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December 10, 2012 Oil Shale and Tar Sands Resources Final Programmatic EIS BLM Director (210) Attention: Brenda Hudgens-Williams P.O. Box 71383 Washington, DC 20024–1383 RE: American Petroleum Institute Protest to Proposed Land Use Plan Amendments for

Allocation of Oil Shale and Tar Sands Resources on Lands Administered by the Bureau of Land Management in Colorado, Utah and Wyoming and Final Programmatic Environmental Impact Statement

Dear Acting Director Pool:

The American Petroleum Institute (API) hereby protests, pursuant to 43 C.F.R. 1610.5-2, the Bureau of Land Management’s (BLM’s) Proposed Resource Management Plan (RMP) Amendments for Allocation of Oil Shale and Tar Sands Resources on Lands Administered by the Bureau of Land Management (BLM) in Colorado, Utah, and Wyoming and Final Programmatic Environmental Impact Statement (PEIS) published by the BLM in November 2012 (the “PEIS and Proposed RMP”).1 API is a trade association representing over 500 companies involved in all aspects of the oil and natural gas industry, including the development of oil shale and oil sands as a future energy supply in the United States. API has formed an Oil Shale Subcommittee with the goal of addressing issues associated with oil shale development and educating policy-makers and the public at large on this important domestic energy resource. API’s members have a direct commercial interest in leasing and developing oil shale and oil sands resources found on BLM-managed lands in Colorado, Utah and Wyoming. Members of API’s Oil Shale Subcommittee, and the oil shale industry as a whole, are committed to delivering technologies and best practices that will allow for the development of oil shale in an environmentally sustainable manner. API has standing under 43 C.F.R. 1610.5-2 to file this protest because API participated in the planning process, and has an associational interest that will be adversely affected by the approval of the proposed RMP.

1 Attached are comments provided previously by API to the BLM filed on May 4, 2012, in response to

BLM’s Draft Programmatic Environmental Impact Statement and Possible Land Use Plan Amendments for Allocation of Oil Shale and Tar Sands Resources on Lands Administered by the Bureau of Land

Management in Colorado, Utah, and Wyoming (Attachment A) and filed on May 16, 2011, in response to

BLM’s Notification of Intent to prepare a Programmatic Environmental Impact Statement (PEIS) and Possible Land Use Plan Amendments (Attachment B).

Emily Kennedy Policy Advisor

Upstream and Industry Operations

1220 L Street, NW Washington, DC 20005-4070 USA Telephone 202-682-8260 Fax 202-682-8426 Email kennedye@api.org www.api.org

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STATEMENT OF THE ISSUES PRESENTED The issues currently presented are whether the PEIS and Proposed RMP violate the spirit and intent of the Energy Policy Act of 2005, the National Environmental Policy Act (NEPA), and the Administrative Procedure Act by, in the absence of credible factual, legal, or policy reasons:

Dramatically and arbitrarily reducing the amount of acreage previously made available for oil shale and oil sands leasing application;

Imposing a Research, Development, and Demonstration-first requirement;

Acting in furtherance of a biased purpose and need statement that drove NEPA analysis to a predetermined outcome;

Failing to adequately identify lands excluded from oil shale and oil sands leasing application;

Not providing an adequate opportunity for notice and comment following the release of 1,900 pages of technical analysis in the Draft PEIS; and

Precluding the opportunity to provide informed comments given that proposed and closely-related rules for amending existing oil shale regulations were not available during the public comment period.

PARTS OF THE PLAN AMENDMENTS BEING PROTESTED

API protests all aspects of the plan amendments that depart from the land use allocation decisions resulting from the 2008 Oil Shale and Tar Sands PEIS and Record of Decision, including the reduction in acreage available for potential oil shale and oil sands leasing application and the requirement that leases on acreage available for leasing application are subject to a Research, Development, and Demonstration-first requirement.

ARGUMENT

API believes the BLM Director’s decision is wrong because the aspects of the plan amendments that depart from the 2008 Oil Shale and Tar Sands PEIS and Record of Decision are inconsistent with the requirements and purposes of the Energy Policy Act of 2005 (EPAct 05). In EPAct 05, the U.S. Congress recognized the critical and urgent need for development of domestic energy resources when it enacted into federal law the Oil Shale, Tar Sands and Other Strategic Unconventional Fuels Act of 2005. Congress could not have been more perceptive and surely could not predict the dire situation of world oil markets and resultant impact on the American public in 2011 when it stated:

“Congress declares that it is the policy of the United States that…oil shale, tar sands, and other unconventional fuels are strategically important domestic resources that should

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be developed to reduce the growing dependence of the United States on politically and economically unstable sources of foreign oil imports….”2

EPAct 05 clearly states that the Department of Interior shall establish a royalty rate to “encourage development of oil shale and tar sand resources,”3 “make available” public lands to “conduct research and development activities with respect to technologies for the recovery of liquid fuels from oil shale,”4 and promulgate regulations establishing “a commercial leasing program for oil shale.”5 In removing 66% of the acreage made available for oil shale leasing application and nearly 70% of the acreage made available for oil sands leasing application in the land use allocations that resulted from the 2008 Oil Shale and Tar Sands PEIS and Record of Decision, BLM’s action is misguided and runs counter to EPAct 05’s directive to promote commercial oil shale development in Colorado, Utah, and Wyoming, including by issuing regulations to establish a commercial oil shale leasing program. Rather than being guided by the Act’s intent and express requirements, BLM has foreclosed even the possibility of oil shale and oil sands leasing and development on more than 1.6 million acres of land by prematurely and inappropriately deciding not to allow site-specific issues to be resolved later at the lease sale and development stages. BLM further frustrates the purpose and intent of EPAct 05 by conditioning the issuance of a commercial lease on having first obtained and complied with the terms of a Research, Development and Demonstration (“RD&D”) lease. The RD&D-first requirement adds lengthy and unnecessary project delays, and forces those with access to viable commercial technologies to await the amendment of RMP’s and face new discretionary administrative actions. Importantly, in stating that it would only consider the removal of lands from application for potential future leasing and then choosing restrictive options as its preferred alternatives, BLM’s Draft PEIS reveals a biased and predetermined outcome that also runs counter to the intent of the National Environmental Policy Act (NEPA). Congress’s intent in promulgating NEPA included the desire to “attain the widest range of beneficial uses of the environment without degradation, risk to health or safety, or other undesirable and unintended consequences,” and to “achieve a balance between population and resource use which will permit high standards of living and a wide sharing of life's amenities.”6 By considering only the narrowing of available lands for oil shale development, BLM failed to consider the range of beneficial uses and the potential to promote human standards of living that could result from more availability of lands for oil shale and oil sands development. The lack of detail that exists with regard to the identification of particular lands that may be excluded from leasing application based on current

2 42 U.S.C. § 15927(b)(1) (2012).

3 42 U.S.C. § 15927(o) (2012).

4 42 U.S.C. § 15927(c) (2012).

5 42 U.S.C. § 15927(d)(1) (2012).

6 42 U.S.C. § 4331(b)(1) (2012) (emphasis added).

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and future information (i.e. lands having wilderness characteristics) also does not comport with the level of specificity required under NEPA. Furthermore, the preferred alternative excludes from commercial oil shale leasing lands identified as having “wilderness characteristics” and/or “core or priority sage-grouse habitat.” API believes that withdrawing lands due to potential wilderness characteristics and sage-grouse habitat protection is premature given that no concrete regulatory action has yet occurred with respect to wilderness or sage-grouse habitat protections. BLM should not foreclose commercial oil shale leasing based on resource protection assumptions that may change. BLM’s new approach abandons the well-written and legally sufficient 2008 OSTS PEIS resource management decisions in an effort to settle the 2009 lawsuit with environmental organizations. In stark contrast to the predetermined outcome identified in the purpose and need statement of the 2012 OSTS DPEIS, the 2008 OSTS PEIS identified the purpose and need of the NEPA document “to meet the requirements of the Energy Policy Act of 2005”. This is a vastly superior NEPA approach because it does not drive the analysis to a predetermined outcome. In addition, BLM has acted in a manner that is contrary to the spirit and intent of the Administrative Procedure Act by not having provided an adequate opportunity for notice and comment following the release of 1,900 pages of technical analysis in the Draft PEIS. An opportunity for the public to review, comment upon, and inform the analysis underlying an agency’s action is, of course, the essence of notice and comment rulemaking under the APA. See Sprint v. FCC, 315 F.3d 369, 373 (D.C. Cir. 2003); Exec. Order No. 13,563 (requiring “an opportunity for public comment on all pertinent parts of the rulemaking docket, including relevant scientific and technical findings.”). BLM also violated the APA by precluding the opportunity to provide informed comments given that proposed and closely-related rules for amending existing oil shale regulations were not available during the public comment period. The approach selected in the Final PEIS is anything but reasonable. In Colorado, for example, BLM has removed an additional 9,049 acres from application for oil shale leasing from the acreage proposed in the 2012 Draft PEIS, offering roughly 7.5% of the land made available for oil shale leasing in the 2008 land use allocation for Colorado. The 2008 OSTS PEIS selected its Proposed Plan Amendment based on:

its consistency with the requirements of the Energy Policy Act of 2005;

its balanced use and protection of resources;

the Final PEIS’s analysis of potential environmental impacts; and

the comments and recommendations from cooperating agencies and the public.

The selected 2008 amendment, Alternative B, was structured to be consistent with the congressional mandate of the Energy Policy Act to emphasize the “most geologically prospective lands in Colorado, Utah and Wyoming” as available for application for leasing. Alternative B, therefore, identified and offered the most geologically prospective acreage (based on grade and thickness of the oil shale deposits) of the Green River Formation located in the Piceance, Uinta,

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Green River, and Washakie Basins of Colorado, Utah, and Wyoming. Alternative B provided for fewer fragmented tracts and provided more contiguous tracts that could be configured for economically and technically feasible extraction or recovery of the resources. Alternative B also allowed for access to more of the most geologically prospective oil shale lands, particularly in Colorado. Alternative B was also designed to provide the decision-maker with the discretion to balance the oil shale use and protection of resources on the public lands during subsequent site-specific NEPA analysis (emphasis added). In the few areas of the state that remain open to potential future leasing, the commercial attractiveness of much of the acreage is limited because the parcels are either oddly shaped, miniscule in size, or not contiguous. The Oil Shale acreage reduction in Colorado, where the thickest and richest deposits of oil shale exist, was over 90%. This basin has the highest likelihood of a commercial development as evidenced by five of six 1st round RD&D leases and all three 2nd round RD&D leases. In the Basin where the industry attention is greatest by far, the BLM acreage removal was by far the greatest as well. Overall, the total amount of acreage potentially made available in the Final PEIS suffers from significant deficiencies in both size and quality and, ultimately, is designed to render commercial production technically and economically infeasible. Arguments that access should be so restricted because commercial-scale production is not yet technologically feasible are belied by the fact that commercial oil shale projects have been underway elsewhere in the world for decades, which API has outlined extensively in its comments on the Draft PEIS submitted in May 2012. Furthermore, any notion that development of a robust oil shale leasing program is not possible due to water use needs is incorrect. Oil shale production requires 1-3 barrels of water per barrel of oil--less water than is required to produce other future transportation fuels or a 2-liter bottle of soda--and technology exists to reduce such requirements even further. Under a 2-barrel of water requirement, a 1 million barrel/day oil shale industry would require roughly 100,000 acre-feet of water each year, or about 2% of Colorado’s available water resources (roughly 1% of water in the Colorado River Basin). That in turn would generate roughly 15% of the Colorado’s state Gross Domestic Product (GDP)7. By comparison, agriculture (utilizes 80-90% of Colorado water resource) and tourism and recreation (utilize about 5% of Colorado water resource) respectively contribute 1-2% and roughly 5% of Colorado state GDP. Importantly, oil shale producers already own enough water rights to produce 10% of U.S. liquid fuel needs8.

