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3 Origins of Leasing and Planning For several years prior to enactment of the Federal Onshore Oil and Gas Leasing Reform Act of 1987 (101 Stat. 1330-256), considerable un- certainty and controversy (including litigation) plagued the relationship between the planning and environmental assessment requirements of fed- eral law and the federal government's onshore oil and gas leasing program. 1b assist in understanding the issues generated by this uncertainly and controversy, brief histories of both the federal oil and gas leasing and management policies and the federal land planning and environmental as- sessment policies are offered. In Chapter 4, the origins of the present controversy are discussed. THE MINERAL LEASING ACT OF 1920 AND THE ACQUIRED LANDS MINERAL LEASING ACT OF 1947 The Mineral Leasing Act of 1920 (41 Stat 437; 30 USC 181-287) authorized the Secretary of the Interior to lease federally owned oil and gas deposits on onshore federal lands.) The Mineral Leasing Act created a two- track, competitive and noncompetitive, leasing system. Leases were issued ~ Prior to enactment of the Mineral Leasing Act, oil and gas had been subject to the uncer- tain and unwieldy requirements of the Mining Law of 1872, which, after a period of confusion, was made applicable lay Congress in the Oil Placer Act of 1897 (61 Stat. 526~. 36

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37 competitively when the lands were "within the known geologic structure of a producing oil or gas field"; otherwise, leases were issued noncompetitively to the "person first making application" (30 USC 226~. ~day, the ratio of competitive leases to noncompetitive leases differs in various states, reflecting in part the probabilities of locating the oil and gas resources in those jurisdictions (see Figure 2.1, p. 20~. All leasing, competitive and noncompetitive, was subject to the discre- tion of the Secretary of the Interior, who may lease lands with or without conditions or withhold lands from leasing. Even though the Mineral Leas- ing Act was designed to promote oil and gas development, it also authorized the secretary, in the words of the U.S. Supreme Court, "to execute leases which, exercising a reasonable discretion, he may think would promote the public welfare" (United States ~ ret McClennan v. Wilbur, 283 US 414, 419 [1931~; see also UdaR v. Tallm an, 380 US 1, 4 [19653; McDonald v. Clark, 771 F.2d 460 [lOth Cir. 19853~.2 The secretary also was accorded broad au- thority under the act to include in each lease such terms and conditions (in the form of lease stipulations) as he deemed necessary "for the protection of the interests of the United States . . . and for the safeguarding of the public welfare" (30 USC 187~. The Mineral Leasing Act preserved for the states opportunity to regu- late certain leasehold activities once leases were issued, although the scope of the state (and possibly local government) authority have remained some- what unclear and are still occasionally tested in litigation. Compare, for example, Gulf Oil Corp. v. Wvomi.n~ fly ~ And I ft~;~;^~ (693 P. 2d 227 [1985]; sate agency may regulate method and means of access to federal oil and gas lease on national forest lands) with Ventura County v. Gulf Oil Coup. (601 F.2d 1080 [9th Cir. 1979], aff,d mem. 445 U.S. 947 [1980~; county may not apply zoning restriction to deny federal lessee access to lease). The Mineral Leasing Act did not disturb the preexisting division of . ,,,_,.__._0 ~- ~rev& ~16116~3lL~rl 2 In addition to his discretion under the Mineral Leasing Act and related statutes to with- hold the issuance of mineral leases, the Secretary of the Interior has long had available a separate mechanism to disallow leasing on federal lands the withdrawal power. This authority, recog- nized by the U.S. Supreme Court in 1915, in United States v. Midwest Oil (236 US 459 [1915~), allows the executive to "withdraw" federal lands from the operation of generic disposal and de- velopment statutes like the Homestead Act and the Mining I~w of 18 72 in order to use them for wildlife protection, military or Indian reservations, and other public purposes. More recently, in the Federal Land Policy and Management Act (FLP MA), Congress expanded and codified this authority, giving the Secretary of the Interior broad power to withdraw federal land "in order to maintain . . . public values in [an] area or [to] reservie] the area for a particular public purpose or program" (43 USC 1702(i)~. Secretarial withdrawals must follow a statutorily specified proce- dure, including submission of a report to the Congress explaining the reasons for, and costs and benefits of, each withdrawal (43 USC 1714~.

