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68-267 PDF 2012

IMPACTS TO ONSHORE JOBS, 

REVENUE, AND ENERGY: 

REVIEW AND STATUS OF SEC. 390 

CATEGORICAL EXCLUSIONS OF 

THE ENERGY POLICY ACT OF 2005 

OVERSIGHT HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES 

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

Friday, September 9, 2011 

Serial No. 112-58 

Printed for the use of the Committee on Natural Resources 

( 

Available via the World Wide Web: http://www.fdsys.gov 

or 

Committee address: http://naturalresources.house.gov 

(II) 

COMMITTEE ON NATURAL RESOURCES 

DOC HASTINGS, WA, Chairman 

EDWARD J. MARKEY, MA, Ranking Democrat Member 

Don Young, AK 

John J. Duncan, Jr., TN 

Louie Gohmert, TX 

Rob Bishop, UT 

Doug Lamborn, CO 

Robert J. Wittman, VA 

Paul C. Broun, GA 

John Fleming, LA 

Mike Coffman, CO 

Tom McClintock, CA 

Glenn Thompson, PA 

Jeff Denham, CA 

Dan Benishek, MI 

David Rivera, FL 

Jeff Duncan, SC 

Scott R. Tipton, CO 

Paul A. Gosar, AZ 

Rau ́l R. Labrador, ID 

Kristi L. Noem, SD 

Steve Southerland II, FL 

Bill Flores, TX 

Andy Harris, MD 

Jeffrey M. Landry, LA 

Charles J. ‘‘Chuck’’ Fleischmann, TN 

Jon Runyan, NJ 

Bill Johnson, OH 

Dale E. Kildee, MI 

Peter A. DeFazio, OR 

Eni F.H. Faleomavaega, AS 

Frank Pallone, Jr., NJ 

Grace F. Napolitano, CA 

Rush D. Holt, NJ 

Rau ́l M. Grijalva, AZ 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Dan Boren, OK 

Gregorio Kilili Camacho Sablan, CNMI 

Martin Heinrich, NM 

Ben Ray Luja ́n, NM 

John P. Sarbanes, MD 

Betty Sutton, OH 

Niki Tsongas, MA 

Pedro R. Pierluisi, PR 

John Garamendi, CA 

Colleen W. Hanabusa, HI 

Vacancy 

Todd Young, Chief of Staff 

Lisa Pittman, Chief Counsel 

Jeffrey Duncan, Democrat Staff Director 

David Watkins, Democrat Chief Counsel 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

DOUG LAMBORN, CO, Chairman 

RUSH D. HOLT, NJ, Ranking Democrat Member 

Louie Gohmert, TX 

Paul C. Broun, GA 

John Fleming, LA 

Mike Coffman, CO 

Glenn Thompson, PA 

Dan Benishek, MI 

David Rivera, FL 

Jeff Duncan, SC 

Paul A. Gosar, AZ 

Bill Flores, TX 

Jeffrey M. Landry, LA 

Charles J. ‘‘Chuck’’ Fleischmann, TN 

Bill Johnson, OH 

Doc Hastings, WA, ex officio 

Peter A. DeFazio, OR 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Dan Boren, OK 

Gregorio Kilili Camacho Sablan, CNMI 

Martin Heinrich, NM 

John P. Sarbanes, MD 

Betty Sutton, OH 

Niki Tsongas, MA 

Vacancy 

Edward J. Markey, MA, ex officio 

(III) 

CONTENTS 

Page 

Hearing held on Friday, September 9, 2011 .......................................................... 1 

Statement of Members: 

Lamborn, Hon. Doug, a Representative in Congress from the State of 

Colorado ......................................................................................................... 1 

Prepared statement of ............................................................................... 2 

Holt, Hon. Rush D., a Representative in Congress from the State of 

New Jersey ................................................................................................... 7 

Prepared statement of ............................................................................... 8 

Statement of Witnesses: 

Bolles, Randy, Manager, Regulatory Affairs Western Division, Devon 

Energy Corporation ...................................................................................... 9 

Prepared statement of ............................................................................... 11 

Response to questions submitted for the record ..................................... 12 

Coleman, W. Jackson, Managing Partner and General Counsel, 

EnergyNorthAmerica, LLC .......................................................................... 20 

Prepared statement of ............................................................................... 22 

Response to questions submitted for the record ..................................... 24 

Gaffigan, Mark, Managing Director, Natural Resources and Environment, 

U.S. Government Accountability Office ...................................................... 26 

Prepared statement of ............................................................................... 27 

GAO Highlights ......................................................................................... 34 

Response to questions submitted for the record ..................................... 35 

Pool, Mike, Deputy Director, Bureau of Land Management, U.S. 

Department of the Interior ........................................................................... 4 

Prepared statement of ............................................................................... 5 

Response to questions submitted for the record ..................................... 51 

Sgamma, Kathleen M., Director of Government & Public Affairs, Western 

Energy Alliance ............................................................................................. 15 

Prepared statement of ............................................................................... 16 

Response to questions submitted for the record ..................................... 18 

(1) 

OVERSIGHT HEARING ON ‘‘IMPACTS TO 

ONSHORE JOBS, REVENUE, AND ENERGY: 

REVIEW AND STATUS OF SEC. 390 CATEGORICAL EXCLUSIONS OF THE ENERGY 

POLICY ACT OF 2005.’’ 

Friday, September 9, 2011 

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Natural Resources 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

1324, Longworth House Office Building, Hon. Doug Lamborn 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Lamborn, Duncan, Johnson, Flores, 

Costa, and Holt. 

STATEMENT OF HON. DOUG LAMBORN, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF COLORADO 

Mr. LAMBORN. The Subcommittee will come to order. The Chairman notes the presence of a quorum, which under Committee Rule 

3(e) is two Members, and I note that the Ranking Member, Representative Holt of New Jersey, is detained because he is presenting an amendment on the Floor. He will be here as soon as he 

is able, and when he comes, he will be given discretion to give his 

opening statement whenever it fits his schedule the best. 

The Subcommittee on Energy and Mineral Resources is meeting 

today to hear testimony on an oversight hearing on the ‘‘Impacts 

to Onshore Jobs, Revenue, and Energy: The Review and Status of 

Section 390 Categorical Exclusions of the Energy Policy Act of 

2005.’’ 

Under Committee Rule 4(f), opening statements are limited to 

the Chairman and Ranking Member of the Subcommittee. However, I ask unanimous consent to include any other Members’ opening statements in the hearing record if submitted to the clerk by 

close of business today. Hearing no objection, so ordered. 

And I now recognize myself for 5 minutes. Today the Subcommittee is meeting to examine the use of categorical exclusions 

for onshore oil and natural gas development. In 2005 the Energy 

Policy Act of 2005 was signed into law. In order to expedite the development of domestic energy production and the creation of American jobs, Section 390 of the Energy Policy Act directed the Bureau 

of Land Management to use categorical exclusions to expedite 

energy supplies by limiting redundant environmental analysis and 

red tape. Categorical exclusions are only used on land where the 

environmental impact is minor, the fields have already been developed, or where drilling was already analyzed under the National 

2 

Environmental Policy Act. In order to lessen our dependence on foreign oil, create jobs for Americans, and secure our energy future, 

Congress should take steps to streamline the process and enable 

energy projects to move forward without being subject to unnecessary bureaucratic delays as well as costly litigation and a burdensome permitting process. 

Categorical exclusions are just one tool Congress has given the 

Bureau of Land Management in order to accomplish this goal. 

Western States, such as Wyoming, Utah, and New Mexico, have 

greatly benefited from the use of categorical exclusions. A 2009 

GAO report showed that Section 390 categorical exclusions were 

used to approve approximately 6,100 of 22,000 applications for 

drilling permits. In Wyoming alone, 87 percent of new gas wells 

drilled in the Upper Green River Basin from 2007 to 2010 qualified 

for expedited development under categorical exclusions. Each of 

these wells brought increased domestic energy production and 

American jobs to the region. 

Categorical exclusions have been successful in expediting American energy production and are an essential part of streamlining an 

already overly burdensome bureaucratic energy permitting process. 

The Obama Administration took full advantage of categorical exclusions after passing the $787 billion American Recovery and Reinvestment Act when the Administration used more than 179,000 

categorical exclusions for projects funded by stimulus money. Oddly 

enough, while categorical exclusions were good enough to use to 

quickly make the Administration’s taxpayer-funded stimulus 

projects shovel ready, the Obama Administration apparently does 

not find them acceptable for American oil and natural gas energy 

projects. 

In 2010, conceding to pressure from environmental groups, the 

Obama Administration adopted new rules to essentially halt the 

use of Section 390 categorical exclusions for energy projects, and 

they reinstated the burdensome and duplicative review process 

that has plagued the energy industry with delays, lengthy review 

processes, and onerous lawsuits. Fortunately, these rules were 

overturned by a U.S. district judge that rejected the Obama Administration’s arguments and reinstated the categorical exclusion provisions. 

Today’s hearing will focus on the use of categorical exclusions 

and their impacts on onshore jobs, revenue, and American energy 

production. I want to thank the witnesses for taking the time to 

appear before our Committee today, and I look forward to your testimony. 

[The prepared statement of Mr. Lamborn follows:] 

Statement of The Honorable Doug Lamborn, Chairman, 

Subcommittee on Energy and Mineral Resources 

Today the Subcommittee is meeting to examine the use of categorical exclusions 

for onshore oil and natural gas development. 

In 2005, the Energy Policy Act of 2005, or EPAct, was signed into law. In order 

to expedite the development of domestic energy production and the creation of 

American jobs, section 390 of EPAct directed the Bureau of Land Management to 

use categorical exclusions to expedite energy supplies by limiting redundant environmental analysis and red tape. Categorical exclusions are only used on land 

where the environmental impact is minor, the fields have already been developed 

3 

or where drilling was already analyzed under the National Environmental Policy 

Act. 

In order to lessen our dependence on foreign oil, create jobs for Americans, and 

secure our energy future, Congress should take steps to streamline the process and 

enable energy projects to move forward without being subject to bureaucratic delays, 

costly litigation, and a burdensome permitting process. Categorical exclusions are 

just one tool Congress has given the Bureau of Land Management in order to accomplish this goal. 

Western states such as Wyoming, Utah, and New Mexico have greatly benefitted 

from the use of categorical exclusions. A 2009 GAO report showed that Section 390 

categorical exclusions were used to approve approximately 6,100 of 22,000 applications for drilling permits. In Wyoming alone, 87% of new gas wells drilled in the 

Upper Green River Basin from 2007 to 2010 qualified for expedited development 

under categorical exclusions. Each of these wells brought increased domestic energy 

production and American jobs to the region. Categorical exclusions have been successful in expediting American energy production and are an essential part of 

streamlining an already overly burdensome, bureaucratic, energy permitting process. 

The Obama Administration took full advantage of categorical exclusions after 

passing the $787 billion American Recovery and Reinvestment Act, when the Administration used more than 179,000 categorical exclusions for projects funded by 

stimulus money. 

While categorical exclusions were good enough to use to quickly make the Administration’s taxpayer funded stimulus projects ‘‘shovel ready,’’ the Obama Administration apparently did not find them acceptable for American oil and natural gas energy projects. In 2010, conceding to pressure from environmental groups, the Obama 

Administration adopted new rules to essentially halt the use of section 390 categorical exclusions for energy projects and reinstated the burdensome and duplicative 

review process that has plagued the energy industry with delays, lengthy review 

processes, and onerous lawsuits. 

Fortunately, these rules were overturned by a US District judge that rejected that 

Obama Administration’s arguments and reinstated the categorical exclusion provisions. 

Today’s hearing will focus on the use of categorical exclusions and their impacts 

on onshore jobs, revenue, and American energy production. I want to thank the witnesses for taking the time to appear before our committee today and look forward 

to your testimony. 

Mr. LAMBORN. We will now hear from our witnesses, and for the 

sake of consolidating the time because we are going to unfortunately have a series of votes from about 10:30 or 10:40, as late as 

possibly to noon, so I want to ask that we have all the witnesses 

come forward. There are a total of four. They will include Mr. Mike 

Pool, Deputy Director of the Bureau of Land Management; Mr. 

Randy Bolles, Manager, Regulatory Affairs of Devon Energy; Miss 

Kathleen Sgamma, Director of Governmental Affairs, Western 

Energy Alliance; Mr. W. Jackson Coleman, Managing Partner and 

General Counsel of EnergyNorthAmerica LLC; and Mr. Mark 

Gaffigan, Managing Director, Natural Resources and Environment 

Division of the U.S. Government Accountability Office. Excuse me, 

I guess that is five total. 

Like all our witnesses, your written testimony will appear in full 

in the hearing record, so I ask that you keep your oral statement 

to 5 minutes, as outlined in our invitation letter to you, and under 

Committee Rule 4(a). 

Our microphones are not automatic, so you have to press the button to turn them on. I will explain how the timing lights work. 

When you begin talking, we will start the timer and a green light 

will appear. After 4 minutes, a yellow light comes on, and after 5 

minutes a red light comes on. You may complete your sentence, but 

at that time I ask that you stop. 

4 

Mr. Pool, you may begin. Thank you for being here. 

STATEMENT OF MIKE POOL, DEPUTY DIRECTOR, 

BUREAU OF LAND MANAGEMENT 

Mr. POOL. Mr. Chairman and members of the Subcommittee, 

thank you for the opportunity to discuss the Bureau of Land Management’s use of categorical exclusions established by Section 390 

of the Energy Policy Act of 2005. The Mineral Leasing Act of 1920 

establishes the statutory framework to promote the exploration and 

development of oil and natural gas from the Federal onshore mineral estate. Secretary of the Interior Ken Salazar has emphasized 

that as we move forward toward the new energy frontier, the development of conventional energy resources from BLM-managed public lands will continue to play a critical role in meeting the Nation’s 

energy needs. 

Facilitating the safe, responsible, and efficient development of 

these domestic oil and gas resources is the BLM’s responsibility, 

and part of the Administration’s broad energy strategy to protect 

consumers and help reduce our dependence on foreign oil. 

The BLM is responsible for protecting the resources and managing the uses of our Nation’s public lands. In Fiscal Year 2010, 

onshore oil production from public lands increased by 5 million barrels from the previous fiscal year as more than 114 million barrels 

of oil were produced from BLM managed mineral estate, the most 

since 1997. At the same time, the nearly 3 trillion cubic feet of natural gas produced from public lands made 2010 the second most 

productive year in natural gas production on record. In 2010 conventional energy development from public lands produced 14.1 percent of the Nation’s natural gas and 5.7 percent of its domestically 

produced oil. 

The Energy Policy Act of 2005 was enacted in part to promote 

and expedite oil and gas development. Section 390 of the Energy 

Policy Act establishes statutory authority for the use of categorical 

exclusions for five types of oil and gas development activities. The 

purpose of Section 390 CXs is to streamline approval of exploration 

and development of oil and gas on public lands and U.S. Forest 

Service managed lands by allowing designated actions to proceed 

without the need for further environmental analysis. 

In 2009, the Government Accountability Office issued a report 

entitled ‘‘Energy Policy Act of 2005: Greater Clarity Needed to Address Concerns with Categorical Exclusions for Oil and Gas Development under Section 390 of the Act.’’ The report found that use 

of Section 390 CXs by BLM field offices was inconsistent and recommended that the BLM issue detailed and explicit guidance to 

address the gaps and shortcomings in its Section 390 guidance. The 

report also recommended that Congress consider amending the Act 

to clarify Section 390 of the Energy Policy Act. According to the 

GAO, whether or not the Energy Policy Act required the BLM to 

conduct an extraordinary circumstances review for applications for 

permit to drill remains an open question. 

On October 21st, 2010, the Western Energy Alliance filed suit 

against BLM, challenging its guidance on the application of Section 

390 CXs. Without deciding the merits of WEA’s challenge to BLM’s 

interpretation of Section 390 of the Energy Policy Act, the U.S. DisVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6602 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
5 

trict Court for Wyoming did decide on August 12, 2011, that the 

BLM had failed to give the public notice and an opportunity to 

comment on the proposed changes before making the May 2010 

guidance effective. 

The court’s order directed BLM to stop using the May 2010 guidance when considering an applicant’s request to undertake activities described in Section 390. This guidance had directed BLM field 

offices to determine whether further environmental reviews were 

required. The BLM informs its field offices of the court’s direction 

on August 19, 2011, effectively reverted back to the 2008 policy. 

In the near term, BLM plans to initiate a rulemaking effort to 

establish guidelines for using the Section 390 CXs as part of the 

BLM’s oil and gas regulations. The regulatory process includes 

public notice and opportunity for comment. 

Consistent with the framework presented by the President’s 

blueprint for a secure energy future, the BLM is working to secure 

our energy future by ensuring that potential oil and gas development on our public lands is realized. 

Mr. Chairman, thank you for the opportunity to testify on BLM’s 

use of the Energy Policy Act of 2005, Section 390 CX authorities. 

I will be pleased to answer any questions you may have. 

[The prepared statement of Mr. Pool follows:] 

Statement of Mike Pool, Deputy Director, Bureau of Land Management, 

U.S. Department of the Interior 

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity 

to discuss the Bureau of Land Management’s (BLM) use of Categorical Exclusions 

(CX) established by Section 390 of the Energy Policy Act of 2005 (EPAct). These CXs 

establish a rebuttable presumption that certain oil or gas exploration and development activities conducted under the Mineral Leasing Act are categorically excluded 

from additional National Environmental Policy Act (NEPA) review. 

Background 

The Mineral Leasing Act of 1920 establishes the statutory framework to promote 

the exploration and development of oil and natural gas from the Federal onshore 

mineral estate. Secretary of the Interior Ken Salazar has emphasized that as we 

move toward the new energy frontier, the development of conventional energy resources from BLM-managed public lands will continue to play a critical role in meeting the Nation’s energy needs. Facilitating the safe, responsible, and efficient development of these domestic oil and gas resources is the BLM’s responsibility and part 

of the Administration’s broad energy strategy—outlined in the President’s Blueprint 

for a Secure Energy Future—that will protect consumers and help reduce our dependence on foreign oil. Well-paying jobs are often associated with oil and gas exploration and development, and provide needed revenues and economic activity in 

many communities. Royalties from onshore public land oil and gas development exceeded $2.5 billion in Fiscal Year 2010. Approximately half of that total was paid 

directly to the states in which the development occurred. 

The BLM is responsible for protecting the resources and managing the uses of our 

nation’s public lands, which are located primarily in 12 western states, including 

Alaska. The BLM administers over 245 million surface acres and approximately 700 

million acres of onshore subsurface mineral estate throughout the Nation. In fiscal 

year 2010, onshore oil production from public lands increased by 5 million barrels 

from the previous fiscal year as more than 114 million barrels of oil were produced 

from the BLM-managed mineral estate—the most since 1997. At the same time, the 

nearly 3 trillion cubic feet of natural gas produced from public lands made 2010 the 

second-most productive year of natural gas production on record. In 2010, conventional energy development from public lands produced 14.1 percent of the Nation’s 

natural gas and 5.7 percent of its domestically-produced oil. 

As of August 1, 2011, the BLM processed more applications for permit to drill 

(APD) than had been received during the year, thereby continuing to reduce the 

number of pending applications. Approximately 7,000 APDs on BLM and Indian 

lands have been approved by BLM, but have not yet been drilled by industry. We 

6 

are achieving these permitting milestones by continuing to work to process APDs 

in a timely fashion. 

Fundamental to all of the BLM’s management actions—including authorization of 

oil and gas exploration and development—is the agency’s land use planning and 

NEPA processes. These open, public processes are ones in which proposals for managing particular resources are made known to the public in advance of taking action. The BLM is committed to providing the environmental review and public involvement opportunities required by NEPA for proposals for the use of BLM-managed lands. As required under the Federal Land Policy and Management Act, the 

BLM strives to achieve a balance between oil and gas production and development 

of other natural resources and protection of the environment; the land-use planning 

and NEPA processes are vital tools used to achieve this statutory mandate. 

Energy Policy Act 

The Energy Policy Act of 2005 was enacted in part to promote and expedite oil 

and natural gas development. Section 390 of the Energy Policy Act establishes statutory authority for the use of ‘‘categorical exclusions’’ (CXs) from further analysis 

under NEPA for five types of oil and gas development activities. The purpose of Section 390 CXs is to streamline approval of exploration and development of oil and 

gas on BLM public lands and U.S. Forest Service lands, by allowing designated actions to proceed without further environmental analysis. 

On September 30, 2005, the BLM issued formal guidance (IM 2005–247) directing 

field offices that the use of these Section 390 CXs was mandatory. This guidance 

was issued without providing public notice and an opportunity to comment. The 

guidance specified that unlike categorical exclusions administratively established 

under NEPA, the new Section 390 CXs were established by statute and not subject 

to the Council on Environmental Quality’s (CEQ’s) NEPA implementing regulations. 

Additionally, the guidance stated that no review for ‘‘extraordinary circumstances’’ 

was required—i.e., circumstances when further review under NEPA would still be 

warranted despite the activity falling into a category that is otherwise excluded 

from such review. 

In 2008, the policy was modified to clarify that use of the Section 390 CXs under 

the EPAct is discretionary, rather than mandatory. This policy was incorporated 

into the BLM’s 2008 NEPA Handbook. However, the 2008 NEPA Handbook retained 

a provision that eliminates the requirement to conduct an ‘‘extraordinary circumstances’’ review when applying CXs to these statutorily-identified oil and gas development activities. 

