[Federal Register Volume 62, Number 244 (Friday, December 19, 1997)]
[Notices]
[Pages 66609-66616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33208]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Record of Decision: Supplemental Environmental Impact Statement/
Program Environmental Impact Report for the Sale of Naval Petroleum
Reserve No. 1 (Elk Hills), Kern County, California
AGENCY: U.S. Department of Energy.
ACTION: Record of Decision.
-----------------------------------------------------------------------
SUMMARY: The Department of Energy (DOE) is issuing this Record of
Decision to proceed, subject to review by Congress, with the sale to
Occidental Petroleum Corporation (Occidental) of all right, title, and
interest of the United States in Naval Petroleum Reserve No. 1 (NPR-1)
located in Kern County, California, in accordance with Title XXXIV of
the National Defense Authorization Act for Fiscal Year 1996, Public Law
104-106 (hereinafter the ``Elk Hills Sales Statute'' or ``Act'').
The Act requires that DOE undertake a process to sell NPR-1 in a
manner consistent with commercial practices and in a manner that
maximizes the proceeds to the Federal government. Furthermore, the Act
requires DOE to complete the sale of NPR-1 by February 10, 1998, unless
DOE and the Office of Management and Budget (OMB) jointly determine
that (i) the sale is proceeding in a manner inconsistent with
achievement of a sale price that reflects full value, or (ii) another
course of action is in the best interests of the United States. The Act
also specifies a process for determining the minimum acceptable price
for the sale of NPR-1.
Based on the analyses in the Supplemental Environmental Impact
Statement/Program Environmental Impact Report (SEIS/PEIR) titled,
``Sale of Naval Petroleum Reserve No. 1 (Elk Hills) Kern County,
California,'' consideration of the Congressional direction contained in
the Elk Hills Sales Statute, and an offer submitted by Occidental that
exceeded the minimum acceptable sale price as determined pursuant to
section 3412(d) of the Act and exceeded all other offers received
following a competitive sales process, DOE has determined that
implementation of the Proposed Action and Preferred Alternative in the
SEIS/PEIR (i.e., the sale of all right, title and interest in NPR-1 in
accordance with the Act to Occidental) is in the best interests of the
United States. Accordingly, DOE is publishing this Record of Decision
(ROD) under the authority of the National Environmental Policy Act
(NEPA) of 1969 to proceed with the sale of NPR-1 to Occidental and to
document the basis for this decision.
ADDRESSES: For further information on the sale of NPR-1 (Elk Hills),
contact Anthony J. Como, NEPA Document Manager, Office of Fossil
Energy, U.S. Department of Energy, 1000 Independence Avenue SW,
Washington, D.C. 20585, (202) 586-5935 or 1-888-NPR-EIS1. For further
information on the NEPA process, contact Carol Borgstrom, Director,
Office of NEPA Policy and Assistance, U.S. Department of Energy, 1000
Independence Avenue SW, Washington, D.C. 20585, (202) 586-4600 or leave
a message at 1-800-472-2756.
SUPPLEMENTARY INFORMATION: DOE is issuing a ROD pursuant to the
regulations of the Council on Environmental Quality implementing the
procedural provisions of NEPA 1 and DOE's NEPA implementing
regulations.2
---------------------------------------------------------------------------
\1\ 40 CFR Parts 1500-1508.
\2\ 10 CFR Part 1021.
---------------------------------------------------------------------------
Background
The Elk Hills Sales Statute, signed by President Clinton on
February 10, 1996, authorized and directed the Secretary of Energy (the
``Secretary'') to enter into one or more contracts for the sale of NPR-
1 by February 10, 1998, unless the Secretary and the Director of OMB
jointly determine that (i) the sale is proceeding in a manner
inconsistent with achievement of a sale price that reflects full value,
or (ii) another course of action is in the best interests of the United
States. The Act further directed that the sales process be conducted
``in a manner consistent with commercial practices and in a manner that
maximizes sale proceeds to the Government.''
