[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

                                _______
                                

                 July 11, 2023.--Ordered to be printed

                                _______
                                

         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.

                             [all]