In 2009, the Government Accountability Office (GAO) issued a report entitled ‘‘Energy Policy Act of 2005: Greater Clarity Needed to Address Concerns with Categorical 

Exclusions for Oil and Gas Development under Section 390 of the Act’’ (GAO–09– 

872). The report found that the use of Section 390 CXs by BLM field offices was 

somewhat inconsistent and recommended that Congress consider clarifying Section 

390 of EPAct. The GAO also recommended that the BLM issue detailed and explicit 

guidance to address the gaps and shortcomings in its Section 390 guidance. Commenting specifically on the use of extraordinary circumstances reviews, the GAO report noted that, although EPAct does not state whether Section 390 CXs are subject 

to extraordinary circumstances review, the lack of direction in EPAct has led to ‘‘differing interpretations, debate, and litigation, and more generally, led to serious concerns that BLM is using section 390 categorical exclusions in too many—or too 

few—instances.’’ 

Court Actions 

In 2008, the Nine Mile Canyon Coalition, together with the Southern Utah Wilderness Alliance and the Wilderness Society, challenged the BLM’s decision to issue 

30 permits to drill gas wells in Utah without requiring further environmental review, consistent with agency’s 2005 Section 390 CX guidance. The BLM settled this 

litigation, agreeing, in part, to issue guidance directing its field offices to consider 

whether a particular proposal covered by a Section 390 CX presented ‘‘extraordinary 

circumstances’’ that would require further environmental analysis. 

Further, the BLM agreed that the agency would not use a Section 390 CX in Utah 

until it issued the guidance directing field offices to consider whether a proposal covered by a Section 390 CX presented ‘‘extraordinary circumstances.’’ The BLM included these terms, as well as more specific provisions, in its May 17, 2010 guidance 

to its field offices (IM 2010–118). In response, the Western Energy Alliance (WEA) 

sued to prevent the BLM from implementing its May 2010 guidance. 

Without deciding the merits of WEA’s challenge to BLM’s interpretation of Section 

390 of the Energy Policy Act, the U.S. District Court for Wyoming did decide on August 12, 2011, that the BLM had failed to give the public notice and an opportunity 

7 

to comment on the proposed changes before making the May 17, 2010, changes effective. The Court’s order directed the BLM to stop using the May 2010 guidance 

when considering an applicant’s request to undertake activities described in Section 

390—guidance that directed BLM field offices to determine whether further environmental reviews were required. The BLM issued the Court’s direction to its field offices on August 19, 2011. 

Current Status 

In the near term, the BLM plans to initiate a rulemaking effort to establish guidelines for using the Section 390 CXs as part of the BLM’s oil and gas regulations. 

The regulatory process includes public notice and opportunity for comment, and we 

anticipate a high level of interest and participation. We look forward to a continued 

dialogue with many interested parties. 

Conclusion 

The BLM remains committed to encouraging the safe, responsible, and efficient 

development of energy resources on public lands. Mr. Chairman, thank you for the 

opportunity to testify on the BLM’s use of the Energy Policy Act of 2005 Section 

390 CX authorities. I will be pleased to answer any questions you may have. 

Mr. LAMBORN. Thank you for your testimony. I would now like 

to recognize the Ranking Member for his opening statement. 

STATEMENT OF HON. RUSH D. HOLT, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF NEW JERSEY 

Mr. HOLT. I thank the Chair for his courtesy, and by way of explanation I should point out that I had an amendment on the Floor 

of the House at exactly the time this Committee convened. It just 

happened that way. So I thank the witnesses for appearing today, 

and I just wanted to set the hearing in some context. 

The National Environmental Policy Act allows all interested 

Americans to have their voices heard on how their public lands are 

managed and allows for agencies like the Bureau of Land Management to make informed decisions about potential environmental 

impacts of their actions. When Congress takes steps to limit NEPA 

review, what often results is environmental harm, less public participation, and more litigation, which everyone should want to 

avoid. 

Section 390 of the Energy Policy Act of 2005 is an example of 

this kind of policy. The categorical exclusions established in Section 

390 to expedite the approval of oil and gas drilling permits were 

unnecessary and unwise. They are unnecessary because the industry is producing oil and gas on really a small fraction, less than 30 

percent, of the public lands that are under lease on shore. In 2010, 

for example, BLM approved approximately 4,100 new permits to 

drill, but the oil and gas industry only drilled 1,500 wells. There 

is no shortage of places where the oil and gas industry could be 

drilling or could start drilling right away. 

Section 390 was also unwise because oil and gas exploration has 

real environmental impacts. There is no question that the industry 

has made great strides in safety and environmental sensitivity. 

Under NEPA the BLM has the authority to establish categorical 

exclusions for activities that don’t, quote, individually or cumulatively have a significant effect on the human environment. 

However, in Section 390 of the bill, of the Act, Congress established a set of legislative categorical exclusions for activities that 

have been documented by the Government Accountability Office to 

have environmental impacts, such as ozone levels that have 

8 

reached or exceeded allowable levels, habitat fragmentation that 

have clearly harmed wildlife. 

The GAO has documented that BLM’s implementation of Section 

390 was inconsistent from one office to another, often resulted in 

violations of NEPA. The previous Administration also actually prohibited the BLM from considering extraordinary circumstances, 

which they are supposed to consider when deciding whether a categorical exclusion applies. 

So as a result of the deficiencies found by the GAO and others, 

the current Administration in 2010 issued a new policy on Section 

390 that vastly improved the BLM’s implementation of that provision of the law. The 2010 policy required the BLM to make sure 

that no extraordinary circumstances are present like threats to 

public health—we would all hope they would consider such 

things—or threats to endangered species prior to granting a categorical exclusion under NEPA for a drilling permit. 

Now, where extraordinary circumstances exist, the BLM is required to conduct a more rigorous review, as we should want. As 

a result of the Obama Administration’s policy and better planning 

from the start, protests of leases have declined. Only 12.5 percent 

of tracts have been contested in 2011 as opposed to 47 percent in 

2009 and 40 percent in 2010. So this is what I was saying before. 

If we do it right and by the book, we will have less litigation. 

However, earlier this year the Obama Administration’s policy 

was struck down by a Federal Court for procedural reasons, and 

I am pleased that the BLM is announcing today that it will conduct 

a formal rulemaking process for using Section 390 categorical exclusions. 

I am concerned that the BLM must now revert to using the previous policy which the GAO had concluded was inadequate in ensuring that BLM meets its obligations under NEPA. As a result, 

today Ranking Member Markey and I are sending a letter to the 

Department of Justice urging an appeal of this decision. An appeal 

and a stay of the court’s ruling would remove any uncertainty 

while the BLM completes its rulemaking which will ensure that 

BLM can conduct oil and gas drilling in an environmentally responsible way. 

I thank the Chair. I hope that puts this hearing in some perspective. 

[The prepared statement of Mr. Holt follows:] 

Statement of The Honorable Rush D. Holt, Ranking Member, 

Subcommittee on Energy and Mineral Resources 

Thank you, Mr. Chairman. 

The National Environmental Policy Act (NEPA) allows Americans from all across 

the Nation to have their voices heard on how their public lands are managed and 

allows for agencies like the Bureau of Land Management to make informed decisions about potential environmental impacts of their actions. When the Congress 

takes steps to limit NEPA review, what often results is unanticipated environmental harm, less public participation in land management decisions, and more litigation challenging agency decisions. 

Section 390 of the Energy Policy Act of 2005 is an example of this kind of bad 

policy. The categorical exclusions established in Section 390 to expedite the approval 

of oil and gas drilling permits were unnecessary and unwise. They are unnecessary 

because industry is producing oil and gas on less than 30 percent of the public lands 

under lease onshore. For example, in 2010, the BLM approved approximately 4,100 

new permits to drill, but the oil and gas industry only drilled 1,500 wells. There 

9 

is no shortage of places where the oil and gas industry could start drilling right 

now. 

Section 390 was also unwise because oil and gas exploration has real environmental impacts. Under NEPA, the BLM has the authority to establish categorical 

exclusions for activities that do not ‘‘individually or cumulatively have a significant 

effect on the human environment.’’ However, in section 390 of EPACT, Congress established a set of legislative categorical exclusions for activities that have been documented by the Government Accountability Office (GAO) to cause environmental impacts, such as ozone levels that have reached or exceeded allowable levels and habitat fragmentation that has harmed elk, antelope and other wildlife in the West. 

The GAO has documented that BLM’s implementation of Section 390 was inconsistent from one office to another and resulted in violations of NEPA. The Bush Administration also actually prohibited the BLM from considering ‘‘extraordinary circumstances’’ when deciding whether a categorical exclusion applies. 

As a result of the deficiencies found by the GAO, the Obama administration in 

2010 issued a new policy on Section 390 that vastly improved the BLM’s implementation of that provision of the law. The 2010 policy required the BLM to make sure 

that no extraordinary circumstances are present, like threats to public health or 

threats to endangered species, prior to granting a categorical exclusion under NEPA 

for a drilling permit. Where extraordinary circumstances exist, the BLM is required 

to conduct a more rigorous environmental review. 

As a result of the Obama Administration’s policy, and better planning from the 

start, protests of leases have declined. Only 12.5 percent of tracts have been contested in 2011 as compared with 47 percent in 2009 and 40 percent in 2010. 

However, earlier this year Obama Administration’s policy was struck down by a 

Federal Court for procedural reasons. I am pleased that the BLM is announcing 

today that it will conduct a formal rulemaking process for using the Section 390 categorical exclusions. However, I am concerned that the BLM must now revert to 

using the Bush administration’s policy, which the GAO had concluded was grossly 

inadequate in ensuring that the BLM meets its obligations under NEPA, while that 

rulemaking is ongoing. 

As a result, today Ranking Member Markey and I are sending a letter to the Department of Justice urging an appeal of this decision. An appeal and stay of the 

court’s ruling would remove any uncertainty while the BLM completes its rulemaking, which will ensure that the BLM can conduct oil and gas drilling in an environmentally responsible manner. 

I look forward to hearing from our witnesses. 

Mr. LAMBORN. OK, thank you, Mr. Holt. We will now go to the 

next witness, Mr. Randy Bolles, Manager of Regulatory Affairs, 

Devon Energy. 

STATEMENT OF RANDY BOLLES, MANAGER, 

REGULATORY AFFAIRS, DEVON ENERGY 

Mr. BOLLES. Thank you, Mr. Chairman, Ranking Member Holt, 

members of the Subcommittee. My name is Randy Bolles, I am an 

employee of Devon Energy Corporation, headquartered in Oklahoma City, Oklahoma. I am pleased to be here today to share my 

perspective on how Section 390 categorical exclusions can help preserve the environment while also benefiting local, State, and Federal economies. More specifically, I will discuss how Devon has 

used categorical exclusions in the Washakie Basin in Wyoming and 

how Devon’s drilling efforts there have been affected by the Bureau 

of Land Management’s May 2010 guidance. 

As this Subcommittee knows, the 2005 Energy Policy Act provided five specific exclusions from review under the Environmental 

Policy Act. In 2010, BLM provided guidance that virtually eliminated categorical exclusions Devon used to drill over 260 wells in 

Wyoming. When categorical exclusions are utilized, each well is 

still subject to public notice and comment procedures and site specific reviews that are conducted by BLM resource staff. In addition, 

10 

categorical exclusions encourage multi-pad well drilling which reduces surface disturbance, and as you can see, Mr. Chairman, categorical exclusions provide BLM with the ability to offer a practical 

environmental review while avoiding a lengthy and often duplicative NEPA effort that had previously been completed. Simply put, 

it is a common sense approach. 

Let me give you an example of our activity as it relates to categorical exclusions. In 2009, before BLM restricted categorical exclusions, the Rawlins field office authorized 75 applications for permit to drill submitted by Devon based on Section 390 categorical 

exclusions. Devon was able to obtain timely BLM approval of those 

applications because of categorical exclusions. If they had not existed, the BLM would have been required to conduct a NEPA analysis on all 75 applications, and those applications would have 

taken much more time and might have led Devon to consider dedicating its resources to more timely projects in other areas of the 

country. 

Even within Devon there is major competition to deploy capital, 

and we are going to deploy that capital in areas where we have the 

least likelihood or burdensome environment to work in. That result 

ends up in less Federal royalties and less taxes being paid to the 

local, State, and Federal economies. 

When considering not only the 75 wells that we drilled in 2009 

but the more than 260 wells that Devon drilled since EPAct was 

approved in 2005, the economic impact is significant. A report released by a consulting firm called SWCA extrapolated the 260 wells 

that we drilled translates into about 6,838 jobs, about $598 million 

in employment earnings, and over the life of the well about $35 

million in annual government revenue. While these numbers are 

significant, so is the toll that is taken when drilling comes to a 

standstill. 

Following the BLM guidance that restricted Devon’s ability to 

use congressionally approved categorical exclusions, Devon reassigned one of its two rigs drilling in the Washakie Basin to other 

areas where we are drilling on fee and State lands. 

This is just one of the BLM restrictions that make it difficult, extremely difficult for Devon to drill, produce, and maintain its wells. 

Burdensome wildlife stipulations and timing restrictions, when 

coupled with the prohibition on the use of categorical exclusions, 

make it almost impossible to develop the resources in an economic 

fashion. 

Devon believes in environmental stewardship, and believe me I 

live it every day, and it is a core value of our company, and has 

been recognized for its efforts to protect and preserve habitat and 

wildlife. However, BLM should give consideration to practical aspects of developing Federal resources. 

In conclusion, Mr. Chairman, Devon Energy Corporation works 

to do its part to preserve and protect the areas in which we operate, and we truly wish to see them grow. As I mentioned earlier, 

the jobs and revenue that occur with new well development can 

leave a significant hole in local economies if they are not considered 

in the regulatory process. 

Devon is dedicated to production on Federal lands and will continue to produce on Federal lands. However, the level of regulatory 

11 

burden will determine not only our activity but also the economic 

benefit received by Federal, State, and local economies. 

Again, thank you very much for allowing me to testify today. It 

is truly an honor, and I stand for any questions. 

[The prepared statement of Mr. Bolles follows:] 

Statement of Randy Bolles, Manager, Regulatory Affairs—Western Division, 

Devon Energy Corporation 

Chairman Lamborn, Ranking Member Holt, and members of the Subcommittee, 

my name is Randy Bolles, and I am employed by Devon Energy Corporation. I am 

pleased to share my perspective on how Section 390 categorical exclusions can help 

preserve the environment while benefiting local, state and federal economies. More 

specifically, I will discuss how Devon has used categorical exclusions in the 

Washakie Basin of Wyoming and how Devon’s drilling efforts there have been affected by the Bureau of Land Management’s May 2010 guidance. 

Devon Energy Corporation is an Oklahoma City-based independent energy company engaged in oil and natural gas exploration and production. Devon is a leading 

U.S.-based independent oil and gas producer and is included in the S&P 500 Index. 

I am responsible for regulatory affairs in Montana, Wyoming, Colorado, New Mexico, Utah and West Texas. My staff and I spend our time working with local, state 

and federal agencies to resolve issues related to regulation so that Devon may gain 

access to minerals on fee, state and federal lands. To the point of today’s topic, I 

am part of the management team responsible for all aspects of the permitting process in the Washakie Basin. 

Mr. Chairman, Devon works hard to be a good neighbor and maintain a strong 

relationship with all landowners. Because about 26 percent of Devon’s leased minerals in the Western Division are on federal lands, Devon’s relationship with the 

federal government is particularly important to us. As a result, Devon strives to 

comply with or exceed all environmental regulations and seek all necessary approvals to drill. To Devon, it is not just about complying with regulations. It’s about taking meaningful environmental steps and assuring the communities where we work 

that Devon wants to partner in their growth. 

As this Subcommittee knows, the 2005 Energy Policy Act (EPAct) provided five 

specific exclusions from review under the National Environmental Policy Act. In 

2010, the BLM provided guidance that virtually eliminated categorical exclusions 

Devon had used over 260 times prior to the regulatory action by BLM. 

When categorical exclusions are utilized, each well is still subject to public notice 

and comment procedures and site-specific reviews to ensure other resources are adequately protected. The exclusions allow Devon to drill multiple wells from an existing pad, or to drill directionally in a field previously approved for vertical wells. This 

practice reduces surface disturbance. The categorical exclusion provides BLM with 

the ability to offer a practical environmental review while avoiding a lengthy, often 

duplicative NEPA effort that was previously completed. Simply put, it is a commonsense approach. 

Let me provide an example of our activity and applications using categorical exclusions: In 2009—before BLM restricted categorical exclusions—the BLM field office in Rawlins, Wyoming, authorized 75 applications for permits to drill submitted 

by Devon based on the section 390 categorical exclusions. Devon was able to obtain 

timely BLM approval of those applications because of the categorical exclusions. 

If the exclusions had not existed in 2009, and BLM was required to prepare 

NEPA analyses on those 75 applications, the applications would have taken much 

more time. As a result, it would have taken Devon more than an additional year 

to develop the leases. Many of the applications simply involved drilling additional 

wellbores from existing well pads. In these cases, the delay would have been unreasonable and might have led Devon to consider dedicating its resources to more timely projects in other areas of the country. 

When considering not only the 75 wells drilled in 2009, but the more than 260 

wells Devon drilled since EPAct was approved in 2005, the economic impact is significant. A report released by SWCA Environmental Consultants this past March, 

when extrapolated to the more than 260 wells Devon drilled under section 390, 

translated to 6,838 jobs, $598 million in employment earnings and, over the life of 

the well, $35 million in annual government revenue. A copy of this study is attached 

to my prefiled written testimony. 

While these numbers are significant, so is the toll that is taken when drilling 

comes to a standstill. Following the BLM guidance that restricted Devon’s ability 

to use the Congressionally-approved categorical exclusions, Devon reassigned one of 

12 

its two drilling rigs in the Washakie field to other areas where that rig could be 

used. 

This is just one of the BLM restrictions that make it extremely difficult for Devon 

to drill, produce and maintain its wells. Burdensome wildlife stipulations and timing 

restrictions, when coupled with a prohibition on the use of categorical exclusions, 

make it almost impossible to develop the resources in an economic fashion. Devon 

believes in environmental stewardship and has been recognized for its efforts to protect and preserve habitat and wildlife. However, BLM should give consideration to 

the practical aspects of developing federal resources. 

In conclusion, Mr. Chairman, Devon Energy Corporation works to do its part to 

preserve and protect the areas we operate. Moreover, Devon is an active part of the 

communities in which we operate, and we truly wish to see them grow. As I mentioned earlier, the jobs and revenue that occur with new well development can leave 

a significant hole in local economies if they are not considered in the regulatory 

process. Devon is dedicated to production on federal lands and will continue to 

produce on federal lands. However, the level of regulatory burden will determine not 

only our activity, but also the economic benefit received by federal, state and local 

governments. 

Thank you very much for your time. 

[NOTE: The study has been retained in the Committee’s official files. It can be 

found at http://westernenergyalliance.org/wp-content/uploads/2011/10/SWCA–ReportWyoming-NEPA-delay-impacts.pdf] 

Devon Energy Corporation 

20 North Broadway 

Oklahoma City, OK 73102–8260 

Phone 405 228 8588 

www.devonenergy.com 

August 17, 2012 

Honorable Doug Lamborn, Chairman 

Subcommittee on Energy and Mineral Resources 

Attn: Tim Charters, Staff Director 

1324 Longworth House Office Building 

Washington, DC 20515 

Dear Chairman Lamborn: 

Per your request, included are the supplemental answers to the testimony I offered 

on September 9, 2011 at the oversight hearing on ‘‘Impacts to Onshore Jobs, Revenue, and Energy: Review and Status of Sec. 390 Categorical Exclusions of the Energy Policy Act of 2005.’’ 

Sincerely, 

Randy Bolles 

Regulatory Affairs Manager 

Devon Energy Corporation 

cc: Sophia Varnasidis via email: Sophia.Varnasidis@mail.house.gov 

Response to questions submitted for the record by Randy Bolles, 

Regulatory Affairs Manager, Devon Energy Corporation 

1. Mr. Bolles, in your testimony you say that in 2009 75 applications for 

permits to drill have been approved using categorical exclusions. Can 

you explain the difference in the approval timeline when categorical exclusions are used versus when you have to go through the usual approval process? Can you discuss the job creation and energy production 

that accompany the expedited approval process? 

It is important to reiterate that oil and gas operators must submit the same type, 

quality and quantity of information to the BLM when preparing an Application for 

Permit to Drill (APD) package. The use of statutory categorical exclusions to 

streamline this permitting process is an internal decision made by the BLM. 

Ultimately, execution of the categorical exclusions process is an internal BLM 

process. The BLM determines whether valid, existing environmental analyses are 

appropriate, in which case, Thus, Devon cannot state with specificity or quantify exactly how use of the categorical exclusions expedited the approval timeframe for cerVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
13 

1To illustrate the complex regulatory requirements mandated by BLM, see attachment entitled ‘‘Federal Onshore Oil and Gas Leasing and Permitting Process,’’ prepared by the American 

Petroleum Institute. 2 An Environmental Analysis, or EA, is required by the National Environmental Policy Act 

(NEPA) 40 C.F.R. Part 1501. An agency conducts an EA to determine whether the action will 

cause a significant impact. If the finding of the EA shows that there will not be a significant 

impact, then the EA is sufficient, and the agency issues a Finding of No Significant Impact 

(FONSI). 40 C.F.R. § Part 1501. If the EA determines that the action will cause a significant 

impact, then a full EIS is required. For an oil and gas project, an EA typically takes anywhere 

from 60 days to five years to conduct. 3 An Environmental Impact Statement, or EIS, is also required by NEPA 42 U.S.C. 4332. An 

EIS is mandated if the EA determines that the action will cause a significant impact. An EIS 

is a more detailed and time consuming process. An EIS typically has four sections: Introduction, 

which includes a statement of the Purpose and Need of the Proposed Action, a description of 

the Affected Environment, a Range of Alternatives to the proposed action, including a ‘‘No Action’’ alternative, and a robust analysis of the environmental impacts of each of the possible alternatives, including impacts to threatened or endangered species, air and water quality, historic and cultural sites, and a cost analysis for each alternative, including costs to mitigate expected impacts. A contractor is secured to complete the EIS, which typically takes several years 

to complete. 

tain oil and gas operations that qualified for one of the statutory exclusions. By way 

of example, in Wyoming, if an APD is submitted and the BLM conducts a standard, 

non-categorical exclusion review, that process could take from 60 to 360 days. If, 

however, a statutory categorical exclusion can be utilized, the APD review process 

can be reduced to 45 to 90 days. Time efficiencies are gained because the BLM is 

able to utilize valid, existing environmental, archeological and wildlife analyses instead of requiring duplicative and overlapping documentation of certain areas, much 

of which is often unnecessary. These statutory categorical exclusions helped Devon 

continue our drilling program. Without these approvals, Devon would have been 

forced to release drilling rigs and terminate the jobs that follow the drilling and 

completion process. In fact, as was mentioned in testimony Devon reassigned a rig 

in Wyoming at least in part due to BLM guidance that restricted Devon’s ability 

to use the Congressionally-approved categorical exclusions. That particular rig has 

since been release and is no longer drilling for Devon. 

