Introduction
Metholology
Data
Results
Comment


Introduction

In the Energy Policy Act 2005 (119 Stat 711) Congress attempted to address a longstanding dissatisfaction with the slow pace at which the Bureau of Land Management (BLM) processes applications for permit to drill. Adding Subsection (p) to Section 17 of the Mineral Lands Leasing Act of 1920 (30 USC § 226(p)), Congress mandated prompt action by the BLM on "complete" applications.

The basics of the required timing may be summarised as follows. On day one, an operator submits an application for permit to drill. By day 11, the BLM is to notify the operator that either the application is complete or specified information is missing. If the application is complete on day 11, the BLM has until day 41 to issue the permit or to notify the operator that the BLM cannot approve the permit yet.

If the BLM issues the notice, the process slows down. In rare cases there may be some substantive bar to issuing the permit, such as a prohibition under the Endangered Species Act or a BLM finding that the operation will cause "undue degradation" of the public lands. In most cases, however, the delay is caused by the requirements of the National Environmental Policy Act. In that circumstance, the law gives the operator up to two years to provide the secretary with all information needed to complete National Environmental Policy Act review.

If, during the two years, the BLM has actually been working on the National Environmental Policy Act document, the operator might be in a position to receive the permit within another 10 days (the operator is now at day 781). But if the BLM has not been working on the document, the statute imposes no limit on how much longer the BLM can take (30 USC § 226(p)(3)(B)).

In response to recent criticism of delays, the BLM has explained that the vast majority of time in the application for permit to drill approval process is spent by the BLM waiting on operators to submit information which they should have submitted in the first place. This update examines publicly available information to see whether it supports the BLM's assertions.

Methodology

How long does it take the BLM to process an application for permit to drill on federal land? This seems like a simple question, especially for the western states of Colorado, North Dakota, Utah and Wyoming, where oil and gas activity is significant. However, the information needed to answer this question can be hard to obtain. Figure 1 below measures the average number of days to process an application for permit to drill per fiscal year (2005-2012).(1) The average time was divided into two parts: industry days and BLM days. 'Industry days' represent the time to submit a complete application for permit to drill (ie, the amount of time between receipt of an application by the field office and its completion), whereas 'BLM days' depict the time to process that application for permit to drill (ie, the length of time between completion of the application and its approval).

Figure 1

The BLM cited no source for any data in the graph. In an effort to understand supporting data for this graph better, a Freedom of Information Act request was submitted to the BLM, asking for the underlying data used by the BLM to construct the graph (restricted to the states of interest for the last three years).(2)

Data

The response to the Freedom of Information Act request(3) included 455 pages of data in a spreadsheet – actually all data used to produce the graph, rather than the specific information requested. The spreadsheet contained information regarding applications for permits to drill approved in fiscal years 2011 and 2012 from 33 field offices across 11 states.(4) In addition to field office and state, for each application for permit to drill the spreadsheet listed dates of receipt, administration (completion)(5) and disposition (approval), as well as the number of days from receipt to completion (administration), completion to approval (disposition) and receipt to approval. For each field office, the BLM used this data to calculate an average number of days for each stage of the process. Finally, interspersed in the data were two summary charts. These charts compile the averages calculated by the BLM (Figures 2 and 3). It appears that these charts were used to prepare Figure 1.

Figure 2

Source: Freedom of Information Act response (November 2012)

Figure 3

Source: Freedom of Information Act response (November 2012)

Results

Chart comparison
The BLM included a summary chart of its calculated averages for both fiscal years for which data was provided (2011 and 2012). However, these averages were not included in the graph. Using the BLM's calculated averages for each field office, a straight average for each segment included on the graph was calculated for both years. Following comparisons, none of the averages matched those on the graph. The graph was apparently skewed or the data was weighted in an undisclosed way, assuming that the graph was a representation of the data sent in response to the Freedom of Information Act request. 'Industry days' for both years on the graph were much higher than the calculations. For example, the BLM's graph shows industry days averaging 236. Using the BLM's chart and calculating an average of what it lists as average days from receipt to completion (or 'industry days'), the actual average is 139.6 days. There is no indication of how the BLM added the extra 97 days. The remainder of the comparisons can be seen in Figure 4.

