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How Will it Affect NEPA Analyses of Uncertain Effects

The Gulf Oil Spill

Presented by: Alan Waltner

CLE International NEPA Conference

January 20, 2011 (San Francisco)

February 10, 2011 (Los Angeles)

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Overview

• Summary of the environmental analysis of the offshore leasing program and its treatment of risk in the BP context

• History of NEPA analysis in the face of uncertainty

• Other NEPA “lessons learned” from the spill

• Emergencies and how to deal with them under NEPA

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From the January 2011 Commission Report

• “[I]t was quickly evident that even the response capacity indicated in industry’s spill response plans did not exist.”

• “In the plan, BP had named Peter Lutz as a wildlife expert on whom it would rely; he had died several years before BP submitted its plan. BP listed seals and walruses as two species of concern in case of an oil spill in the Gulf; these species never see Gulf waters.”

• “In mid-May, a Russian newspaper suggested detonating a nuclear weapon deep within the well to stop the flow of oil, as the former Soviet Union had done on a number of occasions.”

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From the Commission Report (con’t)

• “MMS performed no meaningful NEPA review of the potentially significant adverse environmental consequences associated with its permitting for drilling of BP’s exploratory Macondo well. MMS categorically excluded from environmental impact review BP’s initial and revised exploration plans—even though the exploration plan could have qualified for an “extraordinary circumstances” exception to such exclusion, in light of the abundant deep-sea life in that geographic area and the biological and geological complexity of that same area.” Report at 83.

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From the Commission Report (con’t)

• “[P]rior NEPA reviews were conducted on a broad programmatic basis, covering huge expanses of leased areas of which the Macondo well was a relatively incidental part. Neither, moreover, included a “worst case analysis” because the President’s Council on Environmental Quality had eliminated the requirement for such analysis under NEPA for all federal agencies in 1986.” Report at 83.

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From the Commission Report (con’t)

• “Recommendation --- The new office of leasing and environmental science should, in consultation with the Council on Environmental Quality, develop and make public a formal NEPA handbook within one year. The handbook should address the issue of tiering and provide guidelines for applying NEPA in a consistent, transparent, and appropriate manner to decisions affecting OCS oil and gas activities.” Report at 261.

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The Council on Environmental Quality’s August 2010 Review

CEQ, “Report Regarding the Minerals Management Service’s National Environmental Policy Act Policies, Practices, and Procedures as They Relate to Outer Continental Shelf Oil and Gas Exploration and Development”, August 16, 2010 (In materials)

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Major Lessons Learned

“The agency did not deem a catastrophic spill, comparable to the BP Oil spill, to be a reasonably foreseeable impact, based on historical information on spills in U.S. OCS waters. Since April 20, 2010, that assumption will be revised, and BOEM will take steps to incorporate catastrophic risk analysis going forward.”

“The BP Oil Spill constitutes significant new information and circumstances that may require reevaluation of some conclusions reached in prior NEPA reviews and other environmental analyses and studies. Specifically, conclusions may change about the likelihood, magnitude, and environmental impacts of a major spill in connection with OCS oil and gas drilling activities.”

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The MMS Leasing, Exploration and Development Process

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Tiered NEPA Documents for BP’s Well

• Gulf of Mexico Deepwater Operations and Activities Environmental Assessment (May 2000);

• Outer Continental Shelf Oil & Gas Leasing Program: 2007-2012, Final Environmental Impact Statement (April 2007) (referred to as the “Programmatic EIS”);

• Gulf of Mexico OCS Oil and Gas Lease Sales: 2007-2012 Western Planning Area Sales 204, 207, 210, 215, and 218 Central Planning Area Sales 205, 206, 208, 213, 216, and 222, Final Environmental Impact Statement (April 2007) (referred to as the “Multi-Sale EIS”);

• Proposed Gulf of Mexico OCS Oil and Gas Lease Sale 206 Central Planning Area Environmental Assessment (referred to as the “Lease Sale 206 EA”), with enclosed Finding of No New Significant Impact (FONNSI), signed on October 22, 2007; and

• Two Categorical Exclusion Reviews (CERs) for approving BP’s Initial and Revised Exploration Plans and amendments for the Macondo well.

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Acknowledgement of Risk in the 2000 “Deepwater EA”

• “Many of the wells expected in deep water will have well control equipment located at the seafloor. Water depths may complicate well control operations. Of particular concern is the ability to stop a blowout once it has begun. The availability of rigs capable of drilling in similar water depths, riser components, and associated deepwater drilling equipment may be limited.”