It is difficult to quantify energy production that accompanies the expedited approval process but it does assist in obtaining approved APDs and retaining rigs and 

preparing a continuous drilling program. This in turn creates jobs related to drilling, completion, development and production operations. For example, in Wyoming, 

each oil or gas rig creates about 125 jobs on average. These jobs include—in addition 

to the drilling, completion, and oilfield service contractors—jobs such as welders, 

waste management companies, roustabouts, electricians, food service contractors, 

and truck drivers, just to name a few. Each well in the Washakie area of Wyoming 

costs about $3 million to drill, complete and hook up to the sales pipeline. However, 

this cost is not the norm; Washakie is an established field and drilling efficiencies 

have been maximized. Newer, developing areas can see drilling and completion costs 

that are closer to $5–8 million per well. 

2. Mr. Bolles, in your testimony you say that the categorical exclusion are 

just one of the BLM restrictions that make it difficult to drill and 

produce. Can you elaborate on some of the other restrictions that make 

it difficult for you to conduct your business and what impact these restrictions have on job creation and energy production? 

BLM has many policies and regulations in place that affect companies’ ability to 

access, develop and produce federal minerals. 1 For example, BLM created a new 

leasing policy in 2010 that requires additional and redundant NEPA analyses to determine if leasing should occur. [BLM Instruction Memorandum 2010–117 (May 17, 

2010).] Currently, BLM has Resource Management Plans (RMP) in place that went 

through a rigorous Environmental Impact Statement (EIS) analysis. This analysis 

determines areas within the field office’s jurisdiction that are available for leasing, 

and if the area is available for leasing, which stipulations or other restrictions 

should be included within the lease. In addition to the EIS analysis, BLM Instruction Memorandum 2010–117 also requires the BLM develop repetitive and duplicative second NEPA analyses prior to each lease sale, regardless of whether new or 

additional information is available or whether a secondary analysis will facilitate 

the BLM’s leasing process. This additional Environmental Assessment (EA) 2 or 

even an EIS 3 for a Master Leasing Plan could take several years to prepare. 

While requiring this duplicative analysis may not seem overly burdensome, in reality, the BLM removes lease parcels within these areas from inclusion on the lease 

sale while the NEPA analysis is being conducted. Thus, new areas may be prohibVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
14 

ited from being leased permanently, or at a minimum, delayed considerably, which 

hurts companies’ ability to lease and access those areas for development. 

Since the implementation of the new leasing process in 2010, the BLM’s leasing 

has dramatically slowed across most of the United States. According to recently released information, Federal onshore oil and natural gas leasing was down significantly in the Rocky Mountain region in Fiscal Year 2011, which ended on September 30th. According to the Western Energy Alliance, the number of lease parcels 

offered has declined by 70% the total amount of acreage leased has decreased by 

81%, and revenue generated by Federal onshore oil and gas lease sales has declined 

by 44% since 2008. Because almost half of the revenue generated from Federal onshore oil and gas lease sales is returned to state in which the lands are located, 

the Federal government and state and local governments are all suffering as a result of these declines. 

In addition, the cumulative impacts of overlapping stipulations for the protection 

of wildlife makes it extremely difficult to manage a comprehensive and year-round 

drilling plan. For example, in Wyoming, many overlapping wildlife stipulations can 

occur on a lease from November 15 through August 1 if an area has Big Game Winter Range Stipulations (November 1—April 30) or Sage Grouse and Raptor Stipulations (February 1—August 1). These restrictions leave companies only a three 

month drilling or completion window—August 1—November 15—to conduct operations. These policies and stipulations make it increasingly difficult to conduct energy operations on federal lands. Additionally, special interest groups further delay 

lease development by protesting and appealing the BLM’s decisions, generally with 

the sole purpose of delaying or preventing oil and gas development on public lands. 

The timeframes necessary for the BLM to approve oil and gas development 

projects and field-wide NEPA analysis for oil and gas projects is also a significant 

concern. Currently, there are six oil and gas projects proposed on lands managed 

by five Wyoming BLM field offices. EISs are being prepared for each of the six 

projects. The NEPA planning processes (and Record of Decision (ROD) that follows 

the completion of the EIS) for each of the projects are currently experiencing delays. 

On average the planning process for each EIS was originally estimated to take two 

to three years. However, due to a range of issues that have arisen with each project, 

the RODs have been delayed one to five years. The Table below highlights the six 

EISs currently under development with the Wyoming BLM. These delays are significant, prevent operators from committing the resources necessary to begin operations, and delay the development of new high-paying jobs. 

Additionally, Devon is concerned that BLM budgets have been or will be significantly reduced in the near future, while at the same time, the agency is required 

to respond to an ever-increasing workload and other ‘‘national priorities.’’ Staff 

shortages and an inability to hire or retain quality employees is a constant problem 

in multiple BLM offices. Employees are often prevented from working on oil and gas 

related projects to comply with other priorities set by the national office, including 


68267.002.eps
15 

preparing additional and often duplicative documentation and reports for the national office. 

3. Mr. Bolles, can you provide any examples where CXs enabled your company to continue development and create jobs that it would not otherwise created? 

In an area of development for our company, statutory categorical exclusions enabled Devon to continue drilling operations where while a project-level NEPA analyses were delayed. This area that had already heavily developed and the appropriate level of NEPA analysis had occurred in order to meet the criteria of the statutory categorical exclusion. The categorical exclusion permitted Devon to continue a 

modest drilling program while additional project level NEPA was underway. 

Mr. LAMBORN. OK, thank you for your testimony. The next witness is Ms. Kathleen Sgamma, Director of Government and Public 

Affairs for Western Energy Alliance. 

STATEMENT OF KATHLEEN M. SGAMMA, DIRECTOR OF GOVERNMENT & PUBLIC AFFAIRS, WESTERN ENERGY ALLIANCE 

Ms. SGAMMA. Good morning, Mr. Chairman, Ranking Member 

Holt, and members of the Committee. Thank you for the opportunity to appear before you. 

Section 390 categorical exclusions, cat exes, are important tools 

for encouraging domestic energy production, thereby creating jobs, 

growing Federal revenue, and spurring American economic activity. 

Western Energy Alliance represents more than 400 small businesses and independent producers that operate on public lands in 

the West. 

Our members are proud to provide 27 percent of the Nation’s 

natural gas and 14 percent of the Nation’s oil production while disturbing only 0.07 percent of public lands. Our Blueprint for Western Energy Prosperity finds that by 2020 we could produce as 

much oil and natural gas in the West as the U.S. currently imports 

from Russia, Iraq, Kuwait, Saudi Arabia, Venezuela, Algeria, Nigeria, and Colombia combined, while creating an additional 70,000 

jobs and $3.5 billion in government revenues, just in six producing 

States in the West alone. We hope to achieve that potential if government red tape doesn’t stand in the way. 

Oil and gas has a small and temporary impact on the land, and 

operators comply with thousands of very detailed regulations under 

the Clean Air Act, Clean Water Act, Safe Drinking Water Act, Endangered Species Act, and National Historic Preservation Act, to 

name just a few, as well as State and local regulations and numerous BLM regulations. 

With EPAct 2005, Congress intended to ensure jobs for our future with secure, affordable, and reliable energy. Cat exes are an 

important part of achieving those goals by encouraging domestic oil 

and gas development in very limited ways. By eliminating the requirement for redundant environmental analysis in five specific circumstances in which the environmental impact is minimal and/or 

where development was previously analyzed in an environmental 

document, Congress hoped to create jobs and encourage domestic 

energy. Companies must still comply with all other regulations 

when using a CX. 

Almost all the criticism of categorical exclusions has been about 

missing a layer of environmental analysis, no matter how redunVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
16 

dant, as if oil and gas development is not highly and aggressively 

constrained and regulated. Despite the limited scope of cat exes 

and their success in reducing environmental impact, cat exes have 

been under attack from day one. That criticism would be highly appropriate if cat exes absolved companies from all environmental 

regulations, but they do not. They merely remove a redundant 

layer of NEPA analysis. 

A 2009 GAO report found that BLM regularly did not use cat 

exes in many situations even to the point that five BLM offices refused to use them. However, GAO didn’t highlight that breach of 

the law or the impact on jobs, the economy, and government revenue. Rather, GAO highlighted a very few examples where BLM 

incorrectly uses cat ex. There was no systematic look at the energy 

development and job creation prevented from the government’s refusal to use categorical exclusions. 

While there is coordinated outrage from the environmental lobby 

about the fact that one layer of redundant analysis has been removed, where is the loud response about the fact that government 

reluctance to utilize a legal tool has prevented economic activity 

and jobs? History has shown again and again that wealthy societies 

are best able to protect the environment and poor countries are the 

ones with the most devastating environmental conditions. The best 

way to ensure we continue to improve our environment is to grow 

the economy and create high-paying jobs. American development of 

oil and natural gas is a proven path to that prosperity. 

It is important to note that the use of cat exes doesn’t mean less 

protection for the environment. It just means less redundant analysis and bureaucratic process. In fact, effective use of cat exes can 

enable BLM staff to spend less time behind a desk and more time 

in the field monitoring and inspecting. According to a study from 

the Western Organization of Resource Councils, an environmental 

advocacy group, BLM doubled the number of environmental inspections after the implementation of cat exes in 2006. A recent analysis by SWCA, a respected environmental consulting firm, finds 

that delays from just six oil and gas projects in Wyoming are preventing the creation of over 30,600 jobs, $2.6 billion in labor earnings, and $157 million in annual royalty and tax revenue. Those 

numbers are stark evidence of how redundant red tape can prevent 

jobs and revenue. Cat exes are one solution to that problem. 

Thank you very much. 

[The prepared statement of Ms. Sgamma follows:] 

Statement of Kathleen Sgamma, Director of Government & Public Affairs, 

Western Energy Alliance (formerly IPAMS) 

Mr. Chairman and Members of the Committee—thank you for the opportunity to 

appear before you today. Section 390 Categorical Exclusions (CX) are important 

tools for encouraging domestic energy production, thereby creating jobs, growing federal revenue and spurring American economic activity. 

Western Energy Alliance (formerly the Independent Petroleum Association of 

Mountain States IPAMS) represents 400 companies engaged in all aspects of environmentally responsible exploration and production of oil and natural gas across the 

West. Alliance members are small businesses and independent producers that operate on public lands in the West. 

Our members are proud to produce 27% of America’s natural gas and 14% of its 

oil production while disturbing only 0.07% of public lands. Our Blueprint for Western Energy Prosperity finds that by 2020 we could produce as much oil and natural 

gas in the West as the U.S. currently imports from Russia, Iraq, Kuwait, Saudi AraVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
17 

bia, Venezuela, Algeria, Nigeria, and Colombia combined, while creating an additional 70,000 jobs and $3.5 billion in government revenue. We hope to achieve that 

potential if government red tape doesn’t stand in the way. 

Oil and natural gas development has a small and temporary impact on the land, 

and operators comply with thousands of very detailed regulatory requirements 

under the Clean Air Act, Clean Water Act, Safe Drinking Water Act, Endangered 

Species Act, National Historic Preservation Act, Occupational Safety & Health Act, 

Emergency Planning and Community Right to Know Act, Environmental Response, 

Compensation & Liability Act, and Toxic Substances Control Act, to name a few, 

as well as state and local regulations and numerous Bureau of Land Management 

(BLM) policies and procedures. 

With the Energy Policy Act of 2005, Congress intended ‘‘to ensure jobs for our future with secure, affordable, and reliable energy.’’ Section 390 CXs are an important 

part of achieving those goals by encouraging domestic oil and natural gas development in very limited ways. By eliminating the requirement for redundant environmental analysis in five specific circumstances in which the environmental impact is 

minimal, and/or in which oil and gas development was analyzed previously in a 

NEPA document, Congress hoped to create jobs and increase government revenue 

while encouraging domestic production. Companies must still comply with all other 

regulations when a CX is used. 

Almost all the criticism directed at CXs has been about missing a layer of environmental analysis, no matter how redundant, as if oil and gas development is not 

highly and aggressively constrained and regulated. Despite the limited scope of Section 390 CXs and their success in reducing environmental impact, CXs have been 

under attack from day one. That criticism would be highly appropriate if CXs absolved companies from all environmental compliance, but they do not—they merely 

remove a redundant layer of National Environmental Policy Act (NEPA) analysis in 

specific situations where the impact is minimal or where environmental analysis 

has already been done. 

A 2009 Government Accountability Office report (Energy Policy Act of 2005: Greater Clarity Needed to Address Concerns with Categorical Exclusions for Oil and Gas 

Development Under Section 390 of the Act, GAO–09–872, September 2009) found 

that BLM regularly did not use CXs in many situations, even to the point that five 

BLM field offices simply refused to use them at all. However, GAO didn’t highlight 

that breach of the law, or the impact on jobs, the economy and government revenue. 

Rather, GAO highlighted a very few examples where BLM incorrectly used a CX. 

While GAO recognized they were unintentional errors from implementing a new 

program that are easily corrected administratively, there was no systematic look at 

all the energy development and job creation prevented from the government’s refusal to use CXs. 

Where’s the criticism of the government’s failure to use CXs which discourages 

energy development? While there’s coordinated outrage from the environmental 

lobby about the fact that one layer of redundant analysis has been removed, where’s 

the loud response about the fact that government reluctance to utilize a legal tool 

has prevented economic activity and job creation? History has shown again and 

again that wealthy societies are best able to protect the environment, and poor 

countries are the ones with the most devastating environmental conditions. The best 

way to ensure we continue to improve our environment is to grow the economy and 

create high-paying jobs. American development of oil and natural gas is a proven 

path to that prosperity. 

Developing oil and natural gas from federal lands is a very time consuming and 

expensive process compared to development on state and private lands. The normal 

regulatory requirements mentioned above are augmented with a lengthy federal bureaucratic process and requirements under the NEPA. NEPA requires detailed analysis of environmental impacts at several stages of the process—the land use planning process, leasing, seismic exploration, project planning, and permitting. NEPA 

analysis for large projects can take seven years, and even small projects of a few 

wells can be held up for a few years by analysis. 

Furthermore, permitting times are extremely long for drilling federal wells. While 

states take about a month on average to process and approve a drilling permit, the 

federal government routinely takes six months to two years, depending on the field 

office. Timely permitting enables rigs to keep running, thus enabling companies to 

execute efficient development programs and create jobs. And each rig running creates about 125 jobs. When companies cannot get federal permits in a timely manner, they must move onto state and private lands or lay down rigs and send jobs 

elsewhere. Either way, the federal government has denied itself considerable royalty 

revenue. 

18 

CXs are a means to eliminate redundant analysis in certain circumstances. By 

using CXs, BLM can approve permits in a more timely manner, putting more people 

to work and creating government revenue. A recent analysis by SWCA, a respected 

environmental consulting firm that regularly conducts NEPA and other analysis for 

the federal government, finds that delays from just six oil and natural gas projects 

are preventing the creation of over 30,600 jobs, $2.6 billion in labor earnings and 

$157 in annual royalty and tax revenue in Wyoming alone. 

However, this Interior Department has slowed development of oil and natural gas, 

and last year issued BLM Instruction Memorandum 2010–118 that rewrote the criteria for Section 390 CXs, rendering them virtually ineffective. Fortunately, Judge 

Nancy Freudenthal in Wyoming Federal District Court overturned the policy in our 

successful lawsuit. Western Energy Alliance is hopeful that as a result of her imposition of a nationwide injunction of IM 2010–118, BLM will again use CXs more effectively, thereby creating more jobs and economic growth. 

The use of CXs doesn’t mean less protection for the environment—it just means 

less redundant analysis and bureaucratic process. In fact, effective use of CXs can 

enable BLM and Forest Service staff to spend less time behind a desk pushing 

paper and more time in the field monitoring and inspecting. According to a study 

from the Western Organization of Resource Councils (WORC), an environmental advocacy group, the number of environmental inspections performed by BLM generally 

increased over the last decade until 2006 to 2008, when inspections more than doubled. It’s no coincidence that the dramatic increase in BLM inspections corresponded 

with full implementation of CXs in 2006. Furthermore, CXs only remove the need 

for a redundant layer of NEPA analysis. They do not remove any other regulatory 

requirements or tools like BMPs and voluntary measures to protect natural resource 

values. 

In conclusion, we can use limited, balanced tools like CXs to develop American 

oil and natural gas on public lands, or we can continue to make it more difficult 

for producers to operate on federal lands and forego economic activity and job creation. Thank you for the opportunity to testify today. 

Response to questions submitted for the record by Kathleen Sgamma, 

Western Energy Alliance 

Questions from Subcommittee Chairman Lamborn 

Can you elaborate on the usual NEPA process and how exactly categorical 

exclusions streamline this process? 

Attached is a flowchart from API showing the Standard Onshore Oil & Gas Leasing Process. This concisely shows all the points in the process that NEPA is conducted at. 

Leasing Process (shown in Blue) 

1) Actually, the first NEPA analysis is done during the Resources Management 

Planning before the leasing process can even be started, although it’s shown 

in the flowchart under the blue leasing section. The Environmental Impact 

Statements (EIS) that are done along with RMPs can take several years, at 

least five years usually. 

2) The second is a Master Leasing Plan (MLP) that is a new requirement as 

of May 17, 2010. BLM may determine that some areas should have an MLP, 

which will result in an amendment to an RMP. Although an MLP has not 

been completed yet, I estimate at least three years will be added to the process, since amendments to RMPs can also take several years. 

3) If an MLP is not required, BLM conducts a leasing NEPA analysis, usually 

an EA. I believe this is largely redundant with the EIS done as part of the 

RMP. At the leasing stage it is not known what type of project might be proposed, the number of wells, infrastructure required and many other details, 

or even whether the lease parcel contains economic quantities of oil or gas. 

Therefore, the leasing EA is not site specific and largely just duplicates the 

work done for the RMP EIS. 

APD Process (shown in Peach, the section under ‘‘BLM/FS Initiates NEPA Review’’). 

4) In the flowchart, the project NEPA is included in the overall Application for 

Permit to Drill (APD) process, but it could be thought of as another full section of NEPA Project Approvals. Companies propose projects of a few wells 

to hundreds of thousands of wells. Smaller projects usually require an Environmental Assessment, and larger projects require an EIS document, both 

prepared according to NEPA. EAs are supposed to take about six months, 

19 

but there are many cases where they can take three to five years. EISs are 

supposed to take about three years, but many outstanding EISs are taking 

the government over seven years. Sometimes, even if a project EIS is in 

place, BLM may require further NEPA analysis that may result in an EA. 

5) If an APD is submitted for a well within a Master Development Plan EA or 

project EIS, BLM makes a determination of NEPA adequacy and approves 

the APD. If not but there’s NEPA from a land use plan or the well is from 

an existing pad, for example, a categorical exclusions (CX) should be issued. 

6) If 4) or 5) are not applicable, BLM determines whether an EA or EIS is necessary, and begins to conduct that NEPA analysis. Often, BLM will require 

an EA even if the APD meets the criteria for a CX. 

As you can see from the flowchart and the steps outlined above, there are up to 

six points at which NEPA analysis is conducted in the process. CXs are designed 

to eliminate NEPA analysis at simply one or two of those six points. In addition 

to NEPA, the flowchart shows many other steps that must be complied with such 

as cultural surveys under the National Historic Preservation Act, and consultation 

under the Endangered Species Act. Despite all the intricacies of the process illustrated by the flowchart, it simplifies other regulatory processes. Various actions required to comply with federal, state and local regulations, such as air and water 

permits are all grouped together in just one box. 

Out of the entire multi-step process for operating on federal lands, CXs eliminate 

just one or two levels of NEPA, but not all the other regulatory requirements. The 

only instance where they may eliminate two levels of NEPA is very limited—in 

cases where an EIS completed as part of an RMP is less than five years old. That 

CX was crafted to take advantage of the years of effort that go into RMP EISs, 

which include analysis of what lands are appropriate for oil and gas development, 

but only for a limited time. In that case, a CX will eliminate site-specific NEPA 

Do you have an approximation of the time saved in the permitting process? 

Unfortunately the actual time saved is often opaque to industry because of generally long permitting times. BLM is not complying with notification requirements 

specified in Section 366 of the Energy Policy Act of 2005, so operators often don’t 

know why their permits are taking so long. Often operators don’t even know whether an APD was approved with a CX or if BLM conducted a single well EA even if 

the well met one of the criteria for a CX. We do know that even small EAs can take 

years and open companies to legal challenge under NEPA, so the time savings could 

be potentially significant. Many single well EAs are fairly perfunctory and do not 

take BLM lots of time, but even a small savings of time and paperwork should be 

welcome by an agency that struggles to meet all its obligations, especially at a time 

of tight budgets. CXs can help reduce the time spent pushing paper, and free up 

time for in-the-field monitoring. 