The Act directed the Secretary to take certain measures which were
designed to assure that the sale of NPR-1 would result in the maximum
return to the government and that the full value of the reserve would
be realized. These measures included:
(1) The retention of an investment banker to independently
administer the sale in a manner that maximizes sale proceeds to the
government;
(2) The hiring of an independent petroleum engineer to prepare a
reserve report in a manner consistent with commercial practices;
(3) The finalization of equity interests of known oil and gas
zones;
[[Page 66610]]
(4) Conducting a competitive sale that was fair and open to all
interested and qualified parties;
(5) The establishment of a process for setting the minimum
acceptable sales price; and
(6) The authority to transfer to the purchaser(s) of NPR-1 the
otherwise nontransferable incidental take permit 3 issued to
the Secretary by the U.S. Fish and Wildlife Service (FWS) under section
7 of the Endangered Species Act (ESA).
---------------------------------------------------------------------------
\3\ The authority for Federal agencies to incidentally ``take''
(i.e., kill, harm, hunt, wound, trap, etc.) endangered species is
granted by the FWS through a consultation process. Such consultation
results in the issuance of a Biological Opinion, which includes an
incidental take statement. As used in this Record of Decision, the
term ``incidental take permit'' or ``permit'' refers collectively to
the Biological Opinion and the incidental take statement contained
therein.
---------------------------------------------------------------------------
The Act also requires that DOE submit a written notification to
Congress of the conditions of the proposed sale at least 31 days before
DOE enters into any contract(s).
Minimum Acceptable Sales Price
Section 3412(d) of the Act prescribes a process for the Secretary
of Energy, in consultation with the Director of OMB, to set the minimum
acceptable price for the sale of NPR-1. As required by this section of
the Act, the Secretary retained the services of five independent
experts in the valuation of oil and gas fields to conduct separate
assessments, in a manner consistent with commercial practices, of the
value of NPR-1 to the United States under continued government
ownership and operation. Section 3412(d) specifies that in making their
assessments, the independent experts shall consider, among other
factors, the net present value of the anticipated revenue stream that
the Secretary and the Director of OMB jointly determine the Treasury
would receive from NPR-1 if it were not sold, adjusted for any
anticipated increases in tax revenues that would result if NPR-1 were
sold. This net present value determination was prepared jointly by DOE
and OMB and was provided to the five independent experts for
consideration in making their assessments.
Section 3412(d)(3) of the Act specifies that the Secretary may not
set the minimum acceptable sale price below the higher of: (a) The
average of the five independent assessments; and (b) the average of
three assessments after excluding the high and low assessments. The
five independent assessments were submitted to DOE on September 15,
1997. After reviewing these assessments, on September 26, 1997, the
Secretary and the Director of OMB jointly established the minimum
acceptable price for the sale of NPR-1 as the average of the five
assessments, which average was higher than the average of the middle
three assessments. The best and final offer submitted by Occidental on
October 3, 1997, exceeded the minimum acceptable sale price established
by the above process, as well as all other offers, and combinations of
other offers, submitted by qualified offerors.
Transfer of Incidental Take Permit
Section 3413(d) of the Elk Hills Sales Statute permits the
Secretary to transfer to the purchaser(s) of NPR-1 the incidental take
permit issued to the Secretary by the FWS and in effect on February 10,
1996, ``if the Secretary determines that transfer of the permit is
necessary to expedite the sale of the reserve in a manner that
maximizes the value of the sale to the United States.'' At the
beginning of the commercial sales process, DOE decided that
transferring to the purchaser(s) of NPR-1 the Biological Opinion (and
incidental take statement contained therein) issued to DOE by the FWS
on November 8, 1995, should help maximize the proceeds from the sale of
NPR-1. However, in the event that not all potential purchasers of NPR-1
would be willing to accept the transferred Biological Opinion and its
terms and conditions, DOE determined to make the transfer optional on
the part of the prospective operators in the draft Purchase and Sale
Agreement distributed to potential purchasers during the sales process.
In its offer to purchase NPR-1, Occidental agreed to accept DOE's
Biological Opinion and incidental take statement. Accordingly, under
the terms of the Purchase and Sale Agreement, Occidental will assume
and agree to be bound by and perform all of DOE's obligations (terms,
conditions, and mitigation measures) under the Biological Opinion,
including the on-going monitoring requirements and the obligation to
establish a 7,075-acre conservation area.
