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Land Use Planning and Oil and Gas Leasing on Onshore Federal Lands Committee on Onshore Oil and Gas Leasing Board on Earth Sciences and Resources Commission on Physical Sciences, Mathematics, and Resources National Research Council NATIONAL ACADEMY PRESS Washington, D.C. 1989

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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose membem are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of member, of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. Ibe Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel O. Thier is president of the Institute of Medicine. lithe National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined lay the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The (council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council. Support for this project was provided by the Bureau of I>nd Management in the Department of the Interior and the Forest Service in the Department of Agriculture. Libras of Congress Catalog Card No. 89~3529 International Standard Book Number 0-309-04144-9 Available from National Academy Press 2101 Constitution Avenue, NW Washington, DC 20418 S056 Printed in the United States of America First Printing, November 1989 Second Printing, November 1990

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COMMITTEE ON ONSHORE OIL AND GAS LEASING PERRY R. HAGENSTEIN, Resources Issues, Inc., Chairman JAMES ~ BARLOW, JR., Barlow & Haun, Inc. GARY F. COLLINS, Northern Arapaho Shoal Business Council (retired) TRAVIS H. HUGEIES, P. E. LaMoreaux & Associates ROBERT G. LEE, University of Washington JOHN D. LESHY, Arizona State University DIANNE R. NIELSON, State of Utah, Division of Oil, Gas, and Mining R. MAX PETERSON, International Association of Fish and Wildlife Agencies DAVID E. POWLEY, Amoco Production Company STEVEN P. QUARLES, Crowell & Monng PHILLIP W. SCHNEIDER, Board of Directors, National Wildlife Federation DONALD W. STEEPLES, Kansas State Geological Survey S' MALCOLM SIMMONS, Staff Officer INA B. ALTERMAN, Staff Officer FLORENCE W. POW, Project Secretary iii

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BOARD ON EARTH SCIENCES AND RESOURCES BRIAN J. SKINNER, Yale University, Co-Chairman WILLIAM L. FISHER, University of Texas at Austin, Co-Chairman SAMUEL S. ADAMS, Colorado School of Mines KEIITI AKI, University of Southern California at Los Angeles ALBERT W. BALLY, Rice University JAMES R. BAROFFIO, Chevron USA, Inc. SANDRA L. BLACKSTONE, University of Denver DONALD J. DePAOLO, University of California at Berkeley GORDON P. EATON, Iowa State University W. G. ERNST, University of California at Los Angeles ROBERT N. GINSBURG, University of Miami ALEXANDER F. H. GOETZ, University of Colorado PRISCILLA C. GREW, Minnesota Geological Survey PERRY R. HAGENSTEIN, Resource Issues, Inc. HARRISON C. JAMISON, Petroleum Exploration Consultant THOMAS H. JORDAN, Massachusetts Institute of Technology CHARLES J. MANKIN, University of Oklahoma CAREL Old;, JR., Unocal Corporation FRANK M. RICHTER, University of Chicago THE HONORABLE J. J. SIMMONS III, Interstate Commerce Commission STEVEN M. STANLEY, Johns Hopkins University IRVIN L. WHITE, New York State Energy Research and Development Authority ROBERT S. LONG, Staff Director 1V

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COMMISSION ON PHYSICAL SCIENCES, MATHEMATICS, ANI) RESOURCES NORMAN HACKERMAN, Robert ~ Welch Foundation, Chairman ROBERT C. BEARDSLEY, Woods Hole Oceanographic Institution B. CLARK BURCHFIEL, Massachusetts Institute of Technology GEORGE F. CARRIER, Harvard University RALPH J. CICERONE, University of California at Irvine HERBERT D. DOAN, The Dow Chemical Company (retired) PETER S. EAGLESON, Massachusetts Institute of Technology DEAN E. EASTMAN, IBM T. J. Watson Research Center MARYE ANNE FOX, University of Texas GERHART FRIEDLANDER, Brookhaven National Laboratory LAWRENCE W. FUNKHOUSER, Chevron Corporation (retired) PHILLIP ~ GRIth1THS, Duke University NEAL F. LANE, Rice University CHRISTOPHER F. McKEE, University of California at Berkeley RICHARD S. NICHOLSON, American Association for the Advancement of Science JACK E. OLIVER, Cornell University JEREMIAH P. OSTRIKER, Princeton University Observatory PHILIP ~ PALMER, E. I. du Pont de Nemours & Company FRANK L. PARKER, Vanderbilt University DENIS J. PRAGER, MacArthur Foundation DAVID M. RAUP, University of Chicago ROY F. SCHWIT1~;RS, Superconducting Super Collider Laboratory LARRY ~ SMARR, University of Illinois at Urbana-Champaign KARL K TUREKIAN, Yale University MYRON F. UMAN, Acting Executive Director ROBERT M. SIMON, Acting Associate Executive Director v