Figure 4

Regrettably, it appears the BLM is not evaluating these numbers for accuracy. A quick read-through reveals that it is impossible to have a negative number of days between receipt and approval. The BLM would also realise that for the Casper office in Wyoming to report an average of 65.5 days from receipt to approval, but zero days between receipt to completion and completion to approval, makes no sense. The chart notes that there are "dates either missing, all zeros, or large" but this warning appears nowhere on the graph produced for the public. How are those numbers reflected in the chart? The BLM provides no answers. The missing, zero or large data may or may not be included in the graph. The lack of clarity makes it more difficult to follow the BLM's line of thought in the production of the application for permit to drill permitting times graph.

It is possible that some missing element links the data received to the averages represented by the graph. Even so, this graph is displayed to operators, organisations and the public on the BLM's website to provide an idea of what the BLM believes are average permitting times. Given its public nature, these numbers should be checked for accuracy. This skewed data reinforces the BLM's belief that it spends most time waiting on operators and refuting claims it is the weak link in the permitting process. By exaggerating industry days, the BLM deflects responsibility for slow processing. In addition, by indicating to operators and the public that permitting times are longer than they actually are, the BLM provides its offices with leeway in processing times. It would be able to show operators that it is permitting more quickly than the national average. These numbers are likely to be used in estimations for new rules and to battle existing criticisms. But if these numbers are not reviewed to ensure that they reasonably reflect the BLM's work, there is no way of knowing (accurately) how the process is working.

Inaccurate averages
Once it was clear that the two did not match up, the averages calculated by the BLM were examined in search of a reason explaining the disconnect. The Anchorage field office data from 2012 was examined. With only two applications for permit to drill approved in that year, it was easy to identify the problem. One of the applications for permit to drill processed that year took 14 days to be approved after the application for permit to drill was considered complete, while the other was approved the same day it was completed, therefore listing zero days between those dates. The BLM calculated the average for the Anchorage field office to be 14 days, ignoring the one application that listed zero for that timeframe. An accurate average calculation would find the average here to be seven days. A response time that in this case would make the BLM appear to be a model of efficiency. This inaccurate method of calculating averages was pervasive throughout the set of data provided by the BLM. Unfortunately, this renders the BLM-calculated averages meaningless. This miscalculation is likely to be the result of a computer error. However, providing unreliable data via a Freedom of Information Act request again demonstrates a lack of oversight or review of the BLM's information collection. It is unfair to pass this information to the public as accurate.

Incomplete data
In an attempt to get to the root of the problem, the BLM data was re-examined. Missing data turned out to be ubiquitous. For many entries, it meant only one missing data point, whether it was a date or a number of days. But for the entire FY2011 data, the BLM did not include a column for the date of completion. It is unfathomable how the BLM can provide the number of days considered to be 'industry' or 'BLM' days when there is no date of completion to use in the calculation. Incomplete information such as this makes it impossible to verify that the BLM is calculating processing time correctly. This displays a lack of consistency among the offices. Perhaps a specific set of protocols would help to ensure that all offices include all data considered of interest to the BLM.

In addition to missing data, there was also what appears to be impossible data. Although infrequent, some entries listed negative days between one stage of the process and another. It should not be possible for an application for permit to drill to be approved before it is received if the proper regulatory process is being followed. There were also many instances where the number of days between completion, or even receipt, and approval was less than 30. Federal statutes mandate a 30-day public comment period between completion and approval.(6) If this data is accurate, the BLM is either not meeting its legal requirements or not submitting data as an accurate portrayal of the dates and timelines that do exist.

Comment

These issues reflect a greater problem within the tracking system. As a function of the government, the BLM represents the people's interests on public land. However, the way that the BLM currently tracks information makes it impossible for people to understand how their interests are being pursued. The government has a responsibility to its citizens to make sure that what it publishes is complete and accurate. Without a comprehensive, uniform system, the BLM cannot be expected to do this.

Applications for permit to drill are tracked in the Automated Fluid Management Support System. This national BLM database is not accessible to the public. Aside from the centralised system, data is collected and added to the database by individual field offices. It is possible that each office updates its information a little bit differently from other offices. That being the case, the BLM should require some kind of oversight to ensure consistent, uniform record keeping, without which this data lacks consequence.

