The 2010 oil spill: the Minerals Management Service (MMS) and the National Environmental Policy Act (NEPA).(Report)

 Contents Background and Context NEPA    MMS NEPA Reviews     The 2007-2012 Outer Continental Shelf Oil and Gas Leasing Program     The EIS for the 5-year Plan     The EIS for 11 Gulf of Mexico Lease Sales        Adequacy of the Environmental Review of the Multiple Lease Sales     Lease Sale 206 Environmental Assessment     Categorical Exclusion for the Exploration Plan        Adequacy of the Environmental Review of the Exploration Plan Conclusion Appendixes Appendix A. Background Facts Appendix B. MMS Categorical Exclusions Appendix C. The MMS Categorical Exclusion Review Process 

June 4, 2010

Summary

On April 20, 2010, an exploratory oil well in the Gulf of Mexico exploded, killing 11 people and causing an oil spill that a group of federal experts has said is the worst in American history. The oil well was on a tract leased by British Petroleum (BP), having obtained a lease and the relevant permits from the federal government. Under relevant federal law, federal actions that may have adverse environmental effects are required to be reviewed for potential environmental harm under the National Environmental Policy Act (NEPA). This report will review those environmental procedures. While there are additional environmental obligations imposed on Outer Continental Shelf (OCS) drilling by other acts, this report will not review those requirements.

Multiple environmental reviews were conducted by the Minerals Management Service (MMS) at each stage of OCS development. For the particular well in question, MMS addressed the environmental impacts on four occasions, including two full environmental impact statements, an environmental assessment, and a categorical exclusion. The fact that MMS categorically excluded the exploration plan from a NEPA analysis is controversial, since that is the first step in which drilling would be conducted. It appears MMS followed its internal procedure for NEPA reviews in the western and central areas of the Gulf of Mexico by employing a categorical exclusion for an exploration plan. However, that procedure has never been reviewed by a court to see if it is consistent with the law or whether an exception to the categorical exclusion may apply in this case. Had this project occurred in a different geographical area, including the eastern area of the Gulf of Mexico, it would have undergone a higher level of environmental scrutiny.

Background and Context

On April 20, 2010, an exploratory oil well in the Gulf of Mexico exploded, killing 11 people and causing an oil spill that a group of federal experts says is the worst spill in United States history. (1) The oil well was on a tract leased by British Petroleum (BP), having obtained an oil and gas lease and the relevant permits from the federal government. The spill was at the Mississippi Canyon Block 252, which is one block obtained by BP under Lease Sale 206. Under applicable federal law, federal actions that may have adverse environmental effects are required to be reviewed for potential environmental harm under the National Environmental Policy Act (NEPA). Additional environmental obligations are imposed by the Outer Continental Shelf Lands Act (OCSLA), (2) Endangered Species Act, (3) Marine Mammal Protection Act, (4) and the Coastal Zone Management Act (5) but will not be examined within this report. Rather, this report focuses on the environmental analyses conducted by MMS and their compliance with NEPA.

NEPA

NEPA states that for all "major Federal actions significantly affecting the quality of the human environment" federal agencies shall prepare a "detailed statement" of "the environmental impact of a proposed action, any adverse environmental effects which cannot be avoided should the proposal be implemented, [and] alternatives to the proposed action." (6) Agencies must comply to "the fullest extent possible."

The Minerals Management Service (MMS) of the Department of the Interior is the federal agency charged with overseeing oil and gas exploration of the Outer Continental Shelf (OCS). MMS issued the lease to and approved the exploration plan of BP for the oil well that caused the spill. Under NEPA terminology, MMS is the lead agency for any environmental reviews. (7)

NEPA includes three types of environmental reviews with different levels of scrutiny into the environmental effects of an action. The goal of the reviews is for an agency to be able to demonstrate that it has taken an appropriately hard look at the environmental consequences of its planned activity. (8) The environmental review is also supposed to involve the public. (9) The most comprehensive review is concluded by an environmental impact statement (EIS). It is required by NEPA for all agency actions that will significantly affect the environment. An EIS should demonstrate that the agency considered a reasonable range of alternatives that took a hard look at the environmental consequences of a proposed action. An EIS also requires extensive public involvement, including a public comment period for a draft EIS and consideration of those comments in the final document.

Where an action may not have significant effects, or when an agency is unsure of the degree to which an action may have significant impacts, a review called an environmental assessment (EA) is conducted. An EA also requires consideration of alternatives to the action and a review of the effects, but it is intended to be an abbreviated review. The public comment period is limited and could occur only upon completion of a final document.

