NEPA Compliance for Oil and Gas Lease Reinstatement Petitions

UNITED STATES DEPARTMENT OF THE INTERIOR
BUREAU OF LAND MANAGEMENT
WASHINGTON, D.C. 20240
http://www.blm.gov

August 13, 2013

In Reply Refer To: 
3100 (310) P

EMS TRANSMISSION 09/03/2013

Instruction Memorandum No. 2013-177
Expires: 09/30/2014

To:                  State Directors 

From:              Assistant Director, Minerals and Realty Management

Subject:          NEPA Compliance for Oil and Gas Lease Reinstatement Petitions 

Program Area: Oil and Gas Leasing.

Purpose: This Instruction Memorandum (IM) directs all oil and gas leasing offices to: 1) ensure Resource Management Plan (RMP) conformance; 2) evaluate the adequacy of existing National Environmental Policy Act (NEPA) analysis and documentation; and 3) complete any necessary new or supplemental NEPA analysis and documentation before approving a Class I or Class II oil and gas lease reinstatement petition.[1]

Policy/Action:  Before approving or denying an oil and gas lease reinstatement petition, all Bureau of Land Management (BLM) offices must review applicable RMPs and NEPA documentation to:

1. Ensure reinstatement of the lease would be in conformance with the existing RMP. (Consent or denial must be received from the appropriate surface management agency before the denial or approval of a lease reinstatement);
2. Evaluate the adequacy of existing NEPA analysis and documentation related to the lease parcel; and
3. Complete any necessary new or supplemental NEPA analysis and documentation if the existing NEPA analysis and documentation are inadequate in light of any new information that has become available or resource issues that have arisen since the BLM originally issued the lease. 

Leasing offices must support their decision to reinstate a terminated oil and gas lease through a NEPA review with a Determination of NEPA Adequacy (DNA) or Environmental Assessment (EA)/Environmental Impact Statement (EIS), as appropriate. For all Class II lease reinstatement Federal Register Notices (FRN) sent to the Washington Office (WO), the State Director will include in the FRN reinstatement package:

1. A separate memo signed by the Deputy State Director (DSD) for Resources certifying that the BLM completed a DNA or other appropriate NEPA analysis that the DSD has signed;
2. Identification of the type of NEPA document used and the NEPA log number; and
3. Identification of the lease stipulations the BLM proposes to modify or to add to the lease instrument. (This does not include removal of lease stipulations that are no longer necessary. The BLM will address issues related to potentially unnecessary stipulations through the exception and waiver process when approving an Application for Permit to Drill.)

To document a DNA review, complete the DNA Worksheet, Attachment 1 (also found in Appendix 8, at page 161 of the BLM NEPA Handbook, (H-1790-1), at https://www.blm.gov/sites/blm.gov/files/uploads/Media_Library_BLM_Policy_Handbook_h1790-1.pdf, and attached to this IM as Attachment 1). Section 5.1 (pp. 22-25) of the handbook provides instructions for identifying and reviewing existing RMPs and NEPA documents, considering whether additional public involvement is necessary, and documenting findings. A DNA may rely on one existing NEPA document (e.g., a RMP EIS) or relevant aspects of multiple NEPA documents (e.g., a RMP EIS and an EA prepared before leasing). 

Plan Conformance Review

Review the existing RMP or any ongoing draft or proposed RMP revision or amendment to determine whether planning decisions, stipulations required for new leases, or the area open to leasing have changed since the BLM originally issued the lease, or would change under the Preferred Alternative of the draft or proposed RMP revision or amendment. Document the review through the DNA documentation process. If there are no changes in the RMP or the Preferred Alternative of a draft or proposed RMP revision or amendment, the state office may approve the reinstatement if the petition meets all other requirements.

The state office must deny reinstatement of the lease if the existing RMP or the Preferred Alternative in a draft or proposed RMP revision or amendment closes or would close all or a portion of the lease area to leasing. If the state office denies the reinstatement, the state office will refund the pre-paid rental and the publication costs.

Conduct additional NEPA analysis if the existing RMP and its NEPA analysis are no longer adequate and the RMP is not currently undergoing amendment or revision. Through the analysis, and if appropriate, consider adding additional existing RMP lease stipulations to the lease parcel (see H-1601-1, Chapter VI, Section H. 3. and 4.) or modifying existing stipulations on the lease (see H-1601-1, Chapter VI, Section H. 6.)

If the RMP was revised or amended subsequent to the issuance of the original lease and the updated RMP identifies new lease stipulations for the affected area that are not currently included in the lease, or identifies modifications to stipulations that are included in the lease, the state office must condition the reinstatement on inclusion of those stipulations or modified stipulations in the reinstated lease. The BLM may condition a reinstatement on the lessee’s agreement to new or modified stipulations. (This is not limited to the rental and royalty provisions, which the statute and regulations require to be changed for Class II reinstatements.) For example, if the BLM has updated the RMP to require a new or modified stipulation for improved protection of a particular species, the state office will condition the reinstatement on the lessee’s agreement to the new or modified stipulation.  

