OIl and Gas

Assuming the Best About Federal Employees and Their Challenges: Why Not?

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When I was a post-doc at North Carolina State University I worked for a Pioneering Research Scientist (the top level of scientists in the Forest Service), Dr. Gene Namkoong. He used to say something I can’t remember exactly, but it was something like “when the Forest Service does something bad, don’t assume malevolence or bad faith when they could have simply been disorganized, made a mistake, or so on.” I can’t remember his exact words, but it gave me the impression of good people bumbling along in a complicated system. Gene died a few years ago, or I would ask him.

Assuming the best about people (I suppose it could be argued that the FS is an institution and not people, but does that matter in this context?) is a long held spiritual value, at least in some traditions.  Another value is humility. Still another value is being “impeccable with your word” as in the Four Agreements. Political races, in fact, partisan politics itself, encourage the opposite.  Thankfully we are out of this for now, and President-elect Biden has spoken a great deal about unity- specifically, that people who think and vote differently are not our enemies.  Hopefully The Smokey Wire’s work, seeing through the recurrent partisan spin, hearing the voices of people who think differently, and trying our best to understand each other, will help with the new administration’s efforts.

Remember when the 60-day royalty rate reduction for oil and gas folks was being covered?  That was the end of the story for many.  In Colorado, though, we do have folks who investigate further, thanks to Colorado Politics and their story here.

There was a GAO review of the process.
When developing its temporary royalty relief policy, BLM did not follow guidance for developing new policy contained in its directives manual, including considering a policy’s savings and costs. BLM’s directives manual provides guidance for developing policies that are short-term in nature and are meant to be provided to BLM employees quickly. Among other things, the directives manual says BLM should consider the effects of any temporary policy, including budget impact, costs, and savings, when developing temporary policies such as the temporary royalty relief policy. BLM officials told us that they did not use the directives manual to develop the agency’s temporary policy for royalty relief because of the limited time that the agency had to develop the policy during the early months of the agency’s response to the COVID-19 pandemic. However, BLM’s directives manual states that emergency notifications—in this case, the temporary royalty relief policy—should not be used to circumvent the BLM directives system. By evaluating its temporary royalty relief policy, including the extent to which the policy met BLM’s objectives—preventing unrecoverable loss of oil and gas resources and ensuring a fair return to the government—and the likely costs, such as forgone revenues—BLM could better inform its decisions about granting royalty relief in the future under the agency’s regulation authorizing ongoing royalty relief.
Reading the GAO report, I had a great deal of sympathy for the BLM folks faced with implementing these old and unclear regulations, and was not surprised that they were not consistent from state to state. Let’s give our agency folks a break as they deal with Covid and related crises. It’s much more difficult to do things than it is to criticize others who are doing things. Think of writing a book versus a book review. I’m not saying that agency employees are always perfect, but would it hurt to give them the benefit of the doubt?

Can States Regulate Oil and Gas on Federal Lands?

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A map of Colorado’s oil and gas activity. The blue-shaded area are the oil/gas basins, including the Denver-Julesburg, the largest. Purple and brown mark oil and natural gas fields.

Colorado Politics had an interesting article about Colorado’s never-ending oil and gas regulation debates (they’re never-ending because some groups want to stop permitting oil and gas altogether).

Federal versus state authority

Kinder Morgan, a pipeline company, pleaded for changes around oil and gas activity on federal lands, as did the American Petroleum Institute. Among them: a claim that the state cannot veto federally-approved land use. They asked that the COGCC change a rule that makes it clear that the commission cannot deny a comprehensive area plan (which outlines an oil and gas development) located on federal-owned or managed surface lands already approved by a federal land manager. However, the COGCC could consult with the appropriate federal agency as well as the operator, according to Ana Gutierrez of Hogan Lovells, representing Kinder Morgan.

The commission should also add a rule on site-specific data, mapping and analysis on geologic hazards, such as fault lines, rock falls, mudflows and unstable slopes.

In response, Assistant Attorney General Joel Minor said relevant federal statutes dating back to 1920, as well as case law, do recognize state authority to regulate oil and gas activity on federal lands. That includes state authority to protect the environment and wildlife resources on federal lands, he said.

