[Federal Register Volume 74, Number 226 (Wednesday, November 25, 2009)]
[Proposed Rules]
[Pages 61596-61600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28248]
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DEPARTMENT OF THE INTERIOR
National Park Service
36 CFR Part 9
RIN 1024-AD78
Minerals Management, Nonfederal Oil and Gas Development
AGENCY: National Park Service, Interior.
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ACTION: Advance notice of proposed rulemaking.
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SUMMARY: We are seeking comments to assist us in developing proposed a
proposed rule to revise regulations governing nonfederal oil and gas
development within the boundaries of units of the National Park System.
The regulations have been in effect for over thirty years and have not
been substantively updated during that period. The National Park
Service (NPS) is seeking public input on how to bring exempted
operations under the scope of the regulations, and on how to improve
resource protection aspects of the regulations while accounting for
advances in oil and gas technology and industry practices.
DATES: Comments must be received by January 25, 2010.
ADDRESSES: You may submit comments, identified by RIN 1024-AD78, by any
of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
Fax: 303-987-6792. Attn: 9B Rulemaking Team. Include RIN 1024-AD78
on cover page.
Mail: Department of the Interior; National Park Service; Attention:
9B Rulemaking Team, Geologic Resources Division, National Park Service,
P.O. Box 25287, Denver, Colorado 80225-0287.
Instructions: All submissions received must include the agency name
and docket number or Regulatory Information Number (RIN) for this
rulemaking. All comments received will be posted without change to
http://www.regulations.gov, including any personal information
provided. For detailed instructions on submitting comments and
additional information on the rulemaking process, see the ``Public
Participation'' heading of the SUPPLEMENTARY INFORMATION section of
this document.
Docket: For access to the docket to read background documents or
comments received, go to http://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: Carol McCoy, Chief, Planning,
Evaluation & Permits Branch, Geologic Resources Division, National Park
Service, (303) 969-2096; P.O. Box 25287, Denver, Colorado 80225-0287.
SUPPLEMENTARY INFORMATION:
Background
The NPS promulgated regulations at 36 CFR part 9, subpart B (``9B
regulations'') governing nonfederal oil and gas development in units of
the National Park System in December 1978, with a January 1979
effective date. The regulations control all activities associated with
nonfederal oil and gas development inside park boundaries where access
is on, across, or through federally owned or controlled lands or
waters. As of the drafting of this Advance Notice of Proposed
Rulemaking (ANPR), there are 693 nonfederal oil and gas operations that
exist in a total of 13 units of the National Park System.
The legal authority for the NPS to promulgate the 9B regulations is
derived from the Property Clause (art. IV, section 3, cl. 2) and the
Commerce Clause (art. I, section 8, cl. 3) of the United States
Constitution, and from various statutes enacted by Congress for the
administration of the National Park System. Under sections 1 and 3 of
the NPS Organic Act, Congress has given the NPS, through the Secretary
of the Interior, the authority to promulgate regulations necessary for
the administration and management of the National Park System, which
includes the authority to regulate nonfederal oil and gas activities
within park boundaries for the purpose of protecting park resources and
values. In addition, the enabling statutes for several individual parks
contain specific provisions authorizing the NPS to regulate such oil-
and gas-related activities.
Not all parks with non-federal oil and gas development occurring
within their boundaries have such specific direction within their
enabling statutes. Whether or not specified in an individual park
enabling act, the Organic Act authority alone is legally sufficient to
authorize such regulations.
Non-Federal oil and gas rights are the result of a conveyance of an
interest in real property from a grantor other than the United States
and may be held by individuals, companies, nonprofit organizations, or
state and local governments. Such rights are a form of real property
and fall under the protection of the 5th Amendment of the U.S.
Constitution (``No person shall be * * * deprived of * * * property,
without due process of law; nor shall private property be taken for
public use, without just compensation.''). The NPS nonetheless may
regulate these rights pursuant to the authority stated above.
Under the existing 9B regulations, an entity seeking to undertake
nonfederal oil and gas activities in a park generally must submit and
obtain NPS approval of a proposed plan of operations before commencing
operations inside a park. A plan is essentially a prospective
operator's blueprint of all intended activities within the boundary of
the park, including exploration, drilling, production, transportation,
and reclamation. The regulations require the operator to provide
documentation demonstrating that the operator is exercising a bona fide
property right to non-federal oil and gas in the park unit. In a
proposed plan, an operator must also identify those specific measures
that will be undertaken to protect park resources and values. Finally,
an operator must submit a performance bond for the principal purpose of
ensuring that funds will be available to reclaim a site should an
operator default on its obligations under a plan.