NEPA Process
The continued operation of NPR-1 by DOE has been analyzed in two
previously-issued environmental impact statements (EISs): the 1979 EIS
titled ``Petroleum Production at Maximum Efficient Rate, Naval
Petroleum Reserve No. 1 (Elk Hills), Kern County, California'' (DOE/
EIS-0012) and a 1993 supplement to the 1979 EIS titled ``Petroleum
Production at Maximum Efficient Rate, Naval Petroleum Reserve No. 1
(Elk Hills), Kern County, California'' (DOE/EIS-0158). However, neither
of those documents addressed the possible divestiture of NPR-1.
Therefore, subsequent to the enactment of the Elk Hills Sales Statute,
DOE determined that the sale of NPR-1 would constitute a major Federal
action that may have a significant impact upon the environment within
the meaning of NEPA. Accordingly, on March 21, 1996, DOE published a
notice in the Federal Register (61 FR 11617) announcing its intention
to prepare a supplement to the 1993 Supplemental EIS to address
foreseeable impacts from the sale of NPR-1 and reasonable alternatives.
On April 16, 1996, DOE conducted two public scoping meetings in
Bakersfield, California, to identify major issues and concerns that
should be addressed in the SEIS.
After consultation with the Kern County (California) Planning
Department, Kern County determined that the proposed sale was a project
within the meaning of the California Environmental Quality Act of 1970
(CEQA) requiring the preparation of a environmental impact report
(EIR). Kern County also determined that, because of the unknown future
development decisions of the potential new owners, the EIR should be a
program EIR (PEIR) with future additional analyses to be conducted
under CEQA as required. Then the determination was made by DOE and Kern
County to prepare a joint SEIS/PEIR as allowed by the NEPA and CEQA
regulations.
In July 1997, the DOE and Kern County published a Draft SEIS/PEIR
on the proposed divestiture of NPR-1 titled ``Draft Supplemental
Environmental Impact Statement/Program Environmental Impact Report for
the Sale of NPR-1, Kern County, California (DOE/SEIS/PEIR-0158-S2).
This document addressed the environmental impacts associated with the
Proposed Action (sale of all right, title, and interest of the United
States in NPR-1 as required by the Elk Hills Sales Statute) and two
possible alternatives. DOE and Kern County distributed approximately
300 copies of the Draft SEIS/PEIR to members of Congress, Federal,
state and local agencies, Native American organizations, environmental
groups, businesses, and interested individuals. On July 25, 1997, the
U.S. Environmental Protection Agency published a notice in the Federal
Register (62 FR 40074) announcing the availability of the Draft SEIS/
PEIR and the start of a 45-day public comment period, which ended on
September 8, 1997. As part of the public comment process, DOE and Kern
County held two
[[Page 66611]]
public hearings on August 26, 1997, in Bakersfield, California.
In preparing the Final SEIS/PEIR, DOE and Kern County considered
all public comments received, including comments received after the
September 8, 1997, comment closing date as well as the oral comments
made during the public hearings. Over 300 comments were received from
29 written comment letters and 7 oral statements made at the public
hearings. The Final SEIS/PEIR was distributed on October 17, 1997. This
Final SEIS/PEIR consisted of the Draft SEIS/PEIR and a comment-response
document that included public comments received on the Draft SEIS/PEIR,
responses to those comments, and changes in the Draft SEIS/PEIR in
response to public comments. The Final SEIS/PEIR identified the
Proposed Action as DOE's Preferred Alternative. DOE and Kern County
distributed approximately 300 copies of the Final SEIS/PEIR to members
of Congress, Federal, state and local agencies, Native American
organizations, environmental groups, businesses, and interested
individuals. On October 24, 1997, the U.S. Environmental Protection
Agency published a notice in the Federal Register (62 FR 55399)
announcing the availability of the Final SEIS/PEIR.
Sales Process
In order to meet the February 10, 1998, statutory deadline
contained in the Elk Hills Sales Statute for the completion of the
sale, DOE conducted its sales process concurrently with the NEPA and
CEQA processes. On May 21, 1997, DOE announced the start of the sales
process, which culminated on October 1, 1997, with the submission of
bids for the purchase of NPR-1.