Is that just about oil and gas on federal lands, or does it apply to everything (mines, windfarms, etc.)? Does it only work if states want to be more protective?

Meanwhile, if you think governments in D control will be spared lawsuits about the environment..Wild Earth Guardians is suing the State of Colorado for moving too slowly towards its climate goals.

Such a plan is still months away. The state has been working with an outside consultant on a roadmap to guide its policymaking to meet the climate targets. Putnam expects the effort to wrap up by the end of September.

He added the lawsuit won’t force the state to move any faster. If anything, he worries it could divert scarce legal resources away from the rulemaking process into a legal defense. In a statement from the Governor’s Office, spokesperson Conor Cahill expanded on the point, writing the administration has taken “unprecedented action” to retire coal-fired power plants and electrify Colorado’s economy.

“It’s very unfortunate that some seek to distract from the nationally-leading success of Colorado in order to justify a risky and expensive strategy such as a state-based cap and trade system that has not demonstrated the ability to effectively cut emissions elsewhere. Coloradans trust that Governor Polis will continue to act boldly and swiftly and utilize the tools and resources available to create good green jobs, address climate change, and ensure we can all breathe cleaner air,” wrote Cahill.

Nichols countered the state doesn’t need to waste time fighting the lawsuit. All it needs to do is submit rules to put Colorado on track to meet its climate goals.

“We don’t rush into lawsuits. It’s not something we take lightly, but the stakes are so high here,” he said.

In my experience, speed has never been the ally of crafting good rules about complex phenomena with diverse stakeholders and interests.

Phasing Out Oil and Gas Production: Pros and Cons for California (and Federal Lands?)

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I think it’s always interesting when you find yourself agreeing with someone whose background seems quite different from your own.  I ran across this piece from a law professor at U.C Berkeley named Ethan Elkind (it was posted to an information source called Legal Planet,  which I intermittently read) . What’s interesting to me is that he raises some of the same points on phasing out oil and gas production in California that are similar to phasing out on federal lands, as per Candidate Biden.

What I think is interesting about Elkind’s piece is that it echoes similar complexities of stopping production of anything, anywhere as long as the demand continues.  This isn’t really rocket science to anyone who remembers the Timber Wars. Have we stopped using wood.. well…er.. no. We just get it from somewhere else.  Which in the case of wood, appears to be working out just fine. Thank you, Canadians!

So here’s that argument from him (1) You’ ll Get it from somewhere if you have demand:

The challenge is that demand for fossil fuels in the state will remain for the foreseeable future, even if local production ceases. If we stop producing oil here, we’ll start importing more from elsewhere.

While California’s oil demand is already decreasing due to market and policy factors, until consumers completely transition to zero-emission vehicles and find alternatives to petroleum-based products like plastic and asphalt — and until refineries in the state stop exporting to markets around the Pacific — the supply will still find its way to the state. If that oil comes from out-of-state sources, the carbon footprint may even be higher than if California produced it domestically, due to shipping emissions.

(2) Here’s the economic argument:

However, economic theory indicates that a decrease in California production will mean some decrease in consumption, as global prices will rise slightly from reduced overall supply. One study indicated it could lead to global emission reductions of 8 to 24 million tons of CO2 per year. And any oil left in the ground is oil not burned in the long run, meeting one of the highest priorities of climate activists. So a California phase-out could help avoid some emissions, though the rate is unclear.

How is demand reduced in this case? Via higher prices. Since buying gasoline, heating oil, and natural gas is necessary for folks, it seems like this price rise could have unintended consequences of falling unfairly on poorer people who can’t afford to buy new electric cars and appliances, and who have to drive to work and heat their homes.

(3) The “leadership” argument:

What about the political implications of phasing out oil and gas consumption for climate policy? One argument is that a phase-out here might inspire other jurisdictions to follow suit. As most climate models indicate that some percentage of fossil fuels will have to remain untapped as an imperative for avoiding the worst impacts of climate change, why not start in California, a state committed to climate action? It might be hard to imagine that top oil-producing countries like Saudi Arabia, Iraq and Iran (or other U.S. states) would be so inspired, but perhaps places like Norway or Colorado might be more politically open to it. And if the oil industry in California phased out, its lobbying power might also wane, allowing the state to pursue more aggressive policies on the demand side.

