[Federal Register Volume 74, Number 226 (Wednesday, November 25, 2009)]
[Proposed Rules]
[Pages 61596-61600]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28248]


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DEPARTMENT OF THE INTERIOR

National Park Service

36 CFR Part 9

RIN 1024-AD78


Minerals Management, Nonfederal Oil and Gas Development

AGENCY: National Park Service, Interior.

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ACTION: Advance notice of proposed rulemaking.

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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.

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.

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

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mainly 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 Sec.  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 Sec.  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 Sec.  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 Sec.  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 Sec.  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

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park 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 Sec.  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

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effective 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.

    Dated: October 2, 2009.
Will Shafroth,
Acting Assistant Secretary for Fish and Wildlife and Parks.
[FR Doc. E9-28248 Filed 11-24-09; 8:45 am]
BILLING CODE 4310-EH-P