[Federal Register Volume 61, Number 56 (Thursday, March 21, 1996)]
[Notices]
[Pages 11617-11619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-6837]



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DEPARTMENT OF ENERGY


Sale of Naval Petroleum Reserve No. 1; Intent To Prepare a 
Supplemental Environmental Impact Statement and Conduct Public Scoping 
Meeting

AGENCY: Office of Naval Petroleum and Oil Shale Reserves, Energy.

ACTION: Notice of intent to prepare a Supplemental Environmental Impact 
Statement.

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SUMMARY: Title XXXIV, Subtitle B, of the National Defense Authorization 
Act for Fiscal Year 1996 (Public Law 104-106) directs the Secretary of 
Energy to sell the Federal government's interests in Naval Petroleum 
Reserve Numbered 1 (NPR-1, also called ``Elk Hills''). In 1993, the 
Department of Energy (DOE) published a supplement (DOE/EIS-0158) to a 
1979 Environmental Impact Statement (EIS) which analyzed the impacts of 
oil and gas production at NPR-1 under continued Federal ownership and 
operation. Sale of Federal ownership was not analyzed in the 1993 
Supplemental EIS. DOE has determined that the sale required by Public 
Law 104-106 constitutes a major Federal action which may have 
significant impact upon the environment within the meaning of the 
National Environmental Policy Act (NEPA). For this reason, DOE intends 
to prepare a supplement to the 1993 Supplemental EIS to cover 
foreseeable impacts from the sale and reasonable alternatives.

DATES: DOE invites interested agencies, organizations, and members of 
the public to submit comments or suggestions to assist in identifying 
significant environmental issues and determining the appropriate scope 
of the Supplemental EIS. Comments may be submitted by mail or presented 
at a scoping meeting to be held at Bakersfield, California, on the date 
and at the time indicated below.

Tuesday, April 16, 1996
1:00 P.M. to 3:00 P.M., and 7:00 P.M. to 9:00 P.M.
Red Lion Hotel, 3100 Camino del Rio Court, Bakersfield, California

    Written comments postmarked by May 6, 1996, will be considered in 
the preparation of the Draft Supplemental EIS. Comments postmarked 
after that date will be considered to the maximum extent practicable. 
Requests to speak at the meeting should be received by Anthony J. Como, 
at the address indicated below, on or before April 9, 1996. In 
addition, requests to speak may be submitted to Mr. Como via facsimile 
at (202) 586-6050 or a message may be left on our toll-free number at 
1-888-NPREIS1 (677-3471). Requests to speak may also be made at the 
time of registration for the meeting. However, persons who submitted 
advance requests to speak by April 9, 1996, will be given priority if 
time should become limited during the meeting.

ADDRESSES: Written comments or suggestions on the scope of the 
supplemental EIS, and requests to speak at the scoping meeting, may be 
submitted to: Anthony J. Como, Document Manager (FE-52), U.S. 
Department of Energy, 1000 Independence Avenue, S.W., Washington, DC 
20585-0350, Phone: 202-586-5935, Telefax: 202-586-6050.
    Envelopes should be labeled ``Scoping for Sale EIS''.

FOR FURTHER INFORMATION CONTACT: For general information on the DOE 
NEPA review process, contact: Carol M. Borgstrom, Director, Office of 
NEPA Policy, and Assistance (EH-42), U.S. Department of Energy, 1000 
Independence Ave., S.W., Washington, D.C. 20585-0119, Phone: 202-586-
4600, Telefax: 202-586-7031, Toll Free: (800) 472-2756.
    For information on the sale of NPR-1 required by Pub. L. 104-106, 
contact: John Bartholomew, Divestment Administrator (FE-41), U.S. 
Department of Energy, 1000 Independence Ave., S.W., Washington, D.C. 
20585-0340, Phone: 202-586-4248, Telefax: 202-586-0835.

