BLM Field Offices Used Section 390 Categorical Exclusions for More Than One-Quarter of Their APDs, Although Benefits of Use Varied Widely across Field Offices

In September 2009, we reported that 26 of the 30 field offices with oil and  gas activities used almost 6,900 section 390 categorical exclusions to  approve oil-and-gas-related activities from fiscal year 2006 through fiscal  year 2008. Additionally, field office policies could contribute to  how often section 390 categorical exclusions were used. BLM’s Use of Section 390 Categorical Exclusions from Fiscal Year 2006 through Fiscal Year 2008 Often Did Not Comply with Either the Implementing Statute or Agency Guidance

In September 2009, we reported that BLM’s field offices used section 390  categorical exclusions to approve oil and gas activities in violation of the  law and also failed to follow agency guidance. In  some instances, violations we found may have thwarted NEPA’s twin  aims of ensuring that both BLM and the public were fully informed of the  environmental consequences of BLM’s actions. Specifically, BLM’s guidance at the time said little,  if anything, about (1) the documentation needed to support a decision to  use a section 390 categorical exclusion or (2) the proper circumstances  for using section 390 categorical exclusions to approve modifications to  existing APDs through “sundry notices.” Furthermore, BLM headquarters  and state offices we spoke with had generally not provided any oversight  or review of the field offices’ actions in using section 390 categorical  exclusions that could have ensured compliance with the law or BLM  guidance. Lack of Clarity in the Law and in BLM Guidance Raised Serious Concerns about Section 390 Categorical Exclusions

We reported in September 2009 that the lack of clarity in section 390 of  the Energy Policy Act of 2005 and in BLM’s implementing guidance led to  serious concerns on the part of industry, environmental groups, BLM  officials, and others about when and how section 390 categorical  exclusions should be used to approve oil and gas development. Specifically, these concerns included the following:    Key elements of section 390 of the Energy Policy Act of 2005 were  undefined, leading to fundamental questions about what section 390  categorical exclusions were and how they should be used. This lack  of direction left these elements open to differing interpretations,  debate, and litigation, leading to serious concerns that BLM was using  section 390 categorical exclusions in too many—or too few— instances. BLM officials, environmental groups, industry groups, and  others raised serious concerns with the law as a whole.   Concerns about how to interpret and apply key terms that describe  the conditions that must be met when using a section 390 categorical  exclusion. Vague or nonexistent definitions of key terms in the law and  BLM guidance led to varied interpretations among field offices and  concerns about misuse and a lack of transparency. In addition, to improve BLM  field offices’ implementation of section 390 categorical exclusions, we  recommended that BLM take the following three actions:  issue detailed and explicit guidance addressing the gaps and  shortcomings in its guidance;   provide standardized templates or checklists for each of the five types  of section 390 categorical exclusions, which would specify, at  minimum, what documentation is required to justify their use; and   develop and implement a plan for overseeing the use of section 390  categorical exclusions to ensure compliance with both law and  guidance. BLM Took Actions in Response to Litigation and Our Report, but These Actions Have Been Affected by a Recent Court Decision

While we were working on our September 2009 report, the exact meaning  of the phrase “shall be subject to a rebuttable presumption that the use of  a categorical exclusion under the National Environmental Policy Act of  1969 (NEPA) would apply” was in dispute in a lawsuit in federal court. In May 2010, BLM issued “Instruction Memorandum No. This draft second instruction  memorandum was undergoing review by the department when, on  August 12, 2011, a decision was reached in Western Energy Alliance v.  Salazar. The court held that the instruction  memorandum constituted a regulation that BLM adopted without following  proper rule-making procedures, and the court issued a nationwide  injunction blocking implementation of the memorandum. According to a BLM official, the ruling has  prevented BLM from implementing the parts of the May 2010 instruction  memorandum directly related to extraordinary circumstances and the use  of section 390 CX2 and CX3 and also called into question the issuance of  the second instruction memorandum aimed at further addressing our  recommendations. I would be  pleased to answer any questions that you may have at this time.
Why GAO Did This Study

