27 May 2010

http://www.federalregister.gov/OFRUpload/OFRData/2010-13111_PI.pdf

3125-W0

COUNCIL ON ENVIRONMENTAL QUALITY

Review of MMS NEPA Policies, Practices, and Procedures for OCS Oil and Gas
Exploration and Development.

AGENCY: Council on Environmental Quality.

ACTION: Notice of Review and Request for Public Comment.

SUMMARY: On May 17, 2010, the Council on Environmental Quality (CEQ) informed
the Department of the Interior (DOI) that CEQ was conducting a 30 day review National
Environmental Policy Act (NEPA) policies, practices, and procedures for the Minerals
Management Service (MMS) decisions for Outer Continental Shelf (OCS) oil and gas
exploration and development.

This review of MMS NEPA policies, practices and procedures is being conducted as a
result of the oil spill from the Deepwater Horizon well and drilling rig in the Gulf of
Mexico. The purpose of this review is to ascertain how MMS applies NEPA in its
management of Outer Continental Shelf oil and gas exploration and development and
make recommendations for revisions. The scope of the review is intended to be holistic,
i.e. from leasing decisions to drilling and production.

In line with CEQ’s effort to engage the public in the NEPA process and the President’s
Open Government Initiative, this notice is also a solicitation for public comment on the
review process undertaken by CEQ as well as on current MMS NEPA policies, practices,
and procedures regarding Outer Continental Shelf oil and gas exploration and
development. Public participation in this review effort will benefit this specific review
process, the MMS NEPA implementation, CEQ’s overall effectiveness in overseeing
NEPA, and the environmental and social consequences of government activity.

DATES: Comments should be submitted as soon as possible on the CEQ review,
recognizing that the review is to be completed June 17, 2010.

ADDRESSES: All relevant information related to MMS NEPA procedures and the
review process is available at http://www.whitehouse.gov/ceq/initiatives/nepa .
Comments on the procedures and review should be submitted electronically at the above
URL or to hgreczmiel@ceq.eop.gov or in writing to Associate Director for NEPA
Oversight, Council on Environmental Quality, 722 Jackson Place NW, Washington, DC
20503.

FOR FURTHER INFORMATION CONTACT: Horst Greczmiel, Associate Director for
NEPA Oversight, Council on Environmental Quality, at (202) 395-5750.

SUPPLEMENTARY INFORMATION:

NEPA and Offshore Drilling

Enacted in 1970, NEPA mandates that Federal agencies consider the environmental
impacts of their proposed actions during all stages of decision making, from planning to
implementation. NEPA is a fundamental decision-making tool used to harmonize our
economic, environmental, and social aspirations and is a cornerstone of our Nation’s
efforts to protect the environment. NEPA applies to every stage of Federal decision
making related to offshore oil and gas exploration and development. When an agency
proposes an action, it must determine if the action has the potential to affect the quality of
the human environment. Agencies then apply one of three levels of NEPA analysis. They
may: prepare an Environmental Impact Statement (EIS) when the agency projects the
proposed action has the potential for significant environmental impacts; apply a
Categorical Exclusion (CE) when the agency has previously established a CE based on its
determination that proposed action falls within the categories of actions described in the
CE which the agency has found do not typically result in individually or cumulatively
significant environmental effects or impacts; or the agency prepares an Environmental
Assessment (EA) to determine whether it can make a Finding of No Significant Impact or
proceed to prepare an EIS.

Under the Outer Continental Shelf Lands Act, MMS has implemented a process for oil
and gas development consisting of the following stages: (1) preparing a nationwide 5-
year oil and gas development program, (2) planning for and holding a specific lease sale,
(3) approving a company’s exploration plan, and (4) approving a company’s development
and production plan. MMS is required to apply NEPA during each of these stages,
beginning with the initial planning of outer continental shelf leasing and ending with a
decision on a specific well. The sequence of NEPA analyses is informed by the CEQ
Regulations Implementing the Procedural Requirements of the National Environmental
Policy Act, 40 C.F.R. parts 1500-1508 available at

http://ceq.hss.doe.gov/ceq_regulations/regulations.html. Specifically, 40 C.F.R.
§1502.20, discusses “tiering,” a strategy used to avoid repetitive discussions of the same
issues, and to prevent unnecessary duplication of work by reviewers, as the NEPA
reviews progress from a broad program to a site specific action. In the case of the Gulf of
Mexico leases, MMS prepared several tiered NEPA analyses (see NEPA environmental
review documents available at http://www.mms.gov/5-year/2007-2012BackgroundDocs.htm and
http://www.gomr.mms.gov/homepg/regulate/environ/nepa/nepaprocess.html).

Environmental Impact Statements (EIS), the most intensive level of analysis, were
prepared at two decision points. First, in April 2007, MMS prepared a broad
“programmatic” EIS on the Outer Continental Shelf Oil and Gas Leasing Program for
2007-2012. Also, in April 2007, MMS prepared an EIS for the Gulf of Mexico OCS Oil
and Gas Lease Sales in the Western and Central Planning Areas, the “multi-sale” EIS.
In October 2007, MMS completed another NEPA analysis, an Environmental Assessment
(EA), under the multi-sale EIS, for Central Gulf of Mexico Lease Sale 206. This is the
sale in which the lease was issued for the location that includes the Deepwater Horizon
well. MMS previously approved BP’s development operations based on a programmatic
EA that MMS prepared in December 2002.

