Welcome to The New Interior, a periodic update from Steptoe & Johnson LLP to keep you informed of coming changes at the Department of Interior, and for related matters on Capitol Hill and elsewhere with a new administration taking charge in Washington, DC.  We intend to bring you the very latest on anticipated moves by the Obama Administration and in the 111^th Congress over the next several months, as a new direction takes shape for Interior-related positions and policies.

If you would like to speak with a Steptoe attorney about our Interior practice, please reply to this email or contact Tom Collier (202.429.6242 or tcollier@steptoe.com) or Jody Cummings (202.429.8096 or jcummings@steptoe.com). 

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Drilling in ANWR? Salazar Leaves the Door Open

In a move that may surprise environmentalists, Secretary Salazar told the press at the beginning of the week that he would consider tapping oil from the Alaska National Wildlife Refuge (ANWR) if it could be done from outside the ANWR boundaries through the method of directional drilling and it could be shown that the ANWR’s wildlife and environment would not be disturbed by such efforts.

The Secretary expressed skepticism that directional drilling could be done without impairing ANWR’s ecological values, indicating that most of what he had seen to date did not support the view that the environment would not be harmed.  Still, he seemed open to the idea of discussing directional drilling given technological advancements in recent years.

The Secretary reiterated the Obama Administration’s concern for protecting the ANWR.  He indicated that the ANWR was a “very special place” and that protecting the environment and wildlife there was something that the Administration would not change its position on when considering oil and gas production.

The Secretary’s statements come a couple of weeks after Senate Energy and Natural Resources Committee Ranking Member Lisa Murkowski (R-AK) introduced legislation (S. 503) that would allow oil companies access to the ANWR’s oil through directional drilling.  The bill has been referred to the Energy and Natural Resources Committee for further action. 

Interior and FERC Issue Offshore Renewable Energy Development Joint Statement

After a two-year impasse, the Department of Interior and Federal Energy Regulatory Commission (FERC), through Secretary Salazar and FERC Acting Chairman Jon Wellinghoff, issued a joint statement this week indicating that the agencies will enter a Memorandum of Understanding (MOU) confirming their intent to work together to facilitate permitting of renewable energy in offshore waters.

The joint statement recognizes that Interior, through the Minerals Management Service (MMS) has authority to grant leases, easements and rights-of-way on the outer continental shelf (OCS) for the development of oil and gas resources, and that pursuant to the Energy Policy Act of 2005 (which amended the Outer Continental Shelf Lands Act), Interior has parallel permitting authority with regard to the production, transportation or  transmission of energy from additional sources of energy on the OCS, including renewable energy sources.  The joint statement also indicates that Interior has permitting and development authority over wind power projects that use offshore resources beyond state waters.

At the same time, the statement recognizes that Interior’s authority does not diminish existing OCS-related responsibilities that other agencies maintain, including FERC’s responsibility pursuant to the Federal Power Act to oversee the development of hydropower resources in navigable waters of the United States.  FERC and Interior have agreed that FERC will have primary responsibility to manage licensing of hydrokinetic projects (converting wave, tidal and ocean current energy to electricity) in offshore waters under the Federal Power Act using procedures developed for hydropower licenses, and with input from relevant agencies, including Interior.

The joint statement indicated that a MOU is forthcoming setting out these terms and the process by which permits and licenses relating to renewable energy resources in offshore waters will be developed.

Interior to Hold Regional Meetings on OCS Energy Development

Following through on a promise made by Secretary Salazar several weeks back, the Department announced recently that the Secretary will host four regional public meetings in April to present Interior’s findings on OCS energy resources and information regarding sensitive areas and resources in the OCS.  Interior has opened the meeting for comments from each region’s elected officials, private citizens, interested organizations, energy producers, advocacy groups, as well as local governments.  The Department plans to present a report on offshore energy resources at each meeting. 

