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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Interior Announces Stimulus Funding for Indian Country Projects

Secretary Salazar announced earlier this week that the Department of Interior will provide $500 million for new school and housing construction, road and bridge improvements, and workforce development projects for federally-recognized Indian tribes with funds from the American Recovery and Reinvestment Act of 2009. Through the Bureau of Indian Affairs, funds will also offer federally guaranteed loans for Indian-owned businesses.

Stimulus package funding for Indian country announced by the Department breaks down as follows:

• School Improvement and Repairs - $143.1 million
  
  
• Road Maintenance - $142.5 million
  
  
• School Replacement Construction - $134.6 million
  
  
• Housing Improvement Program - $19 million
  
  
• Construction Workforce On-the-Job Training in Maintenance - $13.3 million
  
  
• Workforce Training - $5.7 million
  
  
• Detention Center Maintenance and Repairs – $7.3 million
  
  
• Indian Guaranteed Loan Program - $9.5 million

Interior to Invest $750 Million from Stimulus in National Parks

The Department has announced that it will invest $750 million allocated from Stimulus package funds in more than 750 projects to create jobs and restore various national parks sites.  The National Parks Service’s projects include:

• $9 million to overhaul a waste water treatment facility at Yellowstone
  
  
• $7 million at Perry's Victory and International and Peace Memorial in Ohio for the first phase of renovating a War of 1812 monument
  
  
• $8.8 million to stabilize the Ellis Island Baggage and Dormitory Building
  
  
• $13.1 million to demolish and replace condemned portions of the Quarry Visitor Center at Dinosaur National Monument in Utah
  
  
• $54.7 million to undertake six mitigation projects to prepare for the removal of the Elwha Dam and restoration of the Elwha River basin at Olympic National Park in Washington
  
  
• $11.5 million to replace more than five miles of water lines at Mesa Verde National Park in Colorado
  
  
• $5.5 million to rehabilitate Independence Hall Tower at Independence National Historical Park in Pennsylvania
  
  
• $2.37 million to reclaim abandoned mine lands and restore the natural landscape at Great Sand Dunes National Park and Preserve in Colorado
  
  
• $304,000 to install gates and protect visitors at Greenwater Valley at Death Valley National Park in California
  
  
• $585,000 to rehabilitate historic bridle trails at Rock Creek Park in Washington, DC
  
  
• $5 million to replace the roof of the Old Courthouse at Jefferson National Expansion Memorial in Missouri 
  
  
• $30.5 million to repair the Lincoln Memorial Reflecting Pool and $7.3 million to restore the District of Columbia War Memorial in Washington, DC

President Obama and Secretary Salazar Announce Framework for OCS Renewable Energy Development

The Department has finalized a framework for renewable energy production on the US Outer Continental Shelf (OCS).  The framework establishes a program to grant leases, easements, and rights-of-way for renewable energy development activities, such as the siting and construction of off-shore wind farms, on the OCS.  The program also establishes methods for sharing revenues generated from OCS renewable energy projects with adjacent coastal States.  Interior has indicated that framework will enhance partnerships with Federal, state, and local agencies and tribal governments to assist in maximizing the economic and ecological benefits of OCS renewable energy development.

In announcing the framework, the Department noted that the Energy Policy Act of 2005 grants its Minerals Management Service (MMS) the authority to regulate renewable energy development on the OCS, but that no action had been taken under that authority until now.  The framework indicates that MMS will coordinate and consult with relevant Federal agencies, with the Governor of any state, and the executive of any local government that may be affected by a renewable energy lease.  Additionally, MMS encourages companies planning to pursue renewable energy activities on the OCS to conduct preliminary outreach, as early in the process as possible, by contacting appropriate state and local parties.

Further, the Department indicates that compliance with the National Environmental Policy Act, the Coastal Zone Management Act, and other relevant laws will be required throughout the life of an OCS renewable energy project—from lease issuance to site assessment, construction, and operation to decommissioning of facilities – and appropriate mitigation measures will be developed through the leasing and plan approval processes.

The framework describes two types of leases (commercial; data collection/technology testing activities) and a lease issuance process for competitive and noncompetitive leases.  For a commercial lease, the framework mandates a Site Assessment Plan (describing the site assessment phase, in which a lessee may install a meteorological or marine data collection facility to assess renewable energy resources) and a Constructions and Operations Plan (describing the construction and operations (generation of power) phase, as well as general plans for decommissioning facilities after termination of the lease).  Also a General Activities Plan will be required for technology testing and resource assessment activities on a limited lease.  Lessees must submit reports describing the renewable energy project’s final design, fabrication, and installation of facilities after MMS approves the Site Assessment Plan, Construction and Operations Plan, or General Activities Plan (whichever is applicable).

The framework includes requirements aimed at preventing or minimizing the likelihood of harm or damage to the marine and coastal environments and promoting safe operations.  It also sets out terms for bonuses, rentals, royalties and other fees designed to minimize the risk of financial loss to the Federal government if lessees and operators default in fulfilling their obligations under the program. MMS will require lessees provide sufficient financial collateral to assure obligations can be fulfilled by a third party in the event of default.  Also note that under the EPAct, the Federal government must share 27 % of the revenues received from any project located wholly or partially within the area extending three nautical miles seaward of the state’s submerged lands, with any state that has a coastline that is located within 15 miles of the geographic center of the project. 

The framework also requires that all facilities, including pipelines, cables, and other structures and obstructions, should be removed when they are no longer used for operations but no later than two years after the termination of a lease.