I don’t think this applies to federal lands. And FWIW, I’m not a political writer, but from where I sit, wanting to be “more like California” is not likely to be a winning slogan in Colorado.

(4) Reducing supply: potentially enriching the “bad guys”. These include corporations and countries of questionable dependability or friendliness. This is generally thought of as an international security issue. Gas lines from the 70’s are fading from public memory, but older people remember.

The economic impacts of a phase-out for climate policy are also complicated. As Severin Borenstein at UC Berkeley Energy Institute at Haas blogged in 2018, a phase-out in California would mean slightly higher worldwide oil prices, which would in turn enrich the major oil producing companies and countries who are still providing supply. As he summarized:

One could think of this as similar to a very small worldwide carbon tax, except in this case the revenue is not rebated to the population as a whole or used to reduce other taxes, but rather handed to those who own and control the world’s oil production.

(5) Oil and gas wells don’t belong in close proximity to communities.

But there is one clear benefit from phasing out in-state oil and gas production in California: improved health and safety of surrounding communities. Scientists have linked drilling for oil and gas to numerous public health challenges, including increased rates of asthma, cancer, and other health threats. And much of the drilling in California occurs in or near residents of disadvantaged communities, adding to the urgency.Also

(Note: in Colorado this has been studied extensively, and the health impacts are not that straightforward. It’s also not clear how much in Colorado is near residents of disadvantaged communities.  Also, if you switch from oil and gas rigs to wind turbines, there can be health impacts on neighbors as well, but more than likely, they are not the same neighbors.)

So if we read through all this, a person could come to the conclusion that oil and gas drilling should be kept away from communities. What place better, then,  than federal lands?

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What I think Elkind may have missed.

(6) this piece doesn’t mention the impacts of California losing direct and indirect taxes and royalties from O&G production. Perhaps they are such a big, rich state it doesn’t matter. For example, New Mexico is the 50th poorest state (according to Wikipedia). The state gets half of federal O&G royalties. According to this handy BLM website that shows disbursements, New Mexico received $1,165,963,636 in 2019.

(7) Jobs I’m agnostic on how this will work out. The idea is for O&G workers to transition neatly into renewable energy jobs, but we don’t have any idea how that would work in practice. I’m willing to think it could be done (have the same number of the same-paying jobs), but it seems to me that this would depend on the job market and economy as a whole.  On the other hand, O&G has always been a volatile industry, and in fact people are getting laid off now due to prices. In fact that’s how former Governor Hickenlooper (currently a Senate candidate) started out, as a petroleum geologist and the craft beer industry and Colorado would be poorer if he hadn’t transitioned.  On the third hand, different people and different social classes may have different levels of resilience.

(8)  Environmental pros and cons of getting it from elsewhere (as in, is their production more environmentally friendly, with regard to methane emissions or ??) other than the transportation-related emissions, which he did mention.

These are all very thoughtful arguments, so thank you Professor Elkind for rounding these up!

 

Oil and Gas Revenue, LWCF and the Great American Outdoors Act

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Unfortunately, finding info on the internet does not always lead to info on the year and pub

Thanks to Shawn Regan of PERC for sending in these two pieces relating to funding for LWCF and the Great American Outdoors Act, related to my previous post here that dealt with the impacts of a possible Biden policy of “no new oil and gas leases” on LWCF.

The first is by Jack Smith, titled  “How Will We Pay For the Land and Water Conservation Fund?”

How much federal revenue could offshore wind generate? The technical energy potential of winds off the U.S. coast is titanic—about 2,000 GW, or nearly double the amount of energy the entire country uses today. But the latest projections suggest that it will take a long time to realize offshore wind’s potential, so funding for the LWCF will probably depend on oil and gas revenue through at least 2050.

To see why, it’s important to understand the different fees energy developers pay the federal government to develop offshore energy resources. These are the revenues that currently sustain the LWCF and a myriad of other funds and programs.

