US House panel examines federal onshore oil and gas permitting proposals

A US House Natural Resources subcommittee discussed four proposals on June 6 that Republicans said would make onshore federal oil and gas permit application processing more efficient and fair. Democrats warned that if the discussion drafts became law, they would discourage public participation in deliberations under the 1970 National Environmental Policy Act (NEPA).

Energy and Minerals Subcommittee Chairman Paul Gosar (R-Ariz.) said in his opening statement that the proposals would:

• Clarify language in the 2005 Energy Policy Act (EPACT) to expand the use of categorical exclusions in approving permits and rights of way that would have minimal environmental impacts.

• Prohibit the US Bureau of Land Management from requiring permits for oil and gas drilling on privately held or state-owned surface land unless the federal government owns more than 50% of the subsurface estate that would be involved.

• Let onshore federal leaseholders submit a drilling notification instead of a permit application if their proposed activity would have little or no environmental impact and give BLM 45 days to object before drilling could proceed.

• Allow the US Department of the Interior to charge parties protesting leasing or other approvals 50¢/page to recover costs of printing documents that sometimes run into the hundreds or thousands of pages.

Gosar said the proposals would streamline onshore federal oil and gas permitting and leasing on federal and Indian lands in an environmentally sound manner. “Embracing policies which will enhance our energy dominance will strengthen our national security, create well-paying jobs, and—more importantly—lower gasoline prices for our constituents,” he said.

Ranking Minority Member Alan Lowenthal (D-Calif.) disagreed. “One of [NEPA’s] foundational principles is involving the public in government decisions,” he said. “People should be told what the government intends to do in their communities, in their neighborhoods, and in their backyards. They should not just be informed of decisions that already have been made.”

Four of the five witnesses who testified generally supported the intent behind the proposals. “BLM is working diligently to improve its permitting process, and its efforts are beginning to show results. In calendar year 2017, it approved 3,293 drilling permit applications on federal and Indian lands which generated approximately $30.5 million in fees,” said Katharine McGregor, deputy assistant Interior secretary for land and minerals.

“The average drilling permit processing time for an administratively complete application also continues to drop, now averaging 130 days of which 50 days was spent with BLM. We hope to improve this figure further,” she said.

Backlogged permit impacts

New Mexico Gov. Susana Martinez (R) said the state that day would lose about $2 million in tax revenue (and the federal government, $3.5 million) from a backlog of more than 800 onshore federal onshore drilling permit applications languishing in BLM offices there.

“In addition to impacting important services, delays in the approval of permits also affect job growth and rural economic development,” Martinez said. “Oil and gas activity contributes more than $11.3 billion to New Mexico’s economy and is responsible for more than 100,000 jobs. Each backlogged permit represents New Mexicans losing out on good-paying jobs and rural communities losing out on economic growth.”

Martinez said she and four other western US governors submitted proposals to Interior that would assure timelier handling of regular federal drilling permit applications, and that the discussion drafts before the subcommittee contained many of the same principles.

Ken McQueen, who leads the state’s energy, minerals, and natural resources department, said the federal government owns and manages 35% of New Mexico’s total acreage where 57% of its total 2017 crude oil production and 65% of its gas came from the federal mineral estate.

“The oil and gas industry is a very cyclical business, with wide and unpredictable swings in activity,” McQueen said. “During the last price collapse, New Mexico saw utilized drilling rigs drop to 13 from 103 in 17 months. “It’s important to provide as many permits as possible while oil prices are high, as they are today. That way, when we move into the next slowdown, having a larger inventory of wells drilled and more production online will help buoy the state through the down cycle.”

‘More streamlined path’

McQueen’s counterpart from Utah, John Baza, who directs the state’s oil, gas, and mining division, said federal oil and gas leaseholders there also have to meet equally rigorous state requirements.

“I believe that thoughtful and creative thinkers could find ways to accomplish the necessary objectives of requiring safe and protective oil and gas development on all lands, including those on the federal mineral estate,” Baza said. “If wells are to be drilled in lower risk areas that have already been analyzed for environmental impact or in well-established areas of drilling and production, then let’s find a more streamlined path to resource development than what exists today.”

But Dennis Willis, a private citizen from Price, Utah, who worked at BLM for 35 years, said the four proposals would replace informed local decision making with rulemaking from the top down in Washington which committee Republicans have complained about for 40 years.

“The proposed fees for protesting a lease are another onerous attempt to silence local voices,” Willis said. “The purpose of a protest is to identify error in an agency decision. The more errors, the more expensive it would be for the public to point them out with the per-page cost.”

In the meantime, anybody can nominate a lease parcel at any time for any reason, Willis said. “The nominator can remain anonymous, pay no fees, and not be obligated to bid for the parcel that is offered for auction while BLM incurs all the parcel evaluation and lease preparation expenses,” he said. “There should not be a fee for reconsidering leasing for a good cause. Maybe there should be one for nominating a lease.”

Contact Nick Snow at [email protected].