7 “Oil Shale Leasing — What Are We Really Waiting For?” Presentation to the 32st Oil Shale Symposium

Golden, CO, October 15-17, 2012 Jeremy Boak, Director Center for Oil Shale Technology and Research Colorado School of Mines 8 Id.

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It is also important to note that BLM’s analysis does not provide credit for water recovery or reuse. In addition, ignoring well-known and clear technology and industry trends, and despite the fact that such facilities are neither technically or economically attractive for oil shale projects, the analysis includes significant additional water usage needs that are associated with coal-fired rather than natural gas-fueled power plants. With regard to other environmental impacts, successful surface reclamation has already been demonstrated on previous prototype leases, and many companies would be operating beneath saline zones and in areas that are isolated from aquifers. In addition, operators and agencies are already required to address contamination prevention, response for and protection of the waters in the aquifer system where most of the oil shale resources are located. In terms of societal impacts, industry costs, experience and lessons learned – as well as BLM duties and responsibilities – are safeguards that militate against extreme boom/bust cycles and squatting on federal leases.

CONCLUSION Rather than take the steps that are necessary to establish a viable commercial oil shale and oil sands leasing program consistent with the spirit and intent of federal law, as described above BLM has instead arbitrarily pursued a path that lacks a basis in both law and fact that seeks to placate special interests who were parties to a litigation settlement agreement. The decision to take approximately 1.64 million acres off the table for commercial development – leaving the most undesirable and least economically and commercially viable lands open for development – follows a series of actions by Interior Secretary Salazar that have similarly frustrated and contravened the intent of Congress when it comes to development of domestic oil shale and oil sands resources, including reconfiguration of the commercial royalty rates established for the federally mandated oil shale program, and the reduction of the amount of preferred acreage from 5,120 acres to 640 acres in the 2nd leasing round. Unsurprisingly, industry and markets have responded negatively to the Administration’s stewardship of the federal oil shale program. It is worth noting that in the 1st round R, D, & D oil shale leases issued in 2006 and 2007, BLM issued six R, D & D leases to four firms out of 20 applications, while the 2nd round elicited only three R, D, & D lease applications under the terms and stewardship proffered by the Administration. Rather than indicate a lack of interest in oil shale development or suggest that additional lands are not needed, this clearly demonstrates that industry is not willing to invest under such terms and in such an uncertain environment. Taken together, all of these actions contradict the clear policy direction provided in EPAct 2005, which reflects the paramount importance of commercial oil shale development in contributing to a viable, realistic path that meets urgent national energy needs. As noted above, the intent of EPAct 05 was that the Department of Interior shall establish a royalty rate to “encourage development of oil shale and tar sand resources,” “make available”

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public lands to “conduct research and development activities with respect to technologies for the recovery of liquid fuels for oil shale” and “promulgate regulations” establishing “a commercial oil leasing program for oil shale.” By pursuing an effort devoid of credible factual, legal, or policy justifications, BLM has engaged in a pattern of antagonistic actions against the federal oil shale program, culminating with the PEIS and Proposed RMP), which are inconsistent with EPAct 05, NEPA and the APA.

In closing, the API asks the BLM to carefully consider the issues and information presented herein and address them as it renders a decision. Should you have any further questions, please contact me at 202-682-8260 or kennedye@api.org.

Sincerely,

Emily Kennedy Policy Advisor, Upstream

May 4, 2012 Oil Shale and Tar Sands Resources Draft Programmatic EIS Argonne National Laboratory, 9700 South Case Avenue – EVS/240 Argonne, IL 60439 Submitted Online via the Public Comment Forum link at http://ostseis.anl.gov

To Whom It May Concern: The American Petroleum Institute (API) offers the following comments on the Draft Programmatic Environmental Impact Statement and Possible Land Use Plan Amendments for Allocation of Oil Shale and Tar Sands Resources on Lands Administered by the Bureau of Land Management in Colorado, Utah, and Wyoming published by the Department of Interior (DOI) Bureau of Land Management (BLM) in January 2012. The API is a trade association representing over 500 companies involved in all aspects of the oil and natural gas industry, including the development of oil shale and oil sands as a future energy supply in the United States. The API has formed an Oil Shale Subcommittee with the goal of addressing issues associated with oil shale development and educating policy-makers and the public at large on this important domestic energy resource. Our members are greatly interested in leasing and developing oil shale and oil sands resources found on lands managed by the BLM in Colorado, Utah and Wyoming. Oil Shale Subcommittee members, and the oil shale industry as a whole, are committed to delivering technologies and best practices that will allow for the development of oil shale in an environmentally sustainable manner. Intent of the United States Congress in Establishing an Oil Shale Program under EPAct 2005 As we have with previous written comments to the Bureau of Land Management on its management of the federal oil shale program, API would like to reiterate the intent of the United States Congress in establishing a program under the Energy Policy Act of 2005. The U.S. Congress recognized the critical and urgent need for development of domestic energy resources when it enacted the Oil Shale, Tar Sands and Other Strategic Unconventional Fuels Act of 2005, as part of the Energy Policy Act of 2005 (EPAct 2005):

“Congress declares that it is the policy of the United States that…oil shale, tar sands, and other unconventional fuels are strategically important domestic resources that should be developed to reduce the growing dependence of the United States on politically and economically unstable sources of foreign oil imports.” (EPAct §369(b); Public Law 109-58)

EPAct 2005 directed the Department of the Interior to promote commercial development of oil shale

resources by making land available within each of the States of Colorado, Utah and Wyoming for leasing

to conduct Research, Development and Demonstration (R, D, and D) of technologies to recover liquid

fuels from oil shale. The Department of the Interior was charged with the creation of an oil shale and oil

sands research and development leasing program. The Department of Energy, and expressly the Office

of Petroleum Reserves, was directed to create and implement a “commercial strategic fuels

development program”.

With the passage of the Energy Policy Act of 2005, Section 369, the Congress and the President forwarded a clear message to the American people of its intention to evaluate and to develop the massive multi-trillion barrel energy source locked in its domestic unconventional hydrocarbon resources, such as oil shale, oil sands, and coal. Congress reiterated the extreme importance of those resources to the national energy security of the nation, while recognizing that development must be accomplished in an “environmentally sound manner and that development should emphasize sustainability”. The intent of EPAct 2005 was that the Department of Interior shall establish a royalty rate to “encourage development of oil shale and tar sand resources,” “make available” public lands to “conduct research and development activities with respect to technologies for the recovery of liquid fuels from oil shale,” and promulgate regulations establishing “a commercial leasing program for oil shale.” It is API’s assertion that the lawsuit and settlement agreement with several non-governmental organizations is driving current Administration policy toward reconfiguring the federal oil shale program under the 2012 PEIS. It is further our assertion that all policy and regulatory decisions made by the BLM on development of oil shale on federal lands should be made under the context of Section 369 of EPAct 2005. Request for Extension of Comment Period The comments on the January 2012 OSTS Draft Programmatic Environmental Impact Statement (DPEIS) to amend the BLM Resource Management Plans (RMPs) are due May 4, 2012. The current public comment period does not provide sufficient time for API to analyze the Draft PEIS’ 1900 pages of technical analysis, consult its membership, and address the numerous and complex issues which could impact our members. In addition, under the settlement agreement with environmental organizations dated February 15, 2011 concerning the 2008 Final Oil Shale and Tar Sands (OSTS) Programmatic Environmental Impact Statement (PEIS), BLM is required to issue proposed rules to amend the existing oil shale leasing regulations by May 15, 2012. Given the connection between the RMP amendments and the oil shale leasing regulations, API recommends that BLM extend the public comment period on the DPEIS so that the public can fully understand and comment on these closely-related matters. As such, API recommends that BLM extend the DPEIS comment period until July 3, 2012 to allow thoughtful development and submission of comments to the docket.

Background In September 2008, BLM issued a Final Oil Shale and Tar Sands (OSTS) Programmatic Environmental Impact Statement (PEIS) analyzing the environmental and socioeconomic impacts of amending 12 land use plans in Colorado, Utah, and Wyoming to designate public lands administered by the BLM as available for commercial leasing for oil shale or oil sands development. No actual oil shale or oil sands leasing was approved under the 2008 OSTS PEIS as the analysis only identified those BLM lands where oil shale and oil sands lease applications would be accepted and resulted in amendments to the corresponding BLM RMPs. Separate National Environmental Policy Act (NEPA) analyses (including compliance with the Section 7 of the Endangered Species Act) would be required before leasing or site development activities could occur. As such, there are multiple future opportunities for site-specific environmental analyses and project-specific NEPA reviews. The land allocation decisions established by BLM’s 2008 land use plan amendments were challenged in a lawsuit brought by several environmental organizations in January 2009. As part of a settlement agreement entered into by the United States to resolve the lawsuit, the BLM agreed to take another look at the land use allocations resulting from the 2008 OSTS PEIS (now covered under 10 land use plans after some consolidation), and to consider excluding certain lands from future leasing of oil shale and oil sands resources. The settlement mandated that the new NEPA analysis must include a specific alternative that would amend BLM land use plans to restrict the lands available for potential applications for oil shale and oil sands leasing (identified as Alternatives 2a and 2b for oil shale and Alternative 2 for tar sands in the current DPEIS). As a result, BLM is reassessing its 2008 decision that made 1,991,222 acres available for potential development of oil shale and approximately 431,224 acres of public land available for potential development of tar sands. On February 3, 2012, the U.S. Environmental Protection Agency published a Notice of Availability of the BLM OSTS DPEIS regarding possible land use plan amendments affecting oil shale and tar sands allocation on BLM administered lands. Comments regarding the 2012 OSTS DPEIS are due May 4, 2012. The primary differences between the new 2012 OSTS DPEIS and the 2008 OSTS PEIS on this same subject, is that the current document contains several alternatives (Alternative 2 - the Conservation Focus Alternative, and Alternative 3 - the Research Lands Focus Alternative) that would dramatically reduce the acreage of BLM administered land for which applications for oil shale and oil sands leases could be submitted. Alternative 4 (the Moderate Development Alternative) would be similar to that adopted in the 2008 OSTS PEIS land use allocations except that the Adobe Town “Very Rare or Uncommon” area lands (180,910 acres) designated by the Wyoming Environmental Quality Council in 2008 and BLM designated Areas of Critical Environmental Concern (ACEC) identified in the 2008 OSTS PEIS (76,666 acres - and those ACECs recently established by BLM in Wyoming and Utah) would be excluded from oil shale and oil sands leasing. Under Alternative 1, the No Action Alternative, no existing land use plans would be amended. Alternatives 2b and 4b only apply to oil shale but would first require a company to obtain and comply with all of the provisions of a Research Development and Demonstration (RD&D) lease before it could be later converted to a commercial lease. BLM has chosen Alternative 2(b) as the preferred alternative for oil shale, and Alternative 2 as the preferred alternative for oil sands. These alternatives are described more fully below. Alternative 2a is also described below because it informs the agency’s preferred alternatives for oil shale and oil sands.