First, developers bid for leases to tracts of property in auctions held by a federal land agency—in the offshore context, the Bureau of Ocean Energy Management. Whichever company wins each auction pays the winning bid—called a “bonus bid”—and then begins paying rent on the number of acres in their lease. Once a developer begins to produce and sell a resource from their lease, they pay the federal government a cut of every unit they produce, called a royalty.

Of these three revenue streams that fund the LWCF, royalties are by far the largest. In 2019, offshore fossil fuel energy royalties totaled $5.0 billion, 84 percent of the total $5.9 billion in offshore energy revenue. Bonus bids and rental payments together provided the other 16 percent.

Offshore wind royalties so far have generated zero dollars, since no project is far enough along to generate energy. But in theory, such projects could generate huge returns in the long run. At the current royalty rate of $5,010 per MW, harnessing all 2,000 GW of technically recoverable offshore wind energy would generate more than $10 billion per year in royalties. Building that much wind capacity is far beyond America’s foreseeable needs, grids’ load-balancing capabilities, and any realistic time horizon. But in the long run, it sets an upper bound for royalty revenue.

So it looks like wind energy probably won’t single-handedly fund the LWCF for at least 30 years, which means that the Great American Outdoors Act will continue to rely in large part on oil and gas revenue.

As a result, it’s clear that fully funding the LWCF permanently will present challenges. Fossil fuel development is increasingly under attack due to concerns about climate change. As policymakers seek permanent funding for conservation and recreation, the challenge will be to find other, more dependable funding sources to sustain outdoor recreation and conservation…

Here’s another piece by Jack Smith, this one on how low oil prices could affect the funding of the Great American Outdoors Act (for those who haven’t been following this, I don’t know the current details, but it would fund LWCF as well as the maintenance backlog for National Parks, and included additional funding for the Forest Service, BLM, and other public lands.

Historically, federal programs and obligations have consumed about half of federal energy revenues, leaving a large chunk in the U.S. Treasury for general use. In fiscal year 2019, that chunk was worth $5.0 billion—a level that would easily fill the maintenance fund’s annual $1.9 billion limit. But so far this fiscal year, federal energy revenues are down $1.7 billion. Unless federal energy revenues increase, it looks like there may not be enough funding this year to fully fund the public land maintenance-portion of the new legislation.

That’s important because a primary goal of the Great American Outdoors Act is to pay for billions of dollars’ worth of unmet maintenance needs in national parks and other public lands across the country—but without enough federal energy revenues to go around, those needs could go unmet even if the bill passes.

This potential shortfall highlights the risk of tethering public lands funding to federal energy revenues, which have become increasingly exposed to volatile oil prices. In the past 15 years, oil revenue has come to dominate the federal energy revenue stream; by 2019, federal oil revenue was $6.6 billion, more than half of total federal energy revenues. That means that an oil price crash has an outsized impact and potentially limits all programs that rely on federal energy revenues.

What’s Up With: Biden “No New Leases” and Funding LWCF?

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From Idaho LWCF summary.

Colorado Senator Gardner (R) and Senator Manchin of WVA (D) were responsible for shepherding the recent LWCF bill through Congress and getting it signed by the President.  Their efforts were greatly supported by the conservation community in general.

Here’s a link to the Forest Service LWCF page. I couldn’t get the map to work, and I’d be interested in whether others can.

Currently the push from organizations like the Land and Water Conservation Fund Coalition is to get Congress to use all the funds (you can sign on to a letter).

It was a simple idea: use revenues from the depletion of one natural resource – offshore oil and gas – to support the conservation of another precious resource – our land and water. Every year, $900 million in royalties paid by energy companies drilling for oil and gas on the Outer Continental Shelf (OCS) are put into this fund. The money is intended to protect national parks, areas around rivers and lakes, national forests, and national wildlife refuges from development, and to provide matching grants for state and local parks and recreation projects.  Over the years, LWCF has also grown and evolved to include grants to protect working forests, wildlife habitat, critical drinking water supplies and disappearing battlefields, as well as increased use of easements.

Yet, nearly every year, Congress breaks its own promise to the American people and diverts much of this funding to uses other than conserving our most important lands and waters.