To comply with the provisions of the Act, DOE implemented a sales
strategy designed to maximize the proceeds to the Federal government.
To comply with DOE's further obligations under NEPA to identify all
practicable means of mitigating adverse impacts, DOE structured the
sales process to incorporate mitigation in a manner that would not
impair the ability of DOE to maximize the proceeds from the sale of
NPR-1. To meet DOE's obligations under the Elk Hills Sales Statute and
NEPA, the Purchase and Sale Agreement provided to prospective offerors
during the sales process (May 21, 1997, through October 1, 1997)
contained three optional provisions designed to incorporate mitigation
into the sale of NPR-1 in a manner that did not impair DOE's ability to
maximize proceeds from the sale. These optional provisions were:
(1) Acceptance of the Biological Opinion (including incidental take
statement) issued to DOE by the FWS;
(2) Identification of mitigation measures (contained in the SEIS/
PEIR) that would be committed to, without reducing the offering price;
and
(3) A guarantee that small and independent refiners in the region
would have access to 25% of the new operator's NPR-1 oil production for
three years following the sale.
During the sales process, prospective purchasers were notified
that, even after offers were submitted and the ``highest offer(s)''
identified, DOE could not enter into a sales contract until:
(1) The NEPA process is completed and DOE publishes a Record of
Decision;
(2) The Justice Department completes an antitrust review of the
sale; and
(3) A 31-day Congressional review period expires with no adverse
Congressional action.
On October 1, 1997, DOE received twenty-two (22) offers from
fifteen (15) entities. After a preliminary evaluation of these offers,
DOE requested submission of ``best and final'' offers from all offerors
whose initial offer exceeded the minimum acceptable price. After review
of the ``best and final'' offers, DOE identified Occidental as the firm
submitting the highest offer for the purchase of NPR-1. In the final
Purchase and Sale Agreement to purchase NPR-1, Occidental proposed to
accept the transfer of DOE's Biological Opinion and to submit to DOE,
within ten (10) business days following the publication of the Final
SEIS/PEIR, a list of mitigation measures Occidental would implement
after the closing date of the sale, which is scheduled to occur no
later than February 10, 1998. This list of mitigation measures
4 is described in this Record of Decision.
---------------------------------------------------------------------------
\4\ The final Purchase and Sale Agreement negotiated with
Occidental contained a provision in which Occidental agreed ``to
deliver a list of mitigation measures to be implemented by Buyer
[Occidental] after Closing.'' In compliance with this provision, on
November 7, 1997, Occidental submitted a list of thirty-three (33)
mitigation measures that it intends to implement. In this letter,
Occidental also identified the appropriate State, local, or Federal
agency which is expected to monitor compliance with each of the
measures.
---------------------------------------------------------------------------
Description of Alternatives
Three alternative actions were analyzed in the SEIS/PEIR: (1) Sale
of all right, title, and interest of the Federal government in NPR-1 in
accordance with the Act (the Proposed Action); (2) continued DOE
ownership and operation of NPR-1 (the No-Action Alternative); and (3)
withdrawal of DOE from direct petroleum production activities at NPR-1
but continued Federal ownership (Alternative to the Proposed Action).
Comments received during the scoping process suggested that,
depending upon how NPR-1 was offered for sale and the type of
entity(ies) to whom NPR-1 was sold, different types and levels of
environmental impacts could result. Based on these scoping comments,
DOE and Kern County developed and analyzed three different divestiture
scenarios under the Proposed Action and two different divestiture
scenarios under the Alternative to the Proposed Action. In each case,
the analyses in the SEIS/PEIR were based upon either a government
approach to field development or a commercial approach, depending upon
the type of entity(ies) assumed to be the eventual owner(s) of NPR-1.
The three alternatives, five divestiture scenarios, and the two field
development approaches combine to produce varying types and levels of
environmental impacts that are identified in the SEIS/PEIR. These
differences in types and levels of impacts result from differences in
the rate and level of intensity of oil field development among the
three alternatives.
The No Action Alternative assumes continued government ownership
and operation of NPR-1 and is based upon the lowest rate and level of
intensity of field development activities among the three alternatives.
