Wednesday, January 25, 2017

Shale Law in the Spotlight: National Park Service – Overview of the Final Rule on Non-Federal Oil and Gas Rights on National Park System Units

The U.S. National Park Service (NPS) is a bureau of the U.S. Department of the Interior having responsibility for managing and maintaining 417 areas – also referred as units – of national significance, including national parks, monuments, battlefields, military parks, historical parks, historic sites, lakeshores, seashores, recreation areas, scenic rivers and trails. Those areas are part of the National Park System and account for a total of 84 million acres within all 50 states, the District of Columbia, American Samoa, Guam, Puerto Rico, and the Virgin Islands.

As part of the National Park System, the NPS is in charge of setting out policies and regulations to protect and preserve the said areas under the authority of the National Park Service Organic Act. Accordingly, in December 1978, the NPS enacted specific regulations governing the exercise of non-federal oil and gas rights in units of the National Park System codified at 36 CFR part 9, subpart B, and applied to all activities associated with non-federal oil and gas development on NPS units “where access is on, across, or through federally owned or controlled lands or waters.”  Non-federal oil and gas rights would encompass those rights owned by private parties, state and local governments, or other entities underlying NPS units.

On October 26, 2015, the NPS published to the Federal Register a proposed rule revisiting the codified regulations of more than 37 years old in order to improve the efficiency and effectiveness of the National Park System. The other purpose of the proposed rule is to ensure NPS units adequate protection from increasing oil and gas exploration and production. As stated in the Federal Register, the NPS has recorded 534 non-federal oil and gas operations in a total of 12 units and “[b]ased on the presence of split estates, exploration and production occurring on adjacent and nearby lands, and likely increases in energy prices, NPS expects that future non-federal oil and gas operations within park boundaries could occur in up to 30 additional System units.”

On November 4, 2016, the NPS published the final rule to protect national parks from potential adverse impacts associated with non-federal oil and gas operations located within the NPS units outside Alaska. The final rule became effective on December 5, 2016.

One of the main changes brought by the new rule concern the scope of application, which has been extended to cover “non-federal oil or gas operations on lands or waters within a System unit, regardless of the ownership or legislative jurisdictional status of those lands or waters.” In addition, the NPS final rule now requires operators to obtain a Temporary Access Permit or an Operations Permit preceding any activities on NPS units. Prior to the enactment of the new regulations, operators only needed to submit a proposed plan of operations and financial assurance for approval. The bonding cap on financial assurance set at $200,000 per operator, per System unit, was removed and, from now on, the financial assurance will be calculated based on the reasonable estimated cost of site reclamation. Furthermore, the NPS will not start reviewing permit applications before operators can prove that they hold a valid existing right to conduct oil and gas operations on NPS lands.

Another important change is that the NPS final rule created new information requirements for previously exempt operators, including operations that do not require access on, across, or through federal lands and grandfathered operations. The NPS explained that operators did not have to obtain an approved NPS plan of operations and financial assurance prior to conducting its oil and gas activities on NPS units, which resulted in adverse impacts on NPS unit resources and public health and safety.

The NPS declared that the promulgation of the final rule allowed extending the scope of application to 60% of the oil and gas operations in NPS units that were previously exempted under the 1978 regulations.

Written by Chloe Marie – Research Fellow

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