each state to hold sales at less than the quarterly required amount. Following implementation of the IM’s directives, the numbers reflect a decline in both new leases issued and APDs approved during the Obama Administration (fiscal years (“FY”) 2009-2016). Although federal oil and gas leasing statistics are necessarily dependent upon a variety of factors that affect whether drilling on federal lands is feasible–most significantly price (see the eleven-year low in oil prices in 2015)–the number of new leases issued by BLM hit a low of just 520 issued in FY 2016.¹⁰ In contrast, 2,416 new leases were issued during FY 2008, the last year of the Bush Administration.¹¹

The process surrounding federal oil and gas leases is complicated and time-consuming, but this Order likely signals a significant policy shift. Though some are sure to frame the Order’s goals in a negative light, the big picture reveals that revenue generated from lease sales is no small figure. The BLM, in a press release published earlier this year, stated that in 2015 its onshore oil and gas program “generat[ed] more than $2.1 billion in royalties, $30 million in rental payments, and $112 million in bonus bids,” an amount that is split between the U.S. and the state in which the development occurred.¹² Thus, accelerating lease sales in conformity with the MLA quarterly lease requirement and streamlining the process of APD permitting will reduce cost and time spent for both the government and the oil and gas industry, something that both parties can certainly benefit from, and may simultaneously have a beneficial impact on the economy of the state that hosts the development.¹³

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¹30 U.S.C. § 226(a)(1)(A) (2012).

²Id. at § 226 (p)(2).  

³Associated Press, Interior Secretary Zinke calls for quicker oil and gas permits, COLORADOAN (July 6, 2017, 9:45 PM), http://www.coloradoan.com/story/news/local/colorado/2017/07/07/interior-secretary-zinke-calls-quicker-oil-and-gas-permits/458054001/

⁴Western Energy Alliance v. Jewell, et al., No. CV-16-0912, 2017 WL 3588648 (D. N. M. Mar. 1, 2017), appeal docketed, No. 17-2005 (10th Cir. Jan. 18, 2017).  The Western Energy Alliance has since noted that they are open to discussion pending implementation of the Order.  See Associated Press, Interior Secretary Ryan Zinke pledges to streamline oil and gas permits, THE DENVER POST (July 6, 2017, 8:29 PM), http://www.denverpost.com/2017/07/06/ryan-zinke-interior-oil-gas-permits-quicker/

⁵BUREAU OF LAND MGMT., Planning and NEPA, https://www.blm.gov/programs/planning-and-nepa/planning-101/types-of-plans-of-plans (last visited August 21, 2017).

⁶Id.

⁷DEPT. OF THE INTERIOR, INSTRUCTION MEMORANDUM 2010-117 (BLM 2017), available at https://www.blm.gov/policy/im-2010-117-0

⁸Id.

⁹Id.

¹⁰BUREAU OF LAND MGMT., Oil and Gas Statistics, https://www.blm.gov/programs/energy-and-minerals/oil-and-gas/oil-and-gas-statistics (last visited August 21, 2017).

¹¹Id.

¹²Press Release, Bureau of Land Mgmt., BLM Releases Statistics on Oil and Gas Activity on Federal, Indian Lands (April 11, 2016), available at https://www.blm.gov/or/news/files/2015_Oil-GasStats_PR_FINAL_BLM.pdf

¹³See CONGRESSIONAL RESEARCH SERVICE, U.S. Crude Oil and Natural Gas Production in Federal and Nonfederal Areas (June 22, 2016), available at https://fas.org/sgp/crs/misc/R42432.pdf