Because the Proposed Action and the Alternative to the Proposed Action
both assume operation of NPR-1 by a private entity, these two
alternatives are based upon the same rate and level of intensity of
field development activities, which is above that assumed in the No
Action Alternative.
In order to provide a development baseline against which to analyze
the environmental impacts resulting from each alternative, the SEIS/
PEIR also included a Reference Case. The Reference Case is based on
continued production of NPR-1 at maximum efficient rate (MER) in
compliance with the Naval Petroleum Reserves Production Act of 1976, 10
U.S.C. 7420 et seq. The 1976 Production Act defines MER as ``the
maximum sustainable daily oil and gas rate from a reservoir which will
permit economic development and depletion of that reservoir without
detriment to the ultimate recovery'' (10 U.S.C. 7420). Such a case
formed the basis of the Proposed Action in the 1993 SEIS. The Reference
Case in the SEIS/PEIR is
[[Page 66612]]
based upon NPR-1's 1995 Long Range Plan.
Proposed Action
The Proposed Action and DOE's Preferred Alternative is the sale of
all the Federal government's right, title, and interest in NPR-1 as
directed by the Elk Hills Sales Statute. Under the Proposed Action, one
or more private entities would purchase NPR-1 and continue to develop
and operate it as a commercial oil and gas field for at least the next
40 years. This alternative would result in a higher rate and level of
intensity of development for NPR-1 than would be the case under
continued government ownership and operation (the No Action
Alternative). This higher rate and level of intensity of development
would result in the construction and operation of more oil field
infrastructure (wells, pipelines, gas processing facilities) than under
government operation with a resulting increase in the level of
environmental impacts.
No Action Alternative
The No Action Alternative assumes continued Federal ownership of
NPR-1 with ongoing responsibility for the field continuing to be
assumed by DOE. This could occur if the Secretary exercises his
authority under section 3414(b) of the Act to suspend the sale. If such
a recommendation were made, new and separate Congressional action would
be required before further action with respect to the disposition of
NPR-1 could take place.
However, section 3412(h) of the Act specifies that, until sale,
production at NPR-1 is to continue at ``the maximum daily oil or gas
rate from a reservoir, which will permit maximum economic development
of the reservoir consistent with sound oil field engineering
practices.'' Therefore, under the No Action Alternative, continued
ownership and operation by DOE would result in a higher rate and level
of intensity of development and associated environmental impacts than
those that formed the basis of the Proposed Action in the 1993 SEIS and
that are above those characterized by the Reference Case in the SEIS/
PEIR.
Alternative to the Proposed Action
Under this alternative, the Federal government would take some
action other than that required by the Act to sell part, but not all,
of its interest in NPR-1, with the same objective of maximizing the
value of the reserve to the government. Under this alternative, some
level of Federal ownership and control over NPR-1 would be retained.
Future oil and gas development of NPR-1 would be at the same rate and
level of intensity as the Proposed Action but at a higher rate and
level of intensity than under the No Action Alternative. However, the
continued Federal role in the overall management of the property would
result in a lower level of environmental impacts than under the
Proposed Action. Implementation of this alternative would require
additional legislation.
Environmentally Preferable Alternative
The Environmentally Preferable Alternative is the No Action
Alternative: continued ownership and operation of NPR-1 by DOE. This
alternative would result in a continuation of the present level of
Federal protection for the threatened and endangered species that are
found on NPR-1. Also, under this alternative, the Federal government
would develop NPR-1 at a lower rate and level of intensity than would a
private entity under the Proposed Action or the Alternative to the
Proposed Action. This lower rate and level of intensity of development
would produce proportionately lower levels of impacts across the full
spectrum of environmental resources. Finally, under the No Action
Alternative, NPR-1 likely would revert to some form of conservation
area after the completion of oil and gas operations. The
environmentally preferable alternative was not selected as DOE's
preferred alternative because it would not permit DOE to comply with
the Congressional direction contained in the Act of divesting the
Federal government of all right, title, and interest in NPR-1.