The plan of operations requirement is the primary tool for
protecting park resources and values from potential adverse impacts
associated with the exercise of nonfederal oil and gas rights inside
park boundaries. In reviewing a proposed plan to determine whether the
NPS can approve an operation, the NPS undertakes a variety of analyses
required by federal statutes, such as the National Environmental Policy
Act, the Endangered Species Act, and the National Historic Preservation
Act, as well as the standards specified in the 9B regulations. In
analyzing proposed plans, the NPS coordinates and consults with a
variety of other regulatory agencies at the federal and state level.
The NPS also works closely with the operator in order to have park
protection concerns addressed through the incorporation of appropriate
mitigation measures into plans.
Once the NPS has completed its review and environmental compliance
responsibilities and determined that a given proposal meets applicable
requirements and approval standards, the NPS will approve an operator's
plan of operations. The approved plan authorizes the operator to
conduct its operation in a unit of the National Park System.
During the life of an oil and gas operation in a park, park
resource managers monitor activities at the operator's site to ensure
compliance with the plan. The existing regulations also authorize the
NPS to enforce the terms of the plan as may be necessary via such means
as suspension of operations or revocation of the plan approval.
It is important to note that while nonfederal oil and gas
operations in parks must also comply with state requirements, the 9B
regulations differ from most state oil and gas regulations by focusing
on the protection of the park's natural and cultural resources and
visitors. State regulations may contain some surface use provisions but
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mainly focus on conservation of the oil and gas resource, protection of
the associated ownership interests, and protection of surface and
groundwater.
Information Requested
The NPS is interested in ideas from the public on ways the NPS
could improve the existing regulations. The NPS intends to use the
input from the public to aid in developing a proposed rulemaking, which
will then also be published in the Federal Register for comment. In
particular, the NPS encourages the public to provide comments and
suggestions related to the topics described in the body of this ANPR.
Please indicate which of the topics your comments address and which
question you are responding to. If your comments cover issues outside
of these topics, please identify them as ``other.''
Regulation of Exempt Operations
The existing regulations, as provided at Sec. 9.30(a), apply where
an operator's access is ``on across, or through federally owned or
controlled lands or waters.'' As a result, 109 operations (17%) are
currently exempt from the regulatory requirements even though the
operations occur inside park boundaries. For example, oil and gas
rights under privately owned lands just inside the boundary of a park
unit, and for which access to those lands is solely maintained without
crossing park owned or administered lands, are not subject to these
regulations.
In addition, under Sec. 9.33, operations covered by a valid state
permit in existence at the time the regulations became effective are
also exempt (i.e., 255 operations or 37%). Ultimately, as these
operations change hands or state permits expire, the exemption no
longer applies and operators must comply with the regulations. However,
the rate of turnover and permit expiration has been much slower than
anticipated by the original drafters of the 9B regulations, leaving a
large number of this class of operations outside the scope of the
Service's regulations.
Because of these two exemptions, 53% (364 wells) of the wells in
parks today are not subject to the requirements of the regulations to
protect park resources and values. These exemptions are not specified
in any statute, but were an exercise of the NPS's discretion at the
time the regulations were promulgated.
The NPS has identified the following factors to be considered in
evaluating options for possibly revising the current approach to
existing operations:
A. Existing exempt operations already have established site
locations and associated access routes.
B. The operations may or may not have equipment on site that
reflects current-day industry standards.
C. Most of the currently exempt operations exist in 3 out of the 13
parks with nonfederal oil and gas operations within their boundaries.
D. Limited park staff and fiscal resources exist in parks for
carrying out a multitude of responsibilities, including the
administration of the 9B regulatory program.
The NPS is considering requiring all previously exempt operations
to comply with the 9B regulations. The following ideas for how such
operations could be brought under the regulations have been discussed:
Option 1--Require presently exempt operators to submit
plans of operations, comply with operating standards, and provide
financial assurance by a set date.
Option 2--Same as Option 1, however, the
submittal of a plan of operations, compliance with operating standards,
and financial assurance would be under a phased timeframe.
Option 3--Instead of requiring the submittal of a plan of
operations for approval, require operators with exempt operations to
verify that their operations are being conducted in a manner that
fulfills a defined set of operating standards which would be
enforceable by park staff. Under this option, operators will also be
required to provide documentation of the legal basis for their
respective oil and gas activities within the park unit, and submit
financial assurance.
