National Academies Press: OpenBook

Airport Participation in Oil and Gas Development (2018)

Chapter: CHAPTER TWO Oversight of Oil and Gas Development at Airports

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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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Suggested Citation:"CHAPTER TWO Oversight of Oil and Gas Development at Airports." National Academies of Sciences, Engineering, and Medicine. 2018. Airport Participation in Oil and Gas Development. Washington, DC: The National Academies Press. doi: 10.17226/25097.
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13 CHAPTER TWO OVERSIGHT OF OIL AND GAS DEVELOPMENT AT AIRPORTS Many different agencies and jurisdictions participate in the oversight of oil and gas development at airports. This chapter provides an introduction to the regulatory framework that an airport encounters when it plans and develops a mineral estate from well sites located either on or off airport property. The first section gives an overview of federal, state, and local areas of jurisdiction and introduces, in general terms, the roles and responsibilities of airport sponsors and developers. The next section discusses airport sponsor regulatory responsibilities at each stage of oil and gas development, and the last section provides a checklist of necessary reviews. This chapter describes the regulatory framework related to development of mineral estates at airports; for more specific discussions of these issues, readers can refer to AC No. 150/5100-20 and the other materials identified in the chapter, as well as their individual state and local statutes, regulations, and ordinances. REGULATORY BIG PICTURE With most large-scale development projects, government agencies participate in the oversight of planning, construction, and review of operations. Oil and gas development at airports is no different. Figure 6 provides an overview of responsibilities among federal, state, and local groups. FIGURE 6 Federal, State, and Local Responsibilities for Oil and Gas Development on Airports. Source: Prepared by KRAMER aerotek, 2016. Note: ALP = airport layout plan; NEPA = National Environmental Policy Act; USDA = U.S. Department of Agriculture. Federal Oversight The FAA participates actively in oil and gas development; its principal concern is that this non-aeronautical activity on sur- face or subsurface airport land is done safely and does not interfere with aeronautical activity. To address these concerns, in March 2016 the FAA issued Advisory Circular (AC) No. 150/5100-20, Guidance on the Extraction of Oil and Gas at Federally Obligated Airports. The AC explains the agency’s position on oil and gas development on federally obligated airport land, including any drilling that penetrates the subsurface. Airports may develop oil and gas resources located on or under airport property; however, any construction or operations on the surface of airport land that changes an approved airport layout plan (ALP) requires FAA approval prior to development. Such development will also require review and approval under the National Environmental Policy Act (NEPA). In contrast,