Major Environmental Impacts and Mitigation Measures
NPR-1 is expected to remain exclusively an oil field for about the
next half century. The differences in environmental impacts among
alternatives are driven by the rate and level of intensity of
development. Development by a private entity under the Proposed Action
or the Alternative to the Proposed Action would occur at a higher rate
and level of intensity than development by the Federal government under
the No Action Alternative.
The two most import resource areas expected to be impacted by the
Proposed Action (as well as the No Action Alternative and the
Alternative to the Proposed Action) are biological and cultural
resources. The SEIS/PEIR also identified two other potentially
significant resource areas for the three alternatives. These include
air resources and water resources. Other potential resource areas and
impacts analyzed in the SEIS/PEIR include geology and soils, hazardous
waste, land use, noise, socioeconomic, energy conservation, and
environmental justice. However, none of the impacts occurring in these
areas were considered likely to be significant. The SEIS/PEIR concludes
that all of the impacts resulting from the three alternatives could be
mitigated to levels that are less than significant.
Proposed Action
Because the proposed sale of NPR-1 to Occidental would involve the
sale of all of the Federal government's right, title, and interest,
implementation of mitigation measures under the Proposed Action would
be accomplished, for the most part (except for the completion of
certain mitigation measures related to cultural resources), by the
proposed purchaser of NPR-1, Occidental, with enforcement by the
Federal, state and local agencies that have regulatory responsibility
for the activities occurring at NPR-1.
Biological Resources
Impacts: The most significant impacts from the Proposed Action and
the attendant future development of NPR-1 would be on biological
resources. NPR-1 serves as an important habitat for a number of
threatened and endangered species, including the San Joaquin kit fox,
the blunt nose leopard lizard, the giant kangaroo rat, the Tipton
kangaroo rat, the antelope squirrel, and Hoover's woolly-star (a
flowering plant).
Oil and gas development on NPR-1 would continue to alter habitat
and destroy or injure individuals of threatened and endangered species
under the Proposed Action. Development under private ownership of NPR-1
would be at a higher rate and level of intensity and, consequently,
have a greater impact on plant and animal communities in general and on
threatened and endangered species in particular. Under the Proposed
Action, potentially significant impacts include: (1) loss of the
affirmative Federal obligation under section 7(a)(1) of the ESA to
protect, conserve and help recover threatened and endangered species
and their habitats, because the degree of mitigation required of
private entities by the ESA is lower than that required of the Federal
government; (2) the potential lack of funds for protection and
management of the habitat conservation area required to be created by
the 1995 Biological Opinion; (3) reduced potential for recovery of
listed species and increased potential for listing additional species;
and (4) increase in habitat loss and mortality, injury or displacement
of plant and
[[Page 66613]]
animal communities, including threatened and endangered species.
The impacts under private ownership from future development
following the depletion of the reserves and the end of oil and gas
production are too speculative to be predicted with any specificity.
However, it is possible that additional stress to biological resources
could occur, depending on how the owners use the land.
Mitigation: The principal mitigation for the potentially
significant impacts on biological resources is Occidental's decision to
accept transfer of and agreement to be bound by all the terms and
conditions of the Biological Opinion and incidental take statement
issued to DOE by the FWS on November 8, 1995. Those terms and
conditions, including the mitigation commitments made by DOE, will be
in effect until Occidental applies for and receives a new incidental
take permit from the FWS under section 10 of the ESA.5 A new
section 10 permit would contain appropriate terms and conditions agreed
to by the FWS and Occidental. The principal mitigation measures
contained in the 1995 Biological Opinion include:
---------------------------------------------------------------------------
\5\ This is the section of the ESA which contains requirements
applicable to private landowners.
---------------------------------------------------------------------------
(1) Creation of a 7,075-acre conservation area and habitat
management program;
(2) Conducting research, monitoring, and biological survey
programs;
(3) Incorporation of a variety of measures to limit disturbance or
destruction of individuals of threatened and endangered species during
operation and construction activities;
(4) Prohibitions of public access, hunting, and livestock grazing
within NPR-1; and
(5) Restrictions on the use of pesticides, herbicides, and
rodenticides.
In addition to accepting the terms and conditions of the 1995
Biological Opinion, Occidental will enter into and implement an Interim
Memorandum of Understanding with the California Department of Fish and
Game pursuant to Section 2081 of California's Endangered Species Act.
