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Law360, June 16, 2010

DOI Asked To Nix NEPA Exclusions For Offshore Oil
By Jessica Dye

New York -- The Center for Biological Diversity is petitioning the U.S. Department of the Interior to formally rescind a policy that allowed BP PLC to receive approval for its offshore drilling operations in the Gulf of Mexico without “meaningful” environmental review under the National Environmental Policy Act.

The petition, filed Tuesday before the DOI's Minerals Management Service and the White House Council on Environmental Quality, calls on federal agencies to issue new rules requiring compliance with NEPA rules at every stage of offshore oil and gas activities and eliminating the categorical exclusion invoked by BP and others to receive expedited approval for drilling and exploration plans.

The center's petition comes in response to a 30-day review of the MMS' compliance with NEPA policies, practices and procedures for oil and gas exploration in the Gulf of Mexico outer continental shelf, initiated in response to the April 20 explosion at the BP-operated Deepwater Horizon rig that sparked the largest oil spill in U.S. history.

BP received approval for its Deepwater Horizon operations under a NEPA categorical exclusion, which allows MMS to greenlight oil and gas exploration and development activities without companies needing to submit an environmental assessment or environmental impact statement, as typically required under NEPA.

Despite the ensuing damage in the two months since the explosion, MMS has continued to approve drilling and exploration activities using categorical exclusions, according to the center's petition.

“Two months later, we have yet to see real reform of the flawed process that ushered in this horrific oil spill,” said Miyoko Sakashita, the center's oceans director.

“In light of the BP oil spill, it is clear that exploratory and development drilling can, and does, result in significant impacts to the environment and communities that depend on the Gulf's coastal resources,” Sakashita added.

The center's formal petition for rulemaking, filed pursuant to the Administrative Procedure Act, would strike any use of categorical exclusions and replace it with a much tougher rule requiring regulatory review of NEPA compliance at every stage of offshore oil and gas activities, including environmental review for exploration, development and production plans, and Development Operation Coordination Documents in the Gulf of Mexico.

The petition also charges that MMS violated NEPA in its approval of Gulf oil and gas exploration activities. According to the center, the environmental assessment prepared by MMS for the 2007 lease spill — the one that parceled out the Deepwater Horizon well — concluded that the lease sale would have “no significant environmental impacts.”

“Even before the spill, the findings that these lease sales pose no significant environmental impacts was arbitrary and capricious; now, post-spill, it is painfully obvious that the secretary's environmental analysis and findings violate NEPA,” the petition stated.

A DOI representative did not immediately return requests for comment on the petition.

The CEQ is scheduled to present the findings from its review of MMS' use of NEPA exclusions in the Gulf on Thursday.

In addition to the rulemaking petition, the center has filed suit in the U.S. Court of Appeals for the Fifth Circuit seeking to force MMS to review all 49 exploration plans in the Gulf that were approved with NEPA categorical exclusions.

Several other environmental advocacy groups, including the Sierra Club, have brought similar suits.

The MMS and DOI have faced intense scrutiny on their actions in overseeing and regulating oil and gas exploration and development activities in the Gulf since the BP spill began.

The agencies have implemented a six-month moratorium on all offshore drilling activity. President Barack Obama said Tuesday that he intended to keep that moratorium in place until an independent commission sent to study the causes of the spill can complete its work.

MMS has also been criticized by federal government watchdogs for its supposedly cozy relationship with the energy companies that it regulates. On Tuesday, DOI officials appointed former U.S. Department of Justice inspector general and current Fried Frank Harris Shriver & Jacobs LLP litigation partner Michael Bromwich to oversee a vast overhaul of the agency.

Photo © Paul S. Hamilton