Alternative 2a: Conservation Focus Alternative, Oil Shale. Under this alternative, 10 land use plans in Colorado, Utah, and Wyoming would be amended to designate less than 830,000 acres (acreage opened under Alternative C in the 2008 OSTS PEIS) as available

for future commercial oil shale leasing. BLM estimates the final area available under Alternative 2a to be 461,965 acres. This alternative would exclude from commercial oil shale leasing the following categories or groups of categories of public lands: 1. All areas that the BLM has identified or may identify as a result of inventories

conducted during this planning process, as lands having wilderness characteristics (LWC);

2. The whole of the Adobe Town “Very Rare or Uncommon” area, as designated by the Wyoming Environment Quality Council on April 10, 2008 (180,910 acres total; 167,517 acres of public land, of which 10,920 acres are already a BLM Wilderness Study Area [WSA]);

3. Core or priority sage-grouse habitat, as defined by such guidance as the BLM or the DOI may issue;

4. All Areas of Critical Environmental Concern (ACECs) located within the areas analyzed in the 2008 OSTS PEIS (76,666 acres in existing ACECs in the 2008 OSTS PEIS plus additional ACEC acreages as a result of Utah and Wyoming planning efforts recently completed); and

5. All areas identified as excluded from commercial oil shale and tar sands leasing in Alternative C of the September 2008 OSTS PEIS (Alternative C made 830,296 acres available for potential commercial oil shale leasing and 229,038 acres available for potential commercial tar sands leasing).

Alternative 2b, RD&D First Requirement, Oil Shale. Under this alternative, the lands open for future oil shale leasing consideration would be the same as those in Alternative 2(a), but only for RD&D leases. The BLM would issue a commercial lease only when a lessee satisfies the conditions of its RD&D lease and the regulations at 43 CFR Subpart 3926 for conversion to a commercial lease. The preference right acreage, if any, which would be included in the converted lease, would be specified in the RD&D lease. Alternative 2, Conservation Focus Alternative, Tar Sands. Under this alternative, six land use plans in Utah would be amended to designate less than 229,000 acres (acreage opened under Alternative C of the 2008 plan amendment) as available for future commercial tar sands leasing. This alternative would exclude from commercial oil shale leasing the same categories or groups of categories of public lands and/or their resource values as listed above under Alternative 2, Oil Shale. The final area proposed for potential leasing under BLM’s tar sands Alternative 2 was estimated as 91,045 acres.

API’s Preferred Alternative API and its member companies strongly support Alternative 1, the No Action Alternative. There is no compelling reason to change BLM’s well researched and thoroughly considered oil shale and oil sands leasing decisions made in 2008. The analysis in the current 2012 OSTS DPEIS does not support the adoption of alternatives other than Alternative 1. API notes that the other alternatives do not fully comply with Congressional intent established in Section 369 of the Energy Policy Act of 2005 to promote the orderly development of oil shale, oil sands, and other unconventional fuels or current U.S. government initiatives to expand domestic oil and gas production. API is strongly opposed to Alternatives 2a and 2b (for oil shale)

Alternative 2 (for oil sands), and Alternative 3 (as applied to both oil shale and oil sands) as they severely restrict the lands available for potential oil shale and oil sands leasing. While inferior to Alternative 1, Alternative 4 (and its various sub-alternatives for oil shale) is acceptable to API as substantial acreage remains available for oil shale leasing applications under this alternative. API Opposes BLM’s Preferred Alternatives. API is strongly opposed to BLM’s selection of Alternative 2b for oil shale and Alternative 2 for oil sands as the preferred alternatives. If adopted, these alternatives would dramatically reduce the amount of land potentially available for oil shale leasing from 2,017,714 (slightly revised from the 2008 OSTS PEIS) to 461,965 acres (22.89% of the original allocation) and the land potentially available for oil sands leasing from 430,686 to 91,045 acres (21.14% of the original allocation). Although not listed as BLM’s preferred alternative, Alternative 3 would also severely limit leasing opportunities to only those areas where there is an existing oil shale RD&D lease signed at the time of the 2012 OSTS Record of Decision is issued (a maximum of 32,640 acres including the Preference Right Lease Areas associated with each RD&D lease). For oil sands, only the pending Asphalt Ridge lease application south of Vernal, Utah covering approximately 2,100 acres is included. If selected, Alternative 3 represents over 98% reduction in area available for potential lease applications and development for oil shale and more than 99.5% reduction in the area now available for potential oil sands lease applications and development (as compared to the existing allocations approved under the 2008 OSTS PEIS ROD). Alternative 4a may be acceptable; however, API is opposed to Alternative 4b. While the same lands would be available for oil shale leasing under Alternatives 4a and 4b, Alternative 4b would require companies to first obtain a Research, Development, and Demonstration (RD&D) lease before the lease could be converted to a commercial lease. API believes this requirement will be an unnecessary, expensive, and time-consuming step in the future as oil shale and oil sands development technology matures. API believes that Alternative 1 (the No Action Alternative) is the right choice for the preferred alternative and believes that the majority of the other alternatives do not comply with the Congressional mandate to promote the responsible development of this important energy resource. The result is greater future dependence on foreign sources of oil and gas and corresponding loss of potential new U.S. jobs and economic activity. API believes that BLM’s severe restriction of potential oil shale and oil sands leasing opportunities in the 2012 OSTS DPEIS alternatives represents an unfortunate lack of planning and poor public policy. API’s Detailed Comments Our review of the document identified a number of areas where we believe further attention to the statements made is worthwhile on the part of BLM’s authors. We have attached one document that contains more detailed comments on the DPEIS. Attachment 1, Comments on the DPEIS for Allocation of Resources, is a table that presents comments that generally reference a specific section or page within the DPEIS. The comments are designed to assist in refining the DPEIS and in several instances describe typographical or other errors noted in the document.

The paragraphs below also provide additional API comments and recommendations on the January 2012 DPEIS. General Comments API is disappointed in the tone and abrupt change in direction from that presented in the original 2008 OSTS PEIS. The current document does not provide credible factual, legal or policy reasons for proposing to amend the ten Resource Management Plans (RMPs) at this time. Rather, BLM offers two reasons for the proposed RMP amendments: (1) the agency committed to revisit the RMPs as part of the 2011 lawsuit settlement agreement with environmental organizations; and (2) new information has come to light that was not available in 2008. A review of the “new information” described in Section 1.1.1. at page 1-5 includes a list of routine developments that combined do not rise to a level requiring that a new NEPA analysis be conducted of the oil shale and oil sands land use plan allocations made in the 2008 OSTS PEIS Record of Decision (ROD), including:

a. A recently completed U.S. Geological Survey (USGS) in-place assessment of oil shale and nahcolite resources in Colorado, Utah, and Wyoming.

b. A March 2010 U.S. Fish and Wildlife Service (USFWS) Notice of Petition Findings, Endangered Wildlife and Plants, 12-Month Findings to List the Greater Sage-Grouse as Threatened or Endangered (75 FR 13910), concluding that while listing was warranted, it was precluded by higher priority listing actions.

c. BLM recently completed updating its inventory of lands having wilderness characteristics (LWC) in each of the three states for the planning area, and the status of several areas originally proposed to be Areas of Critical Environmental Concern (ACECs) in Utah has changed since the preparation of the 2008 OSTS PEIS.

API believes that the “new information” described above represents routine resource management updates and could have been easily accommodated within the context of required lease sale or other project-specific NEPA and Endangered Species Act reviews. In fact, BLM chose not to use the new USGS in place assessment of oil shale and nahcolite resources in Colorado, Utah, and Wyoming to update the boundaries of the 2012 OSTS DPEIS study area (see Section 2.5.1 at page 2-77). The routine nature of the “new information” leads API to the conclusion that the only reason the 2008 OSTS PEIS is being reconsidered now is to accommodate the 2011 settlement with environmental organizations that included the reassessment as a component of the settlement. API notes that BLM’s publication of the 2012 OSTS DPEIS constitutes an abrupt change in direction on the entire federal oil shale and oil sands leasing program in the face of a routine legal challenge from special interest groups. This is disappointing because the U.S. oil shale and oil sands industry needs consistency in federal policy and regulation to provide the confidence needed to make continued investments in technology and demonstration projects. The industry was hopeful that Section 369 of the Energy Policy Act of 2005 would provide federal agencies with the clear intent of Congress to support the responsible development of oil shale and oil sand resources and technology. The new 2012 OSTS DPEIS represents a significant step backwards in this regard. API believes that BLM’s efforts to reexamine the existing RMPs as part of a settlement agreement does not provide an independent basis to amend the RMPs absent some other reasoned decision making. While BLM has the discretion to reopen both the RMPs and the oil shale leasing rules, it should not do so based on arbitrary reasons. Moreover, it cannot violate Congressional intent to encourage research and development of oil shale and oil sands resources located on public lands.

The Document Improperly Abandons/Ignores the Convincing Analysis in the 2008 OSTS PEIS The 2008 OSTS PEIS and subsequent ROD were well researched and written, and compliant with NEPA and other applicable laws and regulations. API believes that the ROD for the 2008 OSTS PEIS reached logical and appropriate conclusions regarding land use plan amendments for allocation of oil shale and oil sands resources on lands administered by BLM. Under the ROD approving the 2008 OSTS PEIS and land use plan amendments, eight land use plans were amended to designate 1,991,222 acres as available for application for commercial oil shale leasing. Specifically, the lands that were available for application include all lands within the most geologically prospective oil shale areas that are BLM-administered public lands. The rational for this decision (Alternative B in the 2008 OSTS PEIS) is extremely instructive in the current case and API recommends that BLM carefully review their prior conclusions in this matter to inform the current analysis. This important discussion in the 2008 OSTS PEIS ROD is repeated below for emphasis:

BLM’s 2008 OSTS PEIS ROD beginning at Page 16. “Alternative B for oil shale was selected as the Proposed Plan Amendment based on: 1) its consistency with the requirements of the Energy Policy Act of 2005, 2) its balanced use and protection of resources, 3) the FPEIS’s analysis of potential environmental impacts, and 4) the comments and recommendations from cooperating agencies and the public. Alternative B is structured to be consistent with the congressional mandate of the Energy Policy Act to emphasize the “most geologically prospective lands in Colorado, Utah and Wyoming” as available for application for leasing. Alternative B, therefore, identifies and offers the most geologically prospective acreage (based on grade and thickness of the oil shale deposits) of the Green River Formation located in the Piceance, Uinta, Green River, and Washakie Basins of Colorado, Utah, and Wyoming. As compared with Alternative C, Alternative B makes more Federal oil shale available for application, and provides for fewer fragmented tracts. Alternative B also provides for more contiguous tracts that could be configured for economically and technically feasible extraction or recovery of the resources. Alternative B would also allow access to more of the most geologically prospective oil shale lands, particularly in Colorado. Unlike Alternative C, which excludes lands based on existing management decisions for oil and gas development, Alternative B provides the decisionmaker with the discretion to balance the oil shale use and protection of resources on the public lands during subsequent site-specific NEPA analysis (emphasis added). This balanced approach is consistent with FLPMA (Federal Land Policy Management Act) principles of “multiple use,” and “sustained yield.” The requirement to perform future NEPA analyses and to comply with other environmental laws allows the decisionmaker to optimize the recovery of energy resources, to establish appropriate lease stipulations to mitigate anticipated impacts, or to fully protect a resource or resource value by choosing not to offer an area for lease at any particular time. Even if some technologies may not allow mining of some tracts to proceed without unacceptable impacts to other resource values, Alternative B would allow the agency the opportunity to choose to offer leases when a technology is proposed that can be used compatibly with the resource values in question. This is consistent with the comments that supported a viable and sustainable commercial oil shale leasing program, while ensuring that any impacts to

sensitive resources or resource values are mitigated to any commercial development (emphasis added). It is also consistent with the planning decisions for other mineral resources for these parcels which authorize leasing subject to restrictive conditions, rather than preclude leasing altogether. Alternative B does, however, exclude certain lands within the most geologically prospective oil shale areas under the basis of existing laws and regulations, executive orders and other administrative designations or withdrawal. These include WSAs, National Monuments, WSRs, NCAs, and existing ACECs that are closed to mineral development.”