The terms, conditions, and mitigation measures that would be contained
in this Memorandum of Understanding will mitigate potentially
significant impacts on those plant and animal species listed as
threatened or endangered by the State of California.
Cultural Resources
Impacts: The second major resource area impacted by the Proposed
Action is cultural resources. Approximately 60 percent of the area of
NPR-1 has been subject to archaeological survey and inventory. There
are two historic archaeological sites at NPR-1 that the California
State Historic Preservation Officer (SHPO) has determined are eligible
for inclusion on the National Register of Historic Places (discussed
below). There are also four prehistoric sites that are eligible for the
National Register. Additional inventory efforts are underway and more
prehistoric sites are likely to be found (discussed below). The
documented prehistoric sites are represented by accumulations of flaked
and ground stone, shell and bone artifacts, features, faunal dietary
remains and human remains (at two known sites), all of which may be
relevant to the prehistory of the area.
Although many potentially significant individual historic
archaeological sites or buildings at NPR-1 have been so disturbed that
their archaeological values have been destroyed, DOE recommended to the
SHPO that NPR-1 be eligible for inclusion on the National Register as
an historic landscape. The SHPO concluded, however, that NPR-1 was not
an historic landscape but found that three early production wells (the
Hay No. 1 Discovery Well, the Hay No. 5 well, and the Hay No. 7 natural
gas well) appear to be eligible for the National Register.
Discussions with the SHPO on prehistoric sites indicate that NPR-1
development may disturb the four individual prehistoric sites eligible
for the National Register. In September 1997, DOE completed a survey of
3,000 acres previously unsurveyed but predicted to be sensitive for
prehistoric archeological resources, and by the end of November 1997,
archeological testing at the most promising sites within the 3,000-acre
survey area had been completed. Data recovery on significant
prehistoric archeological resources will be completed prior to the
conclusion of the sales process which is presently scheduled for early
February 1998.
Mitigation: Pursuant to sections 106 and 110 of the National
Historic Preservation Act, DOE is in the process of finalizing a
Programmatic Agreement with the California SHPO and the Advisory
Council on Historic Preservation concerning surveys, research, data
recordation, documentation and other preservation activities, as
appropriate, to mitigate the impacts of the Proposed Action. A set of
prehistoric resources representative of the types found on NPR-1 would
be treated by a combination of surface mapping, collection, subsurface
excavations and analysis to recover data and to address important
scientific research questions. A Cultural Resources Management Plan
(CRMP) will address the appropriate mitigation required to recover
important data from these resources and preserve them through
appropriate documentation and publication. The CRMP will be made a part
of the Programmatic Agreement.
The Programmatic Agreement will also include mitigation measures
specifically designed to address the impacts on resources of particular
concern to Native Americans. The mitigation measures will be performed
under appropriate archeological protection permits with notice to
Native Americans in accordance with Native American Graves Protection
and Repatriation Act (NAGPRA) and the Archeological Resources
Protection Act. As one of the mitigation measures, DOE will inform
Occidental and the California Department of Conservation, Division of
Oil, Gas, and Geothermal Resources that sites of this type are known to
exist in particular areas of the Reserve, although without providing
specific locations so as to protect Native American values.
The SHPO has indicated to DOE that the Programmatic Agreement must
also address the concerns related to NAGPRA. As DOE develops the
Programmatic Agreement with the SHPO, DOE will provide for involvement
and comment by Native Americans, both from tribes on the NAGPRA list
and from others with traditional ties to Elk Hills. In addition, DOE
will work closely with the FWS and with Occidental in determining the
location of the land to be included in the conservation set aside area
required under the terms of the 1995 Biological Opinion, in order to
maximize the inclusion of areas that archaeologists and Native
Americans have identified as known or likely to contain human remains.
With respect to the two historic oil and gas wells that the SHPO
has determined are eligible for the National Register, the Programmatic
Agreement will provide for a treatment plan to describe the historic
context of these wells, as well as to publish the descriptions and
distribute the descriptions to public libraries.
