Wednesday, December 14, 2016

Shale Law in the Spotlight: U.S. Fish and Wildlife Service – Overview of the Final Rule on Non-Federal Oil and Gas Rights on National Wildlife Refuge Lands and Waters.

The U.S. Fish and Wildlife Service (FWS) is a bureau dedicated to fostering environmental protection and land management, and handling the environment-development nexus and associated issues. The bureau carries out diverse functions, including management of non-federal oil and gas rights on National Wildlife Refuge lands and waters under the amended National Wildlife System Administration Act of 1966. National Wildlife Refuges are part of the National Wildlife Refuge System (NWRS).

Generally, oil and gas exploration and development is prohibited on Refuge System lands and waters unless oil and gas resources are privately owned. In other words, oil and gas development may occur where the FWS does not own the subsurface mineral rights, either because the Federal government purchased the land from someone who did not own the mineral rights beneath it or who retained the mineral rights when the land was sold. 

On December 11, 2015, the FWS published to the Federal Register a proposed rule governing the management of non-federal oil and gas activities on NWRS lands and waters, which revisits codified regulations (50 CFR Part 29) that are more than fifty years old. Non-federal oil and gas rights refer to those that are under individual, company, state, local or Indian mineral ownership. In a draft environmental impact analysis, the FWS explained that “these regulations have not been updated since it was originally published [in 1960] and are ineffective at protecting refuge resources and at giving operators and Service employees clear guidance on requirements for operating on refuge lands.” Thus, the aim of the rule is to ensure clarity of regulatory interpretation for the benefit of both wildlife conservation and oil and gas industry.

On November 14, 2016, the FWS published the final rule, which applies to all operators conducting oil and gas operations on national wildlife refuge lands and waters outside of Alaska. The effective date of the final rule is December 14, 2016.

In order to provide further protection to the refuge resources, the FWS developed a new permitting system to supervise oil and gas activities on private lands within the National Wildlife Refuge System that could impact federally-owned lands and resources of the Refuge System. According to the final rule, new operators must request a Service-issued permit to develop oil and gas resources on private lands, and a subsequent permit for each development phase, including plugging and reclamation. The FWS explained that this new permitting process will enable the Service to minimize the negative impacts on refuge resources by controlling the time, place and manner of activities associated with oil and gas activities.

The final rule also stipulates that, for all existing operations authorized under a special use permit, prior to December 14, the FWS will not require a new permit, unless operators intend to modify their existing operations or conduct new operations. The FWS considers that compliance with a special use permit is enough for the purpose of protecting refuge resources and uses. In case the existing operations were performed without a Service authorization, the FWS also will not require a new permit because negative impacts would have already occurred; thus, there is no need to add on administrative and operational costs. The FWS points out that “this approach to permitting allows the Service to focus its limited time and resources on those new operations that create the highest level of incremental impacts.”

Another main change carried out by the final rule includes new performance-based standards for facility design, fish and wildlife protection, hydrology, safety, lighting and visual, noise reduction, and reclamation and protection. The final rule also provides for additional standards specific to geophysical, and drilling and production operations. The FWS highlights the necessity of a performance-based standards model to further “identify and develop specific actions and best management practices that are then incorporated into operations permits.” To support this view, the FWS argues that a prescriptive approach usually “define[s] specific requirements of time, place, and manner and may not fully consider how these measures achieve the desired level of resource protection or how they may apply in different environments.” Interestingly, the FWS reveals that it developed these standards with the idea that hydraulic fracturing operations would be carried out on refuge lands. Other main provisions include right-of-access through federal lands, financial assurance, and penalty provisions.

Finally, the final rule points out that oil and gas operations in Alaska refuges are exempt from the final rule provisions because the Alaska National Interest Lands Conservation Act and the Alaska Native Claims Settlement Act of 1971 provide enough protection to refuge resources and uses.

The FWS recognizes that the final rule is built to complement state regulatory programs even thought it admits that “the Service and State oil and gas agencies have fundamentally different missions.” The FWS hopes to resolve environmental issues the state agencies were not able to address and, by that, means that “making violation of non-conflicting provisions of State oil and gas law and regulations a prohibited act under the rule [will allow the Service] to enforce on refuges as a matter of Federal law, the same requirements already imposed on operators by a State.”

Written by Chloe Marie – Research Fellow 

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