Welcome Reforms in Federal Coal Leasing, Permitting and NEPA Streamlining

The Utah coal industry has benefited from recent reforms in federal coal leasing, permitting and streamlining of environmental review under the National Environmental Policy Act (“NEPA”).  During the previous administration, applications to lease millions of tons of federal coal reserves encountered significant delays in NEPA review and were ultimately halted by a leasing moratorium.[1]  By Executive Order (“EO”) 13766 dated March 28, 2017, the president lifted the ban on federal coal leasing.  The following day, Secretary of Interior Zinke halted the programmatic environmental impact study (“PEIS”) of the federal coal leasing program.  With removal of the leasing ban, three long pending federal coal lease applications have moved forward in Utah.  The Greens Hollow application proceeded to lease sale in February 2017, the Alton Coal tract was approved for leasing in August 2018 and the Williams Draw lease application is now proceeding.  While lifting the ban was key to considering coal leases by application (“LBAs”), federal initiatives to streamline permitting and NEPA review are now helping pending LBAs to timely progress.

The current streamlining initiative began early in the Trump administration.  Four days after Inauguration, an Executive Order was issued to expedite environmental review and approval of high priority infrastructure projects.  At the same time, the president specifically authorized the North Dakota Access Pipeline and Keystone XL Pipeline.  The Chairman of the White House Council on Environmental Quality (“CEQ”) was tasked by the EO to determine other high priority infrastructure projects which would qualify for expedited review.

In August 2017, NEPA reform was further broadened by Executive Order 13807, “Establishing Discipline and Accountability in Environmental Review and Permitting Process for Infrastructure.”  This EO extended the scope of NEPA reform by broadly defining “infrastructure project” to include energy production and transmission and by defining a “major infrastructure project” as projects requiring multiple authorizations by Federal agencies.  With respect to these projects, the EO requires the appointment of a lead federal agency to conduct the environmental impact statement (“EIS”).  The EO establishes a “One Federal Decision” policy with the goal of environmental review and permitting timetables leading to one decision.  The EO also establishes agency performance accountability, project tracking and scoring.

The U.S. Department of Interior has implemented NEPA reform in a series of policies applicable to its agencies.  These policies augment a comprehensive set of NEPA Departmental Manuals 516 DM 1 -15, with detailed procedures for each agency within the department.  The “One Federal Decision” was addressed by Secretary of Interior Zinke in a Memorandum of Understanding (“MOU”) dated April 10, 2018.  The MOU sets a two-year goal for approval of major infrastructure projects and requires agencies to determine a permitting and environmental review timetable with authorization milestones.  If milestones are missed, delays are elevated to senior management for resolution.

Secretary Zinke has further implemented NEPA reform by Order 3355, dated August 31, 2017, “Streamlining NEPA Reviews and Implementing E.O. 13807”.[2]  Order 3355 adopts EIS page and timing limitations of 150 pages, excluding appendices (300 pages for unusually complex projects), with a one-year deadline for completion from publication of the notice of intent (“NOI”) to prepare an EIS.  For Environmental Assessments (“EAs”), page limitations are set at 30-40 pages (75 pages for more complex analysis) with a 180-day timeline.[3]  These page limits and time lines reflect guidance adopted by the Council on Environmental Quality.[4]  However, while the CEQ rules have been largely advisory, Order 3355 pairs these streamlining goals with accountability standards providing additional incentive for agency implementation.  An agency team is assigned to each EA and EIS, including an attorney from the Solicitor’s Office.

A series of memoranda issued by Deputy Secretary Bernhardt further clarify Order 3355.  For projects with NOIs published prior to August 31, 2017, the one-year timeline commenced April 27, 2017.[5]  Other streamlining measures include elimination of the surnaming process which previously required a redundant sign-off process for draft documents related to EIS, NOIs and Notices of Availability prior to publication in the Federal Register.[6]  Delays in publication of NOIs and other federal register notices have been reduced by the Office of Management and Budget to a few days of preparation rather than weeks or months.  Agencies are now required to compile decision files contemporaneously with the decision.[7]  A standard policy governing engagement of cooperating agencies and third-party environmental contractors now replaces a lengthy process for sign-off of a Memorandum of Understanding for each project.[8]

Department of Interior’s streamlining reforms have not proceeded without challenge.  The federal District Court of Idaho recently issued a preliminary injunction regarding streamlining policies applied to BLM’s December 2018 federal oil and gas lease sale.  The order raised concerns as to the adequacy of public comment regarding adoption and implementation of IM 2018-034, BLM’s streamlining policy for federal oil and gas leasing.[9]

Despite the set-back of the streamlining efforts in federal oil and gas leasing, the Department of Interior’s NEPA reforms have helped to move forward several long-pending federal coal LBAs.  The Green Hollow tract located in Sevier and Sanpete County was the first LBA in Utah to proceed to lease in the new administration.  The federal coal lease was issued following a competitive sale in February 2017.  The Alton Coal Tract LBA in Kane County, Utah, pending for more than 14 years, was recently approved by the Department of Interior for lease sale this fall.  Public comment has been an important component of the department’s federal coal lease review in Utah.  Notably, the NOA for the Alton Coal Tract LBA was published in November 2011.  On the basis of comments received, a further supplemental analysis was conducted and in June 2015 an NOA for the SDEIS was published.  Comments on the DEIs were used to produce the SDEIS and comments on the SDEIS were used to produce the Final EIS released in July 2018.  NEPA reform and streamlining procedures were applied to move the analysis of the LBA from the SDEIS to the Final EIS and ultimately to a Record of Decision in August 2018.

The Department’s NEPA reform efforts provide for agency accountability and decision making which have allowed the Alton Coal Tract LBA to proceed after lengthy delay.  The department’s new emphasis on timelines, environmental review timetables with authorization milestones should significantly improve the NEPA review process for future federal coal lease applications.

[1] Secretarial Order 3338, “Discretionary Programmatic Environmental Impact Statement to Modernize the Federal Coal Program,” dated January 15, 2016, withdrawn by Secretary Zinke Order No. 3348, dated March 29, 2017.

[2] The U.S. Department of Interior web-page setting out NEPA reform policies, streamlining tools, DOI NEPA requirements and guidance and applicant assistance can be found at https://www.doi.gov/NEPA.

[3] Deputy Secretary Bernhardt Memo, “Additional Direction for Implementing Secretary’s Order 3355 Regarding Environmental Assessments,” August 6, 2018.

[4] CEQ: Memorandum to Agencies – Forty Most Asked Question Concerning CEQ’s National Environmental Policy Act Regulations, 46 Fed. Reg. 18026 (March 23, 1981).

[5] Deputy Sec. Memo, “Additional Direction for Implementing SO 3355, April 27, 2018.

[6] Deputy Sec. Memo, “NEPA Document Clearance Process”, April 27, 2018.

[7] Deputy Sec. Memo, “Compiling Contemporaneous Decision Files, April 27, 2018.

[8] Deputy Sec. Memo, “Standardized Intra-Department Procedures Replacing Individual Memoranda of Understanding for Bureaus Working as Cooperating Agencies”, June 11, 2018.

[9] Order dated September 21, 2018, Western Watershed Project v. Zinke, Case No. 1:18-CV-00187, U.S. Dist. Ct., D. Idaho.