In order to understand the nuances of this policy shift, you need to know about the process. Like all executive agencies, the Department of Interior (DOI) is charged with implementing legislation. In this case, there are a number of laws that govern OCS leasing. The primary law is the Outer Continental Shelf Lands Act (OCSLA) which requires the DOI to make OCS leases available and establishes a framework for the development of OCS oil and gas resources. It established a four-stage process:
Preparation Stage - DOI prepares a five-year schedule for proposed lease sales.
Lease-Sale Stage - Interior solicits bids and issues leases for particular areas.
Exploration Stage - Interior reviews and determines whether to approve more extensive exploration plans.
Development and Production Stage - Interior and affected State and Local governments review a more extensive plan from the leaseholder. If Interior finds that the plan would probably cause serious harm to the environment, it may terminate the lease.
The rhythm of this five-year leasing process is important to understand what's happening now, and why it is happening now. Interior is currently in the middle of a five-year period of lease sales that began in mid-2007 and ends in mid-2012. It's also in the planning process for the next five-year period that will begin in 2012. Before the 2012-2017 lease period can proceed, new areas that would be included have to go through the environmental review process (initial "scoping" and then the development of draft Environmental Impact Statement (EIS) and the approval of a Final EIS.) So there are two separate issues: leases in the current five-year cycle that were put into limbo by a court case, and planning for the next five-year cycle.
To access some of the specific reasons why environmental groups are upset about this decision, you have to get beyond a simple "environmental groups think oil drilling is always bad" frame and understand that Interior reinstated leases that appeared to have been thwarted by a 2008 court case. Interior was under an April 2009 order from the DC Circuit Court of Appeals in Center for Biological Diversity v. Department of Interior that vacated the existing OCS leasing program and ordered the Secretary to review the DOI's OCS leasing policy. Specifically, the DC Circuit Court of Appeals held that the DOI is required by OCSLA to review potential OCS oil and gas leases for "environmental sensitivity" and effects on the marine environment as a whole. In deciding to grant the leases, the Bush Interior Department had instead conducted a review that was focused exclusively on the impacts to coastlines. Part of the announcement last week was about complying with the order of the court to review leases granted under the 2007-2012 leasing program initiated under the Bush administration using this new standard. And in announcing the new oil and gas strategy, the Department of Interior specified "In addition to shoreline/coastal resources, the new analysis includes consideration of the sensitivity of offshore/marine resources, divided into three components of the different areas of the OCS that may be affected by oil and gas activities: marine habitats, marine productivity, and marine fauna (i.e., birds, fish, marine mammals and sea turtles). The expanded analysis considers the sensitivity to oil spills and other factors, such as sound and physical disturbance, and increased sensitivity due to climate change and ocean acidification."
The court's decision in Center for Biological Diversity did not require Interior to remove specific areas from the 2007-2012 lease sale, but it did require Interior to conduct a environmental sensitivity review of the leases that were offered using the more detailed analysis. Based on that analysis, Interior removed two areas of the Alaskan coast from the 2007-2012 leasing program (North Aleutian Sea (including Bristol Bay) and Beaufort Sea) as well as areas in the Chukchi Sea except for one area called Sale 193. Sale 193 is the most important, since it attracted an extraordinary amount of industry interest, attracting $2.6 billion in bids. However, Sale 193 was also the reason why the coalition of environmental groups had originally filed the suit. These environmental groups opposed Sale 193 because of threats to wildlife (such as walrus and polar bears) and concerns about global warming. Now it appears that the Sale 193 leases have new momentum with the Interior decision and the EPA granting a necessary air emissions permit for Shell Oil to operate its drilling ship. The cancelled lease sales were areas with minimal industry interest. In addition, Salazar left intact Sale 220 off the Virginia coast, meaning that it will go up for auction sometime in 2011.
So what changed in the present lease cycle? A number of Bush-era leases that had been held in limbo by the court order are now moving forward, some were canceled, and a new type of environmental analysis was created for future OCS leasing decisions. Some of the canceled areas were environmentally sensitive, such as Bristol Bay in Alaska, a tremendously important area for fish and wildlife.
For the next lease cycle (2012-2017) there are even more changes that seem to be a victory for the oil and gas industry and a loss for environmental organizations. The press releases trumpet the millions of acres opened for oil and gas exploration and development. But you'd never know it if you read Red State, or listen to the House Republican Caucus. What are they so angry about? And what exactly does Obama's announcement mean for future exploration and development of OCS oil leases?
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Remember, we're really early in this process. In fact, this announcement just announces the intention of Interior to include new areas in the scoping and environmental review process in the Preparation Stage for 2012-2017. That means that if the EIS process finds that these areas aren't environmentally sensitive, Interior can include some of these areas in their lease sale schedule, which then means that the oil and gas industry can decide if they want to bid on specific parcels, and their exploration and development of any specific area is subject to separate environmental review processes. Announcing that Interior will include these new areas in the EIS scoping process only means that someplace in these new areas could eventually become part of a lease sale - it does not mean that they are now open to willy-nilly widespread oil drilling. And that's why the oil and gas industry welcomes this decision, but isn't exactly doing cartwheels because of it.
Undoubtedly, the potential of offshore drilling has been oversold as an immediate answer to American energy security. Part of the reason is that the lag time from initial exploration is really long. To be clear, that's not just due to environmental review. Even if the federal government were to wave their wand and say "drill, baby, drill!" it would take years of exploration and development before a single drop was produced.
Other aspects of the new OCS policy that might bring some cheer to environmentalists include the exclusion of Alaska's Bristol Bay, and Gulf coast Florida areas within 150 miles of shore from the EIS scoping process. If an area is not included in the scoping process now, it can't be included in the lease sale process later in the five-year cycle.
Actually, the more interesting and important policy shift is in onshore leasing changes that have been percolating since Secretary of Interior Ken Salazar cancelled 77 oil and gas leases granted in the waning days of the Bush administration. In January, the DOI announced changes that frontloaded environmental review in the process of deciding which onshore leases to offer for auction and limited the application of so-called "categorical exclusions" that had limited environmental review of leases.
Taken in sum, these changes cannot be characterized in simple "win / loss" terms for either the oil and gas industry or for environmental groups. The balanced approach that President Obama is attempting to strike is precarious. The oil and gas industry and environmental groups are not known for measured rhetoric, with each choosing nearly apocalyptic terms to describe changes that they oppose. Satisfying neither group is a pretty big risk for the Obama administration.
A lot of the analysis of these decisions has focused on the idea of "political cover" that the OCS decision might provide for cap and trade legislation (see this handy compilation of editorial opinion for a sampling), but my guess is that this is the most salient:
"...maybe that's the point-offer an olive branch and watch Republicans swat it down and look unreasonable."
I think we've reached the end of trying to create legislative compromise with the recalcitrant Republican leadership, whose decision to go all-in on the "just say no" strategy means there's little to be gained legislatively in offering olive branches. However, there is potentially a lot to be gained in repeatedly demonstrating to the voting public that Republicans are unreasonably opposed to anything Obama and the Democratic leadership in Congress propose. And while the incredible oil bubble of 2008 may not be repeated soon, it's hard not to remember that a majority of those who voted for Obama in 2008 favored some form of offshore drilling.
As we move toward the November 2010 elections remember this episode. Maybe the minutia of the actual policy changes bore you, but this is a template for the Obama White House and its attempt to navigate to a politically tricky middle ground. |
