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 the 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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Onshore Oil and Gas Leasing Policy Reforms Announced

In one of his first acts of 2010, Secretary Salazar announced that the Bureau of Land Management will undertake several reforms to improve protections for land, water, and wildlife and reduce potential conflicts that can lead to protests and litigation concerning leases of federal oil and gas resources.  A new Energy Reform Team will be established to identify and implement energy management reforms.  In announcing the reforms, Secretary Salazar cited a need to improve certainty and order in oil and gas leasing on federal lands.

The new draft policy requires:

• More detailed environmental review prior to leasing oil and natural gas resources.

• BLM to engage the public in the development of Master Leasing and Development Plans prior to leasing areas where intensive new oil and gas development is anticipated. The intent is to fully consider other important natural resource values prior to making an irreversible commitment to develop an area.

• Comprehensive parcel review process that takes a site-specific approach to individual lease sales. Each potential lease sale will undergo increased internal and external coordination, public participation, interdisciplinary review of available information, confirmation of Resource Management Plan conformance, and national, state, and local guidance, as well as site visits to parcels when necessary to supplement or validate existing data. State Office quarterly lease sales would still occur as required by law; however, the BLM anticipates that process time frames will be extended to accommodate the interdisciplinary review of lease sale parcels.

• Opportunity for more public participation and better environmental documentation, which in turn is expected to reduce the number of protests filed as well as enhance the State Offices’ ability to resolve protests prior to lease sales.

BLM is also issuing interim draft guidance to its field offices on the implementation of Section 390 of the Energy Policy Act of 2005, which established five categorical exclusions that streamline the environmental review process for permitting of certain oil and gas exploration and development activities.  The draft guidance being issued will establish a process for considering “extraordinary circumstances” when using a Section 390 categorical exclusion. “Extraordinary circumstances” occur when individual actions that normally would be categorically excluded are of such a nature or degree that they warrant further environmental analysis before permitting.  Under the new policy, in accordance with White House Council on Environmental Quality guidelines, BLM will not use these categorical exclusions in cases involving “extraordinary circumstances” such as impacts to protected species, historic or cultural resources, or human health and safety.

As part of this new policy proposal, Secretary Salazar has also issued a Secretarial Order establishing an Energy Reform Team within the Office of the Assistant Secretary for Land and Minerals Management that will identify and oversee implementation of energy reforms.  The Energy Reform Team is tasked with:

• facilitating coordination of onshore and offshore energy planning, leasing, permitting, authorizing, inspection, enforcement and revenue activities;

• overseeing the identification, development and implementation of best practices and reforms to improve Interior’s energy operations;

• conducting planning and evaluating future energy development policies, strategies, and options for BLM, MMS, and OSM; and

• performing related activities aimed at improving DOI’s management of energy resources on Federal lands and the OCS.

A DOI press release indicates that the new oil and gas leasing guidance and categorical exclusion guidance will be implemented once BLM has completed final internal reviews.

Opening in Colorado Governor’s Race Raises Questions about Secretary Salazar’s Plans

With Colorado Governor Bill Ritter (D) announcing recently that he would not seek re-election in fall 2010, speculation is growing that Interior Secretary Salazar may be interested in entering the Colorado gubernatorial race.  The Washington Post reported that Salazar dodged questions about the race during a recent press conference in which he announced reforms for the Department’s oil and gas lease policy.

Meanwhile, the Denver Post reports that Salazar is carefully weighing plans for the governorship bid, and that prominent Colorado democrats are deferring to him before making their intentions known about entering the race.  It was also reported that while the Secretary has been encouraged by the White House to remain in the administration, Salazar would have the administration’s support if he felt it was in the best interests of the party and the state of Colorado to return home.

A decision by Salazar to enter the race could be a shot in the arm for Colorado Democrats, potentially mobilizing voters and helping other Democrats – including US Senator Michael Bennet – who will be on the ticket in November.  Salazar’s decision may have further national political implications, as Colorado's next governor will take part in drawing new boundaries for Congressional seats after the 2010 election.

Should Salazar leave his current position, some shakeup at the Department – beyond just the Secretary’s job – might be expected since Salazar brought several team members with him when he agreed to join the administration.  Further, the selection of a potential successor will be an interesting process to monitor and could be telling about the administration’s plans to keep climate change and energy policy as key priorities for the Department.         

FWS Proposes ESA Protection for Six Bird Species

The Fish and Wildlife Service has published a proposal to protect as endangered under the Endangered Species Act six species of birds found on islands in French Polynesia, Europe, Southeast Asia, and Africa.  The species proposed for protection are the Cantabrian capercaillie, the Marquesan imperial pigeon, the Eiao Polynesian warbler, the greater adjutant, Jerdon’s courser and the slender-billed curlew.

