[Senate Report 118-53]
[From the U.S. Government Publishing Office]
Calendar No. 125
118th Congress} { Report
SENATE
1st Session } { 118-53
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OIL AND GAS PERMITTING PROCESS
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July 11, 2023.--Ordered to be printed
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Mr. Manchin, from the Committee on Energy and Natural
Resources, submitted the following
R E P O R T
[To accompany S. 535]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 535), to streamline the oil and gas
permitting process and to recognize fee ownership for certain
oil and gas drilling or spacing units, and for other purposes,
having considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
PURPOSE
The purpose of S. 535 is to remove the requirement for a
permit from the Secretary of the Interior for certain oil and
gas drilling or spacing units where the Federal Government
holds a minority interest in the minerals within the unit and
there is no surface interest held by the Federal Government in
the area impacted by the action.
BACKGROUND AND NEED
In the western United States, there are occasionally
``split-estate'' situations, where the ownership of the surface
rights and mineral rights are held by different parties.
Generally, in split-estate situations, the surface is owned by
a non-federal entity, while the subsurface mineral estate is
held by the federal government. Split-estates can present
management challenges for oil and gas development as modern
directional drilling techniques have enabled well drilling from
a single well pad on the surface to reach multiple pools of oil
and gas miles apart, potentially with different owners of the
mineral estate and the surface estate.
The leasing of Federally owned or managed minerals is
managed by the Secretary of the Interior, acting through the
Bureau of Land Management (BLM), primarily under the provisions
of the Mineral Leasing Act (30 U.S.C. 181 et seq.) and the
Federal Oil and Gas Royalty Management Act of 1982 (30 U.S.C.
1701 et seq.). Under current law, no drilling operations or
related surface disturbing activities may be initiated without
an approved Application for a Permit to Drill (APD) on lands
and interests in land owned by the United States.
The BLM has procedures to address federal review and
permitting processes applied in split-estate situations,
particularly where wells are not located on federal surface
estate. Like any review of an application for permit to drill
(APD), these situations require administrative resources from
BLM, in the context of significant responsibilities for
reviewing all other APDs across federal surface and fully owned
mineral estate. In cases where federal minerals are combined
with private or state owned minerals due to the geologic
location of the resources and the layout of oil and gas spacing
units identified by state regulators, the presence of federal
minerals triggers the requirement for an APD that would not
otherwise apply. Some private mineral rights holders, as well
as oil and gas developers, have claimed that the development
process is slower in this mixed ownership scenario than would
occur in situations where mineral ownership is limited to state
or private owners, as a result of the requirement for an APD
and the subsequent review process.
LEGISLATIVE HISTORY
S. 535 was introduced by Senators Hoeven and Cramer on
January 27, 2023. Similar legislation, S. 4227, was introduced
in the 117th Congress by Senators Hoeven and Cramer on May 16,
2022. The Subcommittee on Public Lands, Forests, and Mining
held a hearing on S. 4227 on June 7, 2022. The Committee
ordered S. 4227 reported favorably with amendments on July 21,
2022 (S. Rept. 117-203). This legislation, with the exception
of the short title, is identical to S. 4227 as reported
favorably with amendments from the 117th Congress.
COMMITTEE RECOMMENDATION
The Senate Committee on Energy and Natural Resources, in an
open business session on May 17, 2023, by a voice vote of a
quorum present, recommends that the Senate pass S. 535.
SECTION-BY-SECTION ANALYSIS
Section 1. Short title
Section 1 provides the short title ``Bureau of Land
Management Mineral Spacing Act''
Section 2. Compliance with BLM permitting
Subsection (a) provides that subject to any State or Tribal
requirements and subsection (c), the Secretary of the Interior
shall not require a permit to drill for an oil and gas lease
under the Mineral Leasing Act within an oil and gas drilling or
spacing unit if less than 50 percent of the minerals are owned
by the Federal Government and the Federal Government does not
have an interest in the directly impacted surface estate.
Subsection (b) requires that for each State permit to drill
or drilling plan that would impact or extract oil and gas owned
by the Federal Government, each lessee or designee shall notify
Secretary of the Interior of the submission and provide a copy
of the not later than 5 days after submission. Additionally,
the subsection requires that on approval of the State permit or
plan to drill the lessee, designee, or the State shall notify
the Secretary of the Interior no later than 45 days after the
permit or plan is approved.
Subsection (c) provides that Subsection (a) shall not apply
to Indian lands as defined in Section 3 of the Federal Oil and
Gas Royalty Management Act of 1982.
Subsection (d) is a savings clause and provides that
nothing in this Section affects other authorities of the
Secretary under the Federal Oil and Gas Royalty Management Act
of 1982 nor affects royalties otherwise due from the lessee to
the Federal government.