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38 responsibility over National Forest land administered by the Forest Ser- vice. When Congress in 1905 transferred the Forest Reserves from the Department of the Interior to the newly established Forest Service in the Department of Agriculture, it did not alter the Interior Department's pri- ma~y responsibility for minerals management. The Mineral Leasing Act provided the Secretary of the Interior with the authority to issue mineral leases on National Forest land. Under the practice that actually evolved over the years, however, the Forest Service gained an important role in the Interior Department's leas- ing decisions on National Forest land. Forest Service recommendations for lease issuance and lease stipulations to protect surface values, for example, were almost always accepted by the Bureau of Land Management, the In- terior Department agency that exercises the mineral leasing functions (see Wilkinson and Anderson, 1985~. This consultation process was formalized in a memorandum of understanding entitled "Interagency Agreement be- tween the BLM and the Forest Service for Mineral Leasing," signed by the agency heads on June 19, 1984 (BLM, 1984~. The Mineral Leasing Act does not apply to mineral interests acquired by the federal government. Such interests, primarily found in National Forests in the eastern United States, are subject to mineral development under the Mineral Leasing Act for Acquired Lands, enacted in 1947 (1947 act; 30 USC 351-359~. This act, for the most part, simply incorporated the provisions of the Mineral Leasing Act; that is, acquired minerals were authorized to be leased "under the same conditions as contained in the leasing provisions of the mineral leasing laws" (30 USC 352~. Therefore, like the Mineral Leasing Act, the 1947 act vested in the Secretary of the Interior broad discretion over when, where? and under what terms these acquired mineral interests could be leased for oil and gas purposes. Congress has also occasionally authorized BLM to lease other lands, such as acquired military lands previously unavailable for leasing under the Mineral Leasing Act for Acquired Lands (e.g., see 90 Stat. 1083, 1090 [1976i, which amends 30 USC 352~. The only important difference in the two laws concerned the role of the Forest Service. The 1947 act provided that leases could not be issued by the Secretary of the Interior "except with the consent of the head of the executive department . . . having jurisdiction over the lands" (30 USC 352~. Thus, unlike the Mineral Leasing Act applicable to minerals in National Forests reserved from public domain land, explicit Forest Service consent was statutorily required for oil and gas leasing on acquired National Forest lands. As noted further below, however, the Reform Act gave the Forest Service a veto over oil and gas leasing on public domain National Forests in 1987.

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39 Until recently the Department of the Interior normally followed a practice of issuing onshore oil and gas leases upon request by interested parties in those areas of federal land that were not rendered unavailable to mineral leasing by acts of Congress or executive withdrawals. Prior to the 1970s, this leasing was conducted with relatively little pre-lease analysis of tracts of land proposed for leasing, of the trade-offs between oil and gas exploration and development and other possibly conflicting uses of the land, and of the environmental impacts of oil and gas activity. The Interior Department's decision-making processes had few formal requirements for public participation. Furthermore, the department rarely made any attempt to control the configuration or the timing of issuance of oil and gas leases; these matters were left primarily to the lease applicants. In the 1950s, interest in leasing federal land for oil and gas grew dramatically. Often many applications were submitted simultaneously for new oil and gas leases, as old leases for the same tracts expired or were canceled. The Department of the Interior interpreted the Mineral Leasing Act to prohibit competitive leasing in many situations where substantial competitive interest existed. Faced with the problem of selecting, in the words of the statute, the "first qualified applicant" for a lease from among many simultaneously filed applications, the Secretary of the Interior created what was in effect a lottery system. One application was chosen at random to determine the lessee. This practice was upheld by the federal courts as a permissible interpretation of the Mineral Leasing Act in Thor-Westcliffe Dev. v. Udall (314 F. 2d 257 [D.C. Cir. 19633~. The lottery was widely used because most of the thousands of leases issued annually were issued noncompetitively. As leases expired, they were posted as available for noncompetitive offers (unless they fit the narrow category for competitive leasing), and the lease was issued to the applicant whose name was drawn. In the five years prior to the enactment of the Reform Act, up to 15 percent of leases were issued competitively, 20-40 percent of the noncompetitive leases were issued over-the-counter, and 60-80 percent were selected in the lottery (BLM, 1983-1988~. The federal oil and gas leasing practices both historical and present- are discussed more fully in Chapter 6. THE ENVIRONMENTAL LAWS The statutory basis for onshore oil and gas leasing and management had been in place for over half a century before the enactment of three environmental laws that would play such an important role in the present controversy over oil and gas exploration and development on the public lands. Those three laws are discussed in this section.