Finally, for the Deepwater Horizon well, MMS applied its existing Categorical Exclusion
Review (CER) process prior to the decision to approve the Exploration Plan that included
the drilling of the Deepwater Horizon well. The Categorical Exclusion used by MMS for
Deepwater Horizon was established more than 20 years ago. Under section 11 of the
Outer Continental Shelf Lands Act, 43 U.S.C. section 1340, MMS had 30 days to
complete its environmental review and act on the application to permit drilling. The
Administration, in its supplemental budget request sent to Congress on May 12, 2010,
seeks to extend that 30 day timeline; however, this review will consider the existing
statutory requirements applicable to MMS decisions for OCS oil and gas exploration and
development.

The Role of CEQ in the NEPA Process

NEPA charges the Council on Environmental Quality (CEQ) with the authority and
responsibility to guide Federal agencies on their implementation of the Act. In 1978,
CEQ issued regulations implementing the procedural provisions of NEPA. These
regulations apply to all Federal agencies and establish the basic framework for all NEPA
analyses (available at http://ceq.hss.doe.gov/ceq_regulations/regulations.html). The
regulations require Federal agencies to establish their own NEPA implementing
procedures (see 40 C.F.R. § 1507.3), and to ensure that they have the capacity, in terms
of personnel and other resources, to comply with NEPA (see 40 C.F.R. §1507.2).
CEQ periodically issues guidance and other documents, such as guides and handbooks
for NEPA. CEQ also convenes meetings with Federal NEPA contacts to present CEQ’s
interpretation of NEPA requirements and focus on how agencies can improve their NEPA
analyses and documents. Through case law, the Federal courts and the Supreme Court
have established that the agencies can rely on CEQ’s interpretation of, and guidance on,
NEPA.

Agencies establish their own NEPA implementing procedures which tailor the CEQ
requirements to a specific agency’s authorities and decision making processes. MMS
must comply with the Department of the Interior NEPA regulations (available at
http://www.doi.gov/oepc/nepafr.html) and the MMS NEPA implementing procedures
found in the Department of the Interior’s Director’s Manual 516 at Chapter 15 (available
at http://elips.doi.gov/app_DM/act_getfiles.cfm?relnum=3625). CEQ provides assistance
when agency-specific procedures, such as these DOI and MMS NEPA implementing
procedures, are developed. An agency’s NEPA procedures are not official until CEQ
reviews the proposed procedures and determines that they are in conformity with NEPA
and the CEQ regulations. Any subsequent revisions or changes to the agency procedures
are subject to the same oversight process with CEQ. Periodically, CEQ also reviews
agency’s NEPA implementing regulations and procedures. CEQ does not review every
application of a Categorical Exclusion, every agency project, or the NEPA review for
every agency project. The CEQ review will review the NEPA analyses conducted for the
Deepwater Horizon well as well as the overall NEPA process MMS uses for OCS oil and
gas exploration and development.

Discussion of the Request for Public Comment

NEPA itself emphasizes public involvement in government actions affecting the
environment by requiring that the environmental impacts or effects associated with
proposed actions be assessed and publicly disclosed. NEPA is steeped in the principle
that public accountability and oversight makes government more effective. Public access
to and participation in specific agency NEPA actions illuminates areas where agency
reviewers may have overlooked or misinterpreted portions of a submitted EIS or EA.
Public participation in this review process allows CEQ to similarly tap into the collective
wisdom of industry, academia, state, local, and tribal governments, and the rest of the
private sector. CEQ is soliciting comments, questions, and other input about a number of
specific issues focused on the NEPA review of OCS oil and gas exploration and
development:

1. What are substantive issues and at what level should they be analyzed in
each of the tiered NEPA submissions, from National 5-Year Oil and Gas
Program to an individual well permit?

2. Does this sequence of permitting stages (and associate NEPA
submissions) allow for comprehensive evaluation of all relevant issues?

3. What have been past industry and agency experiences with the use of
categorical exclusions for OCS oil and gas activities?

4. Has the use of the CER process been an effective tool for reducing
unnecessary paperwork without compromising the robustness of the
NEPA analysis for OCS oil and gas activities?

5. To what degree has public engagement been a part of MMS NEPA
practice, particularly as it deals with categorical exclusions?

6. What resources are available in Federal, tribal, state, and local government
agencies with a stake in OCS oil and gas exploration and development to
participate in NEPA reviews?

In addition to input on the above issues, general comments and questions are also
welcome. Information relevant to this MMS NEPA policy review can be found on the
CEQ website at http://www.whitehouse.gov/ceq/initiatives/nepa .
Public comments are requested as soon as possible in light of the June 17, 2010, deadline
for the CEQ review.

May 25, 2010

Nancy Sutley

Chair, Council on Environmental Quality

[FR Doc. 2010-13111 Filed 05/27/2010 at 8:45 am; Publication Date: 05/28/2010]