Now as part of Senator Biden’s campaign, he pledged to “ban new oil and gas permitting on public lands and waters” (from the WaPo compendium of positions). I wasn’t sure (1) that the OCS counts as public lands or waters or (2) perhaps the OCS is all leased anyway. Of course, I’m also not sure that “public” is the right word, as I’m not sure the Prez can legally dictate what happens on the land of other government entities.

I couldn’t find any info on this anywhere, and finally a kindly E&E reporter gave me this link to a story by E&E News reporter Kellie Lunney. I hope you can read the whole thing, but I’m not sure about the E&E paywall. Some excerpts:

It’s not an entirely new argument. Members of Congress from energy-producing states, including Louisiana, have pointed out over the years that oil and gas drilling revenues pay for a wide range of conservation and coastal restoration projects, including LWCF.

But it’s an argument that could end up gaining more traction than some more gimmicky attempts — such as that the Green New Deal will eliminate hamburgers and milkshakes — that opponents have used to mock the framework as unrealistic and foolish (E&E Daily, Feb. 28).

“Yeah, I think it’s a Catch-22,” said House Natural Resources Chairman Raúl Grijalva (D-Ariz.) about the dependence of programs like LWCF on oil and gas revenues.

“The more we become dependent on that, the more the push is going to be to expand that, and I think we need to mitigate that.”

Grijalva helped craft the public lands package and push permanent LWCF reauthorization along with the panel’s top Republican, Rep. Rob Bishop of Utah.

The chairman said that other than straight-up appropriations for LWCF, there are “not too many” other funding mechanisms he could envision for the program if the offshore drilling revenue stream were to dry up.

But that’s why it’s important now to allocate more money to the fund than it has traditionally received, to “maximize its use” and start making the transition from offshore revenue-dependent funding, Grijalva said.

The authorized funding level for LWCF is $900 million, but it has hardly ever been funded at that level; its annual appropriations in recent years have typically been about half that.

There’s also GOMESA

The 2006 Gulf of Mexico Energy Security Act (GOMESA), passed shortly after Hurricane Katrina, allows four Gulf Coast states — Alabama, Louisiana, Mississippi and Texas — to share 37.5 percent of oil and gas revenues produced in federal waters off their coasts to assist them with coastal restoration and storm protection.

It’s a critical program for the area, and one the region’s lawmakers fiercely defend.

Louisiana Rep. Garret Graves (R) has referred to the state’s coastal region as being the “goose laying the golden egg” for the federal government when it comes to LWCF, and possibly a trust fund of unallocated revenues to pay for the massive public lands and national parks maintenance backlog (E&E Daily, Nov. 13, 2018).

A portion of GOMESA revenues also helps fund LWCF. Alabama, Louisiana, Mississippi and Texas generated $200 billion in offshore oil and gas revenue last year for the federal government.

What I got from all this is (1) in the short run, with Biden’s promise (and assuming Congress goes along with it) money will keep flowing in from current leases, (2) in the medium term, that funding would dry up and need to be replaced by another source of funding (renewable energy on federal land?) or to the general taxpayers (but that requires budget battles that they may not win). So perhaps we ought to think about replacement in terms of payments to the feds (and the state portion) for future wind and solar leases on federal land. It’s probably not too soon to start thinking about it.

(2) folks in Congress are actually working across the aisle (even possibly unlikely ones like Grijalva and Bishop!)

Impacts to Ranchers, Oil and Gas Workers and Their Communities in Times of Covid

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For whatever reason, there are two activities/businesses that seem to attract an outsize amount of what feels like hate, especially in federal lands discussions.

In many states, though, these same activities- ranching and oil and gas production also occur entirely on private land. In the Denver Post business section over the past few weeks, there have been articles on the impacts of Coronavirus to these two activities, their employees, and others who benefit from what they produce/ their taxes/ and contributions to communities.  Two are about ranchers and challenges they face (and also opportunities to decentralize).  What I like about these is that the reporters (Judith Kohler and John Aguilar) interviewed the people impacted, so we get a much closer to the ground view of these communities and the challenges they (and others who depend on them) face today. They also put a face on the folks working in and around the “oil and gas industry” (many industries with different interests) and the “meat industry” (also different groups of people with different interests).  Since most media today is generated from the Coasts, these are voices we might not otherwise hear. It’s harder to engage in “othering” when people are sitting across the table, and when you can hear their voices.