BLM used similar language in the 2008 OSTS PEIS ROD at page 31 regarding the selection of Alternative B for oil sands development by amending four land use plans to designate a total of 431,224 acres available for application for commercial oil sands leasing. The key drivers for selection that BLM identified were compliance with the Energy Policy Act of 2005, a balanced use of natural resources, maintaining decisionmaker discretion, and maintaining the proper role of subsequent NEPA analysis in the decisionmaking process. It is also instructive to review the logic BLM used in not selecting Alternative C in the 2008 OSTS PEIS ROD (which would have significantly reduced the lands available for potential leasing and development of oil shale and oil sands resources). In describing their logic for not selecting Alternative C regarding oil shale, BLM concluded the following:

BLM’s 2008 OSTS PEIS ROD beginning at Page 22. “Alternative C was not selected as the Proposed Plan Amendment because the alternative would not make the “most geologically prospective lands in Colorado, Utah and Wyoming” as available for application for leasing. Thus it is not fully consistent with the mandate of the Energy Policy Act of 2005. Much of the most geologically prospective acreage would be excluded under Alternative C; in particular areas which are in close proximity to three of the six RD&D leases would be excluded. In addition, this unreasonably fragments the area that would be available for application, resulting in parcels that are unlikely to be explored, leased, or developed. This could be an impediment to sound and rational development of the resource and can reduce the economic return to the public. If oil shale resources are by-passed because of the exclusions in Alternative C, that could also limit the benefits to the nation from exploitation of a domestic unconventional energy source. Selection of alternative C precipitously limits or restricts the decisionmaker’s discretion to balance oil shale use and the protection of resources or resource values, in accordance with FLPMA’s principal of “multiple use.” “

All of the iterations of Alternatives 2 and 3 of the 2012 OSTS DPEIS make significantly less acreage available for potential for oil shale and oil sands leasing than was offered under Alternative C of the 2008 OSTS PEIS. API can only assume that BLM’s well considered analysis from 2008 would apply equally to current Alternatives 2a and 2b for oil shale and Alternatives 2 and 3 for oil sands. API strongly supports the sound logic and balanced approach taken by BLM in the Record of Decision on the 2008 OSTS PEIS. In view of the above, API strongly encourages BLM to reconsider their “preferred alternatives” of 2b for oil shale and Alternative 2 for oil sands.

The Document Fails to Meet the Intent of the Energy Policy Act of 2005 In August 2005, the U.S. Congress enacted the Energy Policy Act of 2005, Public Law (P.L.) 109-58. In Section 369 of this Act, also known as the “Oil Shale, Tar Sands, and Other Strategic Unconventional Fuels Act of 2005,” Congress declared that oil shale and oil sands (and other unconventional fuels) are strategically important domestic energy resources that should be developed to reduce the Nation’s growing dependence on oil from politically and economically unstable foreign sources. To support this declaration of policy, Congress directed the Secretary of the Interior (the Secretary) to undertake a series of steps, several of which are directly related to the development of a commercial leasing program for oil shale and oil sands.

Compliance with Section 369 of the Energy Policy Act of 2005 is mandatory for Federal agencies, including BLM. The preferred alternatives (Alternative 2b for oil shale and Alternative 2 for oil sands) substantially reduce the acreage of lands potentially available for oil shale and oil sands leasing, but BLM does not explain in the 2012 OSTS DPEIS how the RMP amendments (particularly Alternatives 2a, 2b, and 3) are consistent with Section 369 of the Energy Policy Act of 2005, which encourages commercial leasing of oil shale and oil sands. Moreover, the proposed RMP amendments and upcoming revisions to the oil shale leasing regulations have effectively eliminated the regulatory certainty Congress intended to establish to encourage oil shale and oil sands investment. In the 2012 OSTS DPEIS, BLM and DOI appear to be using agency policy decisions to obstruct existing Federal Law. In selecting Alternative 2(b), BLM says the only path to potential commercial oil shale production is through the RD&D Program. However, the Energy Policy Act of 2005 specifically mandated that BLM establish a competitive commercial leasing program that is separate and distinct from the RD&D program. The Document Fails to Support Executive Branch Efforts to Expand U.S, Domestic Energy Production Speaking at the Cushing Pipe Yard in Cushing Oklahoma on March 22, 2012, President Obama clearly articulated the Administration’s position on U.S. energy policy. The President described an “all-of-the-above” energy strategy to “keep us on track to further reduce our dependence on foreign oil, put more people back to work, and ultimately curb the spike in gas prices that we are seeing year after year after year”. President Obama went on to say “so yes we’re going to keep on drilling. Yes we’re going to keep on emphasizing production. Yes we’re going to make sure we can get the oil to where it is needed.” The President noted that renewable energy, new clean energy sources, and improving energy efficiency were also part of the “all-of-the-above” strategy. The President observed that “We want every source of American made energy. I don’t want the energy jobs of tomorrow going to other countries. I want them here in the United States of America. And that’s what an all-of-the-above strategy is all about. That’s how we break our dependence on foreign oil.” The President’s message was clear.

Nearly seven years since the passage of the Energy Policy Act, global oil demand has increased, markets have become tighter, and instability in the Middle East and Africa have caused prices to jump markedly, almost doubling, to close to $110 a barrel, which only underscores our country’s alarming dependence on foreign oil supplies. These recent events and continued political instability in the Middle East underscore the critical importance of domestic oil shale and oil sands resources to our national security and strategic interests. The clear policy direction as provided in EPAct 2005 indicates the paramount importance of oil shale development to meet urgent national energy needs. BLM’s 2012 OSTS DPEIS fails to supports the President’s “all-of-the-above” energy strategy to encourage domestic energy production from significant oil shale and oil sands deposits. Estimates for the oil shale resource in Colorado, Utah, and Wyoming are placed at between 1.2 and 1.8 trillion barrels of oil

equivalent of resource in the ground with as much as 500 billion to 1.1 trillion barrels of oil that is considered potentially recoverable. It is with a sense of incredulity that with a gallon of gasoline surging to above $4 in many parts of the country, we are urging an agency of the Obama Administration to keep American energy supplies on the table for development. As agencies of the Executive Branch, DOI and BLM are obligated to actively support and assist in implementing the President’s energy strategy. Such support is more likely to resemble the alternatives selected in the Record of Decision (ROD) for the 2008 OSTS PEIS than BLM’s preferred alternatives presented in the 2012 OSTS DPEIS. In fact, supporting the President’s policies requires that BLM abandon the agency’s current Preferred Alternatives 2b (for oil shale) and 2 (for oil sands) in favor of Alternative 1 (the No Action Alternative). The Purpose and Need of the DPEIS is Defective and Fails to Comply with the Intent of NEPA The 2012 OSTS DPEIS is biased in that it describes the probable outcome of the NEPA analysis within the purpose and need Statement. Page 1-4 of the DPEIS reads as follows:

“As noted above, the BLM has decided to reconsider the 2008 allocations. The purpose and need for this proposed planning action is to reassess the appropriate mix of allowable uses with respect to oil shale and tar sands leasing and potential development. Specifically, the BLM will consider amending the applicable RMPs to specify whether any areas in Colorado, Utah, and Wyoming currently open for application for future leasing and development of oil shale or tar sands should not be available for such application for leasing and development (emphasis added).”

This purpose and need statement portends the outcome of this supposedly unbiased NEPA analysis by stating that the document will only consider removing lands from those areas currently approved to receive oil shale and oil sands lease applications. There is no consideration of expanding the currently available oil shale and oil sands leasing areas even in the face of potential domestic energy shortages or the recent spike in U.S. gasoline prices. The expected outcome of the analysis is quickly confirmed in Section 2.4.4 at page 2-76 where BLM identifies Alternative 2b (for oil shale) and Alternative 2 (for oil sands) as the agency’s preferred alternatives. Both of these alternatives severely contract the public lands available for receiving applications for oil shale and oil sands leasing and possible future development. In stark contrast to the predetermined outcome identified in the purpose and need of the 2012 OSTS DPEIS, the 2008 OSTS PEIS identifies the purpose and need of the NEPA document “to meet the requirements of the Energy Policy Act of 2005”. This is a vastly superior NEPA approach because it does not drive the analysis to a predetermined outcome. The NEPA analysis contained in the current document has been structured so that it inappropriately bends to meet the requirements of the 2011 settlement agreement rather than representing a fresh look at the issues. API recommends that the purpose and need statement be rewritten to be more neutral or should adopt the original purpose and need statement from the 2008 OSTS PEIS.

The 2012 OSTS DPEIS Fails to Follow the Prescribed “Multi-Step” NEPA Process The 2012 OSTS DPEIS clearly states that the document is the first step in a multi-step NEPA process. This first step considers potential impacts associated with amending 10 BLM Resource Management Plans

(RMPs) to identify appropriate lands for receiving applications for oil shale and oil sands leases and future development. The 2012 OSTS DPEIS notes in multiple places that subsequent site-specific NEPA analyses will be required for issuing RD&D leases and for those cases where a RD&D lease is converted into a commercial lease (e.g. 2012 OSTS DPEIS at Section 1.1.1 page 1-6 lines 8-23 and Section 1.4.1 page 1-17 lines 32-38). As such there will be multiple opportunities for public review and site-specific analyses of proposed oil shale and oil sands leases and development. Alternatives 2a, 2b, and 3 in the 2102 OSTS DPEIS fail to properly account for and utilize these subsequent NEPA reviews because they prematurely remove large areas of potential oil shale and oil sands leasing without allowing proper site-specific environmental reviews.

These alternatives fail to properly acknowledge the multi-step NEPA review process that follows inclusion of BLM lands in agency land use plans as available for consideration of oil shale and oil sands lease applications. This top-down resource management approach relegates the local or regional BLM land manager to that of an observer rather than a participant in resource management decisionmaking. This local resource “management from Washington DC” approach could have the unintended consequence of restricting important domestic energy development opportunities without receiving the input of commercial energy interests, workers, local land managers, other government agencies, special interest groups, and the affected public. Furthermore, Alternatives 2a, 2b, and 3 in the 2102 OSTS DPEIS do not provide for the necessary fine scale (site-specific) environmental reviews that can effectively reconcile necessary resource protections with ongoing needs for developing additional domestic energy resources. The restrictive “policy level” edicts contained in Alternatives 2 and 3 of the 2012 OSTS DPEIS are not appropriate for this high-level NEPA screening phase of the process because they may inappropriately preclude important energy development by not allowing the needed lease specific NEPA review to occur.

Alternatives 2 and 3 of the 2012 OSTS DPEIS Inappropriately Restrict the Role of Local/Regional BLM Land Managers In addition to shortcutting the NEPA process, the 2012 OSTS DPEIS inappropriately restricts the authority of the Federal Land Manager by identifying a host of criteria that would automatically withdraw BLM administered lands from potential leasing for oil shale and oil sands development. In comparison, the 2008 OSTS PEIS ROD describes a process that includes more acreage for potential applications for oil shale and oil sands leases and properly engages local and regional BLM land managers in the resource allocation and management decisionmaking process. Each potential application would be subject to a lease sale NEPA review and a project specific NEPA review. This approach provides the decisionmaker with the discretion to balance the oil shale and oil sands use and protection of resources on the public lands during subsequent site-specific NEPA analysis. These NEPA reviews are the appropriate administrative venue for considering site-specific environmental issues such as ACEC designations or the specific protections needed for threatened and endangered species (or candidate species such as the greater sage-grouse) under Section 7 of the Endangered Species Act. It is inappropriate to remove this site-specific resource management responsibility from BLM land managers.