14 mineral extraction from well sites or infrastructure located off airport land does not, in most cases, require advance FAA approval, because such development generally does not constitute use of obligated (surface) airport property. Regardless of whether mineral extraction is performed on or off airport property, the revenue generated from oil and gas development must be collected and spent in a manner consistent with the FAA’s revenue use policy and in compliance with an airport sponsor’s grant assurances, including No. 24 (Fee and Rental Structure) and No. 25 (Airport Revenue), as well as all other applicable laws, rules, and regulations. An acceptable oil and gas development lease must also provide an airport with at least fair market value for the conveyed mineral rights and must explicitly state that lease activities on obligated airport property are subordinate to the sponsor’s federal obligations. State and Local Laws Matter Oil and gas development is regulated by federal, state, and local laws that cover all aspects of the development process, from exploration to extraction. The relevant federal laws include the following: • Clean Water Act of 1972 and amendments, which regulates surface discharges of water related to drilling and production and stormwater runoff • Safe Drinking Water Act of 1974 and amendments, which regulates the underground injection of water and other fluids related to drilling activities • Clean Air Act of 1970 and amendments (CAA), which regulates emissions from wells and equipment used in drilling activities • National Environmental Policy Act of 1970 and amendments (NEPA), which regulates drilling on federal lands Federal agencies do not have the resources to enforce all of these laws; thus they are implemented through agreements with the states, with a significant degree of ongoing federal oversight (for example, see https://www.epa.gov/hydraulicfracturing explaining EPA oversight and regulations). The states are free to adopt their own environmental standards, as long as those standards and processes are at least as restrictive as those established by federal law. The theory is that individual state stan- dards can more effectively address the regional characteristics of each state (such as geology, hydrology, climate, topography, and population density) than can a single federal standard adopted for all the states. In addition to implementing and enforcing federal environmental laws, states typically add their own environmental laws and regulations. Several states, for example, have adopted versions of NEPA standards that go beyond those contained in the federal statute.1 States also establish administrative agencies that enact regulations and procedures for oil and gas develop- ment; these agencies serve as the primary environmental enforcement authority. State environmental agencies exercise broad authority in regulating, permitting, and enforcing the full spectrum of oil and gas development activities. State agencies generally require a permit before the commencement of drilling and operation of an oil and gas well. This process will usually include the disclosure of specific information about the development, a compliance review by agency staff, and perhaps a site inspection. Once a permit is granted, any change in the scope of activity must be reported to the agency for further review. In addition to state regulations, local government units such as cities, towns, counties, and regional authorities may add further layers of regulations. These local entities may regulate the location and operation of wells, require permits, or estab- lish additional administrative processes related to flood zones, noise levels, setback requirements, site-specific housekeeping issues, or traffic safety. Finally, other regulations may be established if drilling activities will take place near sensitive areas such as river basins and lakes. As AC 150/5100-20 appropriately observes, “Given the dynamic nature of the legislative and regulatory landscape con- cerning hydraulic fracturing, the current legal environment should be carefully examined” (AC 150/5100-20, n. 3.). Early in the oil and gas development process, airport sponsors are advised to conduct a thorough legal analysis of the state require- ments regarding mineral development as well as local laws pertaining to land use, zoning, and setback requirements. State Regulatory Agencies State statutes typically establish one or more regulatory agencies with responsibility for regulating oil and gas matters; these agencies issue permits, conduct inspections, and ensure regulatory compliance for drilling activities. Examples of state regulatory agencies are the Pennsylvania Department of Environmental Protection (PADEP);2 Texas Railroad Commission

15 (RRC); Texas Admin. Code, Title 16, Part 1, Ch. 1-20 and Texas Comm. of Environmental Quality 16 Texas Admin. Code Section 3.30; and North Dakota Industrial Commission, North Dakota Century Code Section 38-08-01, et seq. The adminis- trative processes developed by these agencies can be quite extensive. Mineral Estate Property rights are governed by state law and generally include two distinct sets of rights or estates: the surface estate and the subsurface mineral estate. While the same person or entity typically owns these two estates, they may be divided and owned by separate parties. The division of the surface and subsurface estates is called severance. A written instrument that contains an explicit reservation or transfer of rights to an estate may accomplish severance. Mineral rights are most often severed through a lease document that conveys an interest in the mineral estate for a specific period under specific terms. (Permanent transfers can be made by deed.) Leases that transfer rights to a mineral estate generally shift to the lessee/developer all or much of the obligation for compliance with any federal, state, and local laws pertaining to oil and gas development, includ- ing environmental matters and state and local requirements for zoning and other land use issues. Appendix A describes how various states treat the ownership of mineral estates. Pooling, Unitization, and Integration Oil and gas deposits extend beyond legal property lines and thus may lie under several adjoining lots held by different property owners. Rather than require oil and gas developers to establish well sites on each individually owned lot and tap minerals with horizontal drilling, state regulations often allow subsurface mineral deposits to be pooled into a single integrated entity and to be tapped with directional drilling from a single well site. Pooled owners whose deposits are tapped from a wellhead located on another property may negotiate the terms of payment for their minerals, including royalties and bonuses. As a practical matter, however, rates often are tied to the financial terms negotiated by the owner of the host site from which the pooled reserves are tapped. The host owner is also likely to receive additional payments for the rental of the land on which the well- head and drilling pad are located, as well as for land on which drilling equipment and tanks are stored. Finally, in some states, if a landowner fails or refuses to enter into a voluntary pooling agreement, the developer may request and the state agency may order compulsory participation at lower statutory rates of compensation (see for example, NY ENV CON LAW Sec. 23-0901). Well Site Cleanup and Restoration Once a well has been drilled, an airport may be required to perform interim reclamation, such as recontouring and revegeta- tion, to minimize environmental disturbance at a well site. Although state and local laws generally govern well site closure and reclamation, there are also federal regulatory requirements. A sponsor must approve a Construction Safety Phasing Plan (CSPP) as part of the well closure and reclamation process (AC 150/5370-2G, Operational Safety on Airports during Con- struction). After the well site has been closed and abandoned, the corresponding changes to the ALP must be submitted to the FAA, along with references to the reclamation requirements. Well closure, removal of equipment, and reclamation activities should be anticipated and addressed explicitly in the lease and in any subsequent environmental and NEPA documents. Other Local Responsibilities Local jurisdictions are also responsible for compliance with zoning ordinances, setback requirements, adherence to local building codes, fire safety and fire-fighting response, permitting, and inspections. The transport of oil and gas products, either via pipeline or using ground transport, involves use of non-airport property. Local jurisdictions are also responsible for ease- ments, eminent domain, and fees charged for road damage remediation. AIRPORT SPONSOR REGULATORY RESPONSIBILITIES The airport sponsor has its own regulatory and management responsibilities for oil and gas activity, both surface and subsur- face. This section provides an overview of grant assurances and other FAA requirements that apply to oil and gas development at federally obligated airports. Safety Issues A number of safety-related issues are associated with oil and gas development on airports. First, a determination is made regarding the areas of the airport where oil and gas drilling may and may not occur owing to height restrictions, current