Questions:
1. Taking into account the factors identified above, do any of the
option(s) above have greater merit for bringing previously exempt
operations under the 9B regulations, and if so, why?
2. Do you have another option that you would like to suggest?
Directional Drilling
Under the existing regulations at Sec. 9.32(e), if an operator
locates surface facilities outside the park and proposes to
directionally drill from those surface facilities to reach its non-
Federal oil and gas rights inside the park, the operator can apply for
an exemption to the 9B regulatory requirements. This provision provides
an incentive to operators to locate their surface facilities outside
the park and thereby greatly reduce impacts to park resources and
values.
The scope of Sec. 9.32(e) addresses only those activities that are
occurring within the external boundaries of a park; that is, the
downhole operations that pass through Federal subsurface estate within
the boundary of a park. Surface activities associated with directional
drilling operations outside the park are not within the scope of the
jurisdiction provided to the NPS under Sec. 9.32(e), or under the 9B
regulations in general. If granted an exemption, operators do not need
to submit a proposed plan of operation or a bond covering the
activities occurring in the park (i.e., the downhole activities) to the
NPS for approval. Essentially, under this provision of the regulations
if an operator meets the requirements, the NPS must determine that the
9B regulations do not apply to the operator's activities.
The Service's goal relative to non-Federal oil and gas operations
is to protect parks by eliminating direct impacts to park resources and
values. When an operator takes advantage of the directional drilling
provision of the regulations and locates its surface facilities outside
park boundaries, the operator has significantly reduced direct impacts
to park resources and values. By so doing, the operator has deployed a
major park protection mitigation measure. While potential indirect
impacts of sight, sound, artificial light, odor, and spills may exist
from drilling operations outside a park, they are usually much reduced
relative to surface operations in a park. Such impacts are diminished
even further once the operation progresses from the drilling to
production phase.
In evaluating options for revising this section of the existing
regulation, the NPS has identified the following factors:
A. The NPS wants to ensure that it retain incentives for operators
to locate their surface facilities outside park boundaries, and, if
possible, even enhance those incentives. The NPS realizes that the
primary incentive for operators to locate facilities outside park
boundaries is the ability to save time and money.
B. The NPS wants to ensure the protection of park resources and
values from indirect effects potentially resulting from operations that
are located outside park boundaries.
The NPS is evaluating how to address directional drilling
operations for the proposed rulemaking. The following ideas have been
discussed:
Option 1: Retain the scope of the existing regulatory
provision governing directional drilling operations.
Option 2: Expand the regulation to cover all activities
associated with directional drilling operations which may affect park
resources and values, both the downhole operations in the
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park and the surface location outside the park.
Option 3: Exempt directional drilling operations entirely
from the scope of the 9B regulations.
Questions:
3. Taking into account the factors identified above, what option(s)
do you recommend for addressing directional drilling operations under
the 9B regulations?
4. Are there other options for addressing the potential indirect
impacts from directional drilling operations that retain the incentive
for operators to locate their well pad and surface access routes
outside the boundary of a park?
Operating Standards
The existing regulations contain requirements that operators must
meet in conducting their operations, such as using technologically
feasible least damaging methods in their operations; locating
facilities away from water courses, structures, and visitor and
administrative developed areas; and maintaining sites in a safe and
workmanlike manner. These operating standards are found throughout
various sections of the existing regulations.
The NPS realizes that the formulation of the existing standards is
30 years old. The NPS is aware that in the intervening years other
agencies and industry groups have developed effective standards (e.g.,
API and AGA Standards and Practices, BLM Gold Book, State operating
standards) that the NPS could incorporate into its regulations.
Question:
5. Do you know of examples of effective, enforceable operating
standards that the NPS should consider when it develops its own
comprehensive list?
Financial Assurance
The existing 9B regulations require that an operator file a
performance bond, or other acceptable method of financial assurance,
for all types of nonfederal oil and gas operations and all phases of
the operation(s). The objective of requiring a bond is to ensure that
in the event an operator becomes insolvent or defaults on his/her
obligations under an approved plan of operations, adequate funds will
be available for the NPS to have a third party carry out the plugging
and reclamation requirements. The existing regulations place a bonding
cap of up to $200,000 per operator, per NPS unit. Therefore, if one
operator has multiple wells in a park unit, the NPS can only require up
to $200,000 financial assurance from that one operator.
The NPS is considering eliminating the bonding cap, which was
established in 1978, and replacing it with a variable amount of
financial assurance equal to the reasonable estimated cost of
reclamation and liability today.
