11/03/2020 - Legal Analysis - Regulatory Rollback - Student Work

Forest Service Proposal Deemphasizes Environmental Concerns to Streamline Oil and Gas Leasing Process

by Lindsay Williams, JD 2022

On September 1, 2020, the U.S. Forest Service (USFS) released a proposed rule changing the oil and gas leasing standards and procedures on National Forest System (NFS) lands (found at 36 CFR 228). The purpose of the rule is to “modernize existing procedures and streamline processes and promote efficiency.” It aligns the agency more closely with the Bureau of Land Management’s (BLM) policies for managing oil and gas leasing on these and other federal lands. Changes made include eliminating requirements for notice and comment of a decision to approve an oil and gas drilling plan and eliminating a National Environmental Policy Act (NEPA) compliance review of specific areas offered for lease after a whole-Forest analysis has been completed.

Environmental groups have criticized the rule as potentially opening up the National Forests Systems land to increased mineral extraction activities, disrupting ecosystems which are essential for absorbing and storing carbon in the fight against global climate change. Generally, the rule represents a shift to align USFS’s policies with those of BLM, despite the agencies’ different historical approaches to land use management.

This post provides background on the proposed rule, details its most substantive changes, analyzes they are likely to affect our forests, and identifies potential legal issues that could lead to litigation. To follow the development of this rule, visit our Regulatory Rollback Tracker page.

Background                                      

Several entities manage federal public lands, each with different missions and priorities. The National Park Service has a narrow mission with specific goals to preserve “unimpaired” natural and cultural resources. By contrast, both the Forest Service and the Bureau of Land Management have missions that allow for multiple, sometimes oppositional, uses of the land they manage. The Forest Service’s mission, which mirrors that of BLM, is to “sustain the health, diversity, and productivity of the Nation’s forests and grasslands to meet the needs of present and future generations.” The Forest Service’s “multiple use model” allows for resource extraction in addition to conservation and recreation; however, to date, fewer than one third of National Forests have had mineral extraction, although many are used for timber. In contrast, BLM is the federal agency primarily responsible for the management of mineral extraction on federally owned lands, in accordance with title 30 of the U.S. Code.

In 1920, the Mineral Leasing Act opened oil and gas resources on federal lands to leasing, and in 1987, the Federal Onshore Oil and Gas Leasing Reform Act amended the Mineral Leasing Act to prohibit the Department of the Interior from issuing oil and gas leases on Forest Service land without the consent of the United States Department of Agriculture. The current rules have been in place since 1990, with the exception of a minor modification in 2007.

In March 2017, President Trump issued Executive Order 13783, Promoting Energy Independence and Economic Growth. This executive order directed agencies to review regulations that burden the development of domestic mineral resources. In response, the USFS published an Advanced Notice of a Proposed Rule Making in 2018 that, while vague about specific changes, explicitly noted it was intended to “expedite energy-related projects” to “decrease permitting times” and “promote domestic oil and gas production.” This notice was followed by the proposed rule on September 21, 2020. The USFS has received over 3,000 comments on the proposed rule, many of which oppose the expansion of oil and gas drilling.

Substantive Changes to the Review Process

The new rule claims to “streamlin[e]” procedures without “a significant or measurable impact on rates of oil and gas production,” but there are substantial process differences that give more flexibility to the energy industry and reduce review. These changes, as many of the comments reflect, could lead to increased oil and gas leasing on National Forest System lands.

Leasing Analysis and Consent Decision

Section 228.103, previously found at 36 CFR 228.102, contains one of the most important changes in the new rule. Under the current rule, when specific lands are considered for energy extraction leasing, the Regional Forester authorizes the lease only if the environmental impacts of leasing those specific lands were adequately addressed in area or Forest-wide NEPA reviews and the lease is consistent with the Forest land and resource management plan. The new rule removes the Forest Service’s administrative review of the specific lease area, relying solely on the whole-area analysis conducted on an annual schedule. Furthermore, instead of providing that an authorized Forest Service officer must affirmatively approve the lease sale, it requires that the Forest Service officer withdraw consent prior to a Bureau of Land Management (BLM) lease sale if it does not approve of the lease sale. It is not clear if BLM will notify the Forest Service prior to a lease sale so that the Forest Service can withdraw consent, or if the Forest Service must actively track BLM lease sales in order to affirmatively withdraw consent.

The proposed rule offers several justifications for this decision in the preamble. The agency claims the process should change because  “the existing language has been subject to litigation.” It also argues the change “simplif[ies] the overall process” by only allowing one point for the Forest Service to make a consent decision. However, given the new affirmative step required of Forest Service to stop a plan and the removal of a significant step of review, this will likely lead to more mineral leasing with less oversight. It could also lead to more mistakes with regard to NEPA, as there will be fewer checks on compliance with the statute.

Review and Approval of Surface Use Plan of Operations

Surface Use Plans of Operations, discussed at 228.107, are the lessee’s plans to mitigate disturbances to the forest as a result of their project and to reclaim the land after the project concludes. The existing rule allows the Forest Service to reject surface use plans that otherwise meet applicable laws and lease requirements if the reviewing Forest Service officer determines they significantly impact the environment. The new proposal would remove this discretion, no longer requiring a Forest Service officer review of the acceptability of the plan’s environmental consequences. Additionally, the Forest Service would not have to provide public notice of an approval of a surface use plan of operations.