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Preface The Federal Onshore Oil and Gas Leasing Reform Act of 1987 (Re- form Act; 101 Stat. 1330-256) requires a study by the Comptroller General of the United States and the National Academy of Sciences of land use planning and the leasing and management of oil and gas on the federal lands. The study is to address "the manner in which oil and gas resources are considered in land use plans" prepared by the Bureau of Land Man- agement (BLM) in the Department of the Interior and the Forest Service in the Department of Agriculture for lands under their jurisdiction. In par- ticular, the Reform Act asks for recommendations on "any improvements that may be necessary to insure that (1) potential oil and gas resources are adequately addressed in planning documents; (2) the social, economic, and environmental consequences of exploration and development of oil and gas resources are determined; and (3) any stipulations to be applied to oil and gas leases are clearly identified." The responsibilities of the Pro participants in this study the General Accounting Office, the operating arm of the Comptroller General; and the National Research Council (NRC), the operating arm of the National Academy of Sciences were determined in consultation between the two institutions and with the relevant congressional committees. The General Accounting Office and the NRC agreed that separate reports would be published embodying the study tasks assigned to each institution. Funding for the NRC's study was provided jointly by the BLM and the Forest Service. After agreement had been reached on the "statement of task" that would guide the NRC's study (Appendix A), a letter from the chairman . . V11

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~- ~ V111 of the Senate Subcommittee on Public Lands, National Parks, and Forests and the chairman of the House Subcommittee on Mining and Natural Resources asked for additional information (see Appendix By, which the NRC readily agreed to add to its study responsibilities and provide. The tasks assigned to the NRC included study of the following topics (see Appendix A): current BLM and Forest Service land use planning direction as it relates to oil and gas leasing; the interrelation between oil and gas leasing decisions and other resource planning decisions; ~ _ the impacts of oil and gas exploration and development on wildlife and other resource values; the extent to which the consequences of ol1 and gas development can be analyzed or reasonably foreseen during the land use planning stage prior to actual lease issuance; and whether lease stipulations currently in use are largely successful in resolving potential resource value conflicts. The Committee on Onshore Oil and Gas Leasing was established in November 1988 by the ARC for the purposes of collecting the necessary information to meet the requirements of the statement of task and preparing the report to the Congress. The committee was composed of 12 people with a range of relevant expertise. The committee held two two-day meetings in Washington, D.C., in De- cember 1988 and January 1989, where it heard from federal agency officials, representatives of the oil and gas industry and environmental organizations, Stan of congressional committees, and other persons with a direct inter- est in the manner in which federal oil and gas leasing and management are related to the planning for surface uses of federal lands. Subsequent committee meetings were convened at monthly internals, also for Copay periods, during the spring and early summer of 1989. Three of these meet- i;ngs were held in places other than Washington to compare planning and leasing decisions with actual conditions in the affected areas. The February meeting was held in Arkansas to acquaint the committee with the erects of oft and gas activities in the humid forested areas of the southeastern United States. The March meeting focused on the varied conditions of the high Plains and the Overthrust Belt and included visits to BLM and Forest Service field offices in Wyoming. After a return to Washington, D.C., for the April meeting, the third trip in May took the committee to the Rocly Mountain Front in northern Montana to examine in greater detail a spe- cific geographical area subject to controversy between advocates of surface values, particularly wildlife habitat and proposed wilderness designation, and proponents of oil and gas exploration and development

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IX Many agencies, organizations, and individuals assisted the committee by providing information, reports, and commentary. The BLM and the Forest Service were particularly helpful, but other federal, state, and local officials, as well as representatives of a wide range of interests, also provided insight and information of critical importance to the committee. The report was written by the committee and submitted for NRC review in August 1989. The committee was ably assisted by staff of the NRC and by staff liaison from the federal agencies. A minority statement drafted by one member of the committee appears at the end of the report. It represents the opinion of the member of the committee who does not agree with the committee consensus expressed in the report.

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Contents EXECUTIVE SUMMARY 1 INTRODUCTION Origin of This Report, 6 The Problem, 10 Organization of This Report, 15 References, 16 SETTING Federal Lands, 17 Oil and Gas Resources on the Federal Lands, 19 Relationship of Federal Land Management to States and Indian Lands, 26 Impact on States, 26 Impacts on Indian Lands, 30 The Oil and Gas Industry and Its Puture on the Federal Lands, 31 References, 34 3 ORIGINS OF LEASING AND PLANNING The Mineral Leasing Act of 1920 and the Acquired Lands Mineral Leasing Act of 1947, 36 The Environmental Laws, 39 The Wilderness Act, 40 The National Environmental Policy Act, 40 . X1 6 17 .,