Regional meetings will be held at:

• Atlantic City Convention Center, Atlantic City, New Jersey (Monday, April 6)
  
  
• Tulane University, New Orleans, Louisiana (Wednesday, April 8)
  
  
• Dena’ina Convention Center, Anchorage, Alaska (Tuesday, April 14)
  
  
• University of California-San Francisco, San Francisco, California (Thursday, April 16)

Public comments will be accepted through September 21, 2009 – the end of the 6-month period set by Secretary Salazar for public comment on Interior’s draft OCS plan.  Written comments may be submitted electronically at www.mms.gov or by mail to Renee Orr, Chief, Leasing Division, Minerals Management Service, MS 4010, 381 Eden Street, Herndon, VA 20170-4817.  

Secretary Salazar Issues Order to Spur Renewable Energy Development and Establish Energy and Climate Change Task Force

In another move focusing on renewable energy resources, Secretary Salazar has issued a Secretarial Order that establishes development of renewable energy as a Department priority and creates a Departmental Task Force on Energy and Climate Change. 

The order indicates that the production, development, and delivery of renewable energy is one of the Department’s highest priorities.  It directs Interior’s agencies and bureaus to work collaboratively with each other, as well as with other federal, state and local entities and private landowners to encourage timely and responsible development of renewable energy and related transmission while protecting wildlife and the environment.
 
The Energy and Climate Change Task Force created by the order is to be co-chaired by Interior’s Deputy Secretary and the Counselor to the Secretary.  The Task Force will be responsible for developing a strategy designed to increase development and transmission of renewable energy from areas on public lands and the OCS.  The scope of this task will include: (1) quantifying potential contributions of solar, wind, geothermal, incremental or small hydroelectric power on existing structures and biomass energy; (2) identifying and prioritizing specific domestic locations best suited for large-scale production of renewable energy (i.e. renewable energy zones); (3) identifying electric transmission infrastructure and transmission corridors needed to deliver renewable energy to major population centers; (4) prioritizing permitting and environmental review of transmission rights-of-way applications necessary for delivery of renewable energy to customers; (5) establishing clear roles and processes for each bureau; (6) tracking bureau progress and working to resolve obstacles that limit renewable energy development, permitting, and production; (7) identifying additional policies or policy revisions that are needed; and (8) working with states, tribes, local governments, and other stakeholders to identify appropriate areas for generation and transmission.

The Task Force will also be required to develop best management practices for renewable energy projects to ensure environmental protection, and establish policy direction for authorizing the development of solar energy on public lands.

The order requires Program Assistant Secretaries that are involved in the planning, siting or permitting of renewable energy generation and transmission facilities on public lands and the OCS to: (1) establish and participate in management structures that facilitate cooperation, reporting and accountability across agencies; (2) establish offices to consolidate expertise that will ensure coordinated permitting processes and compliance with applicable laws; (3) work collaboratively with other federal, state and local authorities on non-Federal permitting processes.

Interior’s Assistant Secretary for Policy, Management and Budget will be a member of the Task Force.  Also, each of Interior’s bureau heads must designate a representative to the Task Force.

Nominee for Bureau of Reclamation Announced

As we expected and reported here previously, the White House announced mid-week that Michael Connor would be the Administration’s nominee for the Bureau of Reclamation Commissioner.  Connor has served as the Counsel to the U.S. Senate Energy and Natural Resources Committee since May 2001.  From 1993 to 2001, Connor was at the Department of the Interior.  During part of that time, Connor was deputy director of the Indian Water Rights Office and worked with Steptoe’s John Duffy, who led the Department’s Indian water rights issues team for Secretary Babbitt .  Connor later became Director of the Indian Water Rights Office. Connor has a B.S. in Chemical Engineering from New Mexico State, and a law degree from the University of Colorado School of Law.

Deputy Secretary Nominee Faces Opposition for Confirmation

By a 17-5 margin, President Obama’s nominee for Interior Deputy Secretary, David Hayes, was approved by the Senate Committee on Energy and Natural Resources earlier this week.  However, obstacles may remain in Hayes’ path for Senate confirmation.  Sen. Robert Bennett (R-UT), a member of the Senate Committee, indicated this week that he would try to block Hayes’ confirmation to protest the Obama Administration’s cancellation of federal oil and gas leases earlier this year.  Sen. Bennett indicated that he wants more information from Interior about the February decision to rescind leases that were auctioned off in December.
 