SUPPLEMENTARY INFORMATION: NPR-1 comprises 47,985 acres and is located 
about 35 miles west of Bakersfield in Kern County, California. It was 
created by an Executive Order issued by President Taft in 1912 to 
provide an emergency source of liquid fuels for the military. Except 
for brief periods of production in the 1920's and during World War II, 
Elk Hills was maintained in an essentially undeveloped status until the 
1973-74 oil embargo demonstrated the Nation's vulnerability to oil 
supply interruptions. As a result of the embargo, the Congress passed 
the Naval Petroleum Reserves Production

[[Page 11618]]
Act of 1976 (Pub. L. 94-258), which authorized and directed that the 
Reserve be explored and developed to its full economic and productive 
potential. Public Law 94-258 required that Elk Hills be produced for 
six years at the ``maximum efficient rate'' consistent with sound 
engineering practices. The law also provided the President 
discretionary authority to extend production subsequently, in 
increments of up to three years each, if continued production is found 
to be in the national interest. Such findings have been made and 
production is presently authorized through April 5, 1997.
    Elk Hills is currently producing approximately 61,000 barrels per 
day of oil, 345 million cubic feet per day of natural gas, and 500 
thousand gallons per day of natural gas liquids. All of the 
government's share of production (approximately 47,000 barrels per day 
of oil, 40 million cubic feet per day of natural gas, and 225 thousand 
gallons per day of natural gas liquids) is sold on the open market via 
competitive bids, and all revenues from these sales are deposited into 
the Miscellaneous Receipts Account in the U.S. Treasury. Since the 
opening of Elk Hills to full development in 1976, revenues through 
Fiscal Year 1995 from the sale of hydrocarbon products produced from 
the field have totaled almost $13.0 billion, against total costs of 
$3.0 billion.
    Elk Hills consists of about 67 sections of land, approximately 78 
percent of which is owned by the Federal government and 22 percent by 
Chevron U.S.A. These lands have been developed and operated as a unit 
pursuant to a Unit Plan Contract (UPC) entered into in 1944. Under the 
UPC, the Federal government has the exclusive control, subject to the 
UPC, over the exploration, development, and operation of NPR-1.
    To meet President Clinton's call to reinvent government, DOE 
evaluated the Federal government's role at Elk Hills in context with 
current national priorities and needs. The Department recognized that 
this facility consistently earns substantial revenues for the Treasury. 
However, the Department decided that continued involvement by the 
Federal government in what is essentially a commercial enterprise was 
inappropriate, and recommended to the Congress that Elk Hills be 
privatized. Congress agreed that privatization was the appropriate 
course of action and included language in the Defense Authorization Act 
for Fiscal Year 1996 authorizing the sale.

Preliminary Identification of Alternatives

    One of the major purposes of an EIS is to define and analyze the 
reasonable alternatives to the proposed action, and the environmental 
impacts to be expected from each alternative. As background for public 
comments and suggestions concerning reasonable alternatives to be 
considered, DOE has tentatively identified two alternatives, as well as 
a reference case, to be analyzed in the Supplemental EIS:

1. Continued Federal Ownership and Operation Under Public Law 104-106 
(``No Action'')

    Public Law 104-106 establishes certain conditions that must be met 
for the sale of the Federal government's ownership interests in Elk 
Hills to be completed. For example, under section 3414(b), the 
Secretary of Energy may suspend the sale if the Secretary and the 
Director of the Office of Management and Budget jointly determine that 
the sale is proceeding in a manner inconsistent with achievement of a 
sale price that reflects the full value of Elk Hills, or that a course 
of action other than immediate sale is in the best interests of the 
United States. The ``No Action'' alternative, therefore, contemplates 
that sale does not take place for some reason, and that Federal 
ownership and operation of NPR-1 will continue.
    The environmental and socioeconomic impacts of continued Federal 
ownership and operation of Elk Hills were analyzed in the 1993 
Supplemental EIS (DOE/EIS-0158). Those analyses assumed that the 
petroleum engineering strategy that was being used in 1993 to guide the 
overall development of Elk Hills (``maximum efficient rate'' 
production, as required by the Naval Petroleum Reserves Production Act 
of 1976), would continue to be used in the future. However, section 
3412(h) of the Defense Authorization Act for Fiscal Year 1996, which 
authorized the sale of Elk Hills, also revised the basic operating 
strategy for that oil field. Section 3412(h) requires that, until the 
sale of Elk Hills is completed, DOE must produce the field not at the 
``maximum efficient rate,'' but rather ``at a maximum daily oil or gas 
rate * * * which will permit maximum economic development * * * 
consistent with sound oil field engineering practices * * * '' It is 
possible that development of Elk Hills under this new strategy may 
proceed at a different pace, and may consist of a different mix of 
facility development and operational projects, than was analyzed in the 
1993 Supplemental EIS. DOE will have a more detailed, but still 
preliminary, description of activities under the ``maximum economic 
development'' strategy available at the scoping meeting. However, the 
Department is seeking public input on this issue and encourages 
suggestions and comments.