Questions:
6. Are there alternatives to the existing acceptable financial
assurance instruments (e.g., performance bonds, irrevocable letters of
credit, and cash) that will protect the taxpayer in the event an
operator defaults on its responsibilities under its approved plan of
operations?
7. If so, please describe the advantages or disadvantages of one
type of instrument over another.
Access Fees
The current 9B regulations at Sec. 9.50(a)(1) authorize the park
to impose a registration fee for vehicles used in connection with oil
and gas operations that are using existing roads administered by the
NPS. While this fee provision applies to the use of existing roads
administered by the NPS, it does not apply to an operator's
construction of new roads across federally owned lands to reach their
non-Federal oil and gas rights.
As a result, the NPS is considering eliminating the current
registration fee and replacing it with an access fee. This fee would
compensate the United States for an operator's access across federally
owned surface estate in order to reach the operator's non-Federal oil
and gas rights, be it on an existing road administered by the NPS, or
across undisturbed federally owned lands. Because the operator
generally has only a right to reasonably use the federally owned
surface estate immediately above the non-federal oil and gas right,
this fee would not apply to access within this area. It would also
bring NPS practice with respect to access fees in line with what other
agencies and private land owners are doing.
Both the BLM and USFS charge fees for access where the operator has
no pre-existing right to cross Federal lands. Similarly, adjacent
private land owners also require operators to pay a fee to cross their
land to reach the operator's oil and gas rights. Such fees are
generally recognized today by the oil and gas industry as a cost of
doing business.
Questions:
8. Should the NPS calculate fees for the privilege of access across
federally owned lands, and how?
9. Should the NPS use an appraisal, available data from other
Federal agencies that calculate and compile fair market land values
(such as the National Agricultural Statistics Service), or other means
to determine fair compensation for such use?
Assessments for Non-Compliance
The Superintendent's current enforcement mechanisms for operations
under an approved plan are limited to suspension or revocation of the
plan. If an operator fails to comply with a suspension or revocation
order, the NPS must request that the Department of Justice file a civil
action in Federal court seeking an injunction or restraining order to
halt operations. The Superintendent has no practical method for dealing
with minor regulatory infractions that do not rise to the level of
suspension, revocation, or judicial intervention. Examples of minor
infractions include accumulation of oilfield debris onsite, slow
response to small contained spills, and lack of maintenance on access
roads.
The NPS is considering revising the regulations to allow the use of
administrative assessments to address minor violations of the
regulations or a term or condition of an approved permit. Whenever the
NPS learns of a compliance issue associated with an operation in a
park, the Service's first approach is always to work with operators to
have them rectify the situation. If this approach is not successful,
then the NPS issues a formal notice of non-compliance to the operator.
The NPS is now considering authorizing park staff to issue
administrative assessments upon the failure of an operator to comply
with a notice of non-compliance. The assessment would be a monetary
amount that an operator must pay to the park, based on an estimation of
the cost of damages to park resources due to the operator's violation
of a term or condition of an approved permit. An example of such an
approach is found under BLM regulations at 43 CFR 3163.1, which gives
BLM authority to assess a penalty of $500 per day for major violations,
and $250 for minor violations.
Question:
10. Are there other more effective means beyond the imposition of
an administrative assessment that the NPS can use to address minor
infractions and to provide operators an incentive to comply with the
regulations?
NPS seeks responses to the above noted questions from the public.
Additionally, the NPS seeks any relevant comments to other issues
regarding these regulations. Where options are presented, the NPS
especially seeks comments as to which ones may be considered the most
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effective and efficient approach to managing nonfederal oil and gas
development inside park boundaries. After analyzing the comments
received from this notice, the NPS intends to determine how to proceed
with a proposed rulemaking.
Additional information about the NPS Non-Federal Oil and Gas
Program is available at http://www.nature.nps.gov/geology/oil_and_gas/index.cfm.
Public Participation
All submissions received must include the agency name and RIN 1024-
AD78 for this notice. Before including your address, phone number, e-
mail address, or other personal identifying information in your
comment, you should be aware that your entire comment--including your
personal identifying information--may be made publicly available at any
time. While you can ask us in your comment to withhold your personal
identifying information from public review, we cannot guarantee that we
will be able to do so.
At this time, the NPS is not soliciting comments on environmental
impacts. The NPS will do so as part of its environmental compliance
under the National Environmental Policy Act.
Dated: October 2, 2009.
Will Shafroth,
Acting Assistant Secretary for Fish and Wildlife and Parks.
[FR Doc. E9-28248 Filed 11-24-09; 8:45 am]
BILLING CODE 4310-EH-P