FWS, producers split on proposed changes in wildlife refuge rules

The US Fish and Wildlife Service (FWS) believes changes are necessary in regulations covering oil and gas activity within federal wildlife refuges, an FWS official told a US House Natural Resources Committee subcommittee. Three other witnesses representing producers with such operations strongly disagreed, while another from an environmental group called for stricter requirements.

Changes are necessary to keep pace with development pressure, protect taxpayer investments in the refuges, and bring needed consistency and reliability to mineral rights holders there, FWS Director Stephen D. Guertin told the committee’s Fisheries, Wildlife, Oceans, and Insular Affairs Subcommittee on May 20.

“There is a long history of private oil and gas development on national wildlife refuges,” he explained in his written testimony. “In many cases, oil and gas production is ongoing at the time of land acquisition, making the purchase of the mineral rights prohibitively expensive. Often, the mineral rights have been severed prior to federal acquisition of the property. In other cases, the property owner sells to the United States, but retains the mineral rights.”

Oil and gas development consequently can be found on nearly half of the nation’s wildlife refuges, Guertin said. Federal leasing occurs under 50 CFR 29.32 only in situations where adjacent nonfederal development drains resources from the federal estate, he said.

Government Accountability Office reports in 2003 and 2007 recommended FWS clarify its permitting authority for nonfederal oil and gas operations within the refuges through regulations, Guertin said. The current regulation does not give the US Department of the Interior agency adequate authority to protect wildlife resources, he noted.

‘Appropriate balance’

“A comprehensive and cohesive oil and gas management program for the service could help achieve an appropriate balance between the Refuge System mission and the reasonable exercise of private oil and gas rights,” he said. FWS’s Feb. 24 advance notice of proposed rulemaking outlines its plan to prepare an environmental impact statement and begin formulating a new rule, Guertin told the subcommittee.

He said a new rule could help address leaks and spills of oil, brine, or other contaminants; fish and wildlife habitat alteration; introduction of invasive species; adverse public access and use impacts; and costs to taxpayers.

“State oil and gas regulatory programs provide some level of Refuge System resource protection, but fundamentally have different roles and responsibilities,” Guertin said. “[FWS] is focused on meeting its legal mandate without duplicating state oversight. Our goal is to complement state regulatory programs to the benefit of the surface estate and the resources with which we are entrusted.”

Witnesses representing producers, royalty owners, and a state regulatory agency criticized the proposal. It’s similar to others from the Obama administration because it’s a solution in search of a problem, according to Daniel T. Naatz, vice-president of federal resources and political affairs at the Independent Petroleum Association of America. The advanced notice raises many questions regarding FWS’s authority to regulate development within refuge boundaries, he said in his written testimony.

“Mineral owners have the legal right to explore for and extract oil and gas from their mineral estates, a fact FWS recognizes,” Naatz said. “Mineral rights represent a dominant estate, taking precedence over other rights associated with property, including surface rights.”

He said, “As a result, FWS is limited in its authority to inhibit operations, including horizontal drilling from private lands, to access minerals under a refuge, and we would expect FWS to adhere to the legal bounds of its authority.”

Cites state regulations

IPAA also believes sufficient regulations already exist to protect wildlife refuge resources, Naatz continued. “In every state in which FWS has identified active and inactive wells, oil and gas commissions have adopted regulations that protect the environment through comprehensive drilling, development, and production standards; setbacks; ground water protection measures; financial assurance requirements; spill reporting; and reclamation requirements,” he said.

FWS’s own data also contradict a conclusion that oil and gas production has had an impact on all federal wildlife refuges, he added. Naatz said the national system includes more than 560 refuges, 38 wetland management districts, and other protected areas encompassing 150 million acres of land and water from the Caribbean to the remote Pacific.

Yet FWS’s fact sheet on nonfederal oil and gas activities within its refuge system recognizes that half of all active wells are found on just five refuges, he said. “Information FWS compiled shows that despite the fact that the system contains over 600 protected areas, only 46 have known and confirmed active wells, and 23 of those have five or fewer active wells,” Naatz told the subcommittee.

Royalty owners also have concerns, another witness testified. J. Davis Powell, a board member of the National Association of Royalty Owners’ Louisiana Chapter, said that if FWS pursues its proposal, the agency should recognize the rights of the mineral estate are dominant over those of the surface estate; allow economic and profitable access to, and development of, the mineral estate; balance environmental concerns with the economic development of oil and gas minerals; and not try to regulate surface activity on nonfederal land adjacent to refuges.

Calls for exemption

Two witnesses from Alaska, meanwhile, warned that FWS’s proposed regulations for oil and gas activity within wildlife refuges could create conflicts with exiting federal law under the 1971 Alaska Native Claims Settlement Act (ANCSA) and the 1980 National Interest Lands Conservation Act.

Kip C. Knudson, Gov. Sean Parnell’s (R) state-federal relations director, said that while Alaska contains about half of the national refuge system’s total acreage, only six of the country’s more than 500 refuges are there. “The most efficient way to acknowledge and respect Alaska’s unique circumstances and functioning management structure in the context of the current proposed regulations is for [FWS] to include an unambiguous and categorical exemption for the 16 Alaska refuges,” he maintained.

“I also want to again emphasize the importance of continuing oil and gas exploration and development within Alaskan Refuges to the Americans who reside in Alaska,” Knudson continued. “Gas produced in the Cook Inlet area, including gas from fields within the Kenai National Wildlife Refuge, is the primary source of both heat and electricity for over half the state’s population, and the reserves in the Cook Inlet area provide for the energy security critical to sustaining our livelihoods into the future.”

Ethan G. Schutt, senior vice-president for land and development at Cook Inlet Region Inc. (CIRI), said FWS’s proposal would disturb the careful statutory balance between CIRI and other corporations created under ANCSA and the state on one hand and federal interests on the other. “Many of the proposed rules, e.g. bonding requirements, tread on the prerogative of the lessor and royalty owner and are not an appropriate action by [FWS],” he said in his written testimony. “Such requirements would impose an additional and unnecessary financial burden on oil and gas operators.”

But Noah Matson, vice-president for landscape conservation and climate adaptation at Defenders of Wildlife, told the subcommittee that existing FWS authority to protect wildlife refuges from adverse impacts related to oil and gas activity consists of a single paragraph so full of qualifiers and discretion that it is completely inadequate.

“Existing state and [FWS] regulations, controls, and capacity are grossly inadequate for properly protecting important and irreplaceable wildlife refuge resources,” he said in his written testimony. “Based on these facts, the [FWS], in order to meet the conservation mandates established by Congress in managing the National Wildlife Refuge System, desperately needs to update and expand its regulations to reasonably manage and provide a nationally consistent approach to the development of nonfederal oil and gas resources within the boundaries of national wildlife refuges.”

Contact Nick Snow at nicks@pennwell.com.

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