16 operations, or current or future airport development. The aircraft operations area, runways, taxiway safety areas, object-free areas, runway protection zone, and obstacle-free zones defined in AC 150/5300-13 are off limits to oil and gas development. Sponsors must also ensure that oil and gas development does not conflict with current or planned aviation uses of airport land and does not constitute an obstruction to air navigation (see 14 CFR Part 77). Airport sponsors must ensure that on- or off-airport oil and gas development wells, ponds, wastewater management, and other related infrastructure do not create wildlife attractants (see AC 150/5200-33, Hazardous Wildlife Attractants on or near Airports), interfere with light or radio signals, or impair visibility or flight conditions. Wells must be constructed to ensure safe and continuous public airport operations. Finally, to protect against soil and water contamination, sponsors must comply with all applicable FAA airport design and construction standards, particularly those applicable to stormwater management and spill prevention. Where a proposed oil and gas development contains facilities that will be constructed above grade on airport property, a Form 7460-1 must be submitted to the FAA at least 45 days prior to the commencement of construction. The developer must also complete a Safety Plan Compliance Document (SPCD) for all construction on airport property. The SPCD must be submitted to the sponsor for review and approval, along with the CSPP, before the sponsor issues a notice to proceed with construction. The sponsor’s approval of the oil and gas development CSPP (in accordance with 150/5370-2 and Appendix 3, Operational Safety on Airports during Construction) must assess any clearing and grading work that will be performed on airport land. Most oil and gas developments on airports require subsurface drilling or boring. Prior to drilling and boring, however, a sponsor must conduct adequate engineering analysis and adhere to standards to ensure that any such subsurface activity or other operations do not cause subsidence or adverse effects on airport facilities or uses. If oil and gas development is to be allowed on airport surface land, the sponsor must restrict access and ensure that there is no conflict with airport operations. In addition, oil and gas work crews must be escorted at all times while on airport property or, if this is not possible, the developer must prepare a CSPP for submittal to the FAA. Finally, an airport sponsor must notify the FAA regional or district office early in the planning process to determine the need or requirements for safety risk management (SRM). Safety management system and SRM regulations [FAA Order 5200.11, FAA Airports (ARP) SMS] apply to any oil and gas development proposals that could affect safe airport operations. Note that SRM may be required prior to FAA review and approval of a proposed amendment to an ALP that includes oil and gas extraction facilities. Changes to an Existing ALP and Related Grant Assurance Requirements Oil and gas development on airport surface land requires FAA approval of any proposed changes to an approved airport layout plan prior to commencement of the development. The proposed changes to the ALP must identify the location and elevation of all proposed well sites, related above-ground structures, and all access and support rights-of-way. If the exact well site locations are not known at the time of lease submission, the FAA will consider conditional ALP changes at or prior to a spon- sor’s execution of an oil and gas development lease. However, failure to obtain FAA approval before oil and gas development commences may, at a minimum, delay further approvals and may compel the sponsor to pay the costs associated with curing any violations in accordance with Grant Assurance No. 29(b) (Removal of Unapproved Changes to ALP). An oil and gas development that does not allow use of or access to airport surface land but only provides for development from sites located off airport property is not a use of airport land and does not generally require a change to an existing ALP. Nor does such under-the-fence oil and gas development require the development planning described in Sections 2.4, and 2.7 through 2.10 of AC 150/5100-20. 2-3/2-8. However, an under-the-fence oil and gas development lease should explicitly pre- clude any access, occupancy, or use of airport surface land for well sites or supporting infrastructure or development. Sponsors are also required to maintain good title to obligated airport land included in the Airport Land Inventory Map. When land is proposed for oil and gas development, titles must be reviewed to preclude the existence of surplus property deeds conveyed by the United States (particularly the Bureau of Land Management, the U.S. military, and the General Services Administration) that reserve specific mineral rights to the federal government. Once a well site has been closed and aban- doned, the sponsor must submit the resulting changed circumstances to the ALP to the FAA for approval and must reference