Questions from Committee Ranking Member Markey 

In 2005, the Bush administration published Instruction Memorandum No. 

2005–247. This memorandum went through the exact same process 

within BLM as the 2010 Instruction memorandum. Under Judge 

Freudenthal’s reasoning, would the 2005 instruction memorandum also 

be illegal since the BLM failed to undertake a formal rulemaking process with notice and comment pursuant to the Administrative Procedures Act (APA)? 

Judge Freudenthal issued a very balanced judgement which was not meant to be 

so sweeping and expansive that it would require all instruction memoranda (IM) to 

undergo public notice and comment. If so, not just the original Bush Administration 

IM 2005–247 but all IMs issued by the Obama administration Interior Department 

would have to undergo public notice and comment. 

One of the main points ruled on by the judge when she overruled the Obama administration’s CX policy IM 2010–118 was whether it constitutes a ‘‘legislative’’ rule 

or an ‘‘interpretive’’ rule which can be adopted without public notice and comment. 

I quote directly from the judge’s ruling 

‘‘If a challenged agency action creates a ‘legislative rule,’ then full compliance with the APA’s notice and comment processes is required. . .For the 

reasons that follow, the court agrees with WEA and concludes the issuance 

of the 2010 Instructions violated 5 U.S.C. § 553 (requiring that legislative 

rules be issued only after public notice and an opportunity for comment).’’ 

The reason the judge found IM 2010–118 to be legislative and not a standard interpretive rule was because it was an obvious rewrite of the plain language of Section 390 of EPAct. In her words: 

20 

‘‘. . .there is no path from Section 390 to the 2010 Instructions and in some 

instances there is no obvious consistency between Section 390 and the 2010 

Instructions. As legislative rules, the Federal Respondents had no authority 

to issue the 2010 Instructions without public notice and an opportunity for 

comment.’’ 

Whereas there was a direct ‘‘path’’ from the statute to the guidance issued in IM 

2005–247, there was no direct path in IM 2010–118 because the federal government 

simply rewrote the plain language of Section 390 which Congress had carefully 

crafted to be precise and limited in scope. This is the key difference and why IM 

2005–247 does not need public notice and comment, nor do the majority of IMs 

issued under this and other administrations that conform to the laws passed by 

Congress. 

Do you believe that the 2005 Instruction Memorandum was procedurally 

deficient and should also be repealed? 

The 2005 IM was not procedurally deficient for the same reasons presented in the 

answer to the question immediately above—because it follows the plain language of 

the law. 2005–247 and the majority of IMs issued under this and other administrations that conform to the laws passed by Congress are not procedurally deficient and 

should not be repealed. 

Mr. LAMBORN. Thank you for your testimony, and I think we 

have time for one more of the remaining two witness statements. 

No matter how we structured this, it was not possible to get either 

of the original panels done before the break, and we can’t do the 

combined panel before the voting break, either. So we will come 

back. This is an important topic. Thank you for your indulgence 

while we go over there for 60 to 90 minutes. There is a lengthy series of votes, so it is probably closer to at least 60-plus minutes. 

So thank you for your patience while we do that. 

We will hear one more witness, but when I hear the GAO witness at the end when we come back, I will want to hear the response to what Ms. Sgamma said about the report that was issued 

earlier. 

So the next witness will be Mr. Coleman. 

STATEMENT OF W. JACKSON COLEMAN, MANAGING PARTNER 

AND GENERAL COUNSEL, ENERGYNORTHAMERICA, LLC 

Mr. COLEMAN. Thank you, Mr. Chairman, Ranking Member Holt, 

and members of the Subcommittee. My name is Jack Coleman, I 

am Managing Partner and General Counsel of 

EnergyNorthAmerica, an energy consulting firm in Washington, 

D.C., and Denver, Colorado. About 2 years ago I retired from the 

Federal Government after 27 years, the last 6 years of which was 

spent working for this Committee, and my last 2 years I was Republican General Counsel of the Committee. However, in 2005 with 

the passage of the Energy Policy Act, I was the Energy and Minerals Counsel for the Committee, and I was directly involved in the 

deliberations and the negotiations and drafting of Section 390, 

which became Section 390. 

My work in the House followed 14 years as a Senior Attorney at 

the Interior Department, first as the Senior Attorney for Environmental Protection for the Department for about 3-1/2 years, and 

then Senior Attorney for Offshore Minerals. 

In my written testimony I detailed the history of this provision. 

It started as a provision in H.R. 6, which passed the House on 

April 21st, 2005. It originated as a Member amendment in the 

markup of the Resources Committee. Congressman Peterson from 

21 

Pennsylvania put this forward as an amendment, and the staff and 

the Members of the Committee thought it was a very outstanding 

amendment, and we supported and worked toward its passage from 

that point. 

There have been many, many, I think, misunderstandings unfortunately or maybe intentional misunderstandings or stated misunderstandings of this provision. The House passed it with seven 

categories. I think it is best to go through the history of how this 

was dealt with in the conference report. Staff in the House and 

Senate worked together to try to resolve differences between the 

House and Senate bills. If they were not able to resolve these differences at the staff level, then these differences were kicked up to 

what is called the Big Four, Gang of Four, whatever you want to 

call them, and that was the Chairman and Ranking Member of the 

Energy and Commerce Committee in the House and the Chairman 

and Ranking Member of the Senate Energy Committee. And so 

they were not able to get staff agreement on this provision that 

was in the House bill, and so it was moved to the four leaders of 

the conference. 

This is where a tremendous amount of review took place. I was 

designated to be the staff person to represent the Committee on 

Resources in these discussions, and an attorney for Senator Bingaman represented the Democrat staff. We had basically a moot court 

frankly, several hours of discussion of the law back and forth in 

front of all of these two Congressmen and two Senators and with 

other staff present. This was, as I said, hours of discussion. Finally, 

the decision was made by these four leaders that a provision based 

on the House provision should be included in the conference report, 

and the Senate staffer and I were sent out of the room, told to try 

to come up with a negotiated agreement that we both could recommend back to the leaders, and that is what we did. 

So we eliminated two of the provisions, two of the categories, cut 

back from seven to five, and there were some other changes that 

were made. As I stated in my written testimony, we went over 

every word, every word. If a word is in there, it is meant to be in 

there. If it is not in there, it is meant not to be there. 

So that is what has been irritating to me, frankly, by the BLM’s 

recent reinterpretation of this language and also the GAO’s report. 

Both of them have done a disservice to the work of the Congress. 

Frankly, they seem to be thinking they can write what should have 

been. This was closely analyzed, and these words were determined 

to be, and one of the things I will point out, this is mandatory, the 

whole question of rebuttable presumption, it is a question as to 

whether or not the activity that you are proposing fits within the 

category. That is what can be rebutted. The whole idea, and I know 

there has been this discussion about extraordinary circumstances 

review. Let me point out, I have been a NEPA law practitioner 

since 1978 when I became a lawyer in the Army JAG Corps. I was 

the environmental law officer for Fort Meade, Maryland. This is 

not something I am new to. Categorical exclusions that are administrative have an extraordinary circumstances review. That is the 

way it is under the NEPA regulations. That is not necessary for a 

statutory categorical exclusion that Congress decides to set up, and 

22 

no extraordinary circumstance review was included in this statute. 

So people should not read into this statute what is not there. 

Thank you for the opportunity to testify. 

[The prepared statement of Mr. Coleman follows:] 

Statement of W. Jackson Coleman, Managing Partner and General Counsel, 

EnergyNorthAmerica, LLC 

I. Introduction 

Chairman Lamborn, Ranking Member Holt, and Members of the Subcommittee, 

my name is Jack Coleman and I am Managing Partner and General Counsel of 

EnergyNorthAmerica, LLC, a energy consulting firm with offices in Washington, 

DC, and Denver, CO. I appreciate the invitation to present my views at this hearing 

on ‘‘Impacts to Onshore Jobs, Revenue, and Energy: Review and Status of Sec. 390 

Categorical Exclusions of the Energy Policy Act of 2005.’’ Early in 2009 I retired 

after a career of almost 27 years in the federal government—the last six of which 

were spent working in the House of Representatives. From February 2007 until 

March 2009, I was the Republican General Counsel of the House Committee on Natural Resources, and prior to that I served from May 2003 until late 2006 as the Energy and Minerals Counsel for the House Committee on Resources. While working 

in the House, I drafted many bills, including the Deep Ocean Energy Resources Act 

passed by the House in 2006, and significant parts of the Energy Policy Act of 2005. 

Relevant to today’s hearing, I was the House staff member most directly involved 

in the conference deliberations, negotiations, and other activities related to the decision to include Section 390 in the Energy Policy Act of 2005. I will explain that in 

significant detail later in this testimony. 

My work in the House followed my previous fourteen years as a senior attorney 

at the Department of the Interior. From September 1992 until May 2003, I served 

as a senior attorney in the Office of the Solicitor with the Minerals Management 

Service (MMS) as my primary client, and prior to that, from January 1989 until 

September 1992, I served as Senior Attorney for Environmental Protection and legal 

advisor to the Department’s Office of Environmental Affairs. My first work on offshore oil and gas issues began during the period from March 1982 until August 

1985 when I was Special Assistant to the Associate Administrator of the National 

Oceanic and Atmospheric Administration. 

Prior to my service at NOAA, I served on active military duty as an Army Judge 

Advocate General’s Corps Captain from June 1978 until March 1982. My post-secondary education was completely at the University of Mississippi, except for graduate work in legislative affairs at the George Washington University. I received a 

Juris Doctor degree from the University of Mississippi School of Law in 1978 and 

a Bachelor of Business Administration in Accountancy degree from the University 

of Mississippi in 1975. I am a member of the Mississippi Bar. 

II. History of Section 390 Provisions. 

The focus of this hearing is on Section 390 of the Energy Policy Act of 2005. The 

House of Representatives passed HR6, its version of the Energy Policy Act of 2005, 

on April 21, 2005. Included within HR6 was a provision from the House Committee 

on Resources, Section 2055, which was the precursor of Section 390 which was enacted into law. The Senate bill did not contain a corresponding provision. Section 

2055 follows directly below and may be found on page 975 of the enrolled HR6 as 

passed by the House: 

‘‘SEC. 2055. LIMITATION ON REQUIRED REVIEW UNDER NEPA. 

(a) LIMITATION ON REVIEW.—Action by the Secretary of the Interior in 

managing the public lands with respect to any of the activities described in 

subsection(b)shall not be subject to review under section 102(2)(C) the National Environmental Policy Act of 1969 (42 U.S.C.4332(2)(C)), if the activity 

is conducted for the purpose of exploration or development of a domestic 

Federal energy source. 

(b) ACTIVITIES DESCRIBED.—The activities referred to in subsection (a) are 

the following: 

(1) Geophysical exploration that does not require road building. 

(2) Individual surface disturbances of less than 5 acres. 

(3) Drilling an oil or gas well at a location or well pad site at which drilling 

has occurred previously. 

(4) Drilling an oil or gas well within a developed field for which an approved land use plan or any environmental document prepared pursuVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
23 

ant to the National Environmental Policy Act of 1969 analyzed such 

drilling as a reasonably foreseeable activity. 

(5) Disposal of water produced from an oil or gas well, if the disposal is in 

compliance with a permit issued under the Federal Water Pollution 

Control Act. 

(6) Placement of a pipeline in an approved right-of-way corridor. 

(7) Maintenance of a minor activity, other than any construction or major 

renovation of a building or facility.’’ 

A comparison of House Section 2055 (hereinafter Section 2055) and the language 

enacted as EPACT Section 390 (hereinafter Section 390) reveals a number of differences. First, in Subsection (a) of Section 390: 

1. The Conference Committee expanded the section to apply to the Secretary 

of Agriculture in managing the National Forest System Lands. As passed by 

the House, Section 2055 had only applied to the Secretary of the Interior in 

managing the public lands. 

2. The Conference Committee added the qualifier that application of the statutory categorical exclusions under (b) would ‘‘be subject to a rebuttable presumption that the use of a categorical exclusion under the National Environmental Policy Act of 1969 (NEPA) would apply.’’ Section 2055 had merely 

said that the activity would not be subject to any type of review under 

NEPA. 

3. The Conference Committee added the limitation that the activity on public 

lands subject to the categorical exclusion must be conducted under the Mineral Leasing Act. This change eliminated activities taking place under the 

authority of other laws authorizing energy production activities on public 

lands. For example, this change excluded the use of the section 390 categorical exclusions from the National Petroleum Reserve-Alaska. 

4. The Conference Committee added the limitation that the activity on public 

lands subject to the categorical exclusion must be for ‘‘the purpose of exploration or development of oil and gas.’’ Section 2055 had been broader and 

would have applied to ‘‘exploration or development of a Federal energy resource.’’ This would have applied to other energy resources, including alternative energy. 

Second, in Subsection (b) of Section 390 the Conference Committee made a number of changes, including reducing from seven (7) to five (5) the number of categories 

of activities which would be subject to the statutory categorical exclusions: 

1. The Conference Committee deleted Section 2055 categories (b)(1) (geophysical exploration) and (b)(5) (disposal of produced water). 

2. Section 2055 category (b)(2) became Section 390 category (b)(1), but a limitation was added—‘‘so long as the total surface disturbance on the lease is not 

greater than 150 acres and site-specific analysis in a document prepared pursuant to NEPA has been previously completed.’’ 

3. Section 2055 category (b)(3) became Section 390 category (b)(2), but the Conference Committee added a limitation—‘‘within 5 years prior to the date of 

spudding the well.’’ 

4. Section 2055 category (b)(4) became Section 390 category (b)(3), but the Conference Committee added a limitation—‘‘so long as such plan or document 

was approved within 5 years prior to the date of spudding the well.’’ 

5. Section 2055 category (b)(6) became Section 390 category (b)(4), but the Conference Committee added a limitation—‘‘so long as the corridor was approved 

within 5 years prior to the date of placement of the pipeline.’’ 

6. Section 2055 category (b)(7) became Section 390 category (b)(5) without 

change. 

III. Discussion. 

As I stated earlier, at the time of the passage of the Energy Policy Act of 2005, 

I was the Energy & Minerals Counsel for the House Committee on Resources. I was 

directly involved in the action on Section 2055 at the committee level prior to consideration by the House. This provision was offered as an amendment by a member 

at mark-up. The Committee adopted it. Then the Committee defended this provision 

during passage by the House. The reason—it is a commonsense provision which has 

the effect of focusing the attention of limited staff on matters that really matter. 

We also believed that this provision would prevent trivializing of NEPA and would 

likely encourage drilling from an already used drill site, reducing environmental impacts. The intent of NEPA is to review actions that may have a ‘‘significant’’ impact 

on the environment. It is clear to me, and was apparently clear to the Conference 

Committee, that these 5 categories included in Section 390 are highly unlikely to 

ever cause a ‘‘significant’’ impact on the environment. 

24 

The EPACT Conference Committee worked like this—the staff would consider 

provisions in the House and Senate bills which were not identical. If the staff could 

not come to a resolution of the differences, the matter was reserved for the ‘‘Gang 

of Four’’—the Chairman and Ranking Member of the House Energy and Commerce 

Committee and the Chairman and Ranking Member of the Senate Energy Committee. The staff could not agree on House Section 2055, so the matter of NEPA 

categorical exclusions was kicked-up to the Gang of Four. During consideration of 

this matter by the Gang of Four, I was the only Majority staff member present for 

the discussions/deliberations. In addition, no Member of the Resources Committee 

was present or participated in these discussions—not even the Chairman. I and a 

Democrat Senate staff counsel were asked to discuss/debate, in front of the Gang 

of Four, the legal issues related to House Section 2055. These discussions/debate between myself, the Senate staff counsel, and the members of the Gang of Four took 

several hours over several sessions. The Gang of Four finally decided to include Section 2055 in the Conference Report, but with changes to the language. The Senate 

staff counsel and I were directed to negotiate changes that we could agree to and 

bring them back to the Gang of Four for approval. We did this and those negotiations resulted in the changes that I outlined above. 

Other than removing the two categories related to geophysical surveys and disposal of produced water, most of the other changes involved limitations on Housepassed language, such as 5-year limitations on some, and an acreage limitation on 

another. Each one of these five categories was extensively debated and discussed by 

staff and the members of the Gang of Four. Every word was considered. When 

words were left out of some categories but included in others, this was intentional. 

As someone who was the House staff most involved in the derivation of these provisions, I have been very disappointed by the GAO report and by recent actions by 

the current Administration to, in essence, legislate words into or out of these provisions through implication and/or settlement of litigation. 

This section is mandatory as written, not optional. After enactment, this right to 

the use of these categorical exclusions became part of the bundle of rights that lessees acquire upon obtaining a lease from the government. Discussion of why that 

is so is beyond the scope of this hearing. 

There has been much discussion about the meaning of the term ‘‘rebuttable presumption’’ as used in Section 390. Let me make clear, my understanding of this 

term when it was added in negotiations with my Senate counterpart was the same 

interpretation that BLM adopted in its first implementing instructions. That is, it 

is presumed that an activity that fits the description of the activity listed within 

the category is the activity that is subject to the categorical exemption. However, 

whether or not the subject activity fits the description is subject to be rebutted. The 

rebuttal would only address whether or not the subject activity fit the categorical 

exemption, not whether or not the activity would cause significant impacts. If it had 

meant the latter, then a NEPA document would need to be developed which would 

defeat the purpose of the section. 

In addition, there has been much discussion about whether these Section 390 categorical exclusions should be subject to an extraordinary circumstances review. 

First, there is no mention of the need for an extraordinary circumstances review in 

Section 390. Second, what would be the purpose of Congress legislating a categorical 

exclusion which was really still just a regulatory categorical exclusion? I have practiced NEPA law since 1978. Other staff and counsel involved in negotiating this provision were very aware of NEPA law. The intent of Congress in negotiating these 

statutory categorical exclusions was to fast-track approvals for this very limited 

number of categories. Congress has long been concerned about extensive unwarranted delays because of NEPA litigation. Certainly we knew that extraordinary circumstances reviews lead to litigation. This is why the Congress legislated these exclusions rather than leaving them to the agency to promulgate through regulations. 

Thank you for the opportunity to testify and I would be pleased to answer any 

questions. 

Response to questions submitted for the record by W. Jackson Coleman, 

Managing Partner and General Counsel, EnergyNorthAmerica, LLC 

Questions from Chairman Doug Lamborn 

1. Mr. Coleman, can you explain for the Committee the permitting, economic, and domestic energy production scenario the Committee was facing in 2005 that led to the Committee putting the categorical exclusions 

in EPAct and if you believe these provisions have improved the situation? 

25 

Answer: The Committee has long known that lands owned by the Federal Government, both onshore and offshore, are endowed with vast quantities of oil and natural gas. I reference the Committee to a long line of resource assessments and reports by the United States Geological Survey and the former Minerals Management 

Service which document these resources. These assessments and reports document 

resource numbers which are limited, however, by the lack of sufficient seismic data 

upon which to provide higher resource assessment volumes. Given the great energy 

needs of the Nation and the large contribution that these Federal lands can provide 

to help meet these energy needs, the Congress has acted a number of times to expedite energy production on these lands, while taking care to guard against unwarranted impacts on the environment. 

In 2005, the Committee was cognizant of a number of things which caused the 

Committee to initiate enactment of statutory NEPA categorical exclusions. First, for 

a number of years prior to 2005 the relationship of the Nation’s supply of natural 

gas and the demand for it had become very tight. This caused swings in prices with 

a significant upward trend. Second, environmental groups had become very aggressive in challenging leasing and permits to drill for oil and gas exploration and production on public lands, even though expansive environmental reviews had been 

conducted for leasing and permitting, and much greater environmental protections 

had been placed on such exploration and production. This was having an adverse 

effect on the potential for energy production from public lands, particularly for natural gas, thereby unnecessarily exacerbating the natural gas price upward trend. 

Environmental groups almost always included a challenge to NEPA review in their 

challenges. Third, the frustration level among Members of Congress and Committee 

staff had continued to rise for several years prior to 2005. More and more the desire 

to effect rational policy changes that would increase energy production from public 

lands, while providing for essential environmental protections, had grown. 

So, in 2005 the Committee included a number of reform provisions in the House 

precursor to the Energy Policy Act of 2005 having the objective of expediting leasing 

and permitting of all types of public lands energy resources. One of them was Section 390—NEPA statutory categorical exclusions related to oil and gas production. 

As stated in my testimony at the hearing, the purpose of these categorical exclusions was to describe categories of activities for which significant impacts would not 

reasonably be foreseeable, and therefore no further environmental analysis would 

be necessary. This action would expedite production in a number of ways—shortening the time required for issuing a permit and eliminating litigation about the 

adequacy of environmental reviews. 

Prior to the decision of the current Administration not to implement Section 390 

as written by the Congress, it had significantly achieved the objectives that the 

Committee had for it. However, the Administration’s implementation of the provision had in essence repealed it. 

Mr. LAMBORN. OK, thank you for your testimony. I stated earlier 

we will be in recess for 60 to 90 minutes. Thank you for your patience, and we will see you soon. This is such an important subject, 

we will have multiple rounds of questioning. We will be in recess. 

[Recess.] 

Mr. LAMBORN. The Subcommittee will please come back to order. 

I want to thank the witnesses and everyone else in attendance for 

your patience while we did that series of votes. It was lengthy, like 

I thought it was. But we should be done with any interruptions. 