Deepwater EA at 4-269

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Conclusions of the 2000 “Deepwater EA”

“[A] more detailed investigation is needed to validate the results of this preliminary study,’ including

(1) recommendations for additional study of the consequences of a blowout in deepwater, and

(2) the fate of hydrocarbons released in deepwater environments. . . .”

CEQ, August 16 review at 15 (Emphasis Added).

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Conclusions of the 2000 “Deepwater EA” (con’t)

• The decision document concluded that “the accidental subsea release of oil is a very low-probability event, and extensive mitigation measures for oil-spill prevention and response are already required.”

• The decision document further concluded that “none of the suggested studies, research, or information synthesis represents a critical information need requiring suspension of decisions on specific deepwater activities.”

Id.

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Response to the Deepwater EA’s call for additional research

• “After the Deepwater EA was prepared, several studies on these topics were published. [citation omitted] The Programmatic EIS, the Multi-Sale EIS, and the Lease Sale 206 EA did not incorporate these studies by reference.”

CEQ August 16 Review at 15, n. 40

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Treatment of Spill Risks in the Program EISs

• “In both the Programmatic EIS and the Multi-Sale EIS, MMS concluded that oil from marine/deepwater spills (defined for the purposes of both documents as spills in water depths greater than 200 meters) would be expected to “weather” and degrade by the time it reached shore, and thus would have a “minimal” impact on the environment and wildlife.These conclusions were based on MMS’s analysis of the frequency and volume of historical spills in U.S. waters since 1964, the distance of the well from shore, the warm Gulf environment, and the expected cleanup efforts that would be engaged.”

CEQ August 16 review at 17.

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Treatment of Spill Risks in the Program EISs (con’t)

“The Programmatic EIS, the Multi-Sale EIS, and the Lease Sale 206 EA discussed the consequences of a large spill in the ranges of greater than 1,000 and greater than 10,000 barrels per day, whereas the oil spill response planning process and BP’s Oil Spill Response Plan discussed spills of a much greater size, in the range of 162,000 to 300,000 barrels per day.”

Id. at 26, n. 80

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BP’s Worst Case Estimates of a Blowout at Macondo

• BP Initial Exploration Plan at 7-1

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Evaluation of Spill Risks at the Exploration Stage

• “A scenario for a potential blowout of the well from which BP would expect to have the highest volume of liquid hydrocarbons is not required for the operations proposed in this EP.”

BP, Initial Exploration Plan, February 2009, at 2-1• “In the event of an unanticipated blowout resulting in

an oil spill, it is unlikely to have an impact based on the industry wide standards for using proven equipment and technology for such responses . . .”• BP, Environmental Impact Analysis, February

2009 at 14-4.

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Evaluation of Spill Risks at the Exploration Stage (con’t)

• “An accidental oil spill from the proposed activities could cause impacts to beaches. However, due to the distance to shore (48 miles) and the response capabilities that would be implemented, no significant adverse impacts are expected. Both the historical spill data and the combined trajectory/risk calculations . . . indicate there is little risk of contact or impact to the coastline and associated environmental resources.”

BP Environmental Impact Analysis, February 2009, at 14-5

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What Went Wrong?

• In a heavily “tiered” system, information from earlier tiers was not carried forward to later tiers

• Known information about potential low-probability, high-impact events was not addressed in the NEPA analyses

• Additional information to fill identified data gaps was not developed

• Newly developed information was not integrated into subsequent tiers of the NEPA analysis

• As a result, as the accident progressed, information and solutions needed to be developed “on the fly,” under severe time pressures, leading to delays, false starts and other problems

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NEPA’s Treatment of Uncertainty

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Uncertain Risks

• Terrorist attacks• Facility failures (i.e. oil spills; bridge collapse)• Global warming

• Sea level rise• Changes in water supply

• Seismic risks• Risks of biotechnology and nanotechnology

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Approaches to Uncertainty

• Undertake a worst case analysis• Develop additional information and present what

you know• Speculate• Ignore the issue• Cost vs. benefit of additional information

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Early Litigation

• Scientists’ Institute for Public Information v. Atomic Energy Commission (1973) - reasonable forecasting required

• State of Alaska v. Andrus (1978) - approval does not need to be delayed to develop definitive information

• Sierra Club v. Siegler (1983) – the remoteness of an impact does not excuse the agency from evaluating it

• No bright lines were drawn, although cases generally required a reasonable level of additional inquiry, and declined to excuse ignoring key issues on the basis of uncertainty

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1978-1986 - CEQ’s Worst Case Regulation

• Worst case analysis required in an EIS if information relevant to the agency’s decision is not known and cannot reasonably be obtained

• In that case, “the agency shall weigh the need for the action against the risk and severity of possible adverse impacts were the action to proceed in the face of uncertainty. If the agency proceeds, it shall include a worst case analysis and an indication of the probability or improbability of its occurrence.”