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40 The Wilderness Act In the face of rapidly escalating pressures for uses of the public lands, interest grew among the public and within the land management agencies to preserve a portion of the federal land base undisturbed. This interest culminated in the passage of the Wilderness Act in 1964 (16 USC 1131- 1136~. As stated in section 2 (p. 1131) of the Wilderness Act: In order to assure that an increasing population, accompanied by expanding settlement and growing mechanization, does not occupy and modify all areas within the United States and its possessions, leaving no lands designated for presentation and protection in their natural condition, it is hereby declared to be the policy of the Congress to secure for the American people of present and future generations the benefits of an enduring resource of wilderness. The Wilderness Act established the National Wilderness Preservation System, placed in the system certain areas already managed as wilderness by the Forest Service, and directed the Forest Service, the National Park Service, and the Fish and Wildlife Service to study certain lands for their wilderness character and to make recommendations through the president to the Congress for additional areas to be included by statute in the system. The Forest Service chose to study all roadless lands under its jurisdiction and has done so twice (Roadless Area Reviews and Evaluations, RARE I and II) (Forest Service, 1979~. In the Federal Land Policy and Management Act of 1976 (43 USC 1701-1784), the BLM was directed to conduct a similar wilderness review of its lands. Idday, the National Forests contain some 32.5 million acres, or 36 percent, of the entire National Wilderness Preservation System. Although Congress has now acted upon most of the recommendations from the second Forest Service wilderness review, it is just beginning to turn its attention to recommendations emerging from the BLM's wilderness review. Mineral exploration and development were frequently cited by the proponents of the Wilderness Act as among the activities that must be barred from the designated wilderness. In the compromises made to ensure the act's passage, however, such activities were not immediately proscribed. Instead, all valid rights for mineral development were preserved and all units of the National Wilderness Preservation System were left open until January 1, 1984, for further mineral exploration and development, including oil and gas leasing. As discussed in Chapters 5 and 7, the controversies over wilderness designation and oil and gas leasing became increasingly severe as this deadline was approached and passed. The National Environmental Policy Act The National Environmental Policy Act became effective on January 1, 1970 (42 USC 4321-4370~. It requires all federal agencies engaging in any

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41 action that could significantly affect the quality of the human environment to prepare a document the environmental impact statement (EIS) before a decision is reached on the action (42 USC 433~2~(c)~. The U.S. Supreme Court has recently described the EIS requirement this way (Robertson v. Methow Valley Citizens' Council, 57 USLW 4497, 4501 [May 1, 1989~: It ensures that the Agency, in reaching its decision, will have available and will carefully consider detailed information conceding significant environmental impacts; it also guarantees that the relevant information will be made available to the larger audience that may also play a role in both the deasion-making process and the implementation of that decision. Simply Icy focusing the Agen~y's attention on the environmental consequences of a proposed project, NEPA ensures that important effects will not be overlooked or underestimated only to be discovered after resources have been committed or the die otherwise cast. Many federal agencies were slow to respond to this general, broadly worded statute. The courts stepped into the breach, and interpreted the NEPA expansively and vigorously, and in hundreds of cases ordered the preparation and consideration of EISs. Somewhat curiously, however, the federal onshore oil and gas leasing program escaped judicial scrutiny on NEPA grounds for a decade, even though the federal agencies generally did not prepare EISs on their leasing or management decisions in the oil and gas leasing program, and therefore were vulnerable to challenge under the evolving judicial interpretations of NEPA The agencies occasionally did prepare "environmental analysis reports" (EARs) on some of their decisions approving oil and gas activities. While these EARs contained some environmental assessment, they fell short of satisfying the EIS requirement of NEPA. The Endangered Species Act In 1973, Congress enacted the Endangered Species Act (ESA; 16 USC 1531-15431. Section 7 of this act requires every federal agency, "in consultation with and with the assistance of the Secretary [of the Interior, to] insure that any action authorized, funded, or carried out by such agency is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of habitat of such species . . ." (16 USC 1536(a)~2~. "Jeopardy" has been defined very broadly, to include indirect as well as direct reductions in the likelihood of survival and recovery of such species in the wild (see 50 CFEt 402.02 [1986~. The ESA directs the Fish and Wildlife Service in the Department of the Interior to list species that are either threatened or endangered. The - !