The Energy Policy Act of 2005 was enacted in part to expedite domestic oil and gas development. Section 390 of the act authorized the Department of the Interior's Bureau of Land Management (BLM) to use categorical exclusions to streamline the environmental analysis required under the National Environmental Policy Act of 1969 (NEPA) when approving certain oil and gas activities. Numerous questions have been raised about how and when BLM should use these section 390 categorical exclusions. In September 2009, GAO reported on BLM's first 3 years of experience-- fiscal years 2006 through 2008--using section 390 categorical exclusions. This testimony is based on GAO's September 2009 report (GAO-09-872) and updated with information on court decisions that have been reached since the report was issued. The testimony focuses on (1) the extent to which BLM used section 390 categorical exclusions and the benefits, if any, associated with their use; (2) the extent to which BLM complied with the Energy Policy Act of 2005 and agency guidance; (3) key concerns, if any, associated with section 390 categorical exclusions; and (4) how BLM has responded to GAO's recommendations and other recent developments. For its September 2009 report, GAO analyzed a nongeneralizable random sample of 215 section 390 categorical exclusion decision documents from all BLM field offices that used section 390 categorical exclusions and interviewed agency officials and others.

What GAO Found

GAO's analysis of BLM field office data showed that section 390 categorical exclusions were used to approve almost 6,900 oil-and-gas-related activities from fiscal year 2006 through fiscal year 2008. Nearly 6,100 of these categorical exclusions were used for drilling permits and the rest for other nondrilling activities. Most BLM officials GAO spoke with said that section 390 categorical exclusions increased the efficiency of certain field office operations, but it was not possible to quantify these benefits. GAO reported that BLM's use of section 390 categorical exclusions through fiscal year 2008 often did not comply with either the law or BLM's guidance. First, GAO found several types of violations of the law, including approving projects inconsistent with the law's criteria and drilling a new well after mandated time frames had lapsed. Second, GAO found numerous examples where officials did not correctly follow agency guidance, most often by failing to adequately justify the use of a categorical exclusion. A lack of clear guidance and oversight contributed to the violations and noncompliance. Many instances of noncompliance were technical in nature, whereas others were more significant and may have thwarted NEPA's twin aims of ensuring that BLM and the public are fully informed of the environmental consequences of BLM's actions. In September 2009, GAO reported that a lack of clarity in section 390 and BLM's guidance had caused industry, environmental groups, BLM officials, and others to raise serious concerns about the use of section 390 categorical exclusions. First, fundamental questions about what section 390 categorical exclusions were and how they should be used led to concerns that BLM might have been using these categorical exclusions in too many--or too few--instances. Second, specific concerns were raised about key concepts underlying the law's description of certain section 390 categorical exclusions. Third, vague or nonexistent definitions of key terms in the law and BLM guidance that describe the conditions to be met when using a section 390 categorical exclusion led to varied interpretations among field offices and concerns about misuse and a lack of transparency. As a result, GAO suggested that Congress may want to consider amending the act to clarify section 390, and GAO recommended that BLM clarify its guidance, standardize decision documents, and ensure compliance through more oversight. The Department of the Interior concurred with GAO's recommendations. In May 2010, in response to a court settlement and GAO's recommendations, BLM issued a new instruction memorandum substantially addressing the gaps and shortcomings in BLM's guidance that GAO had identified. In addition, BLM was developing a second instruction memorandum to address GAO's recommendation that it standardize decision documents when, on August 12, 2011, a decision was reached in Western Energy Alliance v. Salazar. The court held that the May 2010 instruction memorandum constituted a regulation that BLM adopted without using proper rule-making procedures and issued a nationwide injunction blocking the memorandum's implementation. According to a BLM official, the ruling has prevented BLM from implementing key parts of the memorandum and called into question the issuance of the second memorandum aimed at further addressing GAO's recommendations.

What GAO Recommends

GAO is making no new recommendations at this time.