There are also people responding to the challenges as in this piece  also in the Denver Post by Josie Sexton about local grocery stores, prices, processors, and ranchers.

We do try to be competitive and fair, but it has to be fair throughout the supply chain,” Marczyk says. “Not just fair to my customer, it has to be fair to my producer.”

Brunson agrees. He pays his farmer $2.50 per pound of beef as opposed to the commodity rate of 82 cents, he said. And what he’s getting is the difference between a “BMW or a Pinto” — all Colorado grass-fed, Black Angus beef.

Marczyk says people go to the grocery store and ask for any 80% ground beef, “and (those meats) are just not all created equal. They’re just not,” Marczyk said. “The average consumer out there, they have no idea.”

Marzcyk and Brunson think that consumers will come out of this period with a better appreciation for their food, and especially their meat — where it came from, what’s in it and who got sick while processing it along the way.

“A supply chain based on monoculture is very, very dangerous,” Marczyk said. “There’s all this economy in consolidation, but there’s risk in consolidation.”

Formerly an investment banker, Marczyk puts it this way: “We talk about diversity all the time… and then we do just the opposite in our food system. Consolidate, consolidate, consolidate. Bigger, bigger, bigger.”

Meanwhile, River Bear this year will expand its Denver facility by another 3,500 square feet. And Marczyk says the outpouring of support for his small grocery stores and their workers has been humbling.

The next step now, and something that’s close to both of their hearts, could be the creation of more regional and local USDA slaughter facilities, so that the same bottleneck in the system doesn’t happen again. But each processing plant can cost somewhere between $3 million to $8 million to build.

“So it’s a huge hurdle for small family farms to do that, but if we start thinking like a community…” Brunson said.

And until then, “We think we can keep our prices stable,” according to Marczyk. “If the (farmers’) costs of production increase, of course we’re going to have to charge more, but if they don’t, we’re going to hold that line.”

Here are the other three pieces.

Farm-to-table operations now taking an online farm-to-public approach in the age of coronavirus

Coronavirus-linked problems in meat supply chain could mean shortages, trouble for ranchers

This one is about oil and gas declines in Weld County with associated impacts to other businesses, taxes, and charities.

Colorado’s oil and gas country – and its people – suffer from twin hits to industry

Texas congressional delegation wants federal oil & gas leasing to fire up in the state

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From the Forest Service scoping notice:

The National Forests and Grasslands in Texas (NFGT) is initiating the preparation of an environmental impact statement (EIS). The EIS will analyze and disclose the effects of identifying areas as available or unavailable for new oil and gas leasing. The proposed action identifies the following elements: What lands will be made available for future oil and gas leasing; what stipulations will be applied to lands available for future oil and gas leasing, and if there would be any plan amendments to the 1996 NFGT Revised Land and Resource Management Plan (Forest Plan).

The Forest Service withdrew its consent to lease NFGT lands from the Bureau of Land Management (BLM) for oil and gas development in 2016. The reason for the withdrawal of consent was due to stakeholder concerns, including insufficient public notification, insufficient opportunity for public involvement, and insufficient environmental analysis. There is a need to analyze the impacts of new oil and gas development technologies on surface and subsurface water and geologic resources; air resources; fish and wildlife resources; fragile and rare ecosystems; threatened and endangered species; and invasive plant management. There is also a need to examine changed conditions since the Forest Plan was published.

These leasing availability decisions are forest plan decisions that were most recently made in 1996.  The action proposed by the Forest Service would result in changes in the stipulations and would therefore require a forest plan amendment.  The changes would shift about 11,000 acres from “controlled surface use” to “no surface occupancy,” and remove timing limitations from about 35,000 acres.

A letter from five Republican members of the delegation disagrees with the premise that the 1996 analysis was inadequate, and is unhappy with the pace of the amendment process.

