Obama's new offshore oil drilling rules: too many loopholes?

The Obama administration's new guidelines for offshore oil drilling, which are intended to require much more detailed environmental reviews for deep-water drilling, have upset not only the oil industry, but environmentalists, too.

The recommendations unveiled by the White House Council on Environmental Quality (CEQ) and the US Department of the Interior on Monday were touted as ratcheting back widespread uses of "categorical exclusions."

That designation by the Interior's Minerals Management Service (MMS) had exempted many deep-water drilling operations from detailed environmental review under the National Environmental Policy Act (NEPA).

In the wake of the BP oil spill in the Gulf of Mexico, environmental and other groups found that BP's Macondo well that was gushing oil – as well as most other deep-water wells in the region – had been graced with a categorical exclusion.

“In light of the increasing levels of complexity and risk – and the consequent potential environmental impacts – associated with deep-water drilling, we are taking a fresh look at the NEPA process and the types of environmental reviews that should be required for offshore activity,” said Interior Secretary Ken Salazar in a statement.

While Congress wrangles over just how to tighten environmental requirements for offshore drilling, the Obama Administration says categorical exclusions will now be used far more sparingly. Steps the CEQ called for in its review include:

• Reviewing the use of categorical exclusions for outer continental shelf, or OCS, oil and gas exploration and development "in light of the increasing levels of complexity and risk – and the consequent potential environmental impacts – associated with deep-water drilling."
• Comprehensive NEPA review of individual deep-water exploration activities, including site-specific information "where appropriate," a loophole that angers some environmentalists.
• Amending the OCS Lands Act to eliminate the current 30-day timeframe for approving exploration plan – and modify NEPA practices to reflect new environmental findings since the BP oil spill.

“The recommendations in this report are targeted to ensure robust environmental reviews for future oil and gas exploration and development,” Nancy Sutley, CEQ chair, said in a statement.

But limiting use of categorical exclusions could create costly delays and curb job growth, the American Petroleum Institute (API), an industry lobby group says.

“We’re concerned the change could add significantly to the department’s workload, stretching the timeline for approval of important energy development projects with no clear return in environmental protection," Erik Milito, upstream director for API, said in a statement. "Environmental review of offshore operations under existing rules is extensive, and decisions on categorical exclusions, which are intended to avoid repetitive analysis, require review."

Many environmentalists, however, were only marginally less irked about the recommendations than the oil industry – arguing that there were too many loopholes that would still allow categorical exclusions.

Under a directive signed Monday by Michael Bromwich, the new director of the MMS's successor agency, the Bureau of Ocean Energy Management, Enforcement and Regulation (BOEM) "shall narrow its use of categorical exclusions."

In the very next paragraph, the requirement "not to use" such exclusions is spelled out for equipment typically used in deep-water drilling – including floating drill rigs. But the last sentence in the paragraph also appears to leave open the possibility of a return to relatively light – some argue superficial – environmental review after the current six-month moratorium on deepwater drilling expires.

"If and when the July 12 suspension is no longer in force, all plans submitted for approval that propose an activity that involves [deep-water drilling equipment] shall be subject to an environmental assessment."

What that means, says Richard Charter, an offshore drilling specialist for the Defenders of Wildlife, is that a few months from now when the moratorium on deep-water drilling in the Gulf is over, the standard for deep-water environmental review could be just an "Environmental Assessment," or EA.

Under NEPA, the EA is a cursory document of a few pages that could easily devolve into a rubber-stamping exercise, he says. What's needed, he argues, is an "Environmental Impact Statement" – a very detailed review – for each deep-water well proposal.

On the plus side, he notes, BOEM is planning to conduct a supplemental environmental impact statement for the Gulf – a major evaluation that could do a lot of good, Charter says. Until then, however, the Bromwich memo paves the way for new activities in the Gulf to continue using categorical exclusions "if they are in shallow enough water and without certain risk factors," he says.

"The Bromwich memo cuts both ways," Mr. Charter says. "It does curb some excesses in the use of categorical exclusions.

"But this is also an interim step that will pave the way for Interior to declare that drilling can now proceed safely. We will just have to wait and see if that word 'safely' means anything or not," he says.

The BOEM will soon begin a formal comprehensive review and evaluation of its use of categorical exclusions, the Interior Department reported. While that review is going on, those exclusions will be used much more sparingly, Bromwich said. After the review is complete, BOEM says it will unveil a new approach that incorporates CEQ recommendations.