17 the applicable reclamation requirements. (Well site closure and reclamation activities are also addressed in any environmental or NEPA documentation completed during the oil and gas development planning process.) Use of Airport Revenue For an airport sponsor, revenues from oil and gas activity may require special attention. The Airport and Airways Improve- ment Act of 1982 (AAIA) (Public Law No 97-248) established restrictions on the use of airport revenue. In 1994, airport rev- enue use provisions were codified as 49 USC Section 47107(b). Although refinements have been made to the AAIA revenue use provisions by subsequent legislation (namely, the FAA Reauthorization Acts of 1994 and 1996), the 1982 Act’s revenue use principles are substantially intact and have been expanded and incorporated into the grant assurances applicable to the Airport Improvement Program grant program. FAA policies on revenue use at airports implement these statutory requirements and have further defined airport revenue as well as the permitted and prohibited uses of that revenue. The FAA has defined airport revenue broadly to include all funds paid or owed to an airport sponsor for the use of airport property by all aeronautical and non-aeronautical users. The definition also includes all revenue from the sale of airport property and resources. In 1999, the FAA published its final Policy and Procedures on the Use of Airport Revenue (64 FR 7696) (Revenue Use Policy). The revenue use policy defined an airport’s receipt of royalties from mineral extraction on airport property as airport revenue. The FAA takes the view that its revenue use policy regarding oil and gas royalties was confirmed when, in 2012, Congress exempted by statute certain mineral rights revenue from the FAA’s revenue diversion policy. That statutory provi- sion allows the FAA Administrator to exempt certain revenue derived from mineral extraction on airport property when it is used for other transportation projects not related to an airport.3 Federal Grant Assurances and Certain General Aviation Airport Exemptions (Pub Law 112-95, Section 813) Prior to receiving airport development assistance under the AIP (49 USC Sec. 47107, et seq.), airport sponsors must make certain grant assurances, which apply regardless of whether federal assistance obligations originated under the Federal Aid to Airports Program, the Airport Development Aid Program, or the AIP. A sponsor may also be obligated by surplus or nonsur- plus property (deed) conveyances of land by federal agencies. Oil and gas development must be subordinate to and in compli- ance with any surplus deed restrictions placed on federal land. Finally, to ensure that it is satisfying its grant assurances, a sponsor may decide to present an oil and gas development lease to the FAA for review before entering into a contract or lease. The following are the grant assurances most relevant to oil and gas development on airports: Grant Assurance No. 4 – Recertification of Good Title Before soliciting an oil and gas development lease, a sponsor’s attorney must recertify that the airport retains good title to airport land for public use airport purposes. The certification must also state that the lease restrictions are enforceable under state law. Grant Assurance No. 5(b) – Preserving Rights and Powers A sponsor must represent that it will not sell, lease, encumber, otherwise transfer, or dispose of any part of its title or other real property interests in obligated parcels shown on the Airport Property Inventory Map without FAA approval. Grant Assurance No. 19(a) – Operation and Maintenance The sponsor must ensure that it will not cause or permit any activity or action on airport land that would interfere with its use of that land for airport purposes. An oil and gas development lease must be legally subordinated to the sponsor’s grant assurance obligations. Grant Assurance No. 20 – Hazard Removal and Mitigation The sponsor must design, construct, and operate the oil and gas development and related structures in a manner that does not create a hazard. Such hazards may include wildlife attractants such as ponds and piping and untended landscaping, and unlighted or unmarked hazards such as drilling platforms, pumps, or other equipment.

