NPS Is Revising Its “9B” Oil and Gas Regulations

December 13, 2015

Edward O. Kassman, Jr.
Geologic Resources Division
National Park Service
P.O. Box 25287
Denver, Colorado 80225

Subject: RIN 1024-AD78 National Park Service, General Provisions and Non Federal Oil and Gas Rights

Dear Mr. Kassman:

I am writing to you on behalf of the Coalition to Protect America’s National Parks (Coalition), a non-profit organization comprised of over 1,100 members; most are former and retired National Park Service (NPS) employees. Collectively, we have over 30,000 years of experience working in and managing the America’s national parks. The Coalition studies, educates, speaks, and acts for the preservation of America’s National Park System.

The purpose of this letter is to submit comments on the NPS proposal to amend its regulations governing the exercise of non-federal oil and gas rights and associated operations within NPS units. The proposed rule would update the existing regulations at 36 CFR Part 9, Subpart B (“9B regulations”), which govern the exercise of non-federal oil and gas rights in NPS units. The proposed revisions are needed to improve the agency’s ability to protect park resources, values, and visitors from potential impacts associated with oil and gas operations located within NPS units, many of which are not currently subject to NPS requirements. The proposal would also update the format to improve clarity and make the regulations consistent with existing policies and practices, and simplify application and compliance for oil and gas operators and NPS staff.

Presently, non-federal oil and gas rights exist in NPS units where the United States does not own the oil and gas interest. Such non-federal ownership interests occur: (1) where the United States does not own a specific tract or parcel of land, including the oil and gas mineral estate beneath such land; (2) when the United States acquired the specific tract or parcel of land, the seller reserved the rights to the oil and gas estate; or (3) the estate was already severed when the United States acquired the surface estate and the mineral rights remain with the previous owner. These non-federal oil and gas ownership interests can be held by individuals, nonprofit organizations, corporations, or state and local governments.  Currently there are over 530 operations to extract non-federal oil and gas occurring in 12 NPS units with continuing development expected. Another 30 NPS units have potential for future development of non-federal interests within park boundaries.

The existing 9B regulations, promulgated by the NPS in 1978, apply to exploration and development activities associated with non-federal oil and gas rights located inside NPS unit boundaries. Where applicable, these regulations require an operator to obtain NPS approval of a proposed plan of operations before commencing oil and gas exploration, drilling, production, or reclamation activities in an NPS unit. The current regulations, however contain two provisions that have had the effect of exempting over half of the operations in parks from NPS review and approval. These exempt operations include: 1) those that do not require access on, across, or through federally owned or controlled lands (15% of total in-park operations); and 2) those “grandfathered” operations that were operating at the time the regulations became effective in January 1979 (45% of in-park operations). Many of these currently exempt operations are conducting operations in a manner that adversely impacts park resources, values, and visitor experience as well as posing hazards to visitor safety. The NPS proposed revisions would eliminate these exemptions and greatly facilitate the NPS ability to appropriately manage non-federal oil and gas activities.

NPS Authority to Regulate Non-Federal Oil and Gas

The NPS has authority to promulgate these regulations pursuant to the statute commonly known as the Organic Act (54 U.S.C. 100101 et seq.) as well as other statutes governing the administration of the National Park System. In the NPS Organic Act, Congress directs NPS to “promote and regulate the use of the National Park System by means and measures that conform to the fundamental purpose of the System units, which purpose is to conserve the scenery, natural and historic objects, and wild life in the System units and to provide for the enjoyment of the scenery, natural and historic objects, and wild life in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.” The Organic Act also gives NPS the authority to promulgate regulations “necessary or proper for the use and management of System units.” (54 U.S.C. 100751). This includes the authority to regulate the exercise of non-federal oil and gas rights within park boundaries for the purpose of protecting the resources and values administered by the NPS.

In addition, the enabling legislation for several NPS units contains specific provisions authorizing the regulation of non-federal oil and gas rights, which are noted in the authority section of the proposed rule. For example, a unique provision exists under the Big Cypress National Preserve Addition Act of 1988, which authorizes rules and regulations governing exploration, development, and production of non-Federal interests in oil and gas located within the boundaries of the Preserve and the Addition, and that such rules and regulations may be made by appropriate amendment to or in substitution of the 9B regulations.

As noted in the preamble, the U.S. District Court and the Fifth Circuit Court of Appeals recognized the NPS authority to promulgate the existing 9B regulations in a case contesting the application of the regulations at Padre Island National Seashore.  See Dunn-McCampbell Royalty Interest v. National Park Service, 964 F. Supp. 1125 (S.D. Tex. 1995), and Dunn-McCampbell Royalty Interest v. National Park Service, 630 F.3d 431 (5th Cir. 2011). Other courts have also consistently recognized NPS’s authority to regulate non-federal interests within units of the National Park System.  See, e.g., United States v. Vogler, 859 F.2d 638 (9th Cir. 1988), cert. denied, 488 U.S. 1006 (1989); United States v. Garfield County, 122 F. Supp. 2d 1201 (D. Utah 2000).  See also Southern Utah Wilderness Alliance v. Bureau of Land Management, 425 F. 3d 735, 746-47 (10th Cir. 2005).