2. Sale of the Federal Government's Ownership Interests (``Proposed 
Action'')

    In this scenario, all Federal ownership interests in Elk Hills 
would be sold; DOE would no longer have authority or responsibility for 
the management of Elk Hills, and all development and production 
decisions would be vested solely with the private sector owner(s). This 
is the outcome sought by the legislation and is therefore the proposed 
action for the Supplemental EIS. Private owners of Elk Hills will not 
be bound by any Federal statutory requirements regarding development 
philosophies, as was DOE with the ``maximum efficient rate'' 
requirement in Public Law 94-258. This may result in the Elk Hills 
field taking a different course in the future, with different levels of 
development activity and different types of projects than under 
continued government ownership. DOE will have a preliminary description 
of a number of possible development scenarios for NPR-1 under private 
ownership available for presentation at the scoping meeting. However, 
the Department is seeking public input on this issue and encourages 
suggestions and comments.

3. Reference Case

    In order to understand the changes in environmental impacts which 
Public Law 104-106 could cause at NPR-1, the Supplemental EIS will 
describe a ``reference case'' scenario comprised of the present 
conditions at the reserve. This scenario will be based on the 1993 
Supplemental EIS and actual operational data obtained since that 
document was published. The reference case will provide a basis of 
comparison for evaluating the required change from the ``maximum 
efficient rate'' operation strategy to ``maximum economic 
development.'' DOE believes at this time that the reference case will 
be similar to the No Action alternative in many respects.

Preliminary Identification of Environmental Issues

    The purpose of this notice is to solicit comments and suggestions 
for consideration in preparation of the EIS Supplement. As background 
for public comment, it is useful to list in this

[[Page 11619]]
document those environmental issues which have been tentatively 
identified for analysis. This list is not intended to be all-inclusive 
or to imply any predetermination of impacts. Following is a preliminary 
list of issues that may require analysis in the NPR-1 Supplemental EIS.
    In addition to seeking comments from the public on this preliminary 
list of potential impacts, DOE is also soliciting comments on how 
environmental compliance activities conducted by a private owner of Elk 
Hills may differ from compliance activities conducted at the site by 
the Federal government, as described in the 1993 Supplemental EIS and 
other documents related to environmental compliance, such as the 1995 
Biological Opinion issued by the U.S. Fish and Wildlife Service under 
Section 7 of the Endangered Species Act.
    1. Air Quality: Release of air pollutants from the Reserve would 
probably occur at about the same levels as projected in the 1993 
Supplemental EIS under Alternative 1, although it is possible that some 
increases could also occur. Implementation of Alternative 2 could 
result in the continued release of gaseous and particulate residuals 
from the Reserve, and possibly increase the level of releases.
    2. Impacts to Wildlife: Operation under either of the alternatives 
would continue to produce some potentially adverse impacts to some 
wildlife inhabiting the Reserve. Of particular concern would be the 
continued or expanded disturbance of habitat, and other related 
interactions, involving the six Federal- and state-listed endangered 
species known to exist on the NPR-1 site (the San Joaquin kit fox, 
giant kangaroo rat, blunt-nosed leopard lizard, Tipton kangaroo rat, 
Hoover's wooly-star, and San Joaquin antelope squirrel).
    3. Socioeconomic Effects: Sale of NPR-1 to a private owner could 
result in a combination of positive and negative impacts in the local 
area, depending on possible changes in state and local taxation of the 
new privately-owned Reserve lands and related revenues, and in the 
alteration of existing Federal purchasing and contracting practices by 
a private sector owner. It is possible that overall staffing levels at 
Elk Hills will be lower under a private owner than they are with 
Federal ownership and operation. Hence, adoption of Alternative 2 by 
DOE could potentially have adverse impacts in a number of Kern County 
communities, due to direct loss of jobs by NPR-1 workers, indirect 
economic impacts on businesses supported in whole or in part by Federal 
operation of the Reserve, and by community loss of other revenues. 
Continued Federal ownership under Alternative 1 could maintain 
socioeconomic benefits for the area through the interaction of the 
substantial employment, subcontracting, and supply requirements of the 
Reserve with the local economy and residents.
    4. Water Resources: Some concern exists regarding the potential for 
additional impacts to groundwater resources near the Reserve as a 
result of continued and possibly expanded reinjection of wastewater and 
disposal of other production wastes onsite. This concern is associated 
with Alternatives 1 and 2.
    5. Cumulative Impacts: NEPA requires that the EIS evaluate the 
potential cumulative effects of the various alternatives in relation to 
the impacts of past, present, and reasonably foreseeable future 
development (of any kind), both on- and offsite. Cumulative impacts 
will be evaluated within the Supplemental EIS for all important issues, 
e.g., air quality, wildlife species, and socioeconomic conditions in 
nearby areas.