COST AND BUDGETARY CONSIDERATIONS
The Committee has requested, but has not yet received, the
Congressional Budget Office's estimate of the cost of S. 535,
as ordered reported. When the Congressional Budget Office
completes its cost estimate, it will be posted on the Internet
at www.cbo.gov.
REGULATORY IMPACT EVALUATION
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 535. The bill is not a regulatory measure in
the sense of imposing Government-established standards or
significant economic responsibilities on private individuals
and businesses. No personal information would be collected in
administering the program. Therefore, there would be no impact
on personal privacy. Little, if any, additional paperwork would
result from the enactment of S. 535, as ordered reported.
CONGRESSIONALLY DIRECTED SPENDING
S. 535, as ordered reported, does not contain any
congressionally directed spending items, limited tax benefits,
or limited tariff benefits as defined in rule XLIV of the
Standing Rules of the Senate.
EXECUTIVE COMMUNICATIONS
The testimony provided by the Department of the Interior at
the June 7, 2022, hearing on similar legislation, S. 4227
follows:
Statement of Nada Wolff Culver, Deputy Director, Policy & Programs
Bureau of Land Management
s. 4227, excluding certain federal minerals from federal drilling
permit requirements
S. 4227 eliminates the requirement that an oil and gas
operator submit to the BLM a Federal Application for Permit to
Drill (APD) in instances where there is non-Federal surface
estate and where the subsurface mineral estate is less than 50
percent Federal in drilling and spacing units. Under the bill,
a state would be required to provide the Secretary of the
Interior a copy of the state approved drilling permit within 45
days of approval. Without a Federal permit, the NEPA, NHPA, and
Endangered Species Act requirements for the exploration,
development, or production of oil and gas would no longer
apply. S. 4227 also states that nothing in the bill alters the
amount of royalties due to the United States from production of
Federal oil and gas.
Analysis
The BLM opposes the modifications to the oil and gas
permitting process outlined in S. 4227. Since taking office
through April 2022, this Administration has approved more than
4,700 APDs, leaving industry with more than 9,000 approved APDs
available for drilling. The total review time for APDs has also
decreased by more than 40 percent since 2011.
The Department has concerns that S. 4227 would remove the
Secretary's discretion to ensure that oil and gas operations
are conducted safely, are following all applicable
environmental laws, and are consistent with the BLM's multiple
use and sustained yield mandate under the FLPMA. Essentially,
the bill would transfer Federal decision-making authority to
the State. By requiring the state to merely notify the
Secretary within 45 days of the State's approval of an APD, S.
4227 would eliminate the Secretary's existing discretion with
respect to these approvals, which would be a significant change
from current law that would undermine the BLM's core
responsibility to ensure that permitted and regulated
activities occurring on Federal lands are in compliance with
Federal requirements designed specifically to protect the
environment, nearby communities, other landowner interests, and
taxpayers.. The provision would not allow the Secretary to
withhold approval, where appropriate, nor does it contain any
requirement for the proponent's request to be fully complete
prior to submission.
The APD is the important final step in the Federal oil and
gas development process before development can occur. The bill
fails to address several key oversight roles the BLM plays in
ensuring that Federal minerals--and that lands that are used to
access them--are protected as the mineral resources are
developed, nor does it allow for inspection and enforcement to
verify production. The BLM has robust drilling and production
standards that are applied to all wells that intersect Federal
minerals. Without these Federal drilling standards--including
those related to blowout preventer tests and cementing and
casing requirements--the BLM has concerns for the protection of
water zones and other potential risks that would result from
the bill. Any shortcomings resulting from a state's permitting
process would inappropriately leave Federal taxpayers
responsible for obligations created by the state.
Further, During the APD review, the BLM is required to
complete a site-specific environmental analysis of the
permitting action, which does not generally occur in the BLM's
land use planning process or in the leasing analysis.
Additionally, during this process, the public has their final
opportunity to engage in the decision-making process, which
helps the BLM identify public health and safety concerns and
other potential resource conflicts related to a proposed
drilling action on resources owned by the public. S. 4227 would
take away important public involvement, where Federal, state,
Tribal, and local entities participate in the environmental
review process through the posting of APDs on the BLM national
public database and within the responsible field office.
If enacted, S. 4227 would require the state to approve all
APDs within drilling and spacing units with less than a 50
percent Federal mineral interest. The BLM notes that there are
units where individual wells could be more than 50 percent
Federal minerals, and these wells would also not require a
Federal APD. As a result, the bill could potentially apply to
significantly more APDs than the Sponsors intended.
CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by S. 535 as ordered reported.
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