18 Grant Assurance No. 24 – Fee and Rental Structure The sponsor must obtain fair market value for all oil and gas development and surface land use and must obtain any available bonuses, royalties, and production delay payments and rents. Grant Assurance No. 25 – Airport Revenue The sponsor must agree to ensure that revenue generated for oil and gas development will be retained for airport purposes consistent with FAA revenue use policy. Grant Assurance No. 29 – Airport Layout Plan The sponsor must submit proposed amendments, revisions, or modifications to the ALP for FAA approval prior to altering the use of airport land designated for an aeronautical use to a non-aeronautical use or constructing above-grade structures such as well sites and supporting structures. General Aviation Exemption Although federal grant assurance obligations apply to all airports that accept federal funds, there are certain exemptions to these obligations for general aviation airports. Public Law 112-95, Section 813 required the FAA to develop procedures that permit certain general aviation airports to use (subject to certain conditions) revenue generated by oil and gas development for eligible transportation infrastructure projects. The statute limits the expenditure of oil and gas development revenue to transportation infrastructure projects “carried out by the airport . . . within the geographical limits of the airport sponsor’s jurisdiction.” FAA REVIEW PROCESS AC 150/5100-20 contains recommendations for a process that a sponsor may follow when drafting and negotiating a lease for oil and gas development. Chapter three of this synthesis discusses the basic components of an oil and gas development lease. This section discusses the FAA’s recommendation that sponsors coordinate oil and gas development plans with their local FAA Airports District and Regional offices (ADO) as early in the development process as possible. The ADO will review sponsor submittals for compliance with all applicable FAA requirements. Participation in early discussions with the FAA at the local or regional level will provide airports with an awareness of the existing standard operating procedures of those offices for needed FAA approvals and acceptances, and the circumstances for rejections. As a preliminary matter, in coordina- tion with the FAA, the sponsor determines where oil and gas development may and may not occur; height restrictions, current operations, or future development may prevent oil and gas development in certain locations. The sponsor is also responsible for discussing the need or requirements for safety risk management with the FAA regional or district office early in the plan- ning process (FAA Order 5200.11). Changes to an approved ALP for oil and gas development require FAA approval prior to the commencement of any mineral development activities. FAA approval of proposed changes to an ALP is a federal action that requires FAA NEPA review and approval. Specific well site locations must be approved as part of the FAA’s ALP review and approval process. Any approval of well sites by the sponsor must be contingent on the FAA’s approval of the proposed changes to the ALP. If the oil and gas developer engages in any subsequent construction activities, the FAA will also approve any supplemental NEPA environ- mental analysis. At the time of well closure and reclamation, the sponsor must submit and the FAA will approve a CSPP (AC 150/5370-2F), as well as any corresponding changes to the ALP and related NEPA and environmental documentation. Under-the-fence oil and gas development that does not allow use of or access to airport land is not a use of airport land and generally does not require changes to an FAA-approved ALP. However, if the sponsor proposes a change to an ALP to allow for a single well site, the sponsor must identify even those well sites that do not use airport land. In addition, if a sponsor wishes to change the designation of an airport land use from aeronautical to non-aeronautical use, the sponsor must comply with the applicable public notice requirements contained in FAA Order 5190.6. Work crews for oil and gas activity must be escorted when they are on airport land. To ensure that safe airport operating conditions are maintained, a CSPP must be submitted to the FAA when it is not possible for an airport to escort oil and gas development crews at all times. The FAA will review the CSPP and will make an airspace determination. The oil and gas

