Land Use Planning and Oil and Gas Leasing on Onshore Federal Lands (1989) / Chapter Skim
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8 Discussion and Recommendations
8 Discussion and Recommendations
Pages 113-140
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From page 113... ...
The modern planning system mandated by Congress for both BLM and Forest Service lands requires that decisions be made well in advance of specific kinds of activities, thereby limiting the private sector's ability to respond promptly to changes in market conditions. Federal land and resource planning has evolved rapidly in response to increasing demands for resources from these lands and to growing concerns for environmental protection across the society as a whole.
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From page 114... ...
For example, the cost of closing some federal lands to oil and gas development to meet national demands for recreation and environmental quality may be largely borne by people in the immediate area of federal lands. On the other hand, the cost of meeting national needs for oil and gas may be borne by local communities in terms of recreational and environmental impacts.
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From page 115... ...
. The committee also recommends that all onshore oil and gas leases contain a carefully drawn stipulation that allows the land management agency to prohibit further activity on any lease after it has been issued where the agency determines that serious, unacceptable, environmental harm is likely to result and the benefits of such prohibition outweigh the
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From page 116... ...
RECOMMENDATION ONE The agencies should use their planning processes to forecast the reasonably foreseeable consequences of oil and gas exploration and development Where those consequences are deemed acceptable, the agencies should make the lands available for leasing. As noted earlier, there is usually a significant time lag between agency planning and leasing, exploration, or development.
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From page 117... ...
In some areas, however, particularly in wildcat areas where reliable information on petroleum potential is lacking, forecasting the reasonably foreseeable consequences of exploration and development will require substantial speculation because the actual impacts of oil and gas development are controlled by the location, quality, and other characteristics of the petroleum resource. Even in these wildcat areas, however, the agencies,
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From page 118... ...
If the agency determines that the impacts are acceptable, the lands ought to be made available for leasing under stipulations identified in the planning process as appropriate to protect other values. In such cases the agencies should, in advance of actually holding lease sales, perform an additional analysis to ensure that the conditions and assumptions made in the planning process leading to the decision in favor of leasing have not significantly changed.
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From page 119... ...
In some situations, especially in wildcat areas where petroleum potential is significant but where little hard information is available, and where other values that might be jeopardized by oil and gas development are Important, a decision to issue leases that convey a right to proceed to full development may be problematic. That is, because the actual characteristics of any petroleum resource discovered in the area will determine many of the impacts of development, in some cases the agency may simply be unable to determine at the planning stage what these impacts will be, and therefore be unable to make meaningful judgments about whether the impacts are acceptable.
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From page 120... ...
The Outer Continental Shelf Model The committee's proposal for a limited amount of leasing for exploration only borrows from the generic approach of the oil and gas leasing program used on the Outer Continental Shelf. In its 1978 overhaul of the Outer Continental Shelf leasing statute (Outer Continental Shelf Lands Act; 43 USC 1331-1356)
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From page 121... ...
. Generally speaking, each stage is separate, and the completion of one stage does not entitle a lessee to begin the next The Outer Continental Shelf program also authorizes test or exploratory wells to be drilled, under governmental supervision, for environmental protection purposes (see 30 CFR Part 251~.
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From page 122... ...
In substantial part this traditional practice stemmed from a general consensus in the Department of the Interior (and probably the society at large) that mineral development was the highest and best use of most federal lands (those not formally withdrawn from mineral development for national parks, military uses, and the like)
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From page 123... ...
That is, it Is the committee's perception that the BLM and the Forest Service have been somewhat reluctant to make decisions that certain lands should not be leased for oil and gas. In some cases, in fact, the government may be issuing oil and gas leases in situations where the land management agency believes actual exploration and development is likely to pose an unacceptable degree of degradation to other values.
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From page 124... ...
Specific criteria for determining unsuitability ought to be formulated in advance of their application to specific lands, through a combination of nationally applicable standards (formulated by rule making to amend the agencies' generic planning regulations) and more localized standards formulated and applied in the planning process for local planning units.
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From page 125... ...
Furthermore, the committee believes that, in most circumstances, oil and gas activity likely can be regulated to an acceptable level of compatibility with other uses and values found on federal lands by means of lease stipulations and the exercise of other regulatory authority. The fraction of federal land legally available for leasing that might pose irreconcilable conflicts includes, in the committee's judgment, many of the ones of the greatest controversy.
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From page 126... ...