In discussing the logic for not selecting Alternative C (which would have significantly limited the acreage of lands available for receiving oil shale and oil sands lease applications) contained in the 2008 OSTS PEIS, BLM clearly articulated their thoughts on this matter as shown below:

BLM’s 2008 OSTS PEIS ROD beginning at Page 22. “Selection of alternative C precipitously limits or restricts the decisionmaker’s discretion to balance oil shale use and the protection of resources or resource values, in accordance

with FLPMA’s principal of “multiple use.” Although as presently being researched, in situ oil shale extraction would have many impacts similar to those of oil and gas development, exclusion of areas based on existing management prescriptions (e.g., no surface disturbance or seasonal limitation that are in place for oil and gas leasing) unnecessarily speculates upon the nature and degree of impacts that would be caused by future oil shale development. It would be premature to eliminate areas prior to site-specific analysis based on factors that are not known now, but that would be known at the leasing or operation permitting stages, such as location, timing and type of oil shale technology, that may show that these resources could be adequately protected through mitigation.”

API agrees with the resource management approach and convincing logic articulated by BLM on the topic of oil shale and oil sands leasing in the 2008 OSTS PEIS ROD. API suggests that the authors of the 2012 OSTS DPEIS review the current document and make necessary adjustments to restore the proper balance of potential oil shale and oil sands use and the protection of resources or resource values. In making these adjustments, API recommends that the proper role of site and project-specific environmental reviews and federal land manager discretion be emphasized.

Conservation Focus Alternative 2a and 2b for Oil Shale and Alternative 2 for Oil Sands are Defective and Do Not Comply with NEPA NEPA requires that agency alternatives be well defined so that both agency decisionmakers and the general public can understand the reasonably foreseeable impacts associated with each alternative. As currently constructed, Alternatives 2a and 2b for oil shale and Alternative 2 for oil sands do not meet that requirement. This is particularly true with the component of Alternative 2a and 2b (oil shale) and Alternative 2 (oil sands) that states that “core or priority sage-grouse habitat, as defined by such guidance as the BLM or the DOI may issue” would be excluded from the lands available for potential leasing applications. These alternatives also include a similar non-specific statement excluding areas from oil shale and oil sands leasing that the BLM has identified or may identify as a result of inventories conducted during this planning process, as lands having wilderness characteristics (LWC). The lack of clarity regarding the current restrictions posed by Alternatives 2a and 2b for oil shale and Alternative 2 for oil sands, combined with the open-ended nature of what constitutes “core or priority sage-grouse habitat” and the unknown future requirements of the “guidance as BLM or the DOI may issue”, make it virtually impossible for oil shale and oil sands interests to either identify the excluded lands or understand any associated restrictions. API contends that this lack of clarity as to the specifics of these alternatives makes them defective from a NEPA process perspective and potentially from a legal perspective, as well.

The Sage-Grouse Related Restrictions are Premature and there are Other, Less-Onerous, Methods of Achieving Sage Grouse Protection API believes that withdrawing lands from potential oil shale and oil sands leasing due to sage-grouse habitat protection is premature given that no specific federal regulatory or administrative actions have occurred with respect to managing core or priority sage-grouse habitat. As a result, these alternatives are vague and poorly defined making it difficult for interested parties to accurately identify the lands that are being withdrawn from potential leasing. API strongly objects to the provisions of Alternatives 2a and 2b for oil shale and Alternative 2 for oil sands that would result in the wholesale exclusion of core or priority sage-grouse habitat from future lease sale applications and believes that greater sage-grouse protection and management can be effectively achieved without the use of such draconian measures.

Wholesale removal of hundreds of thousands of acres of potential energy resources from possible future leasing based on the limited analysis contained in the OSTS DPEIS is clearly inappropriate.

API believes that the potential leasing acreage being eliminated, at least at the PEIS stage, as a result of the greater sage-grouse is unnecessary and is not supported by the analysis contained in the DPEIS. The current programmatic document is not the appropriate stage in the NEPA process to make these site-specific determinations. API supports further detailed analysis of potential greater sage-grouse impacts and site-specific mitigation measures in future lease sale or project-specific NEPA documents where the scale of the evaluation is finer and additional (and site-specific) greater sage-grouse data is available. In addition, the use of suggested management practices may make it possible to site future oil shale and oil sands projects without causing unacceptable impacts to the greater sage-grouse. API believes that there are compatible opportunities to further develop oil shale and oil sands energy resources while simultaneously protecting the greater sage-grouse. As such, API believes that coarse scale greater sage-grouse habitat mapping should not be used to automatically eliminate large areas of important energy resources from future consideration. API points to the large text box at Section 4.8.1 beginning at page 4-124 of the 2012 OSTS DPEIS that describes greater sage-grouse habits and habitats and identifies a number of measures and suggested management practices that can be used to reduce or eliminate harm to the greater sage-grouse. API and our member companies recognize that implementing some of these management practices could result in specific areas being excluded from potential oil shale and oil sands leasing and development. Nonetheless, we believe that the site-specific approach for greater sage-grouse management described in Alternatives 1 and 4 for oil shale and oil sands is superior to the inappropriate and restrictive approaches included in the various iterations of Alternatives 2 and 3.

Alternative 2b and 4b for Oil Shale Could Result in Unnecessary Project Delays API is opposed to Alternative 2b. While the same lands would be available for oil shale leasing under Alternatives 2a and 2b, Alternative 2b would require companies to first obtain a Research, Development, and Demonstration (RD&D) lease before the lease could be converted to a commercial lease. API believes this requirement will be an unnecessary, expensive, and time-consuming step in the future as oil shale and oil sands development technology matures. API also believes that RD&D leases as the current sole lease interest is contrary to the EPAct 2005 direction to implement a commercial leasing program. Alternative 2b is predicated on the inappropriate conclusion that oil shale energy projects will operate indefinitely in a research and development mode. Once technically sound and environmentally acceptable technologies have been developed under the current RD&D program, there is no reason to require all future commercial oil shale lease applications using the same technology to repeat the cumbersome RD&D process. While BLM could amend appropriate RMPs in the future to allow direct commercial applications using proven oil shale technology, the amendment process is time consuming and will result in significant project delays. The same unnecessary project delays described above for oil shale Alternative 2b would also apply to Alternative 4b. Water Use Estimates in the 2012 OSTS DPEIS do not Reflect Current Patterns and Result in Unrealistically High Water Use Estimates Although some uncertainty remains regarding the potential water use from various oil shale development technologies, API notes that the 2012 OSTS DPEIS has assumed a worst case scenario. The analysis does not provide any credit for water recovery from oil shale processing or reuse of water from other local mineral extraction industries (water used or recovered for local oil and gas operations). The

analysis also includes significant additional water use associated with coal-fired power production that it assumes will be built to support the oil shale industry. Even with these worst-case scenario assumptions, the document concludes that there is sufficient water currently available to support a robust oil shale industry and also serve other needs for the foreseeable future.

The 2012 OSTS DPEIS evaluates potential impacts using the assumption that any additional power needed to operate RD&D or commercial oil shale projects would be provided by expanding or building new coal-fired power plants (Section 4.1.6 at page 4-13). BLM advises that they made this assumption to avoid the possibility of underestimating potential impacts. API believes that this assumption is inappropriate and does not reflect the ongoing changes to the power production marketplace in Colorado, Wyoming, and Utah resulting from the rapid expansion of natural gas production in this region. There are multiple examples of power plants switching to burning natural gas in this region with resulting decreases in both air emissions and water use as compared to coal-fired power plants of equivalent capacity (see for instance the April 12, 2012 article in the Wyofile online news service regarding a Wyoming power plant making plans to switch from coal to natural gas fired generation at an existing facility at http://wyofile.com/2012/04/utility-wants-to-convert-wyoming-coal-unit-to-natural-gas/). API urges BLM to review the trends in natural gas power plant construction (and switching) in the region and revise the water use section of the 2012 OSTS DPEIS to make a more realistic estimate of potential water use in oil shale operations. The current pessimistic water use assumptions are not supported by the facts on the ground. While the NEPA process supports an impact analysis that is conservative, it does not require one that is unrealistic.

In any event, API notes that water rights are unique in these western states and that potential oil shale projects would have to acquire these rights in the state and local water marketplace like other current and future water users. There is every indication that necessary water rights will be available to support a robust oil shale industry in Colorado, Utah, and Wyoming. The input from our members strongly suggests that an objective examination of available technologies and costs would conclude that responsible, low-impact, and sustainable water usage is both technically and economically feasible for an oil shale industry producing one to two million barrels per day.

The member companies of the API Oil Shale Subcommittee are committing significant capital and research toward developing technologies and processes to reduce energy usage in their projects while protecting ground and surface water resources. Many of these same firms are collaborating under BLM’s RD&D leasing program, under which the developer has to successfully verify to the BLM that its technology is viable, environmentally acceptable, and sustainable before commercial scale implementation. Regardless of location, each company pursuing oil shale operations will have to validate the environmental and economic viability of its project. API also notes that water use requirements will be evaluated at a finer scale in subsequent NEPA reviews where potential impacts can be assessed on a site and project-specific basis. These future detailed reviews will provide project, technology, and site-specific information on water use to BLM decisionmakers. Additional Note on the Political Nature of BLM Decision-making and Global Commercial Development As stated previously, BLM has failed to make a compelling technical or legal case for reconfiguring the 2008 OSTS PEIS. As we seek an intellectually honest rationale for the BLM’s arbitrary reconfiguration of the 2008 OSTS PEIS, we have examined BLM’s recent statements on the economic case for oil shale development.

BLM has repeatedly pointed to the economic viability of oil shale development (or rather its presumed lack of viability) as a factor in its decision making process.1 As we have stated previously, we are hard-pressed to understand the connection between the viability of commercial oil shale technologies and whether certain lands should be made available for oil shale development in the future and believe they

are entirely separate issues. This is a technologically intensive industry and as with other high-tech industries, development takes time. Progression towards development of U.S. oil shale resources also requires a strong, positive, partnership between industry, financial markets and the federal government. Industry and capital investment have responded negatively to the uncertain terms, uncertain regulation, and policies under this Administration’s stewardship of the federal oil shale program. However, since BLM has chosen to include it as a factor in its decision making process, we would like to provide for BLM more insight into commercial oil shale development globally. It is a fact that several technologies have been developed around the world and that oil shale has been produced on a commercially viable basis for decades outside of the United States. A close examination of activities, technologies, and government policies that have been set into motion elsewhere in the world indicate that, where government policies promote rather than prohibit commercial-scale oil shale development, existing technologies are already in place that can successfully process oil shale resources in a manner that complies with strict environmental standards. From Estonia, where commercial-scale oil shale development has taken place for decades, to Jordan, where foreign companies have made recent and significant investments toward the eventual development of oil shale, governments have instituted policies that recognize and promote the value and significance of this natural resource in terms of its benefits to their economic, energy, and national security. More recently, renewed interest in this resource has been sparked in Israel, where oil shale deposits could yield billions of barrels of domestic oil. The cases provided below demonstrate that the U.S. might well follow examples set by these governments in other parts of the world.