If the BLM is in the process of revising or amending its RMP and the Draft Plan or Plan Amendment has not yet been released for public comment, determine whether to approve or deny reinstatement using the existing RMP decisions (see H-1601-1, Chapter VII, Section E, Status of Existing Decisions During the Amendment or Revision Process).  If the BLM is in the process of revising or amending its RMP and is in the Draft or Proposed Plan or Plan Amendment stage, the BLM will evaluate through the NEPA process the appropriateness of applying to the lease, at a minimum, the applicable lease restrictions (stipulations, no leasing, etc.) that would apply to that parcel of land in the Preferred Alternative.  The state office will deny the reinstatement if the lessee does not agree to the additional or modified stipulations. In that event, the state office will refund the pre-paid rental and publication costs.

NEPA Compliance

Review the existing NEPA documentation related to the leases to determine whether it is adequate to support reinstatement or whether new or supplemental NEPA analysis is necessary. 

The lease may be eligible for reinstatement if the “NEPA Adequacy Criteria” in the DNA Worksheet indicates that the existing NEPA documentation is sufficient (e.g., because circumstances have not changed since the BLM issued the lease and there is no new information relevant to environmental concerns). 

However, if there is new information, or if circumstances have changed (e.g., different resource conditions, recent endangered species listings, updated BLM sensitive species listings, or new regulations or policies), or the “NEPA Adequacy Criteria” indicate that the existing NEPA documentation is no longer adequate for other reasons, then additional NEPA analysis is required. In that event, leasing offices will prepare an EA/Finding of No Significant Impact (FONSI) (or EIS, as appropriate) to inform the decision approving or denying the reinstatement petition. Leasing offices may conduct the additional NEPA analysis and documentation through a standalone EA/FONSI or EIS prepared for the reinstatement decision, or may incorporate the parcel into an EA/FONSI or EIS prepared for an upcoming quarterly lease sale involving the same field office. The leasing office must conduct the additional NEPA analysis in a prompt and timely manner. If the BLM is considering a standalone EA for the lease parcel, it may be appropriate to tier the EA to the RMP/EIS or to the EA for an earlier quarterly lease sale involving the same field office. The EA for the proposed reinstatement can then narrow its focus to issues that are ripe for decision. (See Incorporating by Reference and Tiering, H-1780-1 – NEPA Handbook, p. 25.)

Administrative Costs

The RMP conformance review and NEPA compliance cost are part of the “administrative costs” of a Class II reinstatement under 30 U.S.C. § 188(e), for which recovery is capped at $500 under that section, and which are paid through the $500 administrative fee required under 43 CFR 3108.2-3(b)(3)(vi).  Therefore, additional cost recovery for NEPA analysis would not apply for Class II reinstatements. The fee for Class I reinstatements is included in the fixed fee schedule. Determining whether existing NEPA analysis is adequate is not a unique processing cost within the meaning of 43 CFR 3000.11(a) and therefore, not a proper subject for cost recovery. If analysis shows that an EIS is necessary for a Class I lease reinstatement, the EIS would be a proper subject for cost recovery under section 3000.11(a). Because the relatively low cost of an EA directed only to reinstatement of one or a group of leases is likely to be less than the cost to the agency of collecting the costs of the EA, leasing offices ordinarily would not pursue cost recovery for an EA for a Class I reinstatement.

Attachment 1 – Lease Reinstatement Process Table outlines the steps for reviewing and documenting RMP conformance and NEPA adequacy and completing any additional NEPA analysis and documentation that may be necessary before approving a reinstatement. 

If the authorized officer finds that the reinstatement will not afford the lessee a reasonable opportunity to continue operations under the lease, a lease extension, as allowed under 43 CFR 3107.6, should be considered.

Timeframe: Implement immediately. 

Budget Impact: Additional resources will be needed to complete the RMP and NEPA review and documentation, and if applicable, NEPA analysis for the reinstatement petition.

Background: Historically, the BLM had considered reinstatement of a lease terminated for nonpayment of rent to be a routine administrative action. The Office of the Solicitor has advised the BLM that the lease becomes eligible for reinstatement at the Secretary’s discretion if the petition for reinstatement meets the requirements of the regulations. Since a reinstatement is discretionary, the BLM could decline to reinstate a lease. Because circumstances may have changed, or new information may have become available, since the BLM first issued the lease, the BLM must determine whether existing NEPA analysis is adequate to support reinstatement or whether additional NEPA analysis and corresponding documentation or new or modified lease stipulations are necessary before reinstating a lease. 

Manual/Handbook Sections Affected: The BLM will incorporate this guidance into H-3108-1, Continuation, Extension or Renewal of Leases (O&G Adjudication Handbook) during the next revision.

Coordination: The Washington Office Division of Fluid Minerals coordinated preparation of this policy with the U.S. Department of the Interior Office of the Solicitor, BLM Washington Office, BLM State and Field Offices, and Division of Decision Support, Planning and NEPA.

Contact: If there are any questions concerning this IM, please contact me 202-208-4201, or your staff may contact Steven Wells, Division Chief (WO-310), at 202-912-7143 or s1wells@blm.gov; Atanda Clark, Senior Mineral Leasing Specialist, at 202-912-7156 or aclark@blm.gov; or Jim Perry, Senior Natural Resource Specialist, at 202-912-7194 or jperry@blm.gov.

2 Attachments:

  1 – Lease Reinstatement Process Table (2 pp)

  2 – DNA Worksheet (5 pp)

[1] Class I reinstatements apply to leases where rental was paid or tendered within 20 days after the anniversary date. Additional requirements also apply, as stated in 43 CFR 3108.2-2. Class II reinstatements apply to leases where rental was not paid within 20 days of the anniversary date, as stated in 43 CFR 3108.2-3.