During a trip to North Dakota to visit the site of a recent oil boom, former Secretary of the Interior Ken Salazar announced a "new automated tracking system" as part of initiatives by the department to expedite energy development on public and Indian lands.(7) The BLM expects this system to reduce the processing time for permits by two-thirds as it will "track permit applications through the entire review process and quickly flag any missing or incomplete data".(8) As part of the effort to improve communication between the government and industry, this programme should result in more consistent standards and shorter timeframes. The BLM expected this to be online by May 2013. This announcement follows a two-year pilot programme, tested in several BLM field offices, designed to make the application for permit to drill process more efficient.(9) As part of this programme, the New Mexico offices established an online tracking system, potentially similar to that being described by Salazar.(10) Not only is the transparency of information a huge step up from the current system, but the information is presented more accurately than the data supplied following the Freedom of Information Act request. Unfortunately, to date this upgraded record-keeping approach is limited to the New Mexico office.

The new system is still not online, but it is certainly a step in the right direction. Of course, there will be no way to determine whether the new system reduces processing time because the numbers in the existing system are so unreliable, but the new system may allow for greater consistency and accountability. However, in addition to the automated tracking system, the BLM must remember that oversight is a significant component of the process. Without verification of reasonable numbers, the same problems apparent in the current system may prove resilient. One recommendation is to make sure that raw data is provided to support such important claims as application for permit to drill processing timelines. Public verification will allow for greater transparency between the government and its people.

The United States has the resources and technology to become a significant exporter of oil and natural gas, to supply feedstock for a reviving industrial base and to help to reduce (as it has done over the past four years) the nation's emission of greenhouse gases. However, as many commentators have noted, the dramatic growth in oil and gas production has been achieved largely on privately owned lands. Permitting delays on federal lands create incentives for operators to avoid investments in federal oil and gas leases in favor of investments in private leases.

It will be impossible for the Department of the Interior to determine whether changes to expedite permitting on federal oil and gas leases are successful with the department's currently broken yardstick. With today's level of information technology, mending the stick should not be a difficult task – but will focus and commitment be applied to that task?

For further information on this topic please contact L Poe Leggette or Sarah Zimmerman at Norton Rose Fulbright LLP by telephone (+1 713 651 5151), fax (+1 713 651 5246) or email (poeleggette@nortonrosefulbright.com).

Endnotes

(1) The chart originally reviewed only went up to 2011; however, the BLM has since revised the chart to include the 2012 numbers. Figure 1 shows the revised graph.

(2) The request stated:

"Copies of documents used to create the chart reproduced below but only those documents containing information regarding the states Colorado, North Dakota, Utah, and Wyoming and concerning the years 2009, 2010, 2011. The chart below is located on Bureau of Land Management website Bureau of Land Management."

(3) BLM (2013) FY 2012 Bureau Log generated by EFTS. Retrieved from the BLM Bureau Log.

(4) The field offices included Anchorage (Alaska), Bakersfield (California), Canon City, Craig, Durango, Glenwood Springs, Grand Junction and Meeker (Colorado), Milwaukee and Jackson (eastern states); Dickinson, Great Falls and Miles City (Montana/North Dakota), Reno (Nevada), Carlsbad, Farmington, Hobbs, Rio Puerco, Roswell and Tulsa (New Mexico), Moab, Price, Salt Lake and Vernal (Utah) and Buffalo, Casper, Green River, Kemmerer, Lander, Newcastle, Pinedale, Rawlins and Worland (Wyoming).

(5) Only the date of completion for applications that were approved in 2012 was provided.

(6) 30 USC § 226(p).

(7) "Secretary Salazar Visits North Dakota's Oil Boom; Unveils Initiatives to Accelerate Drilling Permits and Leases on Federal Lands", BLM press release 2012, BLM website April 3 2012. Available at BLM Press Release - Salazar.

(8) Ibid.

(9) BLM "Section 365 of the Energy Policy Act of 2005 Pilot Project to Improve Federal Permit Coordination: Bureau of Land Management Year Two Report" (BLM-WO-GI-08-007-3109). McLean, VA (2008).

(10) "FY Approved APDs Listed" Application for permit to drill tracking system, BLM. Available at BLM- FY 2007 Approved APDs.

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