On the other side of the aisle, Sen. Mary L. Landrieu (D-LA), also a committee member, has indicated that she would reserve judgment on confirmation of Hayes, ostensibly using Hayes’ confirmation as leverage to press her goal of boosting domestic oil and gas production.  Sen. Landrieu has stated that she is among a bipartisan group of senators who will push for more domestic energy production.

Interior Releases Bird Study

The Department released this week its first-ever comprehensive report on bird populations in the United States, The State of Birds.  The report shows that nearly one-third of the nation’s 800 bird species are endangered, threatened or in significant decline.  The report combines data from three primary bird population surveys: (1) North American Breeding Bird Survey administered by the U.S. Geological Survey and Canadian Wildlife Service; (2) National Audubon Society’s Christmas Bird Count; and (3) U.S. Fish and Wildlife Service/Canadian Wildlife Service Waterfowl Breeding Population and Habitat Survey. 

The report concludes that every U.S. habitat includes birds in need of conservation, and that Hawaiian birds and ocean birds appear to be most at risk, with populations in danger of collapse if immediate conservation measures are not implemented.  The report also finds that bird populations in grassland and aridland habitats show the most rapid declines over the last 40 years, and that birds in forest habitats are declining as well.  However, bird populations in wetlands areas showed a significant upward trend in the study. 

The report also highlights a handful of energy, mining, and natural resource use-related impacts that may threaten bird populations:

• In aridland areas, the report suggests that energy development and exploration have had major impacts, and that poorly planned energy infrastructure degrades and fragments habitats and provides conditions favorable for invasive plant species.
   
  
• In grasslands areas, the report cites high commodity prices and demand for biofuels as contributing to reduced acreage for farm conservation programs, which could reverse recent improvements in grassland bird populations.  Wind turbines, if improperly sited, could fragment grasslands and disrupt nesting activities of game birds.  The report also indicates that global warming is expected to increase drought conditions in grassland areas, leading to lower productivity and reduced food supply for birds.
  
  
• In arctic areas, the report states that oil exploration and production threaten major areas of importance to arctic-breeding birds.  The report concludes that arctic warming will make it easier to develop off-shore energy facilities and to transport products, increasing the risk of fuel spills that harm bird populations.
  
  
• In wetlands areas, the report indicates rising corn prices and the conversion of wetlands and adjacent grasslands for biofuel production threaten nesting habitats of several species.  Also, global climate change is expected to degrade wetlands, affecting birds and other wildlife.
  
  
• The report notes that mining activities can cause extensive habitat disturbance and degradation.  Coal mining is cited as an activity that removes large areas of forests and threatens streamside habitats with significant amounts of debris.
  
  
• Logging, road construction, monocultural tree plantations, and fire suppression are identified as culprits of habitat fragmentation and leading to a lack of natural early successional forests, degradation of streamside habitats, and overgrowth of brush and small trees that negatively impact wildlife.  The report indicates that more than 85% of old-growth forest in the Pacific Northwest has been eliminated, leading the listing of the Northern Spotted Owl and Marbled Murrelet as threatened under the Endangered Species Act.

As one of the Department’s first major statements on wildlife issues in this Administration, it will be interesting to monitor how it impacts policy decisions going forward.  A full copy of the bird study can be obtained at www.stateofthebirds.org.

Salazar to Oil and Gas Executives: Energy Focus Must Shift, Royalty Rate Hikes May Be on the Way

Secretary Salazar met with the board of directors of the American Petroleum Institute behind closed doors on Thursday, highlighting significant pieces of the Administration’s plan on energy issues.  He called for an end to dependence on foreign oil, indicating that America must look internally to deal with its energy needs and tackle climate change issues as well.  Salazar indicated that oil, gas and coal were clearly part of the Administration’s comprehensive energy plan, but alone, were not enough.