• Example - total cargo loss by a supertanker (Sierra Club v. Sigler - 1983)

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1986 - Revocation and Replacement of the Worst Case Regulation

• If information relevant to reasonably foreseeable significant impacts is essential to a reasoned choice among alternatives, and it is either unavailable or exorbitant, agency must:

• State that information is incomplete or unavailable

• State the relevance of the information

• Summarize the credible scientific evidence

• Evaluate the impacts “based upon theoretical approaches or research methods generally accepted in the scientific community.”

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Key Elements of the Current Regulation

• Generally applies a “rule of reason” and does not mandate a worst case analysis in every situation

• Analysis of “low probability, high impact” events still required “if the analysis of the impact is supported by credible scientific evidence, is not based on pure conjecture, and is within the rule of reason”

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Metropolitan Edison v. People Against Nuclear Power (1983)

• Injected tort-like considerations of causation into the evaluation of low probability events

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Key Elements of the Metropolitan Edison Decision

• Psychological effects may be covered by NEPA • Those effects were “indirect” and did not need to be

covered in an EIS given the lack of a “reasonably close causal relationship” between the action and the effect

• The element of risk and its perception by the public was a key middle link in the causal chain

• The Court applied tort theory of proximate cause by analogy

• Was expressly limited to the impacts of the risk itself, in contrast to the impacts if the risk were realized

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Ninth Circuit Precedents

• Mothers for Peace v. NRC (2006) – risk of a terrorist attack needed to be evaluated in the NEPA document for a nuclear spent fuel storage facility

• NoGWEN v Aldridge (1988) - addressed the relationship between the establishment of a military communication system and the effects of a nuclear war, concluding that the connection is too attenuated to trigger a NEPA requirement to analyze the effects

• Ground Zero Center v. Navy (2004) – Navy’s conclusion that Trident missile loading operations present minimal accident risks accepted as the basis for excluding consideration of those risks in an EA

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Decisions in Other Circuits

• New York v. US Dept of Transportation (2d Cir. 1982) - risks of sabotage need not be considered in selection of nuclear material transportation routes

• Limerick Ecology Action v. NRC (3d Cir. 1989) - same result re sabotage of nuclear power plant

• Mid States Coalition for Progress v. Surface Transportation Board (8th Cir. 2003) - terrorist threat to rail transportation system need not be evaluated since the threat is general in nature and not specific to any project

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Application to the BP Well

• The NEPA uncertainty regulation was not applied• Known information was not included• The data gaps were not discussed• Reasonable forecasts based upon credible scientific

methods were not made• As a result, key information needed to be developed

“on the fly” as the accident was being addressed• Estimates of the spill rate• Techniques for stopping the spill• Evaluation of impacts on the marine ecosystem

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“A Great Case for Worst Case Analysis”

• “The recent Gulf oil disaster offers a powerful argument for going back to the original requirement for worst-case analysis, which the current regulation allows agencies to avoid. . . . BP was convinced that the blowout prevention systems would work. Therefore, it thought, any leaks would not be large, and could be contained long before they would reach shore. Interior’s Minerals Management Service bought that analysis. . . . But of course both the company and US officials could have anticipated this spill.  They didn’t because they weren’t forced to. It’s human nature to assume the best outcome and downplay the likelihood of catastrophic failure. NEPA can, and should, be used to counteract that tendency. CEQ was right in 1978. It should go back to its original worst-case analysis requirement. Without it, we now know, federal decisions will ignore some major and altogether foreseeable risks.”

Blog posting, “A Great Case for Worst Case Analysis,” Holly Doremus

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From the Commission Report

• “Interior should incorporate the ‘worst-case scenario’ calculations from industry oil spill response plans into NEPA documents and other environmental analyses or reviews. This does not mean that Interior would be required to conduct a ‘worst-case scenario analysis’ under NEPA, but it does mean that Interior would use industry’s worst-case estimates for potential oil spill situations in its environmental analyses.” Report at 267.

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Other NEPA Lessons Learned

• The incident raises fundamental questions about the effectiveness of tiering

• Forecasting in first-tier documents needs to be reasonable

• Key information needs to be carried forward into later tiers

• Overly expansive reliance on categorical exclusions in later tiers may miss important impacts and information

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CEQ Recommendations

• Perform careful and comprehensive NEPA review of individual deepwater exploration activities, including site-specific information where appropriate. 