19 developer must submit for FAA approval notifications of construction activities (FAA Form 7460-1; 14 CFR Part 77, Safe, Efficient Use and Preservation of Navigable Airspace). The FAA will approve any Form 7460-1 submission related to oil and gas development, but the form must be submitted at least 45 days prior to the erection of any oil and gas development equip- ment or structure. Construction noise associated with oil and gas development is addressed in NEPA documents; mitigation measures, if necessary, will be addressed in an FAA Finding of No Significant Impact (FONSI), FONSI with a Record of Decision (FONSI/ ROD), or ROD. In any case, these mitigation measures must be contained in any subsequent lease terms. FEDERAL ENVIRONMENTAL REQUIREMENTS: NEPA AND THE CLEAN WATER ACT Oil and gas well installation, development, and use must conform to all applicable environmental standards, in particular to the design and construction standards applicable to stormwater management and spill prevention that protect against soil and groundwater contamination. Further, FAA approval of an ALP change is a federal action that requires an FAA environmental review and approval under NEPA. No ALP or environmental review is required for under-the-fence oil and gas development (FAA Order 5050.4, NEPA Implementing Instructions for Airport Projects; FAA Order 1050.1, Environmental Impacts: Poli- cies and Procedures). NEPA reviews are conducted consistent with the Council on Environmental Quality’s NEPA regulations and FAA Orders 1050.1 and 5050.4 at the time of FAA’s decision on a major federal action [see FAA Order 5050.4. Ch. 1, (subsection on federal action) and Ch. 2 (subsection on airport layout plans]. The FAA as Lead Agency determines the appropriate level of envi- ronmental review and NEPA documentation required based on the facts and circumstances of the development. The airport sponsor (or possibly the developer) will take the lead in preparing the NEPA documentation to support FAA decision making. If well site and infrastructure locations are known and a design is complete, the sponsor can identify all ALP changes and prepare a NEPA document for unconditional ALP approval. If these locations have not been finalized, conditional approval may be obtained prior to lease execution. In such a case, supplemental details for final well site design and location will be included in the NEPA review before the FAA’s approval of the ALP [FAA Order 5050.4b 202(c) (1) (a)]. Conditional approval does not constitute authorization by the FAA to commence construction. NEPA documents address the entire life cycle of the proposed oil and gas development. This includes the exploration activities and construction schedule, as well as the methods and facilities that will be developed and the plans for well closure. In addition, the NEPA document explains the need for compliance monitoring or maintenance procedures, along with antici- pated well closure and site reclamation. Noise generated by oil and gas development is treated as construction noise for NEPA purposes. The FAA determines the appropriate applicable noise assessment criteria based on specific uses at the airport. The guidance on stationary construction noise from non-aviation sources will apply (see Order 5050.4 and The Environmental Desk Reference for Airport Projects, as well as any applicable state and local noise regulations). Any noise mitigation commitments noted in the FAA FONSI, FONSI/ ROD, or ROD are included in subsequent oil and gas development lease terms. An Environmental Impact Statement (EIS) is necessary if significant environmental effects are anticipated or if an envi- ronmental assessment (EA) finds that the effects cannot be mitigated below applicable significance thresholds. If an EA finds no significant effects, the FAA may close its NEPA review with a FONSI or a FONSI/ROD. For some EAs and all EISs, the FAA concludes its NEPA review with a ROD. CHECKLIST FOR WORKING WITH THE FAA Airports contemplating or engaging in oil and gas development can benefit from a set of guidelines to use as a reference before signing an oil and gas development lease. AC 150/5100-20 contains a number of cautionary notes for airports engaging in oil and gas development. The best practices listed below are drawn from the AC; they are listed in order from the project planning stage to the closing of the well sites. They can be used in conjunction with the suggested provisions for oil and gas develop- ment leases identified in chapter three.

