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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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