So we will finish with our testimony and then have time for a lot 

of questions. I hope a lot of Members can rejoin us. I apologize for 

the delay and how some had to now start their travel plans, going 

back to their families and their districts. But those of us who are 

here are going to have a lot of questions because this is such an 

important topic. 

So now we will hear from the gentleman from the GAO and you 

may continue. 

26 

STATEMENT OF MARK GAFFIGAN, MANAGING DIRECTOR, 

NATURAL RESOURCES AND ENVIRONMENTAL DIVISION, U.S. 

GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY 

JEFF MALCOLM, ASSISTANT DIRECTOR, NATURAL 

RESOURCES AND ENVIRONMENT, U.S. GOVERNMENT 

ACCOUNTABILITY OFFICE 

Mr. GAFFIGAN. Chairman Lamborn, thank you. And with 10 minutes to spare, let me say good morning. I won’t think of myself so 

much as being the last batter but maybe delude myself with, you 

have saved the best for last. Thank you. 

I am pleased to be here to discuss Section 390, categorical exclusions, or cat exes, for oil and gas development. My testimony today 

is based on our 2009 report on this issue and some notable events 

since then; namely, BLM’s subsequent response to our report’s recommendations and some recent court decisions. 

In 2009, as you pointed out at the beginning, we have reported 

that BLM had used the Section 390 cat exes to approve about 6,100 

of the 22,000 applications that had come through between Fiscal 

Year 2006 and Fiscal Year 2008. That is about 28 percent of the 

whole total. BLM reported benefits of increased efficiency that varied across offices depending on a number of different factors, but 

those benefits were not easy for us to quantify. But we did find 

that not unexpectedly for a new law there were some instances of 

noncompliance with either the law or agency guidance. Now our 

findings reflect what appear to be honest mistakes with a new law. 

And while many were technical in nature, they may thwart 

NEPA’s twinnings of ensuring that BLM and the public are fully 

informed of the potential environmental impact of oil and gas development. 

We noted that a lack of clarity in the law and lack of BLM guidance and oversight contributed in large part to the inconsistencies 

that we found and raised cautions amongst all the stakeholders, including industry, environmental groups and BLM. Regarding the 

law, four key questions were raised about Section 390 CXs: Are 

they subject to extraordinary circumstances? Two, are they mandatory? And Ms. Sgamma was talking about whether GAO noted violations of the use of these as not being mandatory. The reason we 

did not do that is it wasn’t clear to us that the law said this was 

mandatory. 

The third question was, what does rebuttable presumption 

mean? And fourth, what level of public disclosure is required? 

Regarding the BLM guidance and oversight, the concerns included three things: One, the need to issue more detailed and explicit guidance for some of the terminology that is undefined in the 

law; two, the need for some standardized guidance, including some 

documentation required to justify the categorical exclusion use; 

and, three, the need for BLM to implement an oversight plan for 

ensuring compliance with the law and guidance in a consistent 

manner. 

Accordingly, our report suggested that Congress might want to 

clarify the law and resolve the questions raised. In addition, we 

recommend that BLM issue more detailed guidance, provide some 

standard templates or checklists for each of the categorical exclusions that at a minimum specifies what kind of justification is reVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6602 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
27 

1Pub. L. No. 91-190, 83 Stat. 852 (1970). NEPA has two principal purposes: (1) to ensure that 

the agency carefully considers detailed information concerning significant environmental impacts and (2) to ensure that this information will be made available to the public. See, for example, Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 349 (1989). It does not, however, require any particular substantive result. See, for example, Department of Transportation 

v. Public Citizen, 541 U.S. 752, 756 (2004). 2Throughout this testimony, we refer to categorical exclusions developed under the NEPA regulations as administrative categorical exclusions. 

quired to be documented, and last that BLM develop an oversight 

plan. 

Since our report 2 years ago, despite efforts to address the need 

for clarity in the law and BLM attempts to provide additional guidance, the bottom line is that today the situation is unchanged. The 

law, with its questions, remains unaltered. And BLM’s attempt to 

provide further guidance in a May 2010 instruction memorandum 

has been recently blocked by a court decision that held that this 

guidance constituted a regulation that was adopted without using 

proper procedures. In short, today we are right back where we 

were 2 years ago when we issued our report. 

In conclusion, no matter where it occurs, oil and gas development 

can be a high risk, high reward endeavor with numerous potential 

benefits and costs for the economy and ecosystems. For years oil 

and gas development under Federal jurisdiction has faced challenges in its efforts to strike the balance between development and 

environmental protection. While the challenges that may be 

brought are largely out of its control, the Federal Government can 

control the quality and integrity of its permitting environmental 

analysis process. Uncertainty and questions about this process only 

increases the vulnerability to challenges from all sides. Anything 

that can be done to reduce this uncertainty and resolve questions 

decreases this vulnerability and enhances the government’s credibility among all stakeholders, as it strives to achieve the balance 

between oil and gas development and environmental protection. 

Mr. Chairman, thank you for your time. This concludes my opening statement. I am happy to answer any questions you might 

have. 

[The prepared statement of Mr. Gaffigan follows:] 

Statement of Mark Gaffigan, Managing Director, Natural Resources and 

Environment, United States Government Accountability Office (GAO) 

Chairman Lamborn, Ranking Member Holt, and Members of the Subcommittee: 

I am pleased to be here today to participate in your hearing on the categorical 

exclusions established by section 390 of the Energy Policy Act of 2005. As you know, 

oil and natural gas production from federal lands is critical to meeting our nation’s 

energy needs. From fiscal year 2006 through fiscal year 2010, the Department of 

the Interior’s Bureau of Land Management (BLM) approved more than 30,600 new 

oil and gas drilling permits across 24 states, largely in the mountain West. Like 

many projects on federal land with possible environmental impacts, oil and gas development activities are typically subject to environmental review under the National Environmental Policy Act of 1969 (NEPA). 1

Under NEPA, federal agencies evaluate the likely environmental effects of 

projects they are proposing by preparing either an environmental assessment or, if 

projects are likely to significantly affect the environment, a more detailed environmental impact statement. If, however, the agency determines that activities of a 

proposed project fall within a category of activities the agency has already determined has no significant environmental impact—called a categorical exclusion— 

then the agency generally need not prepare an environmental assessment or environmental impact statement. 2 The agency may instead approve projects that fit 

within the relevant category by using one of the predetermined administrative catVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
28 

3Pub. L. No. 109-58, 119 Stat. 594 (2005). 

4Pub. L. No. 109-58, § 390, 119 Stat. 747 (2005), codified at 42 U.S.C. § 15942. 

5 Bureau of Land Management, ′′Instruction Memorandum No. 2005 -247: National Environmental Policy Act (NEPA) Compliance for Oil, Gas, and Geothermal Development,′′ attachment 

2 (Sept. 30, 2005), and BLM, National Environmental Policy Act Handbook H-1790-1 (Washington, D.C.: 2008). 6GAO, Energy Policy Act of 2005: Greater Clarity Needed to Address Concerns with Categorical Exclusions for Oil and Gas Development under Section 390 of the Act, GAO-09-872 (Washington, D.C.: Sept. 16, 2009). 7Pub. L. No. 94-579, 90 Stat. 2743 (1976), codified as amended at 43 U.S.C. § 1701 et seq. 

egorical exclusions, rather than carrying out a project-specific environmental assessment or environmental impact statement. 

To address long-term energy challenges, Congress enacted the Energy Policy Act 

of 2005, in part to expedite oil and gas development within the United States. 3 This 

law authorizes BLM, for certain oil and gas activities, to approve projects without 

preparing the new environmental analyses that would normally be required by 

NEPA. Section 390 of the Energy Policy Act of 2005 established five categorical exclusions specifically for oil and gas development. 4 These categorical exclusions—referred to in this testimony as section 390 categorical exclusions—define specific conditions under which BLM need not prepare any new NEPA analysis, such as an environmental assessment or environmental impact statement, which would ordinarily 

be required for oil and gas projects. For a project to be approved using an administrative categorical exclusion, the agency must determine whether any extraordinary 

circumstances exist under which a normally excluded action or project may have a 

significant effect. As originally implemented, projects approved with section 390 categorical exclusions were not subject to any screening for extraordinary circumstances, according to BLM officials. 5

In September 2009, we reported on BLM’s first 3 years of experience—fiscal years 

2006 through 2008—using section 390 categorical exclusions. 6 My testimony today 

will summarize the finding of our September 2009 report, along with some recent 

updates. Specifically, I will discuss (1) the extent to which BLM used section 390 

categorical exclusions each fiscal year from 2006 through 2008 and the benefits, if 

any, associated with their use; (2) the extent to which BLM used section 390 categorical exclusions in compliance with the Energy Policy Act of 2005 and internal 

BLM guidance; (3) key concerns, if any, associated with section 390 categorical exclusions; and (4) how BLM has responded to the recommendations in our September 

2009 report and other recent developments. 

For our report, we reviewed relevant laws, regulations, and Interior and BLM 

guidance. We also reviewed BLM headquarters and field office documents and data 

for each fiscal year from 2006 through 2008. We interviewed officials in BLM headquarters and in the 11 BLM field offices (and their associated state offices) that 

processed the most applications for permit to drill (APD) from fiscal year 2006 

through fiscal year 2008. We also interviewed representatives from industry, historic preservation groups, and environmental groups about benefits and concerns— 

both actual and potential—associated with section 390 categorical exclusions. Other 

recent developments are based on our review of court decisions that have been decided since we issued our September 2009 report. The report was a performance 

audit conducted in accordance with generally accepted government auditing standards. A detailed description of our scope and methodology in presented in appendix 

I of the September 2009 report. 

Background 

Under the Federal Land Policy and Management Act of 1976, as amended 

(FLPMA), 7 BLM manages about 250 million acres of federal land for multiple uses, 

including recreation; range; timber; minerals; watershed; wildlife and fish; and natural scenic, scientific, and historical values, as well as for the sustained yield of renewable resources. In addition, the Mineral Leasing Act of 1920 charges Interior 

with responsibility for oil and gas leasing on federal and private lands where the 

federal government has retained mineral rights. BLM is responsible for managing 

approximately 700 million mineral onshore acres, which include the acreage leased 

for oil and gas development. To manage its responsibilities, BLM administers its 

programs through its headquarters office in Washington, D.C.; 12 state offices; 45 

district offices; and 128 field offices. BLM headquarters develops guidance and regulations for the agency, while the state, district, and field offices manage and implement the agency’s programs. Thirty BLM field offices, located primarily in the 

mountain West, were involved in oil and gas development. 

29 

8 43 C.F.R. § 3162.3-1(c). 

9 Companies may also be required to submit a right-of-way application for related activities, 

such as adding pipelines, that take place on land for which they do not own a lease. See 43 

C.F.R. § 2881.7. 10Pub. L. No. 109-58, § 390(a), 119 Stat. 747 (2005), codified at 42 U.S.C. § 15942(a). Although 

the Energy Policy Act of 2005 authorizes both BLM and the Department of Agriculture’s U.S. 

Forest Service to use section 390 categorical exclusions, our September 2009 report examined 

only BLM’s use of section 390 categorical exclusions. 

To drill for oil or natural gas on leased lands, a company must submit an APD 

to BLM. 8 APDs are used to approve drilling and all related activities on land leased 

by a company, including road building; digging pits to store drilling effluent; placing 

pipelines to carry oil and gas to market; and building roads to transport equipment, 

personnel, and other production-related materials. 9 After an APD is approved, operators can submit proposals to BLM, in the form of a sundry notice, for modifications 

to their approved APD. Sundry notices may involve activities like changing the location of a well, adding an additional pipeline, or adding remote communications 

equipment. 

Interior and BLM have administrative categorical exclusions in place for numerous types of activities, such as constructing nesting platforms for wild birds and constructing snow fences for safety. To use such an administrative categorical exclusion 

in approving a project on BLM land, the agency screens each proposed project for 

extraordinary circumstances, such as significant impacts to threatened and endangered species, historic or cultural resources, or human health and safety or potentially significant cumulative environmental effects when coupled with other actions. 

When one or more extraordinary circumstances exist, BLM guidance precludes staff 

from using an administrative categorical exclusion for the project. 

Section 390 of the Energy Policy Act of 2005 authorizes BLM to forgo environmental assessments and environmental impact statements for oil and gas projects 

under certain circumstances. Specifically, subsection (a) states: 

‘‘NEPA Review.—Action by the Secretary of the Interior in managing the public 

lands or the Secretary of the Agriculture in managing National Forest System 

Lands, with respect to any of the activities described in subsection (b) 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 if the activity is 

conducted pursuant to the Mineral Leasing Act for the purpose of exploration or development of oil and gas.’’ 10 [emphasis added] 

Subsection (b) outlines five new categories of activities to be considered categorical 

exclusions. These section 390 categorical exclusions (referred to in this testimony as 

section 390 CX1, CX2, CX3, CX4, and CX5) include: 

‘‘(1) Individual surface disturbances of less than 5 acres so long as the total surface disturbance on the lease is not greater than 150 acres and site-specific analysis 

in a document prepared pursuant to NEPA has been previously completed. 

(2) Drilling an oil or gas well at a location or well pad site at which drilling has 

occurred previously within 5 years prior to the date of spudding the well. 

(3) Drilling an oil or gas well within a developed field for which an approved land 

use plan or any environmental document prepared pursuant to NEPA analyzed such 

drilling as a reasonably foreseeable activity, so long as such plan or document was 

approved within 5 years prior to the date of spudding the well. 

(4) Placement of a pipeline in an approved right-of-way corridor, so long as the 

corridor was approved within 5 years prior to the date of placement of the pipeline. 

(5) Maintenance of a minor activity, other than any construction or major renovation or [sic] a building or facility.’’ 

In its process for approving oil or gas projects, BLM’s original guidance provided 

that the agency can use a section 390 categorical exclusion when a project meets 

the conditions set forth for any of the five types of section 390 categorical exclusions. 

BLM guidance still directs staff to document their decision and rationale for using 

a specific section 390 categorical exclusion. Furthermore, BLM guidance directed its 

staff when using section 390 categorical exclusions to comply with the Endangered 

Species Act and the National Historic Preservation Act; to conduct on-site reviews 

for all APDs; and to add site-specific restrictions or conditions of approval if deemed 

necessary to protect the environment or cultural resources. 

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-andgas-related activities from fiscal year 2006 through fiscal year 2008. Of these, BLM 

30 

field offices used section 390 categorical exclusions to approve nearly 6,100 APDs 

(about 28 percent of approximately 22,000 federal wells approved by BLM) during 

this period. Three BLM field offices (Pinedale, Wyoming; Farmington, New Mexico; 

and Vernal, Utah) accounted for almost two-thirds of section 390 categorical exclusions used to approve APDs. Section 390 CX3 accounted for more than 60 percent 

of the section 390 categorical exclusions used to approve APDs. BLM also used section 390 categorical exclusions to approve more than 800 nondrilling projects from 

fiscal year 2006 through fiscal year 2008. These approvals were for a wide range 

of activities, such as changing a well location, adding new pipelines, and doing road 

maintenance. The Buffalo, Wyoming, field office was the most prominent user of section 390 categorical exclusions for these purposes, approving more than 250 nondrilling projects with section 390 categorical exclusions. 

The vast majority of BLM officials we spoke with told us that using section 390 

categorical exclusions expedited the application review and approval process, but 

the amount of time saved by field offices depended on a variety of factors and circumstances influencing the extent to which field offices used the exclusions. A frequently cited factor contributing to these efficiency gains was the extent to which 

proposed projects fit the specific conditions set forth in each section 390 categorical 

exclusion. BLM officials also identified other factors that contributed to their ability 

to use section 390 categorical exclusions, including the field office resource specialists’ familiarity with the area of the proposed action, the area’s environmental sensitivity, the extent of the area’s cultural resources, and the proposed action’s extent 

of surface disturbance. Specifically, BLM officials told us that section 390 categorical 

exclusions were regularly used to approve projects in areas where sensitive environmental or cultural concerns were few (e.g., no threatened or endangered species, or 

limited cultural resources in the area), where the resource specialists were familiar 

with the location of the proposed action, or where the proposed project was not unusual or was likely to have minimal impact on the local environment. Additionally, 

field office policies could contribute to how often section 390 categorical exclusions 

were used. The differences in office policies result from field office managers’ comfort with the use of section 390 categorical exclusions and their interpretations of 

appropriate use. 

Because it is not always clear how oil and gas development would have proceeded 

in the absence of section 390 categorical exclusions, BLM officials told us that estimating the amount of time saved by using the exclusions was difficult. In field offices where section 390 categorical exclusions were seldom used to approve APDs 

or nondrilling actions, officials told us that a typical section 390 categorical exclusion approval document saved a few hours of total staff time. In contrast, in field 

offices where section 390 categorical exclusions were used more often, the time savings were cumulatively more significant, although officials could not quantify them. 

Officials in these field offices told us that while the savings for a single APD did 

not by itself mean that the APD was approved in fewer calendar days, the total 

number of APDs processed in the office in a given period was probably larger because of the cumulative time saved by using section 390 categorical exclusions. 

Industry officials with whom we spoke also agreed that BLM’s use of section 390 

categorical exclusions had generally decreased APD-processing times and that this 

increased efficiency was more pronounced in some field offices than in others. Acknowledging that the type of development and the availability of NEPA documents 

were both critical factors, they also stressed that differences in field office policies, 

field office operations, and field management personalities generally influenced how 

readily a given BLM field office used section 390 categorical exclusions. For example, according to industry officials, some field offices were conservative and cautious 

and therefore reluctant to use section 390 categorical exclusions if even minimal environmental or cultural resource concerns existed. This tendency ran counter to 

what some industry officials told us was their interpretation of the law—namely, 

that they believed that section 390 categorical exclusions should be used whenever 

a project meets the required conditions. Industry officials told us that in some cases 

BLM was overly cautious in applying section 390 categorical exclusions, in part because BLM feared litigation from environmental groups. Industry officials commented on the lack of consistency among BLM field offices in how section 390 categorical exclusions were used but overall told us that section 390 categorical exclusions were a useful tool and have contributed to expedited application processing. 

They applauded the exclusions for reducing redundant and time-consuming NEPA 

documentation and making APD application processing more predictable and flexible. 

31 

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. Specifically, we found six types of violations of the Energy Policy Act of 2005 and fives types of noncompliance with BLM guidance (see 

table 1). 

Overall, we found many more examples of noncompliance with guidance than violations of the law. We did not find intentional actions on the part of BLM staff to 

circumvent the law; rather, our findings reflected what appear to be honest mistakes stemming from confusion in implementing a new law with evolving guidance. 

Nevertheless, even though some of the violations of law—such as approving multiple 

wells with one decision document—were technical in nature, they must be taken seriously. 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. For example, approval of multiple wells on 

one or more well pads could have required an environmental assessment or environmental impact statement, which would likely have provided additional information 

on the environmental impacts of approving multiple wells. According to BLM officials, the outcome of the NEPA process likely would have yielded the same result. 

Nevertheless, the purpose of NEPA is to provide better information for decision 

making, not necessarily to alter the decisions ultimately made. The projects would 

likely have been approved, but the specific location and conditions of approval might 

have differed, and BLM and the public might have had more detailed information 

on the environmental impacts of the approvals. 

A lack of definitive and clear guidance from BLM, as well as lack of oversight of 

field offices’ actions, contributed to the violations of law and noncompliance with 

BLM’s existing guidance. At the time of our report, BLM had provided several key 

guidance documents; we found, however, that this guidance did not contain the 

specificity and examples needed to clearly direct staff in the appropriate use and 

limits of section 390 categorical exclusions. 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 


68267.001.eps
32 

11 Nine Mile Canyon Coalition v. Stiewig, Civ. No. 08-586, D. Utah (filed August 6,2008). 12 Bureau of Land Management, ′′Instruction Memorandum No. 2010-118: Energy Policy Act 

Section 390 Categorical Exclusion Policy Revision′′ (May 17, 2010). 

many—or too few—instances. BLM officials, environmental groups, industry 

groups, and others raised serious concerns with the law as a whole. These 

concerns related to four key elements: (1) the definition of ‘‘categorical exclusion’’ and whether the screening for extraordinary circumstances was required, (2) whether the use of section 390 categorical exclusions was mandatory or discretionary, (3) the meaning of the phrase ‘‘rebuttable presumption,’’ 

and (4) the level of public disclosure required for section 390 categorical exclusions. • The law’s descriptions of the five types of section 390 categorical exclusions 

prompted more specific concerns about how to appropriately use one or more 

of the five types of section 390 categorical exclusions. These concerns related 

to (1) the adequacy of NEPA documents supporting the use of a particular 

section 390 categorical exclusion, (2) consistency with existing NEPA documents, (3) the rationale for the 5-year time frame used in some but not all 

types of section 390 categorical exclusions, and (4) the piecemeal approach to 

development fostered by using section 390 categorical exclusions. • Concerns about how to interpret and apply key terms that describe the conditions that must be met when using a section 390 categorical exclusion. In particular, each of the five types of section 390 categorical exclusions contain terminology that is undefined in the law and for which BLM had not provided 

clear or complete guidance. Specifically, the ambiguous terms included (1) ‘‘individual surface disturbances’’ under section 390 CX1, (2) ‘‘maintenance of a 

minor activity’’ under section 390 CX5, (3) ‘‘construction or major renovation 

or [sic] a building or facility’’ under section 390 CX5, (4) ‘‘location’’ under section 390 CX2, and (5) ‘‘right-of-way corridor’’ under section 390 CX4. 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 September 2009, we reported that the failure of both the law and BLM guidance to clearly define key conditions that projects must meet to be eligible for approval with a section 390 categorical exclusion caused confusion among BLM officials, industry, and the public over what activities qualified for section 390 categorical exclusions. As a result, we suggested that Congress consider amending section 

390 to clarify and resolve some of the key issues that we identified, including but 

not limited to (1) clearly specifying whether section 390 categorical exclusions apply 

even in the presence of extraordinary circumstances and (2) clarifying what the 

phrase ‘‘rebuttable presumption’’ means and how BLM must implement it in the 

context of section 390. 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. 11 In Nine Mile Coalition v. 