Estonia The Estonian government’s National Development Plan for the Utilization of Oil Shale2 sets forth the strategy for developing oil shale in the country from 2008-2015. Approved by the Estonian parliament in October 2008, the Plan is based on securing a stable supply of oil shale energy and energy independence, as well as achieving increased efficiencies in and reduced environmental impacts of oil shale mining and use. The plan notes the energy security and economic benefits of the country’s oil shale resource, while also seeking to diversify its energy portfolio by immediately establishing an annual upper limit of 20 million tons of oil shale mining capacity and a 15 million ton upper limit by 2015. To mitigate environmental impacts associated with oil shale mining and use, the

1 In its February 3, 2012 announcement of the DPEIS, BLM justified its preferred alternative selection by stating that “*t+o date, technological and economic conditions have not combined to support a sustained commercial oil shale industry in the United States,…” and in its April 14, 2011 “Notice of Intent to Prepare a Programmatic Environmental Impact Statement (PEIS) and Possible Land Use Plan Amendments for Allocation of Oil Shale,” BLM stated as its rationale that “*a+s there are not economically viable ways yet known to extract and process oil shale for commercial purposes, the BLM, through its planning process, intends to take a hard look at whether it is appropriate for approximately 2,000,000 acres to remain available for potential development of oil shale, and approximately 431,224 acres of public land to remain available for potential development of tar sands." 2 See National Development Plan for the Utilization of Oil Shale 2008-2015, Ministry of the Environment of the Republic of Estonia, Tallinn 2008, available at http://www.envir.ee/orb.aw/class=file/action=preview/id=1155858/P%F5levkivi_arengukava_+EN.pdf; and Ministry of the Environment, News, “Riigikogu approves development plan for use of oil shale,” available at http://www.envir.ee/1082834.

plan calls for the implementation of modern technologies, acceleration of the recycling of residues, and instituting new environmental charge rates for the use of oil shale and related groundwater needs. Today, the Estonian energy company Eesti uses two Enefit-140 units at its Estonian oil plant to process oil shale in the country. Enefit-140 uses solid heat carrier technology to produce liquid fuel and retort gas. The patented technology relies on a three-part process comprised of the following stages: drying, thermal decomposition, and combustion. The plant’s two units can process up to 140 tonnes of oil shale per hour and annually produce up to 240,000 tonnes of liquid fuel (1.5 million barrels) and 60 million Nm3 of retort gas, which can be used to produce hydrogen and power. In recent years, annual production levels have increased to 1 million barrels of liquid fuels and 40 millions Nm3 of retort gas. Improvements to the units’ design have increased their online time from about forty-five percent to nearly eighty percent, exceeding the plant’s planned capacity of seventy-five percent. In terms of the impact of this process on the environment, this oil shale production does not require the use of water, and only about one percent of the production waste is comprised of total organic compounds. In addition, carbon dioxide emissions from liquid fuel production are notably less than the emissions emanating from the generation of electricity from oil shale, since most of the carbon remains in the liquid fuel. In spite of production volume increases, technological advances have enabled Eesti to reduce the amount of pollution discharged from the production of liquid fuels. These developments are not being conducted without any environmental scrutiny. Oil shale activities in Estonia are subject to fifty-five international conventions and agreements that contain environmental restrictions. Included among them are the U.N. Convention on Biological Diversity and European Commission Directives 79/409/EEC pertaining to the conservation of wild birds, 92/43/EEC relating to conservation of natural habitats and wild fauna and flora. These provisions require the protection of endangered species and their habitats, with protected areas that restrict geological and mining activity.

Jordan The Government of Jordan has estimated that the country is home to between 50 and 70 billion metric tonnes of identified oil shale reserves, ranking third in the world. Studies conducted since the 1960’s indicate that oil shale deposits are located in more than 60% of the country. While it has traditionally relied on imported energy to meet most of its needs, Jordan’s National Energy Strategy for 2007-2020 is focused in part on achieving greater energy independence by increasing the country’s use of domestic energy resources, including oil shale. In order to raise the portion of domestic energy resources from 4% in 2008 to 25% in 2015 and 39% in 2020, the country aims to raise oil shale’s contribution to the nation’s energy portfolio to 11% in 2015 and 14% in 2020. This would require an estimated $1.4 to $3.8 billion in investments in oil shale exploration. At the same time, the Jordanian government has embarked on a comprehensive mission to craft a regulatory environment that ensures responsible development of the country’s oil shale resources. Oil shale projects must comply with a variety of rules and standards, including World Bank/International Finance Corporation guidelines, Equator Principles, reasonable and prudent operator standards, and emission limits, which are included in concession agreements. While commercial-scale oil shale production in Jordan has not yet taken place, international companies are devoting significant resources toward achieving that reality.

For example, following a formal agreement reached with the Jordanian government in 2009, the Jordan Oil Shale Company (JOSCo), a wholly-owned subsidiary of Royal Dutch Shell (Shell), registered as a company in Jordan to explore the potential for commercial development of oil shale resources in the country using proprietary In situ Conversion Process (ICP) technology. The area to be assessed is located on 22,250 km² of land on three tracts in the central, southern, and northwestern parts of Jordan. Shell’s ICP technology, which is currently under development but has been the subject of research and testing since the early 1980’s, does not rely on incineration or mining and surface retort techniques to produce energy from oil shale. Rather, ICP uses underground heaters to raise the temperature of the oil shale in place to remove the kerogen and hydrocarbon gas below ground, and then relies on conventional methods of extraction to produce the resources. As a result, the waste that is generated during the separation process remains underground. Additional benefits of ICP technology include the capacity to access oil shale resources without mining, its ability to produce higher quality crude oil and larger quantities of oil and gas more efficiently, requiring a smaller surface area than other production techniques.

Israel According to the Israeli government, oil shale deposits are present in 15% of the country,3 and one assessment estimates that the total amount of oil shale in place in Israel to be close to 250 billion barrels. In turn, public policies have sought to promote investment in the development of these resources. For example, the Ministry of Energy and Water Resources’ Energy Research and Development Department has sought to promote technologies that can turn oil shale into an energy resource to provide an antidote to “excessive fuel price increase or supply difficulties.”4 In addition, the Ministry’s Earth Science Research Administration seeks in part to maintain the scientific infrastructure for oil shale.5 Israel Energy Initiatives Ltd (IEI), a subsidiary of U.S.-based Genie Energy, has been working to develop a means to produce clean transportation fuels from oil shale using In-Situ conversion technology.6 In 2008, IEI obtained an exclusive exploration and production license from the Israeli government in an area covering 70,000 acres with an estimated 40 billion barrels of oil.7 This area is located within Israel’s Shfela basin, which has been estimated to hold approximately 150 billion barrels of oil.8 IEI’s Chief

3 See Reuters, “Oil shale may help energy independence,” May 8, 2011, available at http://www.ynetnews.com/articles/0,7340,L-4061436,00.html. 4 See Ministry of Energy and Water Resources, Energy Research and Development Department, available at http://energy.gov.il/English/Subjects/RAndDChiefScientist/Pages/GxmsMniEnergyResearchAndDevelopmentDepartment.aspx. 5 See Israel Ministry of Foreign Affairs, Ministry of National Infrastructures, available at http://www.mfa.gov.il/MFA/MFAArchive/2000_2009/2002/10/Ministry+of+National+Infrastructures.htm#energy. 6 See IEI, About Us, available at http://www.iei-energy.com/aboutus.php. 7 See IEI, About Us, available at http://www.iei-energy.com/aboutus.php; IEI, Home Page, available at http://d129998.u26.alsonetworks.com/index.php; and IEI, Oil Shale – Our National Treasure, available at http://d129998.u26.alsonetworks.com/shale_oil-natural_treasure.php. 8 See IEI, What is Oil Shale?, available at http://d129998.u26.alsonetworks.com/what_is_oil_share.php.

Executive Officer has stated that successful production in the license area could yield 50,000 barrels of oil per day (20% of Israel’s consumption rate) for thirty years. In sum, as other countries as well as the United States seek to become more energy self-sufficient and chart courses to greater economic and national security, the game-changing impacts associated with commercial development of oil shale resources is spurring governments to take actions that will help turn potential benefits into reality. In such cases, businesses are responding by making investment decisions and applying proven technologies to oil shale development in a manner that could significantly meet the growing energy demands of citizens around the globe. With the passage of time, oil shale production technologies that have developed and advanced over time will continue to evolve and achieve even greater efficiencies and improvements. How this vast resource is developed in the United States remains uncertain. U.S. Federal actions that create obstacles or uncertainty about the potential for commercial-scale development will surely be a limiting factor. During this period of unprecedented economic and geopolitical uncertainty, the examples seen in Estonia, Jordan, and now Israel should serve as a wake-up call to action for decision-makers in the United States and countries around the world who have an interest in achieving greater energy independence. Conclusion For the reasons discussed above and further outlined in Attachment 1, API strongly urges BLM to adopt Alternative 1, the No Action Alternative. The 2012 OSTS DPEIS provides no convincing logic for changing the thoughtful conclusions BLM reach in the ROD for the 2008 OSTS PEIS. Accordingly, API recommends that current (2008) BLM land use plan allocations for oil shale and oil sands leasing be retained as written and not amended. In closing, the API appreciates the opportunity to comment on the Draft Programmatic Environmental Impact Statement and Possible Land Use Plan Amendments for Allocation of Oil Shale and Tar Sands Resources on Lands Administered by the Bureau of Land Management in Colorado, Utah, and Wyoming and asks the Bureau of Land Management to carefully consider our comments and address them as it finalizes the OSTS PEIS document. Should you have any further questions, please contact me at 202-682-8260 or kennedye@api.org.

Sincerely,

Emily Kennedy Policy Advisor

American Petroleum Institute

Comments on the DPEIS for the Oil Shale and Tar Sands – Allocation of Resources

API Letter to BLM on OSTS DPEIS

Attachment 1 PAGE __1__ OF __5__

No.

PDEIS Section No.

Page No.

Line No.

COMMENT

1 1 General The large document has incorporated much of the information from the 2006-2008 EIS effort and

does reflect updating data in some sections. This is particularly important when discussing

important resource issues such as water. Please consider making a statement to the effect that this

document represents the current state of the information when many references are pre-2007. The

statement could be included as part of the opening remarks in each of the resource descriptions in

Section 3.

2 4 Executive

Summary

The ES addressing only the alternatives and BLM’s preferred alternative lacks a summary discussion

of the resource findings presented in Sections 3-6

3 5 Executive

Summary

ES-6 28 BLM inserts uncertainty into the available lands restriction by adding “may issue” to this limitation.

Suggest rewording to … “or the DOI has promulgated through regulation”

4 6 Executive

Summary

ES-6 31 BLM inserts uncertainty into the available lands restriction by not defining specifically what Utah &

Wyoming have “recently completed”. Please direct the reader toward a specific document that

identifies the applicable ACECs or where they are discussed.

5 7 1.4.1 1-17 31 Why bother discussing commercial projects in this EIS when it is stated that this document’s NEPA

scope is limited to something less than the RD&D level of projects? The RD&D leases do have a

PRLA included but it is stated that further NEPA review is required prior to commercial

development.

6 9 1.4.3 1-21 15 How different are the oil and gas lease stipulations relative to those seen in the RD&D leases to

date? Why not include current RD&D lease stipulations in the BLM handbook? It would

demonstrate similarities or differences among industries to the Resource Manager.

7 2.1 2-1 27 A more informed discussion on the methods/process for oil shale and oil sands resources recovery

could be inserted in this section. Alternatively, reference to select subsections of 4.0 and Appendix

A could be made to indicate that more technology description is included in the document.

8 Table

3.1.1-1

3-2 &

3-13

2 Suggest deletion of the Utah GSENMM Plan from the table to consistently show the 10 RMP that

are affected in prominent tables. Acknowledgment of the RMP could be inserted in the text

following the table similar to the presentation on page 1-19 since the existing leased acreage will

likely never be developed nor acreage be available for leasing in the future.

9 Table

3.1.2-1

3-41 -- The data presented is that available in 2006 as noted in the footnote. Please review and update the

table as needed to reflect more recent information (References note that this was reviewed in

October 2011). This could be done for Section 3 in general as much of the document appears based

Comments on the DPEIS for the Oil Shale and Tar Sands – Allocation of Resources

API Letter to BLM on OSTS DPEIS

Attachment 1 PAGE __2__ OF __5__

on information gathered for the 2008 EIS

10 3.12 3-276 30 The socioeconomic history of oil shale development in the area suggests that the maintenance of a

current baseline is important in keeping the future impacts in perspective. The socioeconomic

section does reflect current information; however, the tables related to the environmental justice

discussion reflect the pre-2010 census data. It is suggested the section be reviewed and updated as

necessary to reflect current data. This comment is applicable to similar discussions in Sections 4

thru 6.