The committee recommends following a similar practice here. Furthermore, there are some important differences between the unsuitability review processes conducted in connection with the BLM's coal leasing program and the Forest Service's timber sale program.
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From page 127... ...
The committee is also encouraged by some instances of apparent cooperation between environmental organizations and officials of the Department of the Interior to identify circumstances under which oil and gas leasing should be precluded. RECOMMENDATION FOUR All leases should include a standard stipulation that preserves the govemment's fieucibiliy to control and, if necessary, to prohibit, activities on the leases that pose serious and unacceptable impacts on other vanes, but with the provision that a lessee would be reimbursed for its direct costs in acquiring and developing its lease if farther exploration and development is prohibited.
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From page 128... ...
Such bidding allows potential lessees to make judgments about the risks that government regulation (through exercise of, among other things, the power reserved in lease stipulations) will interfere with activity on the lease, and to act on those judgments in the bidding process.
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From page 129... ...
, the fair value of the canceled rights. The committee has noted that, in addition to the Outer Continental Shelf model, Congress has explicitly adopted a somewhat similar approach in the geothermal leasing program onshore.
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From page 130... ...
. Management of the Outer Continental Shelf is not as subject to overlapping jurisdiction of different federal managing agencies as are onshore federal lands.
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From page 131... ...
This might be justified on the theory that the companies operating offshore are likely to have substantial capital reserves to bear the risks involved. Onshore, on the other hand, lessees are typically smaller independent companies much less able to bear that rise In short, while reimbursement of actual direct costs may not be of critical assistance or concern to major oil companies, it can mean the difference between survival and bankruptcy for smaller independents that are increasingly important in the federal onshore leasing program.
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From page 132... ...
requiring the agency to determine only that "analyses of the environment indicate" that halting activity is "appropriate." By contrast, the language of the Outer Continental Shelf Lands Act, which the committee endorses, requires an explicit determination that activity would "probably cause serious [environmental] harm or damage" that cannot be mitigated within a reasonable period of time, and that cancellation of the lease is better than continuing it in effect.
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From page 133... ...
Cranking up the eminent domain machinery takes considerable time, with serious environmental harm possible in the interim. It would also severely tax the planning process, by in effect requiring the government to make the necessary trade-offs and enter into firm commitments to explore and develop on the basis of the information available then.
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From page 134... ...
Because federal lands have usually not been offered for lease except upon request, and are made available for re-leasing automatically upon expiration of existing leases, the configuration (tract sizes and locations) and timing of leases are fixed relatively haphazardly.
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From page 135... ...
-an a- - -rr The committee believes that the federal land management agencies ought lo pay more attention to this issue in administering the leasing system, but should move carefully because of the potential difficulties involved in delaying lease offerings. Where the agencies have the opportunity, such as in leasing areas for the first time, or where temporary delays in leasing in certain areas have occurred for other reasons, the agencies should try to configure and assemble parcels for leasing in a way that would allow better and fairer (to both potential lessees and other interests)
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From page 136... ...
Also, the fact that onshore operators are usually smaller independent companies means they tend to require more outside financing for exploration, which may also require substantial time to negotiate. RECOMMENDATION SEVEN The agencies should improve opportunities for public participation in their decisions to issue leases and to waive, suspend, or modify lease stipulations.
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From page 137... ...
Ownership and management jurisdictional lines usually depart from watershed or ecosystem boundaries, and at least some environmental impacts from oil and gas activity may be felt on adjacent lands. This also renders more difficult efforts to predict and assess what kind of development is reasonably foreseeable at the planning stage; that is, the agencies may have little or no control over development on state tribal Or nriv~P lands in the same area.
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From page 138... ...
An effort to resolve the conflicts and problems arising out of current planning and leasing practices must take account of the presence of some 80,000 existing oil and gas leases covering some 67 million acres of federal lands. The nature of the rights to explore and produce conveyed in these leases may vary somewhat from lease to lease.
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From page 139... ...
Such an extension of the term of existing leases to allow incorporation of the stipulation could, at least in sensitive areas where the availability of the stipulation might be particularly important, be a useful step to take. In any event, if applying such a stipulation to existing lessees unwilling to include it voluntarily would require legislation, the committee notes that Congress in the 1978 Outer Continental Shelf Lands Act Amendments did apply such a provision to existing lessees.
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From page 140... ...
These would add marginally to the already substantial costs of evaluating federal land areas for possible exploration and development. ~ be weighed against the additional governmental and industry planning costs are the costs to the public of continued stalemates in oil and gas leasing on some federal lands.
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