Stiewig, environmental groups sued BLM, alleging that the phrase meant that BLM 

was required to avoid using a section 390 categorical exclusion in approving a 

project where extraordinary circumstances were present. BLM settled the case in 

March 2010, agreeing, among other things, to issue a new instruction memorandum 

stating that the agency would not use section 390 categorical exclusions where extraordinary circumstances were present. 

In May 2010, BLM issued ‘‘Instruction Memorandum No. 2010–118,’’ 12 which was 

the first in a series of guidance documents BLM planned to issue to address the 

recommendations in our September 2009 report. BLM’s May 2010 instruction 

memorandum announced several key reforms to the way BLM staff can use section 

33 

13 Civ. No. 10-237F (D. Wyo. 2011). 

390 categorical exclusions. These reforms substantially addressed the gaps and 

shortcomings in BLM’s guidance that we identified in our report, directing that, for 

example, section 390 CX2 or CX3 no longer be used to approve drilling wells after 

the law’s allowed 5-year time frame or that section 390 CX3 not be used to approve 

drilling a well without sufficient supporting NEPA documentation. The memorandum explicitly identified the types of NEPA documents needed to adequately 

support the use of section 390 categorical exclusions to approve new wells and directed that any supporting NEPA analysis must be specific to the proposed drilling 

site. The memorandum also directs BLM field offices to ensure that all oil and gas 

development approved with a section 390 categorical exclusion conform to the analysis conducted in the supporting land use plan and come within the range of environmental effects analyzed in the plan and associated NEPA documents. In addition, the May 2010 instruction memorandum implemented the settlement in Nine 

Mile Coalition v. Stiewig by requiring BLM field offices to screen for the presence 

of extraordinary circumstances—such as for cumulative impacts on air quality or 

critical habitat—whenever considering the use of a section 390 categorical exclusion. 

According to BLM officials, the agency developed a second instruction memorandum in 2011 to address our recommendation that it standardize templates and 

checklists its field offices use in approving each of the five types of section 390 categorical exclusions to specify, at a minimum, the documentation required to justify 

their use. 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. 13 In this case, an oil and gas trade association sued BLM, alleging, among others, that the agency issued its May 2010 instruction memorandum 

without following proper rule-making procedures and that the instruction memorandum’s provision concerning extraordinary circumstances violated section 390. 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. The court did 

not address whether the instruction memorandum was consistent with section 390; 

neither did it address the meaning of the phrase ‘‘rebuttable presumption’’ in section 

390. 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. 

In conclusion, it is now uncertain what actions BLM may take in response to the 

most recent court decision. These actions could include, but are not limited to, moving forward and issuing the May 2010 instruction memorandum as a regulation or 

possibly appealing the decision. 

Chairman Lamborn, Ranking Member Holt, and Members of the Subcommittee, 

this completes my prepared statement. I would be pleased to answer any questions 

that you may have at this time. 

GAO Contacts and Staff Acknowledgments 

For further information about this testimony, please contact Mark Gaffigan or 

Anu K. Mittal at (202) 512–3841 or gaffiganm@gao.gov and mittala@gao.gov, respectively. Contact points for our Offices of Congressional Relations and Public Affairs 

may be found on the last page of this testimony. In addition to the contact named 

above, Jeffery D. Malcolm (Assistant Director), Mark A. Braza, Ellen W. Chu, 

Heather E. Dowey, Richard P. Johnson, Michael L. Krafve, and Tama R. Weinberg 

made key contributions to this testimony. 

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GAO Highlights 

September 9, 2011 

ENERGY POLICY ACT OF 2005 

BLM’s Use of Section 390 Categorical Exclusions for Oil and Gas 

Development 

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. 

GAO is making no new recommendations at this time. 

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 violaVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
35 

1GAO, Energy Policy Act of 2005: Greater Clarity Needed to Address Concerns with Categorical Exclusions for Oil and Gas Development under Section 390 of the Act, GAO–09–872 (Washington, D.C.: Sept. 16, 2009). 

tions 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 rulemaking 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. 

Response to questions submitted for the record by Mark Gaffigan, 

Managing Director, Natural Resources and Environment, GAO 

Questions for the Record Submitted by Ranking Member Edward J. 

Markey 

Question 1: During the period between now and when the rulemaking is 

complete, BLM must now revert to the Bush Administration’s 2005 policy on categorical exclusions. What might be the implications of returning to the Bush Administration’s policy? Will it lead to uncertainty and 

inconsistency among BLM field offices regarding the implementation of 

Section 390? 

GAO Response: 

In the absence of the clarifying guidance and templates that we recommended in 

our September 2009 report,1 and in the absence of clarifying amendments to section 

390 of the Energy Policy Act of 2005, the implementation of section 390 categorical 

exclusions will likely continue to raise the same questions and concerns that we 

identified in our report. We reported that BLM field offices had frequently implemented section 390 categorical exclusions in a manner inconsistent with the law and 

BLM’s 2005 guidance. We recommended that BLM issue additional guidance and 

conduct vigilant oversight to ensure that section 390 categorical exclusions are used 

appropriately—neither over- nor under-used. 

Question 2: Will going back to the Bush Administration’s policy in the interim lead to the possibility of additional habitat fragmentation or 

harm to wildlife? 

GAO Response: 

The environmental effects of oil and gas development can vary based on a number 

of site-specific factors. For example, adding a new well to an existing well-pad is 

unlikely to cause additional habitat fragmentation or harm to wildlife. In contrast, 

drilling a well in a new location could possibly lead to additional habitat fragmentation or harm to wildlife. Going back to BLM’s 2005 guidance on the use of section 

36 

2 Bureau of Land Management, ‘‘Instruction Memorandum No. 2010–118: Energy Policy Act 

Section 390 Categorical Exclusion Policy Revision’’ (May 17, 2010). On August 12, 2011, in a 

decision in the Western Energy Alliance v. Salazar case, 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. Civ. No. 10–237F (D. Wyo. 2011). 

390 categorical exclusions, however, may not have a substantive affect on habitat 

fragmentation or wildlife because as we reported in September 2009, according to 

BLM officials the applications for permit to drill (APD) not approved using a section 

390 categorical exclusion would likely have been approved under BLM’s regular approval process following the National Environmental Policy Act (NEPA). 

Question 3: Could returning to the Bush Administration’s Section 390 policy make it more likely that there could be additional damage to Native 

American cultural sites throughout the West? 

GAO Response: 

As stated above, the environmental effects of oil and gas development can vary 

based on a number of site-specific factors. An important factor in this case would 

be the level of official status or recognition that a particular Native American cultural site may have, if any. We reported in September 2009 that BLM guidance directs its staff when using section 390 categorical exclusions to comply with the Endangered Species Act and the National Historic Preservation Act; to conduct on-site 

reviews for all APDs; and to add site-specific restrictions or conditions of approval 

if deemed necessary to protect the environment or cultural resources. BLM’s overturned May 2010 instruction memorandum directed BLM field office staff to screen 

for the presence of extraordinary circumstances—such as significant impacts on (1) 

such natural resources and unique geographic characteristics as historic or cultural 

resources and (2) properties listed, or eligible for listing, on the National Register 

of Historic Places—whenever considering the use of a section 390 categorical exclusion.2 The overturned guidance sought to prevent the use of a section 390 categorical exclusion when an extraordinary circumstance was present. 

Question 4: The GAO found that three field offices—the Pinedale, Wyoming 

office, the Farmington, New Mexico office, and the Vernal, Utah office— 

accounted for almost two-thirds of section 390 categorical exclusions 

used to approve APDs. In these three areas, the Environmental Protection Agency found that ground level ozone levels exceeded EPA air 

quality standards in these three areas. Could returning to the Bush Administration’s 2005 Section 390 policy lead to adverse air quality impacts where cumulative impacts are not analyzed? 

GAO Response: 

Yes. We reported in September 2009 that of the various extraordinary circumstances, concerns about the cumulative impacts of additional oil or gas development—especially adverse effects of such development on air quality—have been 

among the most widespread and potentially serious. We reported that environmental groups and government agencies alike had raised concerns that section 390 

categorical exclusions exacerbate air quality problems and threats by not subjecting 

projects to screening for extraordinary circumstances such as cumulative impacts. 

To the extent that new decisions by BLM to approve APDs with section 390 categorical exclusions do not consider cumulative impacts such as air quality, the concerns 

we cited in our report would persist. Moreover, as we noted in our report, certain 

projects erroneously approved as section 390 categorical exclusions may have required more rigorous environmental analyses—such as environmental assessments 

or environmental impact statements—which could have assessed the need to mitigate potentially adverse effects on natural resources like wildlife and air quality. 

Without the additional guidance we recommended, the potential for similar errors 

would persist. 

Question 5: Given the ambiguities in Section 390’s statutory language, 

would it be important for BLM to develop a consistent policy that allows for the consideration of extraordinary circumstances such as the 

cumulative impacts of drilling? 

GAO Response: 

We have not taken position on whether the use of section 390 categorical exclusions should be subject to a screening for the presence of extraordinary circumstances. However, this issue is subject to interpretation and, as our September 

37 

2009 report noted, there are conflicting interpretations of section 390 of the Energy 

Policy Act of 2005 with respect to this issue. Furthermore, in our report we suggested that Congress should consider amending section 390 to clarify and resolve 

some of the key issues that we identified in the report, including, but not limited 

to, clearly specifying whether section 390 categorical exclusions apply even in the 

presence of extraordinary circumstances. 

Question 6: Another concern identified by GAO regarding Section 390 was 

the large amount of variation among BLM field offices in how they 

each implemented this section. Do you think it’s important to standardize the application of Section 390 as part of BLM’s new rule? 

GAO Response: 

Yes. BLM field offices should be consistently implementing section 390 of the Energy Policy Act of 2005 in accordance with the law and BLM’s internal agency guidance. Specifically, in our September 2009 report, we recommended that BLM 

• issue detailed and explicit guidance that addresses 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. 

Question 7: Please explain the problems BLM has had in interpreting each 

of the five categorical exclusions contained in Section 390 due to ambiguities in the statutory language of the Act. 

GAO Response: 

Section 390 of the Energy Policy Act of 2005 authorizes BLM to forgo environmental assessments and environmental impact statements for oil and gas projects 

under certain circumstances. Specifically, subsection (b) outlines five new categories 

of activities to be considered categorical exclusions. These section 390 categorical exclusions (which we refer to as section 390 CX1, CX2, CX3, CX4, and CX5) include: 

‘‘(1) Individual surface disturbances of less than 5 acres so long as the total surface disturbance on the lease is not greater than 150 acres and site-specific 

analysis in a document prepared pursuant to NEPA has been previously completed. 

(2) Drilling an oil or gas well at a location or well pad site at which drilling 

has occurred previously within 5 years prior to the date of spudding the 

well. 

(3) Drilling an oil or gas well within a developed field for which an approved 

land use plan or any environmental document prepared pursuant to NEPA 

analyzed such drilling as a reasonably foreseeable activity, so long as such 

plan or document was approved within 5 years prior to the date of spudding 

the well. 

(4) Placement of a pipeline in an approved right-of-way corridor, so long as the 

corridor was approved within 5 years prior to the date of placement of the 

pipeline. 

(5) Maintenance of a minor activity, other than any construction or major renovation or [sic] a building or facility.’’ 

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, some of those concerns included the following: 

• The law’s descriptions of the five types of section 390 categorical exclusions 

prompted concerns about how to appropriately use one or more of the five types 

of section 390 categorical exclusions. These concerns related to (1) the adequacy of NEPA documents supporting the use of a particular section 390 categorical exclusion, (2) consistency with existing NEPA documents, (3) the rationale for the 5-year time frame used in some but not all types of section 

390 categorical exclusions, and (4) the piecemeal approach to development fostered by using section 390 categorical exclusions. 

• Concerns about how to interpret and apply key terms that describe the conditions that must be met when using a section 390 categorical exclusion. In particular, each of the five types of section 390 categorical exclusions contain terminology that is undefined in the law and for which BLM had not provided 

clear or complete guidance. Specifically, the ambiguous terms included (1) ‘‘inVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
38 

3 Nine Mile Canyon Coalition v. Stiewig, Civ. No. 08–586, D. Utah (filed August 6, 2008). 

4During Senate floor debates on the conference version of the bill, which ultimately became 

law, one of the bill’s supporters stated that the bill ‘‘does not include categorical waivers for 

NEPA for oil and gas developments.’’ 151 Cong. Rec. S9340 (daily ed. July 29, 2005) (statement 

of Senator Akaka). 

dividual surface disturbances’’ under section 390 CX1, (2) ‘‘maintenance of a 

minor activity’’ under section 390 CX5, (3) ‘‘construction or major renovation 

or [sic] a building or facility’’ under section 390 CX5, (4) ‘‘location’’ under section 390 CX2, and (5) ‘‘right-of-way corridor’’ under section 390 CX4. 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. 

Question 8: Please explain the difficulties in enacting Section 390 of the Energy Policy Act with respect to the phrase ‘‘subject to rebuttable presumption’’? How should a BLM field office decide whether a rebuttable 

presumption exists if that office cannot consider extraordinary circumstances? 

GAO Response: 

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 during 

the preparation of our report.3 The court in the Nine Mile case did not reach a decision on this issue, but the government still could appeal the ruling. Accordingly we 

are not in a position to interpret this language. 

However, in terms of the ‘‘rebuttable presumption’’ language, we reported in September 2009 that it was unclear what presumption was rebuttable and how that 

presumption was to be rebutted. Consequently, we stated that Congress should consider amending section 390 to clarify and resolve some of the key issues identified 

in our report, including, but not limited to clarifying what the phrase ‘‘rebuttable 

presumption’’ means and how BLM must implement it in the context of section 390. 

Moreover, in our September 2009 report we noted that the language in a House 

version of the bill would have specifically exempted from additional NEPA analysis 

activities similar to those meeting the conditions for a section 390 categorical exclusion—meaning that use of the new provisions would have been mandatory. The law 

as enacted, however, contained no such specific exclusion, and instead included the 

rebuttable presumption language.4 Whatever this language means, it certainly differs from the mandatory exemption language that existed in the House bill. 

Question 9: During its investigation, GAO discovered that BLM had actually used Section 390 categorical exclusion over 6,100 times, while BLM 

believed that it had only used these exclusions about 5,000 times. Has 

BLM implemented a system yet to fully track the uses of these categorical exclusions? 

GAO Response: 

We are not aware that BLM has implemented such a system. 

Question 10: Please explain the benefits of a standardized checklist for all 

BLM offices to follow with respect to these categorical exclusions? Do 

you believe that BLM could still develop a standardized checklist on 

how to use Section 390 exclusions? 

GAO Response: 

As we stated above in our response for Question 6, we believe BLM field offices 

should be consistently implementing section 390 of the Energy Policy Act of 2005 

in accordance with the law and BLM’s internal agency guidance. In our September 

2009 report, we recommended that BLM 

• issue detailed and explicit guidance that addresses 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. 

We still believe that it is important that BLM continue to pursue implementing 

these recommendations. 

39 

5GAO, Energy Policy Act of 2005: BLM’s Use of Section 390 Categorical Exclusions for Oil and 

Gas Development, GAO–11–941T (Washington, D.C.: Sept. 9, 2011). 

Question 11: The 2006 BLM guidance did not address the documentation 

needed to support the use of a section 390 categorical exclusion or even 

whether BLM field offices had to disclose how often these categorical 

exclusions were used. What did GAO recommend with respect to documenting the use of these categorical exclusions? 

GAO Response: 

With regard to documenting the use of section 390 categorical exclusions, we recommended in our September 2009 report that BLM provide standardized templates 

or checklists for each of the five types of section 390 categorical exclusions, which 

would specify, at a minimum, what documentation is required to justify their use. 

Question 12: GAO also recommended the development of a BLM oversight 

plan to ensure compliance with EPACT, NEPA, and agency guidance 

documents. Has BLM done this yet? 

GAO Response: 

As far as we know, BLM has not yet developed an oversight plan as we recommended in our September 2009 report. As we noted in our testimony,5 BLM was 

in the process of developing a second instruction memorandum in 2011 when the 

court overturned their May 2010 instruction memorandum. BLM has had to adjust 

their plans as a result of the August 12, 2011 court decision. 

Mr. LAMBORN. Thank you for your testimony. We will now go to 

our rounds of questions. And because yet another one of the Members of the Committee is on a tighter time schedule for traveling 

back to the district, I am going to defer to Mr. Flores and let him 

go first. So I recognize the gentleman from Texas. 

Mr. FLORES. Thank you, Mr. Chairman. I will try to get through 

as many questions as I can as quickly as I can. 

Mr. Coleman, you were I think fairly adamant that the law was 

very clear, that the legislative intent and legislative history of 

EPAct ’05 was very clear. But your friend to the right of you is saying that it wasn’t. Can you guys reconcile this for me? Mr. 

Gaffigan, I am going to ask you for your comments. Why don’t you 

give me your comments first? Mr. Gaffigan. 

Mr. GAFFIGAN. I think in general when we talked to a lot of people when we did this study, and we tried to look through the legislative history, and we are GAO auditors. We are trying to understand what went behind some of the words that are in there. A lot 

of folks are not sure what some of the key terms in the law referred to. And in searching the legislative history we couldn’t find 

much evidence of that. I know Mr. Coleman is pretty clear that he 

felt it was clear as to what was intended. And I think that if you 

talk to some others who were involved—because he did have some 

other friends who were helping him with the legislation, you will 

probably hear a different version of what might have been clear. 

All we are pointing out is that a lot of folks have raised this 

question. It has already been subject to litigation, and we suspect 

that it probably will be in the future, no matter what the outcome 

of further guidance is. 

Mr. FLORES. Mr. Coleman. 

Mr. COLEMAN. I appreciate you asking that question. As we 

talked, Mr. Gaffigan and I have and others, these issues that were 

raised in the GAO report, some of them about lack of clarity I 

didn’t think were really appropriate. Congress does not define 

40 

every term that is in a bill. These have to be interpreted based on 

their common usage or experience. The whole question is—and I go 

back to the testimony that I gave earlier, what has been attempted 

is to read some words into this bill which were not in there, like 

extraordinary circumstances; and read some words out of there 

that are clearly in there, like having a categorical exclusion for 

NEPA based on a land use plan. That is clearly in there. We have 

went over that in great detail. 

Frankly, there was only one other person that really negotiated 

this. Now I am not sure if she would agree with me on everything. 

But that one she would have to agree that we went over every one 

of those words. So I know we can’t have a disagreement on that. 

Every one of these words is what we intended to be in there. As 

a lawyer, we have certain rules of statutory construction that we 

use to interpret statutes. We do not have to write all that out. And 

as I mentioned to others, at one time the Congress used to have 

a habit of writing detailed report language. This is not what we 

were doing in EPAct 2005. So we tried to write in terms that were 

going to be clearly understood. And I think the people who were 

against this law, mostly environmental groups, wanted to raise 

these issues to create a problem which didn’t really exist. 

Mr. FLORES. OK. More questions for Mr. Gaffigan. Were there 

any substantive problems? It sounds like we had paperwork problems, inconsistencies. Were there substantive problems? 

Mr. GAFFIGAN. I would say no. Most of them were sort of technical in nature, but we felt they were serious enough to point out. 

As you know, lawsuits can be lost or criminal cases when they are 

brought can be lost in terms of a technicality. So we wanted to 

make clear that to put us in the best position of not being vulnerable to challenges that all these things were important to address. 

Mr. FLORES. Was NEPA violated at any time? 

Mr. GAFFIGAN. Not in anything that we have found, no. 

Mr. FLORES. So as far as we know, none of these mistakes or inconsistencies caused a pollution incident or a loss of life or damage 

to property or anything of that nature? 

Mr. GAFFIGAN. Well, there was a challenge and there were some 

in the Nine Mile Canyon case that were challenged that there was 

a categorical exclusion brought there. Some environmentalists 

brought a lawsuit challenging that. And that is what sort of led to 

a settlement where BLM came out with more further detailed guidance. 

Mr. FLORES. That doesn’t answer my questions. Was there any 

pollution incident or loss of life or damage or injury or anything because of the inconsistencies in the way the paperwork was processed? 

Mr. GAFFIGAN. Not in the paperwork. 

Mr. FLORES. OK. Ms. Sgamma, your testimony was pretty compelling to me. And Mr. Chairman, may I have a couple more minutes? 

Mr. LAMBORN. Yes. I will recognize myself now, but I will yield 

to you. 

Mr. FLORES. Thank you, Mr. Chairman. Ms. Sgamma, you went 

through some metrics pretty quickly. You talked about this SWCA 

analysis or study. You gave us some numbers, jobs, payrolls, govVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
41 

ernment revenues, things like that. Can you repeat those quickly 

for me? 

Ms. SGAMMA. Sure. In Wyoming, because of delays to six NEPA 

documents, six environmental impact statements, 30,600 jobs have 

been prevented, $2.6 billion in labor earnings, and $157 million in 

annual royalty and tax revenue. And that is just in Wyoming. If 

you would like, I can leave that study. 

Mr. FLORES. OK. And this is just because the environmentalists 

felt like there was a missing layer of NEPA analysis which the law 

provides that that could be subject to a categorical exclusion, is 

that right? 

Ms. SGAMMA. Well, I was actually bringing up merely to make 

the point that NEPA can take a long time. In the case of these six 

EISs, they are over 6 years. They are at about the 6-year mark 

with no draft in sight. So when we look at categorical exclusions 

once that EIS is done, they are a way to enable one additional 

layer of redundant NEPA to be avoided. So my point was that 

NEPA does, indeed, cost and delays to doing NEPA can cost time, 

money, and more importantly, jobs and government revenue. 

