A federal court in Wyoming Friday rejected the guidance of two federal agencies limiting the use of environmental categorical exclusions to speed up the processing of oil and natural gas producers’ applications to drill (PAD) on federal lands.

The Western Energy Alliance (WEA) challenged the guidance issued by the Interior Department’s Bureau of Land Management (BLM) and Department of Agriculture’s U.S. Forest Service last year, which limited the use of Section 390 categorical exclusions that were granted under the Energy Policy Act of 2005 (EPAct). EPAct established categorical exclusions from the National Environmental Policy Act (NEPA) that apply to five specific categories of oil and gas exploration and production activities.

Before the U.S. District Court for the District of Wyoming, the Denver-based group of 400 independent producer, service and supply companies argued that the instructions issued by the BLM and Forest Service in 2010 were “arbitrary, capricious and contrary to the law.” WEA further argued that its members “will be injured by the delay, expense and legal risks associated with NEPA compliance.”

The Wyoming federal court agreed with WEA and vacated and enjoined the BLM’s and Forest Service’s 2010 guidance “to the extent that they address and limit the use of Section 390 CXs [categorical exclusions] by: 1) establishing a screening process to consider extraordinary circumstances when using any Section 390 CX; 2) interjecting a new condition within Section CX2 to limit its use only if the specific location and/or well pad site for the proposed drilling was adequately analyzed in an existing activity-level or project-specific NEPA document; and 3) eliminating BLM’s ability to use Section 390 CX3 for actions based solely on a NEPA document associated with a land use plan.”

The court “takes this action nationwide on the basis that the 2010 instructions, as specifically noted, constitute legislative rules adopted contrary to public notice and comment procedures required by law,” wrote Chief U.S. District Judge Nancy D. Freudenthal.

“Contrary to the federal [agencies’] argument, the 2010 instructions are not interpretive; they are legislative…As legislative rules, the federal [agencies] had no authority to issue the 2010 instructions without public notice and an opportunity for comment,” the court said. As such, the court said the instructions violated federal law.

“The judge’s ruling is a victory for responsible American energy development…With this nationwide injunction, we hope the government will return to using categorical exclusions to encourage domestic oil and natural gas production and cease requiring redundant environmental analysis that slows economic activity,” said Kathleen Sgamma, director of WEA’s government and public affairs.

“The judge ruled soundly that the government cannot substantially change a law passed by Congress without so much as notifying the public and engaging in proper rulemaking,” she continued.

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