The published timeline anticipated a Draft EIS in the winter of 2019 with the Final EIS expected in the fall of 2020. We are concerned that this timeline is no longer achievable given current pace of progress.

We request that USFS end the informal comment period, issue a Draft EIS this spring and ultimately approve the Final EIS that reinstates BLM’s ability to offer public competitive leases of National Forest and Grasslands in Texas for oil and gas leases before the end of 2020. While USFS is required by law to respond to eligible comments received within the public comment window (CFR218.12), the Forest Supervisor also has the authority to declare the available science sound, conclude the public comment period, and proceed with the issuance of the scoping comments and alternative development workshops as the next steps ahead of a Draft EIS (CFR219.2.3, 219.3) (sic).

That last sentence got my attention as the kind of congressional attention to Forest Service decision-making that might cause them to cut a legal corner here or there (especially when there is an election coming).  I also noticed the absence of any reference to the new requirements for amendments, and maybe the delay could have something to do with this becoming evident to them as a result of scoping.  36 CFR §219.13(b)(6):

For an amendment to a plan developed or revised under a prior planning regulation, if species of conservation concern (SCC) have not been identified for the plan area and if scoping or NEPA effects analysis for the proposed amendment reveals substantial adverse impacts to a specific species, or if the proposed amendment would substantially lessen protections for a specific species, the responsible official must determine whether such species is a potential SCC, and if so, apply section §219.9(b) with respect to that species as if it were an SCC.

I found nothing in the EIS for the 1996 revision about effects of oil & gas development on at-risk wildlife species.  You’d think the new information since 1996 might have something to do with effects on climate change, too.

Public land developers getting financial pushback

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An interesting observation from the Washington Post.  As investors become more enlightened about the financial risks caused by climate change they are starting to hold corporations accountable.  That includes their operations on public lands – and litigation is part of the risk.

A dozen-and-a-half senators wrote letters to 11 of the largest U.S. banks asking them to back down from financing any oil and gas activity in an unspoiled expanse of Arctic wilderness.

“The scale of your banks’ assets individually, let alone together, give you the ability to drive change in protecting the Arctic National Wildlife Refuge and in shifting towards a U.S. financial sector that effectively analyzes and plans for climate risks,” the group of a senators, led by Sen. Martin Heinrich (D-N.M.), told Wells Fargo, Bank of America, Citigroup, Morgan Stanley, JPMorgan Chase and six other banks in a letter sent last Thursday.

Democrats hope these banks follow the lead of one key peer: In December, Goldman Sachs said it is ruling out financing new drilling or oil exploration in the entire Arctic.

The world’s largest asset management firm, BlackRock, said last month it would divest from coal burned in power plants and make climate change a “defining factor” of its investing strategy.

And just last week, a group of investors representing nearly $113 billion in assets under management issued a similar letter to energy, mining and timber companies. Their warning: Don’t invest in certain federally controlled areas once protected but now open to development by the Trump administration.

These areas include not only the oil-rich Arctic refuge but also Alaska’s Tongass National Forest, the largest intact temperate rainforest where the U.S. Forest Service wants to allow new logging, (discussed here) and Minnesota’s Boundary Waters Canoe Area Wilderness (the Twin Metals mine litigation is discussed here), a popular lake-pocked forest near where the administration wants to allow a copper and nickel mining operation.

The institutional investors, which include several religious funds as well as a fund established by the late oil heir David Rockefeller, warned companies that many of the administration’s rollbacks of public land protections are legally precarious, and may be struck down by the courts or the next presidential administration. The letter went out to ExxonMobil, the timber company Weyerhaeuser and 56 other firms, according to Reuters.

“Many of these projects are mired in litigation,” the letter stated, “challenging the legality of any current or future industrial activity initiated in these regions and providing evidence of the risks associated with conducting commercial development on lands that the American public has deemed valuable for protection.”

The institutional investor letter also mentioned other areas, including protected sage grouse habitat (litigation discussed here) and the national monuments that have been reduced in size by the Trump Administration that are also under litigation (discussed here).  Here’s the latest on that.