Salazar stated that Interior would also be opening its doors to solar, wind and wave, biofuels, geothermal and small hydro energy resources.  He highlighted a handful of statistics that may indicate where the Department’s focus will be directed: BLM has identified approximately 20.6 million acres of public land with wind energy potential in 11 western states and approximately 29.5 million acres with solar energy potential in six southwestern states.  Also, there are more than 140 million acres of public land in western states and Alaska with geothermal resource potential.  Further, the National Renewable Energy Lab has identified more than 1,000 gigawatts of wind potential off the Atlantic Coast, and more than 900 gigawatts of wind potential off the Pacific Coast.  Salazar indicated that there is a backlog of about 200 solar energy applications on BLM lands in the southwest, and that there are another 20 proposed wind development projects on western BLM lands.

He noted his recent creation of an energy and climate change task force that will move the Administration’s energy agenda forward and identify specific renewable energy zones on public lands.  He also stated that Interior will assign a high priority to completing appropriate environmental review and permitting of transmission corridors and right-of-way applications that are needed to deliver renewable energy generation to consumers. 

On drilling issues, Salazar indicated that this year, Interior will hold over 40 onshore Federal oil and gas lease sales.  As to offshore concerns, he stated that more information must be gathered about OCS resources as Interior has limited or outdated data for large portions of the OCS that have not been leased out.  Salazar also suggested that Interior’s limited seismic data in the Atlantic is 20 to 30 years old.  He asked the executives for input on how such data should be gathered for making wise decisions about the OCS.

Salazar cited a GAO report issued earlier this week confirming that the federal government receives one of the lowest shares of revenue for oil and gas extraction when compared with other countries.  He suggested that Interior must re-examine the royalty system as the issue had not been closely studies for more than 25 years.  He mentioned a need to ensure that Americans felt they were receiving a fair return on oil and gas resources.  Discussing his views on oil shale, Salazar stated that Interior should support research and development, but that a 5% royalty rate for commercial production was too low.

Court Blocks Bush Guns in Parks Rule       

A federal court has issued a preliminary injunction that at least temporarily blocks a Bush Administration rule change that would allow individuals to carry concealed, loaded guns in national parks and wildlife refuges.  In consolidated lawsuits brought by the National Parks Conservation Association, Brady Campaign to Prevent Gun Violence and other plaintiffs, District of Columbia federal district court judge Colleen Kollar-Kotelly ruled that the plaintiffs are highly likely to prevail on the merits of their NEPA claim that the Department failed to consider the environmental impacts of the rule change.  For now, the previously applicable guns rule, i.e. prohibited possession of firearms in national parks and wildlife refuges unless “packed, cased or stored in a manner that [would] prevent their ready use” 48 Fed. Reg. 30,252 (June 30, 1983), 49 Fed. Reg. 18,444 (April 30, 1984), goes back into effect. 

The court also ordered that by April 20, 2009, Interior must file a notice with the court indicating whether it intends to conduct an Environmental Assessment or prepare an Environmental Impact Statement on the impact of the rule change under NEPA or advise the court with respect to any other intended course of action.  This portion of the court’s order may put pressure on the Obama Administration to finally indicate its position on the guns rule change.  The Administration’s views had been a lingering question.  Some have interpreted the federal government’s continued defense of this lawsuit as support for the rule change, which took effect in January.  

BLM Schedules Tribal Listening Sessions

The Bureau of Land Management (BLM) announced on Wednesday that it would be hosting a series of regional tribal listening sessions this spring.  BLM envisions the sessions an opportunity for tribal leaders to discuss a range of public lands topics of interest to tribes.  BLM indicates that the information and recommendations obtained through the meetings will be beneficial for BLM’s initiatives and objectives as it attempts to meet tribal consultation and land management responsibilities.  The sessions are:

• Phoenix, Arizona (April 8, 2009)
  
  
• Billings, Montana (April 15, 2009)
  
  
• Albuquerque, New Mexico (April 24, 2009)
  
  
• Boise, Idaho (May 6, 2009)
  
  
• Reno, Nevada (May 19, 2009)
  
  
• Palm Springs, California (May 20, 2009)