• Track and take into account all mitigation commitments made in NEPA and decision documents that are used to determine the significance of environmental impacts, from the initial Programmatic EIS through site-specific NEPA analyses and decisions. 

• Ensure that NEPA analyses fully inform and align with substantive decisions at all relevant decision points; that subsequent analyses accurately reflect and carry forward relevant underlying data; and that those analyses will be fully available to the public. 

CEQ August 16, 2010 Press Release on its Review of MMS’s NEPA Procedures -- Recommendations

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CEQ Recommendations (con’t)

• Ensure that NEPA documents provide decisionmakers with a robust analysis of reasonably foreseeable impacts, including an analysis of reasonably foreseeable impacts associated with low probability catastrophic spills for oil and gas activities on the Outer Continental Shelf. 

• Review the use of categorical exclusions for OCS oil and gas exploration and development in light of the increasing levels of complexity and risk – and the consequent potential environmental impacts – associated with deepwater drilling.  Determine whether to revise these categorical exclusions. 

• Continue to seek amendments to the Outer Continental Shelf Lands Act to eliminate the 30-day decisional timeframe for approval of submitted Exploration Plans. 

• Evaluate supplementing existing NEPA practices, procedures, and analyses to reflect changed assumptions and environmental conditions, due to circumstances surrounding the BP Oil Spill.

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Treatment of Risk Under CEQA

• CEQA requires consideration of “reasonably foreseeable” consequences of a project

• Speculative effects need not be evaluated• Reasonable attempts to forecast impacts required

based on available methods

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What is an Emergency?

• NEPA lacks a specific definition of “emergency circumstances”

• The District Court in NRDC v. Winter relied on ordinary dictionary definitions that apply to “unexpected, suddenly arising situations that require agency action in a shorter time frame than would be required to prepare an EIS.”

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What is an Emergency? (Con’t)

• Federal Stafford Act and California Emergency Services Act provide for a formal declaration

• Federal declaration appropriate where federal assistance is needed “to save lives and to protect property and public health and safety, or to lessen or avert the threat of a catastrophe.” 42 U.S.C. 5122

• State declaration to be based on the “existence of conditions of disaster or of extreme peril to the safety of persons and property . . .” Gov’t Code 8558

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What is an Emergency? (Con’t)

• CEQA defines an emergency as a “sudden, unexpected occurrence, involving a clear and imminent danger, demanding immediate action to prevent or mitigate loss of, or damage to, life, health, property, or essential public services.” Pub. Res. Code 21080(b)(4)

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Emergency Procedures under NEPA

• Stafford Act declaration directly exempts response actions

• Otherwise, special CEQ regulations apply • Can be invoked when “emergency circumstances

make it necessary to take an action . . . without observing the provisions of these regulations”

• Consultation with CEQ required to establish “alternative arrangements”

• The “arrangements” are limited to actions necessary to “control the immediate impacts of the emergency”

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The CEQ Emergency Regulation

“Where emergency circumstances make it necessary to take an action with significant environmental impact without observing the provisions of these regulations, the Federal agency taking the action should consult with the Council about alternative arrangements. Agencies and the Council will limit such arrangements to actions necessary to control the immediate impacts of the emergency. Other actions remain subject to NEPA review.”

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Cases Addressing the NEPA Emergency Procedures

• NRDC v. Winter (2008) – Rejected the application of emergency procedures where the time constraints were perceived to be of the agency’s own making

• Valley Citizens v. Vest (1991) – No supplemental EIS needed to support round the clock flights to supply Operation Desert Storm

• Nat’l Audubon v. Hester (1986) – Deference given where immediate action was necessary to prevent extinction of the California condor

• Crosby v. Young (1981) – Immediate response required for a city to meet a federal funding deadline for a project counteracting economic effects of the closure of a General Motors plant

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Conclusions

• As with the 9/11 attacks, the BP spill will heighten sensitivity and awareness of key NEPA issues

• Facility failures and other “low probability, high impact” scenarios will likely be considered more “foreseeable” and should be considered carefully in future NEPA documents

• When in doubt, NEPA document drafters should error on the side of assuming higher risks, since subsequent events could shift perceptions of the degree of risk

• Effective tiering requires the tracking and implementation of information and recommendations from earlier tiers

• A “safety net” is in place to streamline procedures once an emergency occurs

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Contact Information

Alan WaltnerLaw Offices of Alan Waltner415-641-4641waltnerlaw@gmail.comwww.waltnerlaw.com