20 … Ascertain that the proposed oil and gas development is on airport property and shown on an approved ALP or, if not, obtain FAA approval for proposed changes to a previously approved ALP and obtain an environmental (NEPA) review. … Review the land title before entering into an oil and gas development lease—especially for deeds conveyed by the U.S. military, General Services Administration, or Bureau of Land Management—to identify any reserved mineral rights that are not owned by the airport. … If there is a change in airport land use from an aeronautical use to a non-aeronautical use, the sponsor must comply with the applicable public notice requirements (FAA Order 5190.6). … Determine where on the airport oil and gas development may and may not occur (AC 150/5300-13). … Prepare NEPA documentation if directed to do so by the FAA. … Confirm that the proposed oil and gas development wells and related infrastructure meet airport design standards (particularly those related to stormwater management and spill prevention that protect against water and soil contami- nation) and do not constitute obstructions to air navigation (see 14 CFR Part 77) [AC 150/5370-2, Appendix 3, Safety and Phasing Plan Checklist (for location of oil and gas development on airport land)]. … Coordinate with the U.S. Department of Agriculture to ascertain that the proposed oil and gas development will not create hazardous wildlife attractants, cause light and radio signal interference, or impair visibility or flight conditions. … Ensure that the revenue generated by the oil and gas development is or will be spent in compliance with FAA’s revenue use policy (Grant Assurance No. 25). … Ensure that the oil and gas development lease contains a fee and rental structure to establish appropriate fair market value rents, royalties, and bonuses (Grant Assurance No. 24). … Make certain that the oil and gas development lease legal description and development plans preclude access or development in areas on the airport property that would interfere with current or future aeronautical development or operations. … Consider submitting the draft oil and gas lease to the FAA for review prior to execution. … Confirm that the oil and gas developer has prepared and submitted a CSPP for FAA review and airspace determination (AC 150/5370-2). … At least 45 days before the erection of drill rigs or other towering structures, confirm the submission to FAA of Form 7460-1 and the completion by the developer of an SPCD for any construction on airport property before issuing a notice to proceed with construction. … Adhere to state and local regulatory requirements for well closure and site restoration. Upon closure, the airport spon- sor secures a “clean closure” or “no further action” letter from the appropriate state or local regulatory agency. … Once a well is closed or abandoned, the airport sponsor must submit to the FAA corresponding changes to the ALP and must reference reclamation requirements. FEDERAL ENFORCEMENT ACTIONS If an airport sponsor does not satisfy FAA requirements (such as those contained in AC 150/5100-20 and the grant assur- ances), the airport may be in a violation of its federal obligations. Such violations may require corrective action to bring the sponsor back into compliance. Corrective action may include termination of an oil and gas development lease to ensure that the sponsor has sufficient right, title, and interest in federally obligated land to operate and maintain the airport in compliance with FAA requirements.

21 If the sponsor fails to take voluntary corrective action, the FAA may choose to initiate formal administrative action under 14 CFR Part 16 to impose corrective action and other remedies. If, after a Part 16 proceeding, a sponsor is found in formal noncompliance, the FAA may issue an order terminating eligibility for grants pursuant to 49 USC Sections 47106(d) and 47111(d), and may suspend the payment of grant funds. The sponsor may also be held liable for the costs to restore or replace damaged facilities or to restore adequate title to airport land. Oil and gas development revenues and other non-airport funds may be used to fund corrective actions, but site remediation may not be funded by AIP funding or other airport revenue. WRAP-UP Federal, state, and local agencies all participate in the regulation and review of oil and gas development at airports. Sponsors of federally obligated airports shoulder the main responsibilities to ensure that oil and gas developments comply with grant assurances and other federal, state, and local regulations. To minimize the regulatory aspect of oil and gas activity, some airport sponsors elect to participate in drilling activity that originates off airport property. Other sponsors retain a specialized contractor to oversee and manage mineral extraction programs. Airport sponsors are directly responsible for valuing their oil and gas reserves, soliciting contractors or developers, and entering into beneficial lease agreements. ENDNOTES 1 See generally http://www.alsglobal.com/en/Our-Services/Life-Sciences/Environmental/Capabilities/North-America-Capabilities/ USA/Oil-and-Gasoline-Testing/Oil-and-Gas-Production-and-Midstream-Support/Fracking-Regulations-by-State (hydraulic frac- turing regulations in the United States by individual states). 2 http://www.dep.state.pa.us/dep/subject/advcoun/oil_gas/oil_gas.htm 3 See FAA Compliance Guidance Letter 2012-01: FAA Implementation of Public Law 1123-95 Section 813, Use of Mineral Revenue at Certain Airports (5.16.12) at: https://www.faa.gov/airports/airport_compliance/mineralrevenue/media/cgl2012-01Sec813Miner- alRevenue.pdf.

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TRB's Airport Cooperative Research Program (ACRP) Synthesis 87: Airport Participation in Oil and Gas Development provides airports with practical considerations and responses involving oil and gas extraction. The report documents lessons learned as energy prices went from their highest levels (in the mid-2000s) to some of their lowest (in 2015 and 2016). It includes a compilation of federal, state, and local regulatory frameworks; available airport oil and gas leases; municipal permits and ordinances; and case examples from targeted interviews with eight airports. As the price of oil and gas has a long history of volatility, a view of the full price cycle has particular utility to airports.

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