The third type of review is for actions that agencies have pre-determined have no significant impact, typically because an agency routinely conducts the activity. This type of review is a categorical exclusion (CE, sometimes known as a Cat Ex). Technically, it means a formal review is not required because the agency has already determined that the environmental consequences of the action will not be significant. (10) Agencies prepare lists of CEs and may exclude a particular action if it is on that list. The decision to invoke a CE for a project must be documented in some way. (11) CEs are not allowed when there are extraordinary circumstances surrounding a proposed action, which generally include the presence of endangered species or significant resources of some type, such as archeological sites. This is consistent with the purpose of CEs--they do not apply when there could be a significant environmental impact.

Aside from the interpretive case law, the requirements for NEPA reviews can be found in two places: the regulations issued by the Council on Environmental Quality (CEQ); (12) and within agency-specific regulations or guidelines. Generally speaking, the CEQ regulations provide the foundation for NEPA compliance, while the agency guidelines provide for more specific application to the circumstances of a particular agency. In the case of MMS, NEPA procedures are found within the Department of the Interior agency-wide NEPA guidelines in the Departmental Manual (DM), (13) as well as in MMS guidelines within the DM. (14)

MMS NEPA Reviews

MMS's summary of its OCS program indicates there are four different stages at which it performs an environmental review for OCS leasing. (15) The summary indicates what type of environmental review is typically done at each stage. Those stages, and the typical environmental reviews, are:

* develop a 5-year program--EIS;

* plan for a specific lease sale--EIS;

* approve the exploration plan--EA; and

* approve development and production plan--EIS.

The four stages are based on the OCSLA. (16)

Records indicate that MMS conducted four separate environmental reviews related to the oil well known as Mississippi Canyon Block 252, including two EISs, one EA, and a CE. These four documents relate to the first three stages described above; two reviews were conducted at the lease sale stage, and the development and production stage had not been reached. Mississippi Canyon Block 252 was at the exploration stage. Briefly, those four documents are as follows:

* April 2007: MMS issued an EIS for the OCS Five Year Leasing Program, the 2007-2012 Outer Continental Shelf (OCS) Oil and Gas Leasing Program. This document considered environmental impacts related to off shore drilling, not just within the Gulf of Mexico, but for the two other areas in which off shore drilling is conducted: around Alaska and along the Atlantic coast.

* April 2007: MMS issued an EIS for the lease sale in the western and central portion of the Gulf of Mexico.

* October 2007: MMS issued an EA for lease sale 206, which included Mississippi Canyon Block 252, finding no new significant impact. This document was intended by MMS to supplement the other environmental reviews, which is why instead of the accepted NEPA terminology of "finding of no significant impact" (FONSI) it referred to no "new" significant impacts.

* April 2009: MMS issued a CE for the exploration plan that authorized BP to begin exploratory drilling on its site.

Additionally, two other environmental reviews were conducted that relate to drilling in the Gulf. Both were programmatic environmental assessments, meaning they were designed to consider broad impacts from a type of federal action and not just the impacts from one action. Programmatic environmental reviews are viewed as an efficient way to consider impacts without creating redundant reviews. (17) In July 2004, MMS announced completion of a programmatic EA that evaluated potential impacts of geological and geophysical testing in the Gulf. (18) That testing included seismic testing. A different programmatic EA was announced in March 2005 for Structure-Removal Operations in the Gulf, (19) which typically involve the use of explosives.

The 2007-2012 Outer Continental Shelf Oil and Gas Leasing Program

In February 2006, and again in August 2006, MMS sought comments on its proposed 5-year lease plan for 2007-2012 that would expand OCS leasing areas. The proposed plan addressed 21 OCS areas, including two in the Gulf of Mexico. (20) An EIS for this plan was prepared, and the final 5-year Plan EIS was completed in April 2007. (21) The 2007-2012 OCS Oil and Gas Leasing Program became effective on July 1, 2007. However, a federal court of appeals determined that MMS had not complied with all of the environmental requirements, and the program was returned to MMS for revision. (22) A preliminary revised 5-year plan was announced in March 2010. (23)

The EIS for the 5-year Plan

The EIS for the 5-year Plan for 2007-2012 (24) describes its scope as being regional and programmatic, and it also describes the assumptions made when evaluating the environmental effects of the proposed action. It divides the environmental effects based on the three geographical areas within the 5-year Plan: Gulf of Mexico, Atlantic, and Alaska. Different assumptions are made for each area, and the environmental effects are premised on that. One assumption for the Gulf of Mexico is the scale of oil spills that could be expected to occur. (25) The estimates were made for potential spills during production and transportation, and do not appear to consider oil spills at the exploration stage. A large oil spill, according to the 5-year Plan EIS, would be one of 1,000 barrels (bbl) or greater. Based on historical modeling, MMS calculated a probable large oil spill from a platform to be 1,500 bbl and 4,600 bbl from a pipeline. (26) The spill from the current Mississippi Canyon exploration well is categorized as a platform-related spill. The 5-year Plan EIS estimates that the Gulf of Mexico wells would produce 4 to 8 billion bbl of oil and have nine large oil spills (four from pipelines; four …