The primary factors causing the population declines vary by species, but include habitat loss and modification, overutilization (e.g., hunting, collection), inadequacy of existing regulatory mechanisms, and other natural and manmade factors, including pesticide use and disturbance.

FWS indicates that the addition of foreign species to the Federal list of threatened and endangered species places restrictions on the importation of either the animal or its parts.  Listing also serves to heighten awareness of the importance of conserving these species among foreign governments, conservation organizations and the public.

FWS will accept comments and information concerning the species from all interested parties for 60 days.  Comments may be submitted electronically at www.regulations.gov.  Comments may also be submitted by US mail or hand-delivery to Public Comments Processing, Attn: RIN 1018-AV75; Division of Policy and Directives Management; US Fish and Wildlife Service; 4401 N. Fairfax Drive, Suite 222; Arlington, VA 22203.

ASARCO Pays $1.79 Billion to Fund Environmental Cleanup, DOI Will Use Its Share for NRDAR Fund

In the largest environmental damage bankruptcy case in US history, mining conglomerate ASARCO LLC has paid $1.79 billion to fund environmental cleanup efforts at more than 80 sites in 19 states.  More than half of the ASARCO payment will go to environmental restoration work now under way outside Tacoma, Washington; Everett, Washington; and Coeur d'Alene, Idaho.

Interior Secretary Salazar has announced that nearly $200 million of the settlement fund would be used for the recovery of wildlife, habitat and other natural resources managed by Interior, state, and tribal governments at more than a dozen sites around the nation.  On behalf of federal, state, and tribal co-trustees, Interior will deposit these funds into the Department’s Natural Resource Damage Assessment and Restoration Fund.  In consultation with co-trustees, the money will be used to restore, replace, and/or acquire the equivalent of the injured natural resources managed by Interior and jointly managed with state and tribal governments.

The sites to which Interior’s share of this funding will go include the California Gulch Site in the Upper Arkansas River Basin in central Colorado, the Bunker Hill Superfund Facility in the Coeur d’Alene Basin of Northern Idaho, the Ray Mine/Hayden Smelter Site located in east-central Arizona, the Southeast Missouri Lead Mining District, the Tri-State Mining District (including parts of southeast Kansas, southwest Missouri and northeast Oklahoma), and the Montana Custodial Trust – East Helena Site, Black Pine Site, and Iron Mountain Sites.

FWS Director Names Chief of Staff

Fish and Wildlife Service Director Sam Hamilton has named Megan Conklin as his Chief of Staff.  In that role, Conklin will assist Director Hamilton on key policy issues, provide political support to the Director, facilitate communication between the Department and FWS, and support the Director on other special projects.

Prior to joining FWS, Conklin served as Deputy Director of the Office of Congressional and Legislative Affairs in the Office of Interior Secretary Ken Salazar.  Before coming to DOI, Conklin worked for Chairman Nick J. Rahall (D-WV) and Subcommittee Chairman Raúl M. Grijalva (D-AZ) on the House Committee on Natural Resources, Subcommittee on National Parks, Forests and Public Lands. She was the primary staffer on the House Natural Resources Committee on forest policy, fire policy, and wilderness policy, and also worked on a variety of public land issues.

Will Interior Reinstate Wilderness Rule?

Recent rumblings from the environmental community indicate that there may be a renewed effort underway to push the Department to reinstate the Wilderness Study Area (WSA) determination process that was set aside by the Bush Administration.  Under the WSA process, the Bureau of Land Management may set aside land to be protected from development until Congress can decide whether the permanently designate all or part of it as federal wilderness. 

Opponents of the WSA process argue that reinstating it takes significant areas of land out of play for development of natural resources like oil and gas.  With all key Department appointees now in place, however, restoration of the process could be a point of focus for its proponents and Secretary Salazar’s team in 2010.

Virginia Governor-Elect Pushes Department on OCS Development

Virginia’s Governor-Elect Bob McDonnell wrote to Secretary Salazar in late December asking that Interior move more swiftly on the leasing of parcels off Virginia’s coastline for oil and natural gas drilling.  While a lease sale for the area is tentatively set for 2011, McDonnell and other Republicans are concerned that Democrats will stall the lease process.

McDonnell expressed concern to Secretary Salazar that there has been little movement on plans for the Virginia OCS lease sale.  In response to the letter, the Secretary’s office indicated that the Department is still reviewing the proposed Virginia lease sale, and at this point no decisions had been made.  Such a response is not surprising as President Obama indicated last year that he wants a comprehensive energy strategy developed before offshore drilling advances in the Atlantic Outer Continental Shelf.

McDonnell’s request is supported by vast oil and gas resources that are estimated to be located off Virginia’s coastline. MMS has projected that this area may contain 130 million barrels of oil and 1.14 trillion cubic feet of natural gas.