Mr. FLORES. And to continue on the jobs and government revenue for a minute. You talked about small businesses and producers. If they were allowed to continue I guess under the older 

rules, the original interpretation of the CXs, that we could be producing what percentage of our domestic oil and gas and using what 

percentage of public lands? 

Ms. SGAMMA. Well, currently we provide in the West—and by the 

West, I mean basically the Rocky Mountain States, not including 

California. But just in the Rocky Mountain States, we are producing 27 percent of the Nation’s natural gas, 14 percent of the oil 

production, and we are disturbing less than 0.1 percentage of public lands. So of the 700 million acres of Federal mineral estate, 

there is about, as best we know—because the last time BLM put 

out a number was 2007—as best we know there are about 500,000 

acres of actual surface disturbance and that equates to less than 

a tenth of a percentage. 

Mr. FLORES. OK. And 70,000 jobs is part of that. And what was 

the government revenue as well? 

Ms. SGAMMA. Well, we did our blueprint study which finds that 

by 2020, we could produce as much in the West—and I can leave 

a copy of that as well—as we import from several nations such as 

Saudi Arabia, the Middle East, and Venezuela. And if government 

policies don’t get in the way, we are able to produce that by 2020 

and create about 70,000 jobs and $58 billion worth of additional investment in the West. 

Mr. FLORES. And I think the answer to my next question is obvious, we can do that without any government stimulus, is that correct? 

Ms. SGAMMA. That is correct. That is pretty much a projection 

that doesn’t look at high, medium and low levels of additional regulations. That is kind of the status quo now. Or if we can use things 

like categorical exclusions. 

Mr. FLORES. Essentially we get government out of the way and 

then Main Street America can do its job and create revenues and 

42 

grow payrolls and produce more revenues to the Federal Government? 

Ms. SGAMMA. Absolutely. 

Mr. FLORES. As well as State and local governments. Thank you. 

That is the end of my question. I yield back to you, Mr. Lamborn. 

Mr. LAMBORN. Thank you. We will now start our second round 

of questions. And thank you for allowing us to do multiple rounds 

of questions. And whoever is here will have that opportunity. This 

is such an important topic. 

Deputy Director Pool, I would like to go straight to you because 

you hold a very important position in the Administration. And first 

of all, just a simple, hopefully a yes or no answer—and I think I 

know what you are going to say. The purpose of categorical exclusions are to streamline the permitting process and expedite American energy production and job creation. And do you believe that 

we accomplish this goal with categorical exclusions? 

Mr. POOL. I think generally speaking we do. 

Mr. LAMBORN. Thank you. Now more specifically, this is a technical question, and I know you will be able to follow it. I don’t 

know if everyone will be able to follow it but nevertheless your answer is critical to this question. 

In light of the court’s recent ruling that was discussed earlier 

and the statement that we heard this morning that BLM plans to 

issue a rulemaking process for categorical exclusions, can you tell 

us if you intend on putting IM 2010 118—that is BLM’s 2010 policy 

that includes the extraordinary circumstances provision and a rewrite of two of the five categorical exclusion categories and that 

would reinstate duplicative regulatory reviews for energy projects, 

which as we know, the President said that is one of the things we 

should guard against in his speech last night, burdensome regulations. Do you intend to put this out for notice and comment? Or 

do you plan on putting out a policy that complies with Section 390 

as it was originally passed into law in 2005? 

Mr. POOL. Chairman, in reference to the two CXs that we had 

readdressed in the IM that was rescinded by the courts in addition 

to the application of extraordinary circumstances, those three items 

will be taken into consideration in terms of a rulemaking process, 

and that rulemaking process will involve public notification and 

comment. 

Mr. LAMBORN. So it will be put out for public notice and comment? 

Mr. POOL. That is correct. 

Mr. LAMBORN. OK. Let me shift to Mr. Bolles. Can you provide 

any examples where categorical exclusions enabled your company 

to continue development and create jobs that would not otherwise 

have been created? 

Mr. BOLLES. Thank you, Mr. Chairman. Yes, as I mentioned in 

my testimony, Devon Energy is involved in a field in Wyoming 

called Washakie Basin where we have an active drilling program 

as well as a production going on there. We have used in the past 

categorical exclusions to gain applications for permit to drill in that 

field. We had a situation—I think as I mentioned where we had 

two what we call fit for purpose rigs, drilling wells in this basin, 

and those two rigs were drilling basically the same amount of footVerDate Nov 24 2008 16:51 Oct 25, 2012 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 L:\DOCS\68267.TXT Hresour1 PsN: KATHY
43 

age or wells as seven rigs prior to these new generation rigs. And 

so we kind of created an efficient machine, if you will, of infield 

drilling within this particular field. And in order to keep those rigs 

busy, in order to keep them—because we are paying $25,000 to 

$30,000 a day to keep these rigs busy, whether they are working 

or whether they are not, that alone equates to a number of jobs. 

Not just Devon employees but jobs, the local welder, the road grader, the local restaurants that are all helping to provide services to 

all of these people. We had to at one point—at least part of the reason for us to eliminate the use of one of those rigs on these particular lands in Carbon County, Wyoming was related to the BLM’s 

decision to not grant APDs using categorical exclusions. Obviously 

part of the reason was also the price of natural gas declined. But 

that rig has moved on, and it is currently working on fee lands in 

another part of Wyoming and soon will be not employed by Devon 

any longer. 

Mr. LAMBORN. OK. Thank you. 

Mr. Gaffigan, in your written testimony you say that in some 

cases, ‘‘BLM was overly cautious in applying Section 390 categorical exclusions in part because BLM feared litigation from environmental groups.’’ Could you elaborate on that, please? 

Mr. GAFFIGAN. Well, I think, again, because of some of the uncertainty in the language of both the law and their guidance, if they 

could see a situation where they could approve an APD without 

using a categorical exclusion they would go that route rather than 

jeopardize potential challenge under the uncertainty associated 

with categorical exclusions. I think that is the basic mindset that 

they were going through. 

Mr. LAMBORN. OK. Thank you. I would now recognize the gentleman from California, Mr. Costa, the former Chairman of this 

Subcommittee in the previous Congress, for 5 minutes. 

Mr. COSTA. Thank you very much, Mr. Chairman. Thank you for 

holding today’s hearing, as we try to deal with the host of challenges on increasing our opportunities for energy development of 

all kinds, as we use all the energy tools in our energy toolbox. It 

is our proposal to discuss the impacts of the regulatory framework 

that is involved in our energy policy in total because there is a very 

important hand-in-glove, I think, relationship there. 

Let me first ask Mark Gaffigan, in yesterday’s Natural Resources 

Committee hearing on jobs and offshore energy development, I 

learned of Scott Mitchell’s comments from Wood McKenzie, who 

mentioned that slowing activities in drilling comes at great cost. 

Now we know if we look at the last 11-year cycle from drilling domestically to a decrease in the mid part of the last decade to what 

has been a very rapid increase in the last 2 years that these 

changes—and from those changes, you could draw examples. But 

he talked about the Gulf of Mexico that showed that if permitting 

paces were restored to the prelevel Macondo levels, the estimation 

is it would create an additional 200,000-plus jobs in 2012, or $8.4 

million. And I am not sure that number is correct. When we look 

at the royalty structure, it must be billion, I would think and 

roughly additional significant revenues to States. What is your assessment, Mr. Gaffigan, of jobs that might be recovered if the Administration were to again use categorical exclusions? 

44 

Mr. GAFFIGAN. You know it is very difficult to quantify that. But 

there is no doubt there has always been a boom and bust cycle in 

oil and gas development. And there have always been a lot of reasons for why development—as far as categorical exclusions go, in 

our work, we did see some benefit. We focused on the permitting 

process in the offices. I think what is hard to quantify is what 

would have happened if the categorical exclusion were—— 

Mr. COSTA. Let me ask the question this way then, because I 

think you ought to provide the Committee with a detailed response, 

notwithstanding the various circumstances. We would like to have 

that. I think I would like to have that. With the President’s desire, 

both last night and in previous statements that have been made by 

both he and the Secretary, are you going to focus on removing various regulatory burdens? And do they include categorical exemptions as a part of that consideration? 

Mr. GAFFIGAN. At GAO, I don’t think we are going to be making 

any decisions. 

Mr. COSTA. No, I know that. I would like the Administration to— 

Mr. Pool, you are representing the Administration? 

Mr. POOL. Yes, sir, I am. 

Mr. COSTA. And that question was noted more appropriately 

placed toward you. 

Mr. POOL. Sure. Thank you. Well, let me just add that BLM has 

used categorical exclusions for many, many years. We use about 80 

administrative CXs that cover, you know, nine BLM program areas 

which also includes other aspects of oil and gas and geothermal development. We think the CXs are a valuable tool in terms of managing land surface activities. 

Mr. COSTA. You are saying in contrary that you think the use of 

categorical exclusions has added significant delays to leasing lands 

in intermountain West? 

Mr. POOL. I don’t think it has added significant delays. I think 

that—some of the challenges we have in various provinces of the 

West depends on the environmental considerations that are being 

addressed through NEPA. Many of these planned well developments on a much larger scale does require more extensive NEPA 

evaluation. 

Mr. COSTA. My time is running out. I want to ask this same 

question to the other witnesses here. So you are going to do it on 

a case-by-case basis? How are you going to approach regulatory reform in this instance? 

Mr. POOL. I think that the leasing reforms that have been initiated by this Administration, as previously mentioned in the early 

part of this hearing, that prior to the leasing reforms, many of our 

oil and gas leases were being protested, appealed, or litigated, as 

high as 50 percent. It wasn’t serving the public interest. It wasn’t 

serving industry’s interest. So as a result of leasing reforms, we are 

up front, the BLM, in cooperation with industry and the conservation community and State and local governments, were spending 

more time in evaluating landscapes such that when we offer them 

for lease that we receive fewer protests. And prior to the leasing 

reform, our protests were as high as 50 percent bureau-wide. 

Mr. COSTA. And so how much have they been reduced? 

45 

Mr. POOL. We think they have been reduced down to 12 to 14 

percent, and that is because of the quality up front work. 

Mr. COSTA. Could you provide the Subcommittee with that information, please? 

Mr. POOL. Yes. I would be a glad to. 

Mr. COSTA. My time has expired. Mr. Chairman, I don’t know if 

you think it is warranted but whether or not the private sector participation here would want to respond to—— 

Mr. LAMBORN. We will have a second round of questions, another 

round of questions. 

I would like to ask either Ms. Sgamma or Mr. Coleman, if BLM 

issues IM 2010 118 that we discussed earlier for public comment, 

do you feel that that would be in compliance with the recent court 

ruling? Either one of you. 

Ms. SGAMMA. Well, I believe that Mr. Pool said just now that 

they would not just simply turn around and issue 118 for comments but actually consider the judge’s ruling as far and that rewrite of the two CXs. So it didn’t sound, if I was understanding Mr. 

Pool correctly, that they are just going to turn around and issue 

that 118 for public comment. Well, we would have a problem with 

that. If you looked at the judge’s ruling—and although she didn’t 

rule on the merits specifically, she did say that there was not a direct path from the statute to the regulation that was put out—that 

2010 118. So I thought Mr. Pool’s answer was encouraging, that 

they are not just going to turn around and issue that. 

Mr. LAMBORN. Mr. Pool, was that a correct understanding? 

Mr. POOL. That is a correct understanding. And in fact that directive has been vacated and currently we have gone back to the 

standards in our NEPA handbook of 2008. And based on the 

judge’s decision, we will reconsider some of the areas that we readdressed in that directive, including two of the CX modifications 

in addition to the review of extraordinary circumstances in a rulemaking, and that will be designed for public notice and comment. 

Mr. LAMBORN. OK. Thank you. And Mr. Coleman. 

Mr. COLEMAN. I think that is what it calls for. Hopefully BLM 

will have an open mind on these now, particularly in view of the 

legal issues of changing their interpretation of the statute. They 

had had a pretty clear interpretation early on of what this statute 

said and then they did an about-face that has real legal problems 

with doing that. So I hope they will go back to the previous version 

and work from there. 

Mr. LAMBORN. Thank you. And Ms. Sgamma, I have another 

question for you. As you have heard discussed to date, BLM offices 

are sometimes hesitant to use categorical exclusions—this is what 

we heard from the GAO—due to a fear of litigation by environmental groups. Is this fear of environmental litigation something 

that your members are often faced with when developing energy 

projects? 

Ms. SGAMMA. Absolutely. There are several points at which an 

energy project can be litigated. And we face litigation at almost any 

one of those points, at the R&D stage, at the leasing stage. There 

are protests at the project stage, project-level NEPA and even 

sometimes at the APD level, the permit level. So that certainly is 

a valid concern. 

46 

However, I sometimes think that the interpretation of Interior on 

the validity of some of these suits is unwarranted. A lot of times 

we see environmental lawsuits that are cut-and-paste from one to 

the next, cut-and-paste language that doesn’t apply or that case 

law clearly supports the BLM’s decision. So often we would wish 

that BLM would stand up for their decisions that they make rather 

than continuing to delay making those decisions in the hopes of 

bulletproofing every decision that they make. 

For example, what we are seeing now with all those jobs being 

delayed in Wyoming, for example, because of delays to NEPA, we 

are seeing BLM take a long time because they are trying to—they 

are almost practicing preventive medicine. They are trying to bulletproof their decisions so that they don’t get sued. 

Well, they are going to get sued because there is a group out 

there that is going to sue them no matter how frivolous the lawsuit 

or how specious the grounds or how shaky the grounds. 

So case law does support responsible oil and gas development on 

public lands. For example, the categorical exclusions. So we would 

just hope that we could get on, move on, and not let that litigation 

bog down the entire process. 

Mr. LAMBORN. Thank you. Mr. Coleman? 

Mr. COLEMAN. Mr. Chairman, I just wanted to add that one of 

the reasons that the committee was interested in doing the statutory categorical exclusions was, with the administrative categorical 

exclusions, which BLM has talked about how they have used for 

such a long time for various things, you still get to litigate that. 

What you do is, you litigate whether or not that extraordinary circumstances document. You do an extraordinary circumstances review. And the environmentalists litigate whether that has done an 

adequate look of whether there were extraordinary circumstances. 

That is one of the reasons the Congress wanted to pass a statutory 

categorical exclusion, so we did not have these extraordinary circumstances review lawsuits. 

Mr. LAMBORN. All right. Thank you. I would like to recognize the 

gentleman from California for up to 5 minutes. 

Mr. COSTA. I don’t think I will take that long, but maybe the witnesses might in their response. The question that I asked earlier 

to the private sector participants, I would like the three of you to 

give me your take on whether or not you think the exclusion of the 

use of categorical exclusions adds significant delays to interleasing 

mountains and I guess, Kathleen, you just spoke of that in your 

last response as an example. Obviously you have a lot of real 

hands-on experience on this kind of stuff. 

And I concur with your comment. There is a group out there in 

many instances that will sue as a pro forma because it is part of 

the agenda that they have and their philosophy. And I think we 

should do due diligence to make all of our permitting process as 

bulletproof as possible and obey the law and protect the environment in that process. But clearly that is not going to prevent folks 

who just don’t believe we ought to be using public lands in this 

fashion from suing. 

So would you please, the three of you, respond on the categorical 

exclusions. How much do they add in delays, if they do? 

47 

Ms. SGAMMA. Do you mean how much is not using them adding 

to delays? 

Mr. COSTA. Right. 

Ms. SGAMMA. Well, I mean we have put together several instances where companies clearly met the criteria in one or more of 

the criteria in Section 390. And rather than using it, a CX, the 

BLM, the field office said, no, go ahead and do an EA, an environmental assessment. And sometimes that can take a couple of years. 

I mean usually an EA for a couple of wells doesn’t take that long 

or shouldn’t take that long, but there are cases where it can take 

years. And so time is money. And what happens also is you might 

have to lay down a rig. You might not be able to go and create jobs, 

about 125 per rig running, if you have to lay down that rig because 

you can’t get a permit. 

But I guess Randy has probably some better examples. 

Mr. BOLLES. Yes, sir. I think I mentioned before that in this particular—I am just using it as an example—this particular field in 

Wyoming in Washakie Basin, where we had a situation where we 

utilized—or BLM approved applications for permit to drill utilizing 

categorical exclusions. That particular area called the Washakie 

Basin is under an extensive EIS review right now, environmental 

impact statement, that began in 2004 for Devon. And to date— 

what are we, September of 2011—we still don’t have a draft document. 

Mr. COSTA. Are there some distinctions here—and this is way out 

of my realm here—but between natural gas fields and oil fields in 

some of the areas? I know in Colorado we rely heavily on California 

on a lot of our natural gas because of our air quality issues. It is 

the energy de jure. Is it more problematic in some instances versus 

others? 

Mr. BOLLES. I am not sure I understand your question, sir. 

Mr. COSTA. With pursuing these efforts in natural gas fields 

versus oil, are the delays—are they the same, I guess, is what I am 

trying to get to. 

Mr. BOLLES. I think there are different instances or different 

issues in developing oil versus developing gas. And in the particular situation I am talking about, it is actually a development 

of both. It is oil and gas coming from the same stream. So I don’t 

know that it makes any difference whether it is oil or gas. The 

NEPA work is done on Federal lands, whether they are oil fields 

or gas fields. 

Mr. COSTA. So the delays—the bottom line—relate to months and 

years? 

Mr. BOLLES. Yes, sir. I was going to give the example of this particular environmental impact statement. We don’t have a draft document. It is almost 8 years. It worked well for a company like 

Devon who used categorical exclusions to be able to continue to develop that field and drill—it is an infield drilling project where we 

are drilling—maybe we had six wells in a particular section and we 

needed to drill three or four more wells in order to—our reservoir 

engineers had determined that would fully drain that particular 

reservoir in that particular area. In order for us to do that, we 

were able to use categorical exclusions to get permits to drill those 

additional three wells inside of this field. And that allowed us to 

48 

have—and we had less surface disturbance because technology allowed us to drill off of one pad instead of three or four different 

pads. So those delays—I guess that is an example of—— 

Mr. COSTA. Yeah. It doesn’t make any sense. 

Mr. BOLLES. Right. 

Mr. COLEMAN. And I would just add, Congressman, that just as 

a fundamental matter of how the litigation takes place, frankly, we 

normally don’t get—we should not get a litigation on the statutory—and we do have some. But we did not have a lot of litigation 

on these statutory categorical exclusions, yet we do on these regulatory ones because, as I said earlier, that delays things—the regulatory ones do—because you get to litigate whether or not that extraordinary circumstance review has been done properly. And certainly if you do an EA, if you are forced to do an EA, then that 

takes a whole lot longer from an administrative processing point of 

view before you get your permits. 

Mr. COSTA. Thank you. Thank you, Mr. Chairman. 

Mr. LAMBORN. OK. I will now recognize myself. 

Mr. Pool, earlier this year Director Bob Abbey and Secretary Ken 

Salazar announced that BLM would be increasing oil and gas permits by 44 percent this year to 7,200 from 5,000 in 2010. Is BLM 

on track to meet that goal for Fiscal Year 2011? 

Mr. POOL. Are we talking about applications for permit to drill? 

Mr. LAMBORN. Yes. 

Mr. POOL. Yeah. Currently we have issued APDs approved from 

7/10 to 6/30 of 2011 is around 4,156. So we are a little bit shy of 

that goal. But I also might add that we have issued 7,000 APDs 

that have yet to be drilled, and we have been able to really address 

some of our backlog situation. We only have 680 plus APDs from 

backlog status, and most of those reside in Utah. They are a 

planned development scale involving maybe several hundred wells. 

The same may hold true in Colorado. But I just want to point out 

that there have been 7,000 APDs that have yet to be drilled. 

Mr. LAMBORN. Thank you. Mr. Gaffigan, the GAO’s categorical 

exclusion report discussed concerns with CXs from an environmental standpoint only. Why didn’t GAO address the lack of utilization of CXs and the impact on jobs and the economy? 

Mr. GAFFIGAN. In terms of our objectives as far as benefits go, 

we try to address the benefits of actually using those for BLM’s use 

of the categorical exclusions. And we did talk about the benefits of 

reduced time and efficiency that the BLM offices were achieving 

through their use of categorical exclusions. 

Mr. LAMBORN. OK. Mr. Coleman, do you have any theories why 

BLM would not make greater use of categorical exclusions and 

thereby stand in the way of more job and revenue creation? 

Mr. COLEMAN. Mr. Chairman, I don’t know what would go 

through individual BLM office directors’ minds on this. I find it 

very curious that you had various offices that made extensive use 

of these statutory categorical exclusions and others who didn’t do 

anything with them. It points out a problem that I have had with 

BLM of not really having good strong central management sometimes to make sure that you have proper implementation across 

BLM of policies. I will say again, as I said in my testimony, the 

use of these categorical exclusions is not optional. And yet it should 

49 

have been made mandatory by oversight from BLM management 

to make sure that the agency was implementing this across the 

board as it should have been. 

Mr. LAMBORN. OK. And Ms. Sgamma, in your testimony, you discussed the redundant and overlapping environmental analysis that 

categorical exclusions are supposed to eliminate. 

Can you elaborate on the usual NEPA process and how CXs 

streamline the process and do you have an approximation of time 

saved in the permitting process when they are used versus when 

they are not used? 

Ms. SGAMMA. It is hard to give specific statistics on time saved 

because often a company doesn’t even know whether an APD was 

approved under a categorical exclusion or not. We have members 

telling us about instances where they know they have met the criteria and didn’t get a CX because they were asked to do an EA. 