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. X11 The Endangered Species Act, 41 Congressional Codification and Strengthening of the Federal Land Management Agencies' Land and Resource Planning Processes, 43 References, 43 DIFFICULTIES IN RELATING LEASING AND PLANNING 44 The Energy Security Act, 45 Oil and Gas Leasing and Wilderness; 45 The Court Decisions National Environmental Policy Act, 46 The Court Decisions Endangered Species Act, 49 The Court Decisions-Industry Suits, 50 The Reform Act, 51 Agency Reform Efforts, 52 References, 53 LAND USE PLANNING FOR OIL AND GAS Background, 54 Current Planning Direction, 55 Bureau of Land Management Planning, 56 Forest Service Planning, 58 Status of Land Use Plans, 62 Evaluation of Oil and Gas Resources for Planning, 62 Evaluation of Land Use Plans with Respect to Oil and Unsuitability, 74 Evaluating the Impacts of Oil and Gas Exploration and Development on Wildlife, 78 Limitations of Planning for Oil and Gas, 80 Economic Analysis in the Planning Process, 80 Role of Values in Planning for Oil and Gas Development, 82 Information and Planning, 83 Land Use Plans and Environmental }reviews, 84 References, 85 Gas Leasing, 66 Headwaters Resource Management Plan (Bureau of Land Management), 67 West HiLine Resource Management Plan Bureau of Land Management), 69 Lewis and Clark Forest Plan (Forest Service), 70 Bridger-lLton Forest Plan (Forest Service), 72 54

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. . X111 6 OIL AND GAS LEASING AND MANAGEMENT PROCEDURES Overview, 87 Oil and Gas Lease Issuance, 89 Current Oil and Gas Leasing Procedures for BLM and Forest Sentence Lands, 89 Proposed Forest Service Oil and Gas Leasing Procedures, 94 Lease Stipulations, 96 Standard Stipulations or Terms of the Lease, 96 Timing Limitation (Seasonal) Stipulation, 97 Controlled Surface Use Stipulation, 97 No-Surface-Occupancy Stipulations, 98 Contingent Right Stipulation, 99 Forest Service Proposed Stipulation, 100 General Concerns Regarding Stipulations, 101 Anticipating Exploration and Development, 102 Exploration Drilling and Full Field Development, 103 References, 105 7 AREAS OF THE GREATEST CONFLICT IN VALUES The Wilderness Review and Designation Process, 106 Congressional "Release" of Lands Not Designated Wilderness, 108 "Release" and the Planning Process, 109 Wildlife Habitat Protection, 110 Ecosystem Management, 110 Implications for This Report, 111 8 DISCUSSION AND RECOMMENDATIONS Introduction, 113 Summary of Core Recommendations, 114 Recommendation One, 116 Recommendation Two, 118 The Outer Continental Shelf Model, 120 An Alternative Considered and Rejected, 121 Recommendation Three, 122 Recommendation Four, 127 The Outer Continental Shelf Model, 129 The Strength of the Outer Continental Shelf Analogr, 130 Cash Versus Other Forms of Compensation, 131 Comparing the Committee's Recommendation to the Forest Service's Proposed Regulations, 132 An Alternative Considered and Rejected, 133 Implementing the Committee's Recommendation, 133 87 106 113

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XIV Recommendation Five, 134 Recommendaiion Sac, 136 Recommendaiion Seven, 136 Recommendation Eight, 137 Recommendaiion Nine, 138 Reference, 140 MINORITY STATEMENT APPENDIXES A Statement of Asks Agreed on by the Bureau of Land Management, the Forest Service, and the National Academy of Sciences, 145 B Letter from Chairmen Clarifying Ask, 147 C U.S. Department of the Interior, Bureau of Land Management, Offer to Lease and Lease for Oil and Gas, 151 D Detailed Description of Notice of Staking, Application for Permit to Drill, and Approved Drilling Plan Procedures, as Delineated in Figure 6.4, 156 141

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List of Tables 1.1 Percentage of Federal Lands Within States 2.1 Revenues from Oil and Natural Gas Production from Federal Leases, Onshore Continental United States, Fiscal Years 1978-19~ 2.2 State Revenues from State Severance lynxes on Federal Oil and Gas Production 2.3 Competitive Sales by Bureau of Intend Management Offices, Fiscal Year 1987 2.4 Competitive Sales by Bureau of Land Management Offices, Fiscal Year 19~ 5.1 Estimated Annual Glue of Resource Benefits on the Bndger-Teton National Forest 6.1 Noncompetitive Leasing by Year and Lease Category, Bureau of Land Management xv 9 24 25 27 29 81 93

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List of Figures 1.1 Distribution of Onshore Federal Lands in the United States 7 1.2 Duration and Timing of Various Oil and Gas Planning, Leasing, and Management Actions 2.1 Federal Lands Under Oil and Gas Lease, Effective as of September 30, 19~ 2.2 Oil and Natural Gas Production from Federal Lands, Onshore Continental United States, 1976-1988 2.3 Oil and Gas Drilling Activity, Onshore Continental United States, 1985-1988 5.1 Bureau of Land Management Resource Management Planning Process 5.2 Forest Service Resource Management Planning Process 5.3 Proposed Forest Service Oil and Gas Leasing and Operations Process 5.4 Life Cycle of a Producing Oil and Gas Field 6.1 Competitive and Noncompetitive Oil and Gas Leasing on Federal Lands, Onshore Continental United States, Fiscal Years 1976-1988 6.2 Federal Oil and Gas Leasing Process, Post-Reform Act 6.3 Administration of Federal Oil and Gas Leases on National Forest System Lands 6.4 Procedures for Approval of Lease Operations . . XV11 12 20 23 24 57 60 61 64 90 92 95 104

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