Scoping

    The above preliminary lists of major environmental issues and 
reasonable alternatives are not meant to be exhaustive or final. For 
instance, even though some potential environmental impact areas, such 
as cultural resources, land use, and recreation, are not specified 
above as major issues, they will be evaluated as part of the NEPA 
analysis and will be discussed in the Supplemental EIS. DOE identified 
the reasonable alternatives and environmental issues listed above based 
on its experience with the major issues that have been raised in 
previous NEPA compliance activities for Elk Hills. DOE considers the 
scoping process to be open and dynamic in the sense that alternatives 
other than those given above may warrant examination, and new issues 
may be identified and evaluated. Interested parties are invited to 
participate in the scoping process both to refine the preliminary 
alternatives and environmental issues to be analyzed in depth, and to 
eliminate from detailed study those alternatives and environmental 
issues that are not significant or pertinent.
    The scoping process will involve all interested agencies (Federal, 
state, county, and local), groups, and members of the public. Comments 
are invited on both the alternatives and the issues to be considered in 
the Supplemental EIS. A public scoping meeting will be held at the 
location, date, and time indicated above. This scoping meeting will be 
informal and conducted as a discussion between attendees and DOE. The 
DOE presiding officer will establish only those procedures needed to 
ensure that everyone who wishes to speak has a chance to do so and that 
all issues and comments raised are clearly understood by DOE. Depending 
upon the number of persons wishing to speak, DOE may allow longer times 
for representatives of organizations. Consequently, persons wishing to 
speak on behalf of an organization should identify that organization in 
their request to speak. Persons who have not submitted a request to 
speak in advance may register to speak at the scoping meeting. However, 
advance requests to speak are encouraged. Both oral and written 
comments will be considered and will be given equal weight by DOE.
    A complete transcript of the public scoping meeting will be 
retained by DOE and made available for inspection during business 
hours, Monday through Friday, at the Department of Energy Freedom of 
Information Reading Room, Forrestal Building, 1000 Independence Avenue, 
S.W., Washington, DC 20585, and at the Department of Energy Oakland 
Operations Office, 1301 Clay Street, Oakland, CA 94612-5208. Additional 
copies of the public scoping meeting transcripts will also be made 
available during normal business hours at the following locations:

Beale Memorial Library-- Main Branch, 1315 Truxtun Avenue, Bakersfield, 
California
Taft Branch--Kern County Library, 27 Emmons Park Drive, Taft, 
California

    A notice of locations where documents will be available will be 
published in the Federal Register at the time of announcement of the 
availability of the Draft Supplemental EIS. In addition, copies of the 
public scoping meeting transcripts will be made available for purchase.
    Those interested parties who do not wish to submit comments or 
suggestions at this time, but who would like to receive a copy of the 
Draft Supplemental EIS, should notify Anthony J. Como at the address 
given in the address section of this notice.

    Dated at Washington, DC, this 13th day of March, 1996, for the 
United States Department of Energy.
Peter N. Brush,
Principal Deputy Assistant Secretary Environment, Safety and Health.
[FR Doc. 96-6837 Filed 3-20-96; 8:45 am]
BILLING CODE 6450-01-P