Key Proposed Regulatory Revisions

The NPS proposed regulations include several important elements to improve their effectiveness in protecting park resources and values and enhancing visitor experience and safety. First is the elimination of the two regulatory provisions noted above regarding access across federal property and grandfathered operations, which exempt approximately 60% of the oil and gas operations located within the boundaries of NPS units. Under the current rules, the NPS cannot regulate 319 out of 534 non-federal oil and gas wells currently within the authorized boundaries of parks due to these exemptions. As a result, many unregulated operations are not following best management practices, resulting in degradation of park resources and values and potential safety hazards for park visitors.

Second is elimination of the limit on financial assurance (bonding) that NPS may require to ensure that adequate funding is available for well plugging and site reclamation. Current regulations limit the bond to $200,000 per operator per park. Experience has shown this performance bond limit no longer represents the current costs of reclamation, particularly in cases where an operator has several wells in a park. For example, a foreign company that had an operating permit for 11 wells at Padre Island recently abandoned all operations and essentially disappeared. While the NPS held a $200,000 bond, the cost to plug wells and reclaim one site with 5 wells is estimated and $350,000 alone. As more operations occur or as operators consolidate holdings in a park, the NPS will likely be faced with more situations where the current limit is insufficient to properly reclaim sites where the operators fails to fulfill their obligations under an approved plan of operations. Under existing rules, recovery of reclamation expenses exceeding the bond requires NPS to undertake costly and time consuming civil litigation to recover costs, if a viable mineral operator can be located. The proposed revision in Section 9.141 would make the required bond amount equal to the estimated cost of reclamation for each operation, ensuring that future reclamation funds would be available, and removing this potential burden from the NPS and American taxpayers.

Other noteworthy changes included in the NPS proposed 9B revisions are:

• Application of the NPS penalty provisions at 36 CFR 1.3 to address regulatory violations, which would provide a practical method of dealing with minor regulatory infractions that do not rise to the level of permit suspension or judicial intervention;
• Clarification that an “operations permit” will be a special use permit allowing the NPS to recover costs associated with the permitting and operations monitoring process (Sec. 9.40), and that the NPS may require the use of third-party monitors to oversee permitted operations (Sec. 9.121), which will facilitate NPS monitoring of operations;
• Incorporation of a new format for information requirements (Sec. 9.80-9.90) and operating standards (sec. 9.110-9.118) that makes it easier for both the NPS and the operator to readily identify the standards that apply to particular operations;
• Codifying a definition for “technologically feasible, least damaging methods” as the non-prescriptive general standard for all operations, and requiring such methods in all operations to protect park resources and values, visitor experiences, and NPS staff safety (Sec. 9.110(c));
• Provision for new information requirements and operating standards for well stimulation, including hydraulic fracturing (Sec. 9.118(b)) that are modeled after the BLM’s recently promulgated regulations, which will facilitate analysis and public involvement in these often contentious fracking proposals;
• Addition of a new well-plugging provision (Sec 9.170) to address inactive and shut-in wells and ensure timely reclamation, which will eliminate long-standing inactive well sites that cause ongoing resources degradations and visitor safety hazards; and
• Consolidation of existing regulatory provisions and elimination of redundant provisions.

The Coalition fully supports the NPS proposed revisions to the 9B regulations. While the existing rules have served reasonably well in addressing new oil and gas operations in parks, it is apparent that the original regulations resulted in significant regulatory gaps that need to be addressed for the agency to fully carry out its preservation mandate under the NPS Organic Act of 1916 (54 U.S.C. 100101 et seq.), and NPS Management Policies. The proposed regulatory revisions are necessary to: 1) strengthen the NPS’s ability to fulfill its mission to protect park resources and visitor values, 2) provide equitable financial compensation and surety to protect the public’s resources and taxpayer dollars, and 3) create and improve efficiencies in the regulatory requirements.

Especially important are the proposed revisions to eliminate the exemptions regarding access across federal lands and grandfathered operations. At the time the current regulations were promulgated the NPS made a policy choice to exempt (grandfather) existing operations until expiration of their state and local permits, based on the theory that this would allow a phase-in of NPS regulations for these operations. Operations not requiring access on federal property were also exempted as this was expected to occur in limited circumstances. Like the grandfather exemption, this access exemption is not specified in any statute, but was an exercise of the NPS discretion at the time the regulations were promulgated.