11 4.1.1 4-4 2 For completeness, consider giving a short reason that surface mining of oil shale in Colorado is not

being discussed in the EIS.

12 4.1.6 4-14 11 The premise that coal is the energy source for oil shale and oil sands development is not reasonable

in today’s or predicted future energy markets. For comparative purposes consider providing the

summary of emissions if natural gas was used as the energy source. Such a comparison would allow

the reader to infer their own magnitude of impacts when reviewing impacts presented in the

remainder of the document that are based solely upon coal as a fuel versus a project sited gas fired

power plant.

13 4.3.1.1 4-25 19 Assuming Comment 15 was accepted and addressed, a sentence could be added that long-term

disturbance of electrical transmission lines would be reduced if power were generated at the project

site. Similar remarks could also be added as appropriate in other resource discussions.

14 4.5.1.2 4-36

& 4-

37

45 BLM discussion on climate change cites reports and numbers where they acknowledge the values

have a high level of uncertainty. It might be better to return to the qualitative discussion consistent

with the rest of the section than contain numbers with high uncertainty.

15 4.5.1.3 4-39 9-

21

Data are presented from operations monitoring in this paragraph; however the information lacks

good context such as information on background or reference well data to demonstrate the impact of

the RD&D activity.

16 4.5.1.3 4-39 24 Consider review and possible revision to the remarks regarding Chevron’s project based upon recent

announcements regarding their oil shale leases.

17 4.5.1.4 4-40 27 Consider adding some context to the change in groundwater flow by giving the range of flows in

Yellow Creek in the vicinity of the study.

18 4.6.1.1 4-55 46 Reference to oil sands could be deleted in this sentence as well as others in the section because the

focus is oil shale development.

19 4.6.1.1.1 4-57 4 Consider providing an update on the status of the proposed rulemaking for the final PEIS.

Comments on the DPEIS for the Oil Shale and Tar Sands – Allocation of Resources

API Letter to BLM on OSTS DPEIS

Attachment 1 PAGE __3__ OF __5__

20 4.8.1 4-74 1 Table 4.8.1-1 presents the magnitude of unmitigated impacts to the aquatic resources. A more

reasonable assessment would to present the magnitude after application of generally accepted

mitigation practices typically required by BLM in permitted actions. This comment is also

applicable to other resource topics where the magnitude of impacts is presented before mitigation.

21 4.9.1.1.2 4-142 15-

16

Typo: What is the need for the italic in this paragraph?

22 4.9.1.3 4-148 32 Typo: Similar vs. Similarly

23 4.9.1.3 4-149 35 Consistency is suggested when discussing new power plants sizes (Pg. 4-13 Line. No. 38).

24 4.9.1.4.2 4-152 The discussion on power plants in the section on transmission lines and pipelines appears out of

place. Would such a discussion be better in Section 4.1.6 leaving only the focused remarks on visual

resources (i.e. power plant have a visual impact)

25 4.15 4-200 6 Consider restating the sentence “If exposures….” because emissions will be limited by controls and

worker safety requirements that are stipulated in the permits issued for operations.

26 5.1.1 5-5 20 -

29

What is the justification for the authors in the oil shale and oil sands evaluation of impacts use of

different external energy sources, coal fired power plants and on site natural gas/propane

respectively? A similar change is also noted for other parameters defined in the assumptions. Also

compare Tables 4.1.1-1 and 5.1.1.-1 for impact values.

27 Chapters 4

& 5

The impact descriptions presented in Sections 4 & 5 contains information that are duplicative or

common to both oil shale and oil sands development. Such information could be presented once.

This allows the mineral specific information to be presented more concisely and with a short

reference back to the general information when needed. The present approach makes finding unique

Area information difficult. Much of Chapter 5’s 162 pages could be reduced about 90 % by

presenting only the unique oil sands impact discussion.

28 Table

6.1.4-4

6-205 -- The listing of the mammal species needs to be reviewed and several bird entries deleted and if not

already listed, added under the bird section of the table.

29 6.1 -- -- The treatment of comparing alternatives among the resources is inconsistent. For example, land use

and water use describe impacts by alternative but wildlife is done by state. Consider placing a table

at the front of the section providing guidance on what level of analysis will be provided for each

resource and resource alternative discussed. (The comparison of alternatives is more fully presented

in Section 6.5.1)

30 Chapters -- -- The impact descriptions presented in Sections 6.1 and 6.2 contains information that are duplicative

Comments on the DPEIS for the Oil Shale and Tar Sands – Allocation of Resources

API Letter to BLM on OSTS DPEIS

Attachment 1 PAGE __4__ OF __5__

6.1 & 6.2 or common to both oil shale and oil sands development. Such information could be presented once.

This allows the mineral specific information to be presented more concisely and with a short

reference back to the general information when needed. The present approach makes finding unique

Area information difficult. Much of Chapter 6.2’s 251 pages could be reduced presenting only the

unique oil sands impact discussion.

31 6.1.1 6-4 40-

44

The statement that oil shale and oil sands development is largely incompatible with oil and gas

development is misleading. Use Agreements and various drilling technologies are available to

resolve conflicts among willing parties. Mineral development conflicts would occur where resource

recovery would use the same extraction method (i.e. surface or underground mining) on the same

land; however, precedent leasing would typically result in a design and subsequent lease agreements

that is compatible with development. The Enefit RD&D project is an example where both mining

and oil and gas development co-exist (see page 6-122).

32 6.1.1.11.2 6-63 -- Table 6.1.1-13 should be updated to reflect the more recent community input data

33 6.1.2.10 6-113 32-

33

It seems unreasonable to state the act of leasing has the potential to adversely impact cultural

resources by lease terms limiting an agency’s ability to avoid, minimize, or mitigate adverse effects

of proposed development. This statement should be deleted or expanded upon to describe the lease

terms that allow a lessee to impact cultural resources. See page 4-158 or 5-118 for a possible

expansion of this thought. A similar situation is noted in Section 6.1.3.9, pg. 6-162, line 26.

34 6.1.3.4 6-125 -- The purpose of Alternative 3 needs to be more fully explained. Sec 6.1.3 appears to summarize the

prior NEPA work. The RD&D projects have all the commercial acres identified. It appears that

Alternative 3 effectively closes future lands to any commercial development (except PRLA) and

would only allow RD&D projects.

35 6.1.3.5 6-129 4-6 What does this sentence add to defining the GHG emission concerns for the project? Consider

adding the period at the end of the sentence and expanding the discussion to include any data on

expected emissions.

36 6.1.4 6-171 19 Alternative 4 proposes to remove lands that are “proposed for” future planning restrictions in

addition to those lands removed by BLM action since the 2008 PEIS. The analogy is similar to

Candidate T&E species status to the Listed species. The listed has the full support of law where the

candidate does not.

37 6.1.5 6-224 -- This is most useful section in the EIS for assessing comparatives. Information from this section

could be put in tabular form to expand the Executive Summary.

38 Table 6-246 -- The information on coal mining and preparation impact should be reviewed and updated as

Comments on the DPEIS for the Oil Shale and Tar Sands – Allocation of Resources

API Letter to BLM on OSTS DPEIS

Attachment 1 PAGE __5__ OF __5__

6.1.6-2 appropriate. More recent data from the three western state agencies regulating mining would be the

source for such an update as opposed to the central / eastern state mining operations.

39 Table 6.1.6-3

6-249 -- The information on coal fired power plant impact should be reviewed and updated as appropriate. In

addition, an analysis of gas fired power plant impact should be added to reflect the future trend in

electric power generation.

40 6.1.6.3.11 6-304 44 The information on socioeconomic impacts should be reviewed and updated as appropriate using

data from those current RD&D developments and projecting forward when appropriate.

41 6.1.6.3.13 6-307 30 The discussion of hydraulic fracturing should be reviewed and updated based on information that is

more recent.

42 6.1.6.3.13 6-311 38-

42

A discussion of gas-fired power plant should also be provided, as coal may not be the fuel choice for

newly constructed power plants.

1

May 16, 2011

BLM Oil Shale and Tar Sands Resources

Leasing Programmatic EIS Scoping

Argonne National Laboratory

EVS, 240

9700 S. Cass Avenue

Argonne, IL 60439

Re: American Petroleum Institute (API) Comments on the Bureau of Land

Management’s (BLM) Notification of Intent to prepare a Programmatic

Environmental Impact Statement (PEIS) and Possible Land Use Plan Amendments

To Whom It May Concern:

The American Petroleum Institute (API) appreciates this opportunity to provide written

comments on the Bureau of Land Management’s (BLM) “Notice of Intent to Prepare a

Programmatic Environmental Impact Statement (EIS) and Possible Land Use Plan Amendments

for Allocation of Oil Shale and Tar Sands Resources on Lands Administered by the Bureau of

Land Management in Colorado, Utah and Wyoming.”

The API is a national trade association that represents over 470 members involved in all aspects

of the oil and natural gas industry. API has formed an Oil Shale Subcommittee with the goal of

addressing issues associated with oil shale development and educating policy-makers and the

public at large on this important domestic resource. Our members are greatly interested in

leasing and developing oil shale and tar sands resources found on lands managed by the BLM in

Colorado, Utah and Wyoming. Oil Shale Subcommittee members, and the oil shale industry as a

whole, are committed to delivering technologies and best practices that will allow for the

development of oil shale in an environmentally sustainable manner.

Estimates for the oil shale resource in Colorado, Utah, and Wyoming are placed at between 1.2

and 1.8 trillion barrels of oil equivalent of resource in the ground with as much as 500 billion to

1.1 trillion barrels of oil that is considered potentially recoverable. Close to two-thirds of global

oil shale resources are located in the United States.

The U.S. Congress recognized the critical and urgent need for development of domestic energy

resources when it enacted the Oil Shale, Tar Sands and Other Strategic Unconventional Fuels

Act of 2005, as part of the Energy Policy Act of 2005 (EPAct 2005):

Holly Hopkins Policy Advisor Upstream and Industry Operations 1220 L Street, NW Washington, DC 20005-4070 USA Telephone 202-682-8439 Fax 202-682-8426 Email hopkinsh@api.org www.api.org

“Congress declares that it is the policy of the United States that…oil shale, tar sands,

and other unconventional fuels are strategically important domestic resources that

should be developed to reduce the growing dependence of the United States on

politically and economically unstable sources of foreign oil imports.” (EPAct §369(b);

Public Law 109-58)

EPAct 2005 directed the Department of the Interior to promote commercial development of oil

shale resources by making land available within each of the States of Colorado, Utah and

Wyoming for leasing to conduct Research, Development and Demonstration (R, D, and D) of

technologies to recover liquid fuels from oil shale.

To date, BLM has issued six R, D, and D leases (three additional leases are in NEPA review)

granting rights to develop oil shale resources on up to 160-acre tracts of public land. The leases

grant an initial term of 10 years and the possibility of up to a 5 year extension upon proof of

diligent progress toward commercial production.

In a February 15, 2011 announcement Interior Secretary Salazar and BLM Director Bob Abbey

announced that the BLM will take a “fresh” look at commercial oil shale rules and plans issued

under the previous Administration. “If necessary,” they stated, “they will update them based on

the latest research and technologies, to account for expected water demands in the arid West and

to ensure they provide a fair return to taxpayer.” On April 14, 2011 the BLM issued a notice in

the Federal Register of its intention to take a fresh look at the land use plan allocation decisions

made in the 2008 Record of Decision (ROD) associated with the Programmatic Environmental

Impact Statement (EIS), in order to consider which lands should be open to future leasing of oil

shale and tar sands resources.