Secretary Salazar Requests Action to Revoke Mountaintop Coal Mining Rule

Earlier this week, Secretary Salazar asked the Department of Justice (DOJ) to file a pleading with the US District Court for the District of Columbia requesting that the court vacate and remand to Interior for further action the Bush Administration’s mountaintop coal mining “stream buffer zone rule.”  Under that rule, coal mine operators may dispose of excess mountaintop spoil in perennial and intermittent streams and within 100 feet of those streams if alternative options are "not reasonably possible."  The Department indicates that disposal into streambeds is permissible when alternatives are considered "unreasonable," which occurs under the Bush rule whenever the cost of pursuing an alternative "is substantially greater” than normal costs.  The Bush rule replaced a 1983 rule enacted during the Regan Administration, which allows dumping within 100 feet of a perennial or intermittent stream only upon finding that the dumping will not adversely affect the water quantity or quality or other environmental resources of the stream.
 
In asking DOJ to take action, Secretary Salazar indicated that the “stream buffer zone rule” does not pass muster for adequately protecting water quality and stream habitats.  If the DC District Court grants the requested relief, the 1983 rule will continue to remain in force in all of the states that have delegated authority under the Surface Mining Control and Reclamation Act (i.e. all states but Washington and Tennessee).

Along with announcing Secretary Salazar’s request, the Department indicated that the Office of Surface Mining expects to issue guidance to states regarding application of the 1983 rule and solicit comments on the potential development of a comprehensive new stream buffer zone rule that would update the 1983 rule.

ESA Consultation Requirement Restored

In a decision that hardly comes as a surprise, Secretary Salazar and Commerce Secretary Gary Locke announced this week that they are revoking a December 2008 Bush Administration rule that altered Endangered Species Act (ESA) consultation requirements.  This action reinstates the requirement that federal agencies must consult with the U.S. Fish and Wildlife Service and National Oceanic Atmospheric Administration before taking any action that may affect threatened or endangered species.

The revocation comes after President Obama directed Interior and Commerce in March to review the Bush Administration’s rule, and then Congressional action in the 2009 Omnibus Appropriations Act that provided the agencies with authority to revoke the rule without having to navigate a notice and comment period.  In announcing restoration of the consultation requirement, the agencies indicated that they will conduct a joint review of the consultation regulations to determine if any improvements should be proposed.

DC Appeals Court Strikes Down Bush Administration 5-Year Oil and Gas Leasing Program

The US Court of Appeals for the District of Columbia Circuit has ruled that the Bush Administration’s 5-year leasing program for OCS oil and gas development violates the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. §§ 1331-1356a, a statue that establishes a procedural framework under which Interior may lease areas of the OCS for purposes of exploring and developing the oil and gas deposits of the OCS’s submerged lands.  Although rejecting several claims that several environmental advocates and Alaska Native corporations advanced under the OCSLA, NEPA and ESA, the court determined that the leasing program’s environmental sensitivity rankings were irrational as Interior failed to properly conduct an environmental sensitivity analysis and properly balance several factors when preparing the leasing program. 

The court ordered that to meet the requirements of the OCSLA, the Secretary must first conduct a more complete comparative analysis of the environmental sensitivity of different OCS areas and attempt to identify those areas whose environment and marine productivity are most and least sensitive to OCS activity.  Interior must then determine whether its reconsideration of the environmental sensitivity analysis warrants the exclusion of any proposed area in the leasing program and reassess the timing and location of the leasing program to obtain a proper balance between the potential for environmental damage, the potential for the discovery of oil and gas, and the potential for adverse impact on the coastal zone, as required by the OCSLA.  On these findings, the court vacated the entire leasing program (even though the original challenge only disputed oil development on Alaska’s OCS).

While remanding the full leasing program for Interior’s review, the court did not address how OCS lease sales that have already occurred under the program will be impacted.  Neither has MMS spoken out on the subject.  Certainly, the opinion will play a significant role in Interior’s development of its next leasing program, debate on which has been underway for some time now with Secretary Salazar traveling the country for regional meetings on OCS issues.

Appointments Buzz

• On April 30, Secretary Salazar’s Chief of Staff Tom Strickland was confirmed by the Senate (89-2) as Assistant Secretary for Fish Wildlife and Parks.  Strickland will maintain both positions at Interior.  There is some buzz that a new National Park Service director will be announced shortly, a position that Strickland oversees in his Assistant Secretary role. 
  
  
• The Senate Committee on Indian Affairs has announced that it will hold a hearing on May 7 concerning the nomination of Larry EchoHawk as Assistant Secretary for Indian Affairs.
  
  
• Confirmation of Deputy Secretary nominee David Hayes continues to be delayed by a hold from Sen. Robert Bennett (R-Utah).  Sen. Bennett has signaled that his hold will remain in place until Interior clarifies its decision to rescind 77 Utah oil and gas leases auctioned by the Bush administration in December.  Sen. Lisa Murkowski (R-Alaska) announced late this week that she was joining the hold on Hayes’ confirmation vote, citing frustration with the Obama Administration’s decisions, including the recent revocation of the Bush Administration’s change to the ESA consultation policy.
  
  
• It was also reported yesterday that Sen. Bennett has placed a hold on the Senate confirmation vote for Interior Solicitor nominee Hillary Tompkins.  In delaying the vote, Sen. Bennett complained that Tompkins, in her nomination hearing before the Senate Energy and Natural Resources Committee, had not answered his questions about whether Interior has the power to create new wilderness study areas and its position on the Utah Wilderness Settlement Agreement.