As is evident from the preamble and the supporting analysis, experience to date has shown that these exempted operations are often not following best management practices and are causing unacceptable impacts to park resources and values. These exempted operations are causing adverse resource effects and presenting visitor hazards and need to be managed by NPS to prevent additional risks and damages. The proposal and supporting documents show that these unregulated oil and gas activities are currently impacting NPS resources in many ways including the following:

• NPS has documented 26 instances of surface contamination and water quality degradation from spills, storm water runoff, erosion, and sedimentation;
• Forty-seven cases of oil and ground water contamination have been found from existing drilling mud pits, poorly constructed wells, pump jack leaks, operations and maintenance spills, and tank battery leaks;
• Many sites cause air quality degradation from dust, natural gas flaring, hydrogen sulfide gas, and emissions from production operations and vehicles, and NPS inspections have documented 14 instances of notable odors emanating from the wellhead;
• Increased human presence and noise from seismic operations, blasting, construction, drilling and production operations effect wildlife behavior, breeding, and habitat utilization, and negatively impact the visitor experience;
• Adverse effects on sensitive and endangered species. NPS site inspections have documented 15 sites with sensitive species or habitat;
• Disturbance to archeological and cultural resources from blasting associated with seismic exploration and road/site preparation, maintenance activities, or by spills; and
• Visitor safety hazards from equipment, pressurized vessels and lines, presence of hydrogen sulfide gas, and leaking oil and gas that can create explosion and fire hazards. Through site inspections the NPS has documented 62 instances of visitor safety hazards.

Another critical improvement is the NPS proposal to eliminate the current bonding (financial assurances) limit of $200,000 per operator per unit. Currently, in the case of an inadequate bond amount, the only NPS recourse is a civil suit to recover additional reclamation costs – a difficult, costly, and time consuming process. In cases where the operator is insolvent or can’t be located the cost of well plugging and site reclamation fall on the NPS and American taxpayers.

One area we would like to see clarified is the issue of public notice and participation. The preamble states that the proposed regulations will eliminate the existing requirements to publish notice of potential operations and replace them with “a more efficient public involvement and review process.” However, neither the proposed Public Participation (Sec. 9.200) nor any other regulatory section addresses public notice requirements. As noted in the preamble, the current regulations require the Superintendent to publish notice in a local paper upon a request to conduct operations and to publish notice in the Federal Register upon receipt of a plan of operations. While it may be the NPS intent that normal NEPA and other compliance processes will provide adequate public notice and participation opportunities, this needs to be clearly stated in the regulatory proposal. We suggest specific public notice requirements be inserted in the proposal at the sections where NPS determines a proposed application is complete and it will begin formal review (e.g., Sec. 9.101(a)(1), Sec. 9.105 (a)(2)). Such specific public notice will be important to ensure full public participation in NPS future oil and gas permitting.

As proposed, with the elimination of exemptions and clarification of process, the revised 9B regulations will allow the NPS to achieve the following objectives:

• All non-federal oil and gas operations conducted within the authorized boundaries of park units will be managed to ensure the use of technologically feasible least damaging methods to prevent or to minimize damage to national park system resources, visitor values, and management objectives.
• Updated operating standards will reflect new technologies, operational methods, and current scientific and technological findings to result in operations least damaging to park resources and values.
• Health and safety hazards associated with non-federal oil and gas operations will be managed to protect park staff and visitors.
• Adequate financial assurance will be provided by non-federal operators to ensure that park resources and values are protected and all oil and gas operation sites are properly reclaimed.
• Appropriate penalty authority will be available to provide a practical and effective means for dealing with minor acts of noncompliance or unauthorized operations in parks.
• An incentive will be retained for operators to directionally drill from surface locations outside parks, which minimizes effects on park resources while still maintaining the ability of the NPS to protect park resources and values to the fullest extent practical.
• Reorganized and clarified regulations will be more understandable to operators, the public, and NPS staff, helping to provide reasonable and timely processing of applications and permits.

In closing, while legislation and property law allow for the development of non-federal oil and gas rights in some units of the National Park System, the NPS has a legal obligation to manage such development in a manner that is consistent with the NPS Organic Act and related NPS Management Policies. The NPS stated purpose of the proposed revisions to the 9B regulations is to protect public health and safety; improve understanding, application and effectiveness of the regulations for the NPS and for industry; and incorporate new requirements that will ensure that all non-federal oil and gas operations conducted in national park system units avoid or minimize, to the greatest possible extent, adverse effects on natural and cultural resources, visitor uses and experiences, park infrastructure and management. We believe that the proposed rule is fully consistent with these requirements and strongly support the proposed rule as written.

Sincerely,

 

 

Maureen Finnerty
Chair, Coalition to Protect America’s National Parks