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

In May 2010, BLM issued "Instruction Memorandum No. 2010-118," 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 390 categorical exclusions. These reforms substantially addressed the gaps and shortcomings in BLM's guidance that we identified in our report. However, on August 12, 2011, a decision was reached in Western Energy Alliance v. Salazar that affected the implementation of the instruction memorandum. 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. In September 2011, we reported that, according to a BLM official, the ruling has prevented BLM from implementing the parts of the May 2010 instruction memorandum and it also called into question the issuance of the second instruction memorandum aimed at further addressing our recommendations (see GAO-11-941T). As of November 2016, we are not aware of any further actions by BLM to address this issue.

In September 2011, we reported that, according to BLM officials, the agency developed an 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 (see GAO-11-941T). This draft instruction memorandum was undergoing review by the department when, on August 12, 2011, a decision was reached in Western Energy Alliance v. Salazar. 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. In September 2011, we reported that, according to a BLM official, the ruling has called into question the issuance of the draft instruction memorandum aimed at further addressing our recommendations. As of November 2016, we are not aware of any further actions by BLM to address this issue.

The court's decision in Western Energy v. Salazar--in which the court held that BLM's May 2010 instruction memorandum addressing the first recommendation in GAO-09-872 constituted a regulation that BLM adopted without following proper rule-making procedures and issued a nationwide injunction blocking implementation of BLM's May 2010 instruction memorandum--has, according to BLM, called into question the issuance (timing and scope) of future instruction memorandums aimed at further addressing our recommendations. As a result, no plan has been released for overseeing the use of section 390 categorical exclusions to ensure compliance with its guidance.