As such, API offers the following comments for consideration:

1) A “Fair” Return to the Taxpayer and Commercial Viability of Oil Shale Technology

In their February 15, 2011 announcement, both Secretary Salazar and Director Abbey base their

rationale for revisiting oil shale rules and plans on the assertion that oil shale technologies are not

yet commercially viable with Secretary Salazar stating, “With commercial oil shale technologies

still years away, now is the time to ensure that our rules and plans reflect the latest information

and will deliver a fair return to the American taxpayer.”

A “Fair Return to the Taxpayer”

Secretary Salazar has been quoted on several occasions that he believes the commercial royalty

rates established for the oil shale program under the Bush Administration would short-change

U.S. taxpayers. In its February 27, 2009 Notice for Withdrawal of the Call for Nominations –

Oil Shale Research, Development and Demonstration (R, D, and D) Program and Request for

Comment, the BLM stated that “to ensure a fair return for the public for commercial

development of these Federal resources….further information is needed.”

In our comments two years ago, API asked that as the BLM determined a “fair return to the

public,” it consider the intent of Congress in establishing that “unconventional fuels are

strategically important domestic resources that should be developed to reduce the growing

dependence of the United States on politically and economically unstable sources of foreign oil

imports (EPAct §369(b); Public Law No. 109-58).” This clear policy direction as provided in

EPAct 2005, we argued, indicates the paramount concern of oil shale development to meet

urgent national energy needs, which should be factored in by BLM as it considers what defines a

“fair return” to the U.S. taxpayer.

It is worth noting that in API’s May 28, 2009 written comments to the U.S. Department of the

Interior on the proposed terms and conditions of future oil shale research and BLM’s R, D, and

D leasing program, the price of West Texas Intermediate (WTI) crude was $57 a barrel.

Almost two years later, global oil demand has increased, markets have become tighter, and

instability in the Middle East and Africa has grown. Such factors have undoubtedly contributed

to a marked increase in the price of oil, almost doubling, to over to $100 a barrel.

Moreover, the U.S. Energy Information Administration (EIA) anticipates that global

consumption will grow an annual average of 1.6 million barrels per day through 2012, yet non-

OPEC (Organization of the Petroleum Exporting Countries) supply will only increase 170,000

barrels a day in 2011 – before declining again in 2012.

In response, OPEC production will likely increase by 1.9 million barrels per day, a substantial

figure relative to non-OPEC production.

Continued unrest in producing countries – including Libya–and instability throughout the region

as well as uncertainty about future economic growth and energy demand are all factors that can

continue to put upward pressure on oil prices in the coming years.

Thus, it is imperative to U.S. economic and national security that future oil supplies come from

a variety of reliable sources, including expansion of unconventional sources such as oil shale.

In our comments two years ago, API encouraged BLM to also consider the ancillary benefits to

the American public from a robust oil shale industry when considering a “fair return to the

taxpayer.”

Commercial Viability of Oil Shale

In its April 14, 2011 “Notice of Intent to Prepare a Programmatic Environmental Impact

Statement (PEIS) and Possible Land Use Plan Amendments for Allocation of Oil Shale,” BLM

states as its rationale that “As there are not economically viable ways yet known to extract and

process oil shale for commercial purposes, the BLM, through its planning process, intends to

take a hard look at whether it is appropriate for approximately 2,000,000 acres to remain

available for potential development of oil shale, and approximately 431,224 acres of public land

to remain available for potential development of tar sands."

We are hard-pressed to understand the connection between the viability of commercial oil shale

technologies and whether certain lands should be made available for oil shale development in the

future. We believe these are entirely separate issues.

The BLM has failed to define an opportunity cost of keeping these lands available or to show

that there are other competing priorities for this land.

Removing these targeted areas from possible future development shows that the priority of the

Department of Interior has shifted away from development of secure, domestic energy resources

toward other “undefined” purposes under the guise of a technological review.

It is a fact that several technologies have been developed around the world and in fact shale oil

has been produced on a commercially viable basis for decades outside of the U.S. in Brazil,

China, and Estonia. Estonia has commercially produced oil from oil shale for more than 30

years. Eesti Energia’s current and new generation technology meets all European Union

environmental standards and the oil extraction process uses no water. Furthermore, in 2012

Eesti Energia is scheduled to place in service a new plant using second generation technology

which is even more efficient and is based on its current proven technology. The new Enefit280

plant will consume 2.26 million tons of oil shale per year and will produce 2,000,000 bbl of shale

oil per year, 75 million m³ of high calorific retort gas and 280 GWh of electricity. The plant will

cover all of its own electrical needs as well as sell back to the grid. Eestonian Energy’s

technology is not subsidized or otherwise financially supported by the Estonian government.

Today several dozen U.S. technology and resource development companies are pioneering the

next generation of oil shale technologies. These technologies are designed to yield energy return

on energy investment comparable to current enhanced oil projects, minimize water use, limit air

emissions (including CO2) to applicable regulatory standards and create minimal surface

disturbance so that the physical environment can be restored to its natural state after production

is complete. Through these ongoing research efforts, exciting and innovative production shale

oil technologies have emerged and additional innovations are progressing, positioning oil shale

technology and innovation squarely in the mix for sustainable energy development.

This is a technologically intensive industry and as with other high-tech industries, development

takes time. The fact that there is not yet a commercial development operation in the United

States does not mean that there has not been a significant amount of work done towards that goal

or that we should abandon the industry.

The commercial development of U.S. oil shale resources will improve our country’s

competitiveness in fields such as mining, engineering, education, petroleum engineering and

research and will establish the U.S. as a world leader in developing best practices, technologies

and management for unconventional hydrocarbon development.

2) The Need for Stable Regulation and the Clear Policy Direction of EPAct 2005

The April 14, 2011 Federal Register Notice is the latest in a series of antagonistic actions taken

by the Obama Administration toward the federal oil shale program that would indicate the

Department of the Interior has no intention of building the coherent framework of policy and

regulation needed to send proper signals toward capital markets and industry to realize the

significant investments needed for commercialization of this important domestic resource.

During his brief tenure at the U.S. Department of the Interior, Secretary Salazar has announced

his plan to revisit the commercial royalty rates established for the federal oil shale program; has

reduced the amount of earned preference lease acreage from 4,960 acres to 480 acres in the 2nd

leasing round; has implemented more stringent milestones and reporting requirements for the R,

D, and D leasing program; and has signaled that he intends to take approximately 2,000,000

acres off the table for potential development.

Unsurprisingly, industry and financial markets have responded negatively to the

Administration’s stewardship of the federal oil shale program. It is worth noting that in the 1st

round R, D, and D oil shale leases issued in 2007, the BLM issued six R, D, and D leases to four

firms out of more than 20 applications, while the 2nd

round elicited only three R, D, and D lease

applications under the terms and stewardship proffered by the Obama Administration. While

this does not demonstrate a lack of interest in oil shale development or indicate that additional

lands are not needed, it does clearly show that industry is not willing to invest under such terms

and in such an uncertain environment.

We believe these actions contradict the clear policy direction provided in EPAct 2005, which

indicates the paramount importance of oil shale development to contribute to a viable, realistic

path to meet urgent national energy needs.

The intent of EPAct 2005 was that the Department of Interior shall establish a royalty rate to

“encourage development of oil shale and tar sand resources,” “make available” public lands to

“conduct research and development activities with respect to technologies for the recovery of

liquid fuels from oil shale,” and promulgate regulations establishing “a commercial leasing

program for oil shale.”

API would like to point out that EPAct 2005 and the subsequent Task Force on Strategic

Unconventional Fuels and the 2008 Oil Shale Rule followed an extensive public process. That

regulatory process took several years and involved extensive and open public participation in

which all of the parties participated. Due to the complex nature of the rulemaking, BLM did not

merely initiate rulemaking by publishing a proposed rule. Rather, in August 2006, BLM issued

an advance notice of proposed rulemaking to “request comments and suggestions to assist in the

writing of a proposed rule to establish a commercial leasing program for oil shale.” BLM

received a staggering 75,000 comments from individuals, federal and state governments and

agencies, interest groups, and industries representatives. Because of these extensive comments,

and the lack of any substantial changes relating to oil shale development over the last five years,

it is doubtful that any substantive new insight will be available from additional comments and

discussion.

The robust and transparent public process in which the 2008 Oil Shale Rule was established, in

which the views of all the stakeholders were considered, resulted in a final rule which carefully

balanced the economic realities of oil shale development with appropriate environment and

socioeconomic safeguards.

To satisfy its obligations under EPAct 2005, BLM also issued an “Approved Resources

Management Plan Amendments/Record of Decision for Oil Shale and Tar Sands Resources to

Address Land Use Allocations in CO, UT and WY and Final PEIS” on November 17, 2008,

amending BLM’s decisions specific to oil shale and tar sands resources addressed in twelve land

use plans.

The two BLM decisions – the 2008 Oil Shale Rule and accompanying 2008 RMP Amendments

– established the legal parameters for oil shale leasing in northwestern CO, southwestern WY,

and northeastern UT.

While no party obtained all it wanted from the 2008 Oil Shale Rule and 2008 RMP

Amendments, the administrative process was comprehensive and rigorous, and attempted to

achieve both the resource development goals of EPAct 2005 and protection of the environment

and recreational uses of public lands.

For this reason, it is our assertion that the only tenable alternative is the “no action” option,

which would leave the current allocation decisions from the 2008 ROD in place.

Any alternative which reduces acreage is not tenable, subverts the public process and contradicts

the spirit of the 2008 ROD negotiations.

3) Use of the GAO Water Report

Secretary Salazar also noted the recent Government Accountability Office Water Report

“Energy-Water Nexus: A Better and Coordinated Understanding of Water Resources Could

Help Mitigate the Impacts of Potential Oil Shale Development” in the announcement of his

decision to take a “fresh” look at commercial oil shale rules and plans.

In API’s March 30, 2011 letter to Congressman Ralph Hall, Chairman of the House Committee

on Science, Space and Technology, which commissioned the GAO Water Report, API noted that

we applaud the intent of this study as a potentially important policy tool to provide the

information and data necessary for sound decision-making both by the DOI and Congress on

actual water usage and risks associated with the ultimate development of this important natural

resource.

API also stated in its comments to Chairman Hall that we generally concur with the

recommendations by the GAO to the Department of Interior on the need to establish baseline

conditions for water resources in oil shale regions, the need to model regional groundwater

movement, and the necessity to coordinate on water-related research with DOE and state

agencies involved in water regulation.

However, further in our comments, we take the opportunity to address and directly challenge

some of the assertions in the report as to the overall potential water use by oil shale production.

We note to Chairman Hall that the committee would have been better served by the GAO had it

constructed its Water Report in a way that provides policymakers with objective information

indicative of probable outcomes, rather than theoretically possible scenarios that are highly

improbable under any circumstance that would support commercial oil shale operations.

Our comments strongly suggested to Chairman Hall that an objective examination of available

technologies and costs would conclude that that responsible, low-impact, and sustainable water

usage is both technically and economically feasible for an oil shale industry producing one to

two million barrels per day.

In closing, API would like to reiterate the need for consistent and stable regulation to promote

the commercial development of an important and strategic national resource. Whether oil shale

commercialization is realized three years or ten years in the future, we believe that consistent

governance from the BLM in the management of this resource is essential in attracting the

significant investment capital needed to fulfill this industry’s vast potential.

Nearly six years since the passage of the Energy Policy Act, the costs of our reliance on imported

energy have continued to increase resulting in millions of lost jobs, economic stagnation, and a

troubling transfer of wealth and power from America to hostile oil producing regimes around the

world, placing our national security at risk.

We believe the Administration’s stance that it is taking a “hard look” at removing federal lands

off the table for development, sends negative signals to industry and capital markets at exactly

the wrong time for the American public.

Sincerely,