American Oil and Gas Reporter - April 2016 - 121

USFWS Rewrites Refuge Regulations
WASHINGTON-A proposal to change
how the U.S. Fish & Wildlife Service
manages nonfederal oil and gas rights on
federal acreage devoted to conserving
animals, fish and plants is being criticized
by oil and gas trade groups.
In December, USFWS proposed
changes to its management of nonfederal
oil and gas activities on National Wildlife
Refuge System (NWRS) lands, saying it
sought to improve its ability to protect
refuge resources, and visitors' and the
public's health and safety from potential
impacts from those operations.
According to the Federal Register notice
announcing the rule, USFWS has not updated its NWRS regulations for 50 years,
and current regulations provide vague guidance to staff and operators. It says the proposed changes will provide regulatory
clarity, provide a simple compliance process,
and incorporate technological improvements
in exploration and drilling technology.
In their comments on the proposed
rule, the American Petroleum Institute
and Independent Petroleum Association
of America assert it would mark a sea
change in how oil and gas activities on
NWSR lands are managed, and question
whether USFWS has the authority to
promulgate the proposed regulations.
"Although a mineral interest owner's
use of surface NWSR lands must be reasonable and provide due regard for federal
interests, the service may not condition
access on a permitting system containing
burdensome requirements," the two groups
contend. "We respectfully recommend
that the service instead perform a genuine
assessment of the effectiveness of guidelines administered through a program that
is sufficiently funded and staffed. Such
an assessment may demonstrate that a
new regulatory program is unnecessary,
or alternatively, that narrowly targeted
regulatory modifications are needed."
Managing Split Estates
USFWS says other federal land management agencies, such as the National
Park and Forest services, have regulations
that address oil and gas development for
nonfederal subsurface interests. It maintains the proposed rule will bring it in
line with those agencies.
"These regulations outline a general
policy to minimize impacts to refuge resources to the extent practicable from all
activities associated with nonfederal mineral
exploration and development where access
is on, across, or through federally owned
or controlled lands or waters of the NWRS.

However, they have been ineffective at
protecting refuge resources or providing
operators explicit requirements for operating
on refuge lands," USFWS says.
The agency points out that nothing in
the proposed regulations gives the government the right to take a property interest.
USFWS asserts the proposed rule is not a
taking, but rather is intended to impose
reasonable regulations on activities that
involve or affect federally owned lands.
According to USFWS, oil and gas activities that have the potential to adversely
impact refuge resources include:
* Spills, stormwater runoff, erosion,
or sedimentation degrading surface water;
* Drilling mud pits, poorly constructed
wells, or improperly conducted enhanced
recovery techniques;
* Oil and gas development impacting
wildlife migration routes;
* Dust, natural gas flaring, hydrogen
sulfide releases, or emissions from production operations; and
* Seismic operations, blasting, construction, drilling, or production operations
increasing noise levels.
"Refuges have sustained significant
damages from leaks and spills, unplugged
or inadequately plugged wells, abandoned
equipment, and insufficient or no reclamation of refuge lands and resources,"
USFWS says. "Avoiding spills and similar
problems is the best means of ensuring
that taxpayers are not left with the costs of
restoring refuge resources. By incorporating
new operating standards into the regulations,
this should ensure that any damages to
refuge lands and resources are minimized
to the greatest extent possible."
Industry Comments
IPAA and API point out that while
the USFWS states it has authority to require permits and regulate the use of
refuge lands by mineral interest holders,
the proposed rule overlooks applicable
laws that are inconsistent with the scope
of authority USFWS assumed. Most
NWRS acreage is acquired pursuant to
the Migratory Bird Conservation Act,
which limits agency authority in a splitestate context to the rights granted to it
by the specific acquisition deed or lease.
"In addition, Congress explicitly decided
to eliminate an amendment to the National
Wildlife Refuge System Administration
Act (NWRSAA) in 1966 that would have
provided the secretary of Interior with
specific regulatory authority over the surface use of NWRS lands by holders of
mineral interests," the groups say.

Although USFWS says some courts
have construed NWRSAA to provide the
service with authority to regulate the use
of refuge lands, API and IPAA point out
that neither of the court decisions cited
involve split estates involving subsurface
mineral interest holders. In addition, they
note in Minard Run Oil Co. v. U.S. Forest
Service, the federal court held the Forest
Service didn't have the authority to require
subsurface mineral interest holders to obtain a permit to access those rights.
The service asserts that current regulations are ineffective for protecting refuge
resources, but it fails to provide information
to support that claim, IPAA and API
argue. The service quotes a 2015 report
by its inspector general as evidence of
ineffectiveness, but the industry groups
say it does not document any systematic
problems with prereclamation activities.
The inspector general's report also finds
that USFWS-related administrative issues-
including understaffing, the failure to monitor
industry activities and a failure to adequately
train service employees-also contribute to
lapses in refuge protection, but the industry
groups say the solution is sufficient staffing
and training, not more regulations.
The proposed rule duplicates federal
regulations, including the Environmental
Protection Agency's authority under the
Clean Water Act, API and IPAA continue,
and also incorrectly suggests that state
laws do not adequately address environmental concerns.
"In every state in which the service
identified active and inactive wells, state
oil and gas commissions have adopted regulations that protect the environment through
comprehensive drilling, development, and
production standards; setbacks; groundwater
protection measures; financial assurance
requirements; spill reporting; and reclamation
requirements," the two groups assert.
IPAA and API also criticize USFWS's
plans to impose one regulatory scheme
for all its refuge holdings, saying NWRS
lands have varying easement exceptions,
mineral extraction rights, management
plans, and obligations to facilitate oil and
gas development.
"Moreover, mineral rights law varies
among states, and the interpretation of a
deed or land sale contract between a private
party and the government also will vary
by state," the industry groups say. "One
set of rigid, generally applicable regulations,
as has been proposed by the service, is
not practical, and does not take into account
the substantial legal and factual variations
across NWRS lands."
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APRIL 2016 121
American Oil and Gas Reporter - April 2016

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