Why Don’t Environmentalists Just Buy the Land They Want To Protect? Because It’s Against the Rules

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WEG worked to retire a permit for 50 cows on the 8,454-acre Alamocita allotment.

This is a thoughtful piece by Shawn Reagan of PERC in Bozeman, Montana about some of the same NGO’s we see litigating on federal lands trying approaches of buying and retiring leases to stop activities they don’t like, say grazing or oil and gas. As he says, in many places environmental groups feel that they can’t just buy land (as the example yesterday) because the land of interest is owned by the feds or state.  He has examples from grazing, oil and gas and timber, so it’s too long for me to excerpt meaningfully. I’d recommend reading the whole thing. He also has a more in-depth journal article with a co-author, Bryan Leonard of Arizona State University in the Natural Resources Journal.

Disputes between environmental activists and developers often have a predictable result: litigation. Environmental activists have perfected a zero-sum game of suing, suing, and then suing some more to halt development projects or other land-use activities they don’t like. An alphabet soup of environmental laws—from the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA) to the Federal Land Policy and Management Act (FLPMA) and the Equal Access to Justice Act (EAJA)—gives groups ample opportunities to stall projects with legal challenges or to thwart them entirely.

But increasingly, environmentalists are testing the strategy of bidding for the rights to natural resources instead. In recent years, activists have attempted to acquire oil and gas rights in Utah, buy out ranchers’ public grazing permits in New Mexico, purchase hunting tags in Wyoming to stop grizzly bears from being killed, and bid against logging companies in Montana to keep trees standing.

“It’s a market-based approach,” says Judi Brawer of WildEarth Guardians, an environmental group that has negotiated several grazing permit buyouts from ranchers in the Gila National Forest in New Mexico. “And it’s way more effective at the end of the day.”

Environmentalists paying to protect landscapes isn’t itself new. Nonprofit organizations such as the Nature Conservancy do it all the time, raising millions of dollars in donations to buy land or easements to protect important landscapes from development. But the extent of these voluntary market-based exchanges is often limited to private lands. On federal and state property—which makes up most of the land in the American West—such deals are much more complicated, if not outright prohibited.

I’ll share some of my own perspectives on the topic:

1)  The oil and gas industry hires working-class (as well as other) people and pays them good wages, which leads to other purchases and taxes and so on, plus federal money goes to states which they use for education, etc.  So for the people, the county and the state, it’s not just the cost of the lease itself.  Example from this article: “The check, for $486,000,000, represents the portion the state receives from federal oil and gas lease sales. In total, the New Mexico has received revenues exceeding $1 billion in 2018 from BLM’s mandated quarterly lease sales.”  On the other hand, environmental groups might not pick the leases most likely to be developed, because of the cost.

2) This is a bit philosophical, but as Shawn points out, the original laws regarding federal land were to promote use of the land.  Are we that rich a country that we don’t need to use our own natural resources anymore? Would we feel the same way about buying out a ski area lease, or a wind or solar farm lease? It is a good thing to depend on international trade and the good will of other countries to provide energy and shelter? If we use things and don’t produce them ourselves, are we in effect exporting environmental damage to other countries, and is that the right thing to do? Do we trust those other countries or are there national security implications of not producing them here? Perhaps importing wood from Canada yes, perhaps oil from OPEC, no.

3) We could change from however flawed (as we at The Smokey Wire are very aware) planning decisions made by federal employees, with the input of the public, to planning decisions made by boards of some not-for-profit.  Some not-for-profits are sometimes funded by rich people from elsewhere (though again, not always).  Nevertheless, it’s clearly less transparent and less open to public opinion than the flawed federal decision-making process. Of course, they may be the same groups who tend to  “get their way” via litigation, as in Shawn’s piece.

4) I see grazing/ranching as a different situation due to the private and public land linkages (if groups bought the home ranch property and the federal permit, that would work better) , as he points out. There is also a difference in the people employed both in numbers and pay, and the fact that the US many other food sources. Still, ranchers provide financial and social capital bonuses to many struggling rural communities in a way that leaving it alone does not.

5) In the related realm of water rights NFWF (Nif-Wif) did an extensive review here.

Much for discussion here. Other thoughts?