This, like the changes in section 228.103, reduces the burdens on industry and the discretion of Forest Service staff to take actions to protect the environment of National Forest Service lands. The Forest Service must still comply with NEPA, which offers a backstop. Although NEPA requires the agency to consider different options and their impact to the environment, it does not mandate a particular course of action (see Department of Transportation v. Public Citizen). This change will likely facilitate the leasing process and reduces public involvement in the process.

Bonds

There are several additions and modifications to the bonds process, discussed in the proposed rule at 228.109. Bonds are assets belonging to the operator held by an agency (usually BLM) to provide assurance that the operator will not abandon reclamation proceedings and leave the agency to cover that cost. The proposal changes the process for bonds for reclamation proceedings. Under both the new rule and the current rule, the Forest Service can require operators to increase the bond held with Bureau of Land Management or file a separate bond with the Forest Service if the Forest Service determines the BLM bond is insufficient. According to the proposed rule’s preamble, this frequently occurs. However, the proposed rule adds limits to this process. It adds consideration for the performance history and risk posed by the operator and says the amount cannot exceed the total estimated cost of reclamation based on surface disturbance.

It’s unclear what the precise effect of these changes would be. Allowing consideration of performance history and risk, which was not a listed factor for consideration in bond amounts previously, may allow Forest Service officers the discretion to lower bond requirements if they do not believe the operator is a high risk. This could leave taxpayers left to cover the costs if the low risk operators default and leave behind waste.

Environmental groups cite Allegheny National Forest as an example of the destruction that could result from increasing oil and gas leasing in Forest Service managed lands. Allegheny National Forest has unique mineral rights, the exploitation of which has led to abandoned wells and mining infrastructure. If the new rule increases leasing in other forests, and the Forest Service fails to require sufficient bonds in certain cases due to reliance on operators’ histories, that could become a pattern in other National Forests, reducing the potential of their other beneficial uses.

Notice of Non-Compliance

Section 228.112 details what happens when operators are not in compliance with their Surface Use Plan of Operations or other orders and notices. When the operator is unable to come into compliance within a “reasonable” deadline the Forest Service currently has no discretion to offer extensions except in cases of circumstances outside the operator’s control. The proposed rule removes that restriction and simply requires that the operator must provide a written rationale for delaying compliance, and the authorized Forest Service officer may extend the deadline at their discretion. This change could allow projects to remain in noncompliance for significantly longer than under the previous rule, which could cause environmental damage to the National Forest lands.

Intangible Changes

In addition to the substantive procedural changes, there are some notable changes in language and framing that indicate a shift for the agency towards more permissive leasing.

Removal of Reference to Environmental Procedures

References to the National Environmental Policy Act (NEPA) appear ten times in the current rule. Reference to the Endangered Species Act appears three times. The proposed rule completely removes any reference to either. The provided justification in the preamble is that “the proposed rule would remove references to other laws and regulatory requirements, particularly with respect to complying with NEPA and the Endangered Species Act and their implementing regulations, in favor of letting those laws and regulations speak for themselves and to reduce likelihood that direction could be confused in the future if other regulations change.” Although the preamble does state that despite the removal of the citations, agencies have to comply with all applicable laws, this comes on the heels of a pattern of regulatory rollbacks from the Trump administration. In July, the Council for Environmental Quality (CEQ) issued a final rule which relaxed many procedural safeguards that NEPA imposed and reduced both the scope of projects subject to NEPA and the alternatives that agencies must consider. The FWS proposed a new rule in September that would change the definition of critical habitat to allow more infrastructure in areas on which listed species depend. By removing reference to NEPA and the ESA at the same time as the administration is also making substantive changes to the regulations implementing both of those statutes to loosen their requirements, the agency appears to deemphasize consideration of the environmental effects of these projects in the Forest Service’s decision making process.

Alignment with the Bureau of Land Management

The Forest Service states that one of their purposes with the proposed rule is to “better align Forest Service regulations with those used by the Bureau of Land Management.” This is borne out throughout several provisions. The definitions section adds and modifies terms for consistency with BLM, the rule removes requirements for explicit consent from the Forest Service for a lease (as discussed above), removes discussion of supplemental surface plans in favor of “sundry notice” language preferred by BLM, among other changes. Although these provisions do not in and of themselves necessarily create new legal rights and obligations, they signal a shift in priorities to be more in lockstep with the organization primarily responsible for mineral leasing. This, alongside language revisions that deemphasize environmental protection processes, suggests a refocusing of priorities towards increased energy development.

Conclusion

While the agency states that the changes “would not materially alter the basic responsibility of either the agency or of oil and gas operators on NFS lands,” the overall tenor and some of the provisions seem to represent a fairly dramatic shift in the policy priorities of the Forest Service. Many of the comments have expressed opposition to this shift. If finalized as proposed, the rule could face challenges in court from environmental groups. If a final rule survives any challenges, the streamlined NEPA review processes could lead to increased litigation down the road questioning BLM and the Forest Service’s compliance with NEPA in individual lease sales and approvals.