Public outrage over the Deepwater Horizon spill has had multiple targets. Among these was the news that BP’s exploration plan for extracting crude oil from the Macondo well was approved without consideration by Minerals Management Service (MMS) (renamed the Bureau of Ocean Energy Management, Regulation and Enforcement, or BOEM) of environmental risks at the well site. Drilling at Macondo occurred under more than 5,000 feet of water. While operating drills under the extreme pressure found at such depths is not unprecedented, experience with similar operations is limited.

The process that led to MMS’s approval of BP’s drilling operation is complex. However, MMS’s decision to grant two categorical exclusions (CE) at the Macondo well is one of the more salient features of that process. Basically, this meant that MMS approval of the Macondo operation was preceded by neither a site-specific environmental assessment (EA) nor a more complex site-specific environmental impact statement (EIS)—two types of environmental reviews to determine if a project permitted by the federal government will result in a significant environmental impact. Instead, MMS granted the CEs based on information collected in prior environmental reviews. That decision may lead to significant changes in how CEs are applied to offshore drilling.

Under the National Environmental Policy Act (NEPA), a CE refers to an activity that has been determined through an appropriate public process not to raise environmental issues or concerns that require analysis in an EA or EIS. Once a CE is established, it can be applied to a specific proposed action if there are no extraordinary circumstances that raise the potential for significant impacts based on relevant site-specific analysis.

Before the Deepwater Horizon spill, two broad EISs were conducted for large areas of the Gulf where multiple drilling operations were planned. Also, an EA was conducted for a bundle of leases (Lease Sale 206) that included the lease for the Macondo well. Following these reviews, MMS approved the two CEs for the Macondo operation. One CE approved the offshore lease. The second approved the application for a permit to drill, provided “appropriate mitigation measures are described in an approved exploration plan.”

In discussing the disaster in a recent report, the Council on Environmental Quality (CEQ) drew particular attention to MMS’s decision to approve BP’s exploration plan based on reviews of potential oil spill impacts contained in the earlier EISs and EA. “The NEPA reviewers did not prepare a site-specific analysis to determine impacts from a potential site-specific spill,” states CEQ. “No analysis was prepared on oil spills and blowouts when the categorical exclusion review for the BP exploration plan approval was prepared.”

CEQ went on to recommend that BOEM review the use of CEs related to oil and gas (O&G) drilling on the Outer Continental Shelf “in light of the increasing levels of complexity and risk—and the consequent potential environmental impacts—associated with deepwater drilling.” CEQ also raised the possibility of revising CEs specifically associated with O&G exploration.

Upon release of the CEQ report, BOEM Director Michael R. Bromwich, issued a memo indicating that BOEM will review the use of CEs for the offshore O&G sector. Until that review is complete, Bromwich ordered BOEM to narrow its use of CEs. Specifically, Bromwich prohibited the use of two CEs. One CE (516 DM 15.4.C(10)) approves exploration in the central or western Gulf of Mexico and was granted to BP for the Macondo well. The second CE (516 DM 15.4.C(11)) approves minor revisions or variances from activities in an approved offshore exploration plan.

Furthermore, upon termination of the Department of Interior’s current suspension of certain drilling activities, Bromwich directed that EAs be conducted for all plans submitted for approval that propose an activity that involves a subsea blowout preventer (BOP) or a surface BOP.

Finally, Bromwich ordered that CE reviews be conducted for “all other plans.” The reviews must assess whether any factors—including, for example, proposed use of a new or unusual technology, the presence of high H2S, or proximity to a biological bank—exist such that the plan involves an extraordinary circumstance and, therefore, must be subject to an EA.