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Proposed Rule

Minerals Management, Nonfederal Oil and Gas Development

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Information about this document as published in the Federal Register.

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AGENCY:

National Park Service, Interior.

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ACTION:

Advance notice of proposed rulemaking.

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.

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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.

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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 Start Printed Page 61598mainly 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 § 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 § 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 § 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 § 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 § 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 Start Printed Page 61599park 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 § 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 Start Printed Page 61600effective 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.

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Dated: October 2, 2009.

Will Shafroth,

Acting Assistant Secretary for Fish and Wildlife and Parks.

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[FR Doc. E9-28248 Filed 11-24-09; 8:45 am]

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