So I mean I have some anecdotal evidence but it is hard to get at 

the specific time saved. I actually haven’t seen categorical exclusion 

numbers in a couple of years now. So I don’t even know how many 

have been issued in the last couple of years, and I am hoping that 

BLM will issue those numbers soon. But I am sorry, Chairman, I 

don’t have a specific date on that. 

Mr. LAMBORN. OK. Thank you. And Ms. Sgamma, you I believe 

live in Colorado, and so you are familiar with along the Front 

Range where there is more development, private residential development, when there is oil and gas exploration or development, 

there can be friction between the surface owner and the mineral 

rights owner. And the more densely populated an area, that is 

more of an issue, especially when we are talking about private 

lands versus public lands. 

Is it a fair statement to say that the less that public lands are 

able to be used for oil and gas development, that puts more pressure on the need to find private land places for development, hence 

increasing the friction between the surface owners and the mineral 

rights owners? 

Ms. SGAMMA. What happens with companies when they can’t get 

permits from the BLM but they can get a State permit in about 30 

days versus up to years in some cases from the BLM. Often companies will go to adjacent private or State lands. So often adjacent 

private and State lands see more development than public lands 

because the process is just more burdensome on Federal lands. If 

you look at areas—you mentioned the Front Range, Congressman. 

You look at, for example, the Niobrara in Colorado and Wyoming. 

I don’t think we would be seeing the production and the job creation there in eastern Colorado as much if that had been primarily 

public lands. I think we are seeing more development today because most of that is private lands. So it does enable us to develop 

oil in this case much faster than if it were on public lands, just like 

the Bakken in North Dakota. That is primarily private lands. We 

weren’t able to develop that area, nor the Niobrara even just 5 

years ago. And we are able to explore and develop and produce that 

and increase American oil production in such a quick and timely 

fashion because that has been primarily on private lands. 

Mr. LAMBORN. All right. Thank you. And then as we wrap up 

here, do any of you have any comments that you want to make as 

50 

we conclude here based on what anyone else has said or you think 

is needed to complete the record for our hearing today? And I will 

open this up to any one of the five of you. 

Ms. SGAMMA. I would just like to make one correction from something that was said earlier by a Member. And that is that incorrectly stated that we are developing on less than 30 percent of the 

leases. That is incorrect information. In March of this year, Interior 

did a leasing utilization report and they found that in fact companies are producing on 43 percent of the Federal leases, not less 

than 30 percent, as was said earlier. And that equates to about— 

of the 38 million acres currently under lease about 16 million are 

in production. And we continue to hear the old numbers on that 

which are just false. So I am just hoping that those corrections can 

be made. 

Mr. LAMBORN. OK. Thank you. Anyone else before we conclude? 

Mr. Coleman. 

Mr. COLEMAN. Thank you, Mr. Chairman. And I want to say, I 

congratulate you on having this hearing. I want to reiterate, if 

NEPA is trivialized by continuing to have to have environmental 

assessments over very minor activities and minor impacts, then 

you will just bog everything down. And that is not what NEPA was 

intended to do. It is supposed to focus on the potential for significant impacts. And we felt very strongly when we were working on 

this legislation that these were categories that did not have that 

kind of risk of having significant impacts and something that the 

Congress could do on its own, not wait on an Administration, any 

Administration. You could clarify these things because we knew 

that these things would not have significant impacts. So otherwise 

you risk trivializing NEPA and bogging everything down in litigation. 

Mr. LAMBORN. OK. Thank you. Any final comments? Mr. Pool, 

Mr. Bolles, or Mr. Gaffigan? If not, thank you all for being here. 

This has been a very important subject. I appreciate your travel 

and your time here. 

I would note that it is about 12:35. Had we not had our 80- 

minute delay for voting—we started at 10:00. We would have been 

done by, I think, 11:15. So it is spread out longer than we had to, 

but we were only here apparently about 80 minutes or so. Thank 

you very much for your testimony. And if there is no other business 

to come before the Subcommittee, seeing none, we will be adjourned. 

[Whereupon, at 12:38 p.m., the Subcommittee was adjourned.] 

[Additional material submitted for the record follows:] 

51 

Response to questions submitted for the record 

by BLM Deputy Director Mike Pool 

Questions submitted by Chairman Doug Lamborn (CO) 

1. Deputy Director Pool, BLM has, in the past, made significant modifications to administrative requirements to which oil and natural gas operators on public lands are subject, without recourse to formal rulemaking 

processes with provision for notice and comment. This was the case with 

IM 2010–117, describing revisions to BLM land use planning and lease 

parcel reviews, and with IM 2010–118, describing revisions to BLM policy regarding use of EPAct05 Section 390 Categorical Exclusions. Please 

explain the agency’s rationale for pursuing this course of action. How 

does the agency make a distinction between subject matter that merits 

an administrative rulemaking process, and subject matter that may be 

addressed by internal guidance to agency staff in the form of an instructional memorandum. 

Response to 1: 

The BLM engages in rulemaking when it is imposing a requirement or revising 

a requirement previously imposed, that confers a new privilege or duty upon a member of the public. In general, an instruction memorandum is used to direct BLM employees how to perform their program work, as in this case NEPA analysis, or to 

provide clarification and interpretation of existing regulations. 

2. Deputy Director Pool, the purpose of categorical exclusions are to 

streamline the permitting process and expedite American energy production and job creation. Do you believe that categorical exclusions accomplish this goal? 

Response to 2: 

Certain actions are categorically excluded from NEPA review because the class of 

actions has been determined to typically not raise the potential for significant environmental impacts. Categorical exclusions can, when appropriately applied to a specific proposed action, provide an efficient tool to reduce paperwork and potential 

delay by eliminating the BLM’s need to conduct and prepare further, more detailed, 

environmental analysis and documentation—EA/FONSIs or EISs—to support the 

authorization of specific Federal activities. This tool is used by the local office where 

appropriate and where it makes sense. BLM line managers have the best information to make decisions that match the appropriate level of NEPA review for a proposed activity to the conditions on the ground. 

Some BLM field offices have made use of Section 390 CXs more than others. The 

differences stem from a variety of factors and circumstances, such as whether an 

office has recently completed any site-specific NEPA documentation, the level of confidence the authorized officer has in using a Section 390 CX, and the level of understanding the resource specialist has about the environmental sensitivity in the area 

where the project would take place. While a particular use of a Section 390 CX does 

not, in most cases, save substantial time, the cumulative time savings from processing multiple actions with Section 390 CXs can be significant. 

3. Deputy Director Pool, despite the fact that the GAO report on categorical exclusions did not recommend their elimination, but instead recommended simply that clarification be provided on how they would be 

used. Why did BLM then choose to essentially eliminate of the use of categorical exclusions? 

Response to 3: 

The BLM’s Section 390 CX reform policy did not eliminate the agency’s ability to 

use the Section 390 CXs. The policy made the process for using Section 390 CXs 

consistent with the agency’s existing environmental review process for using administrative CXs, including the need to conduct a review for extraordinary circumstances. If extraordinary circumstances associated with an action are identified, 

there is an indication that this particular proposed action could raise significant environmental impacts and therefore it is not appropriate to use an administrative 

categorical exclusion and further NEPA review, either an Environmental Assessment or and Environmental Impact Statement, is required. The BLM’s policy to review the potential for significant impacts based on the site and project specific circumstances before proceeding with the Section 390 CX, aligned the use of Section 

390 CX with all other BLM CXs, was supported by the Council on Environmental 

Quality and was responsive to a legal challenge, concerns raised by members of 

52 

Congress, and information identified in the GAO’s report which recommended that 

the BLM issue detailed and explicit guidance that addresses the gaps and shortcomings in its Section 390 guidance. 

As part of BLM’s multiple-use mission, the BLM seeks to protect all resource values as it administers the development of domestic energy resources such as oil and 

gas on public lands. This is achieved, in part, by ensuring that adequate reviews 

are conducted before authorizing oil and gas development activities, including the 

identification of appropriate mitigation measures. Environmental analysis documents associated with land use plans do not generally include an analysis that adequately evaluates the effects of specific oil and gas development proposals. 

For these reasons, the BLM issued a policy in 2010 that required a review of extraordinary circumstances to help ensure impacts that may be significant were adequately evaluated before authorizing the development of federal oil and gas resources. 

4. Deputy Director Pool, as I’m sure you know, the Administration used 

categorical exclusions over 179,000 times to advance the progress of taxpayer funded stimulus projects. Can you please explain to the Committee why the Administration found categorical exclusions acceptable 

to use for stimulus projects, but categorical exclusions were not acceptable for oil and gas projects that have previously gone through extensive 

environmental reviews? 

Response to 4: 

The Department of the Interior and the BLM are able to categorically exclude 

some types of activities (most of which are unrelated to federal oil and gas development) from the preparation of an environmental analysis document. Stimulus 

projects covered a wide array of activities that fit into one or more of the categories 

that could qualify for an administrative categorical exclusion. All categorical exclusions used for an American Recovery and Reinvestment Act (ARRA) project were reviewed for extraordinary circumstances, and in the absence of extraordinary circumstances the project proceeded based on the CX. The range of categorical exclusions used for ARRA projects was much broader than the five types of narrowly defined oil and gas activities that may be categorically excluded by a Section 390 CX. 

Also, criteria used to identify projects appropriate for stimulus funding included the 

need for proposed projects to be ‘‘shovel ready.’’ Essentially these projects were 

prescreened to determine if they raised potentially significant environmental concerns and would therefore merit additional, more extensive environmental analysis, 

before they could be undertaken. Most projects that had a potential for significant 

environmental issues were not selected for stimulus funding in the first place. 

5. Deputy Director Pool, can you explain whether the agency’s experience 

with implementation of the Energy Leasing Reforms indicates staffing 

and budget are adequate at Field, District and State Offices to execute 

the new Reform plan and to fulfill other agency mandates. 

Response to 5: 

The Secretary’s oil and gas reforms, announced in 2010, establish a more orderly, 

open, consistent, and environmentally sound process for developing oil and gas resources on public lands. The BLM continues to implement these key policy changes 

that include an upfront investment in site visits, environmental documentation, and 

public participation. This has strengthened the BLM’s ability to document its decision-making process. Initial indications are that protests for oil and gas leasing are 

decreasing but not eliminated. We continue to create these and other efficiencies. 

In these times of increasing fiscal constraint, the BLM is initiating its reforms 

within current budgets to the extent practical by adjusting program funding and 

priorities. The BLM is committed to doing its part to implement these policy 

changes within appropriated funding levels for 2012. 

a. Are backlogs developing in BLM Offices with respect to required prelease or leasing actions, with respect to issuance of permits, or with 

respect to other agency actions? 

Response to 5a: 

No. The BLM issued 2,188 leases during fiscal year (FY) 2011. This is 116 more 

than were issued in FY 2009 and 880 more than were issued in FY 2010. Using 

the Leasing Reform Policy, the BLM continues to process expressions of interest and 

issue leases in areas where oil and gas development is appropriate. At the end of 

FY 2011, there were more than 7,000 APDs approved for operations on BLM and 

tribal lands, but not yet drilled by industry. At the end of FY 2011, there were 730 

53 

APDs pending longer than 30 days for a BLM decision to approve or deny the application. 

b. What are the potential impacts of these backlogs to the public lands and 

resources, and how and when will these backlogs be eliminated? 

Response to 5b: 

With over 7,000 APDs approved, but not yet drilled, opportunities remain to develop resources on the public lands. Nonetheless, the BLM continued to process 

more applications for permit to drill than had been received during the year, thereby continuing to reduce the number of pending applications, including those that are 

in ‘‘backlog’’ status. 

c. Do you believe that using categorical exclusions would be a sufficient 

way to eliminate some of these backlogs? 

Response to 5c: 

There are a variety of options the BLM utilizes to fulfill its NEPA requirements. 

The Section 390 CXs are one of those options that are beneficial in circumstances 

where they are applicable. However, in order to use a Section 390 CX, activities 

must meet the particular criteria of a given category, such as proposing to drill a 

new well on an existing well pad or proposing surface disturbance that is no greater 

than 5 acres. 

The design features of projects to develop federal oil and gas resources are not 

driven by the criteria associated with the Section 390 CXs. Therefore, not all proposals to develop federal oil and gas resources fall within the criteria of the Section 

390 CXs. For example, many proposals do not entail drilling a new well on an existing well pad or disturbing less than 5 surface acres and, therefore, do not qualify 

for a Section 390 CX. Compliance with NEPA would need to be accomplished 

through other means, such as the preparation of an Environmental Assessment and 

Finding of No Significant Impact (EA/FONSI) or an EIS as appropriate. 

6. Deputy Director Pool, can you please provide the Committee with a full 

set of numbers of categorical exclusions (CX) issued by field office and 

state beginning with 2006 when the statutory CXs were first implemented through the end of fiscal year 2011? This includes, for each field 

office, total CXs used by type (#1, #2, #3, #4, and #5), total APDs approved, the percentage of total CXs used, and total APD’s approved. 

Response to 6: 

The data presented in the table below is from periodic data requests that did not 

always coincide with a fiscal year, is not maintained in a database that can be 

queried or manipulated, and is complete through June 30, 2011. The table summarizes the number of categorical exclusions (CXs) issued by each field office and state 

beginning with FY 2006 through June 30, 2011 to approve APDs. The percentage 

of total Section 390 CXs used to approve APDs is calculated using the sum of approvals that relied on CX#1 (individual surface disturbance less than five acres), 

CX#2 (drilling at a location at which drilling has previously occurred within the last 

five years), and CX#3 (drilling in a developed field for which an environmental document, approved within the last five years, analyzed drilling as a reasonably foreseeable activity). This is because these three CXs are the only CXs that may be used 

to support the BLM’s APD approval. Section 390 CX#4 (placement of a pipeline 

within a right of way corridor approved within the last five years) and CX#5 (maintenance of a minor activity) may be used to support the approval of other authorizations provided for under the Mineral Leasing Act (MLA), such as MLA Rights-ofWay (ROW) and Sundry Notices (SN). 

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Questions submitted by Ranking Member Edward J. Markey 

1. Can you please explain how the 2010 policy guidance issued by the 

Obama Administration addressed some of the problems with the Bush 

Administration’s policy for implementing the categorical exclusions for 

some oil and gas permits under Section 390? 

Response to 1: 

As part of BLM’s multiple-use mission, the BLM seeks to protect all resource values as it administers the development of oil and gas resources on public lands. This 

is achieved, in part, by ensuring that adequate NEPA reviews are conducted prior 

to authorizing oil and gas development activities, and appropriate mitigation measures are identified. Environmental analysis documents associated with land use 

plans cover broad areas and do not generally include an analysis that adequately 

evaluates the effects of site-specific oil and gas development proposals. 

The BLM’s policy to review the potential for significant impacts based on the site 

and project specific circumstances before proceeding with the Section 390 CX, 

aligned the use of Section 390 CX with all other BLM CXs, was supported by the 

Council on Environmental Quality and was responsive to a legal challenge, concerns 

raised by members of Congress, and information identified in the GAO’s report 

which recommended that the BLM issue detailed and explicit guidance that addresses the gaps and shortcomings in its former Section 390 guidance. For these 

reasons, the BLM issued a new policy that requires a review of extraordinary circumstances to help ensure impacts that may be significant are adequately evaluated 

before authorizing the development of federal oil and gas resources. 


68267.003.eps
55 

2. The BLM announced on September 9th that it would be moving forward 

with a formal rulemaking. However, given the August 12 court decision, 

it is my understanding that the BLM will be operating under the Bush 

administration’s policy for Section 390 categorical exclusions, while the 

rulemaking is ongoing. How will BLM operations in its field offices during the period between now and when the rulemaking is completed? 

Response to 2: 

On August 19, the BLM complied with the Court’s Order to stop using the Section 

390 CX guidance in Instruction Memorandum (IM) 2010–118 to the extent it limited 

the application of Section 390 CXs in specific ways. The BLM directed its field offices to resume following the guidance outlined in the 2008 BLM NEPA Handbook 

when considering the application of Section 390 CXs. This includes: 

• Documenting, and incorporating into the well file or case file, the decisionmaker’s rationale as to why one or more Energy Policy Act CXs apply; 

• Not conducting a review for extraordinary circumstances when considering 

the use of a Section 390 CX; and 

• Clarifying that other procedural requirements still apply, such as consultation 

under the Endangered Species Act and National Historic Preservation Act. 

It is still the BLM’s policy to maintain a structured, multi- or interdisciplinary 

permit review and approval process, conduct onsite exams for 100 percent of proposed well and road locations, comply with other procedural requirements required 

by other environmental statutes, such as the National Historic Preservation Act and 

the Endangered Species Act, and apply appropriate mitigation and BMPs to all permitted actions even when using a Section 390 CX. 

3. Your testimony states that BLM plans to initiate rulemaking in ‘‘the near 

term.’’ How quickly do you anticipate BLM being able to begin the rulemaking process and how quickly do you anticipate finalizing the rulemaking? 

Response to 3: 

When the BLM determines how best to address the Court’s order and implement 

Section 390 of the Energy Policy Act of 2005 (EPAct), it will initiate a rulemaking 

effort. The BLM expects the rulemaking process to take approximately 18 months. 

4. The GAO has found that the implementation of the Bush Administration’s policy was inconsistent amongst BLM offices and documented 

harm to air quality and wildlife habitat as a result of over-use of these 

exclusions. Will returning to the Bush Administration’s policy while the 

rulemaking process is ongoing lead to the same problems? 

Response to 4: 

The BLM’s policy is still to maintain a structured, multi- or interdisciplinary permit review and approval process, conduct onsite exams for 100 percent of proposed 

well and road locations, comply with other procedural requirements required by 

other statutes, such as the Federal Land Policy and Management Act, Clean Air 

Act, Clean Water Act, and Endangered Species Act, and apply appropriate mitigation and BMPs to all permitted actions even when using a Section 390 CX. 

The BLM’s interim direction is to follow the guidance outlined in the 2008 BLM 

NEPA Handbook when considering the application of Section 390 CXs. . 

5. The Bush Administration policy prevented BLM from even considering 

whether there were extraordinary circumstances, such as threats to 

public health and safety, impacts to endangered species or cumulative 

impacts that would warrant additional environmental review when a 

Section 390 exclusion was utilized. Do you think it’s important for BLM’s 

rule to allow for a review of extraordinary circumstances? If so, why? 

Response to 5: 

The review of extraordinary circumstances helps to identify those circumstances 

where other substantive environmental requirements, such as the Clean Air Act and 

the Endangered Species Act, must be satisfied before the proposed action can proceed. As previously mentioned during the Deputy Director Mike Pool’s testimony, 

one of the options the BLM will be considering as part of the agency’s rulemaking 

effort would be those elements of its 2010 guidance the Court vacated, which include 

a review of extraordinary circumstances. The BLM will provide notice and an opportunity for the public to comment, consistent with the Administrative Procedure Act 

(APA), as part of its rulemaking effort. 

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6. Another concern raised by the GAO regarding Section 390 was the large 

amount of variation among the BLM field offices in how they each implemented Section 390. This led to a great deal of uncertainty, and a 

large number of protests challenging BLM’s actions. Do you think it’s important to standardize the permit application process of Section 390 as 

part of the new rule? 

Response to 6: 

The Section 390 CXs are used to support decisions to authorize specific oil and 

gas permits issued by the BLM. An example of such a permit includes an Application for Permit to Drill (APD). Unlike decisions to issue a federal oil and gas lease, 

which may be protested administratively, decisions to issue a specific permit to develop federal or Indian oil and gas resources are subject to legal appeal under procedures outlined in 43 CFR Part 4. 

The application for a permit to drill is a standardized process. The BLM Authorized Officer has the final decision-making authority with respect to the appropriate 

form of analysis needed before a decision can be made on a drilling application. 

BLM application review policies provide a framework for management. These policies are not site-specific prescriptions but guide responsible energy and mineral development. The policies enable local review to account for site specific resources, resource uses, industry interests, and community needs. This flexibility is needed to 

be responsive to different combinations of these factors. Nonetheless, the APD outcomes may vary somewhat when compared regionally because of accounting for specific local conditions. The outcomes, however, comply with laws, regulations, and 

policy. 

7. The GAO’s 2009 report noted that significant impacts to air quality and 

wildlife habitat had occurred in areas where Section 390 categorical exclusions were heavily utilized, especially in Wyoming, Utah, and New 

Mexico. How does the BLM plan on reviewing drilling permits where 

these environmental impacts have occurred in light of the current court 

ruling? 

Response to 7: 

On August 19, the BLM complied with the Court’s Order by directing its field offices to stop using the Section 390 CX guidance in IM 2010–118 and resume using 

the guidance outlined in the 2008 BLM NEPA Handbook when considering the application of Section 390 CXs. 

It is still the BLM’s policy to maintain a structured, multi- or interdisciplinary 

permit review and approval process, conduct onsite exams for 100 percent of proposed well and road locations, comply with other procedural requirements required 

by other environmental statutes, such as the Clean Air Act and the Endangered 

Species Act, and apply appropriate mitigation and BMPs to all permitted actions 

even when using a Section 390 CX. 

8. Does BLM still plan on developing a standardized checklist for the review and use of Section 390 categorical exclusions, as the GAO recommended? Or will this be part of a new rulemaking process? 

Response to 8: 

The BLM is considering long-term options for regulations to address the Court’s 

order, which range from reverting to the previous policy outlined in the 2008 BLM 

NEPA Handbook to proposing those elements of IM 2010–118 the Court vacated and 

enjoined the agency’s ability to implement. The BLM’s rulemaking effort will address the Court’s concern that BLM provide notice and an opportunity for the public 

to comment before BLM adopts procedures that would bind the agency and impose 

or affect individual rights and duties. 

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