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42 law also creates a consultation process triggered by the determination of the agency proposing the action that the action might affect a listed threatened or endangered species. If such a determination is made, the Fish and Wildlife Service must prepare a "biological opinion" evaluating the nature and extent of possible jeopardy posed by contemplated agency action (16 USC 1536(b)~. If the opinion concludes that the proposed action is likely to jeopardize a listed species, the agency proposing the action must modify its proposal to remove the perceived threat, unless an exemption from the ESA is obtained under a special process providing very narrow grounds for exemption (see 16 USC 1536(g), chid. During the consultation process, the agency proposing the action is forbidden from making any "irreversible or irretrievable commitment of resources" that might lead to the jeopardy the act forbids (16 USC 1536(d)~.3 The ESA operates in broad terms something like NEPA; that is, it creates a process for analyzing the effects of an agency's proposed action upon the environment (although the ESA concerns only one part of the environment-threatened and endangered species rather than the environment as a whole, as does NEPA). Both processes conclude with similar documents containing the requisite analysis: the ESA's "biological opinion" and the NEPAs EIS. On the other hand, the ESA is wholly unlike NEPA in one crucial respect: NEPA's command has been interpreted by the U.S. Supreme Court as being procedural only; that is, the statute "does not mandate particular results, but simply prescribes the necessary process" (Robertson v. Methow Valley Citizens Council, 57 USLW 4497, 4501 [May 1, 19893~. The ESA, on the other hand, contains a substantive bite, requiring agencies "to afford first priority to the declared national policy of saving endangered species" (TVA v. Hill, 437 US 153, 185 [1978~. According to the Supreme Court, the "plain intent [is] to halt and reverse the trend toward species extinction, whatever the cost" (437 US 153, 184~. The courts have been as vigorous in enforcing the mandates of the Endangered Species Act as those of NEPA, deciding dozens of cases brought under the ESA in the last decade and a half. But, as with NEPA, the onshore federal oil and gas leasing program was not the subject of litigation on ESA grounds until the early 1980s. 3The ESA was substantially overhauled in 1978 after the Supreme Court's decision in the famous "snail darter" case, TVA v. H'11~437 US 153 [1978~), but the revisions generally strength- ened rather than weakened the act, and it has been readopted twice since with only minor revi- sions.

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43 CONGRESSIONAL CODIFICATION AND STRENGTHENING OF THE FEDERAL IAND MANAGEMENT AGENCIES' LAND AND RESOURCE PLANNING PROCESSES In the middle 1970s, Congress overhauled the land management plan- ning systems of the Forest Service and the BLM. The Forest and Rangeland Renewable Resources Planning Act of 1974 (16 USC 1600-1614) and the National Forest Management Act of 1976 (16 USC 1601-1614) both applied to the Forest Service; the Federal Land Policy and Management Act of 1976 applied to the BLM. In these statutes, Congress created similar (but not identical) planning processes that the agencies were required to use to guide their management decisions for the lands under their respective jurisdictions. The land use planning authority and practice both historical and present the two land management agencies are more thoroughly dis- cussed in Chapter 5. REFERENCES Bureau of Land Management, Department of the Interior. 1983-1988. Public Land Statistics. 198~1987. Bureau of Land Management and U.S. Forest Service. 1984. Interagency Agreement Between Bureau of Land Management and the Forest Service for Mineral Leasing. June 19. Forest Service. 1979. Final Environmental Impact Statement for Roadless Area Review and Evaluation. FS 325. January. Wilkinson, C.F., and Anderson, H.M. 1985. Land and Resource Planning in the National Forests. Oregon L. Rev. 64~1~:261-263.