In addition to DOE's mitigation, the mitigation measures Occidental
intends to implement include:
(1) Evaluate inclusion of the two locations of suspected human
remains identified by DOE within the conservation area to be
established pursuant to the 1995 Biological Opinion;
(2) Implement a cultural resources training plan supervised by an
archaeologist; and
[[Page 66614]]
(3) Implement a plan to address the discovery of suspected human
remains, other than human remains addressed by the Programmatic
Agreement between DOE and the SHPO, which may be unexpectedly
encountered during construction activities. The plan may include
consulting with the County Coroner, an archaeologist and/or a local
Native American Representative to avoid disturbing suspected human
remains.
Other Potentially Significant Impacts
Impacts: The two other potentially significant resource areas
impacted by the Proposed Action are air quality and water resources.
Future development of NPR-1 under the proposed action would likely
result in higher levels of air emissions. Modeling of projected
emissions for the year 2001, the highest expected emission year, shows
the potential that the state ambient air quality standards for
PM10 (particulate matter 10 microns or larger) could be
exceeded off-site. In addition, on-site Federal ambient air quality
standards for NO2 (Nitrous Oxide) and state ambient air
quality standards for PM10 and SO2 (Sulfur
Dioxide) might be exceeded. However, these results are conservatively
based on maximum permitted emission rates rather than likely lower
actual emission rates, so the actual future emissions are expected to
be within the National and state standards.
The last potential significant impact area from the Proposed Action
is the potential impact on water resources. The higher rate and level
of intensity of development under the Proposed Action would increase
water use in the enhanced oil recovery technique knows as ``water
flooding'' and increase in treatment and disposal requirements for
``produced waters.''
Mitigation: The impacts to these resources would be roughly
proportional to oil production levels and can be mitigated through
compliance with applicable National and state air emission standards
and a continuation of the ongoing NPR-1 program to use treated produced
waters in ``water flood'' projects. Occidental intends to implement two
mitigation measures with respect to air quality and fifteen (15) water
resource mitigation measures. These mitigation measures by Occidental
would continue existing DOE practices.
Other Resources
Impacts: Additional areas of potential concern are geology and
soils, hazardous waste management and disposal, land use, noise,
socioeconomic, energy conservation, and environmental justice. Impacts
in these areas are not likely to be significant.
Comments received during scoping and comments received on the Draft
SEIS/PEIR expressed concern that the possible loss of access to NPR-1
oil for use in local refineries and as a diluent for pipeline
transmission could lead to a premature loss of local refinery
production and/or the inability of local crude oil producers to deliver
their products to market. Some local small and independent refiners
and/or producers of heavy crude oil are dependent on continued access
to the lighter NPR-1 oil, and concern was expressed that the proposed
sale could limit their access to the oil. Although the proposed
purchaser of NPR-1, Occidental, did not accept the optional sales
provision to guarantee access to small and independent refiners,
Occidental does not refine oil in California and is expected to put its
share of the production from NPR-1 on the market. Therefore, small and
independent refiners in the region should have access to NPR-1 crude
oil under the Proposed Action (sale of NPR-1 to Occidental).
Mitigation: Occidental intends to implement 10 additional
mitigation measures (see Footnote 4) with respect to these other impact
areas. In addition, all known hazardous waste sites at NPR-1 have been
or will be remediated by DOE using appropriate remediation technology.
However, remediated sites have, as yet, not received determinations
that no further actions are needed from the relevant regulatory
agencies. DOE will continue to work with these agencies to achieve
final closure on the sites, including any additional mitigation work if
required. In the unlikely event that any previously undiscovered
reportable hazardous waste sites are encountered prior to the sale, DOE
will characterize the contamination and disclose it to Occidental.
No Action Alternative
Government development of NPR-1 under the No Action Alternative
would likely be at a lower rate and level of intensity than under the
Proposed Action or the Alternative to the Proposed Action. Further, DOE
would retain the affirmative Federal obligation to mitigate the
environmental consequences of its actions. However, the affected
environment and the types of impacts to the affected environment would
be the same under both the Proposed Action and the No Action
Alternative. In addition, the SEIS/PEIR recognizes the possibility
(although an unlikely one) of a higher rate and level of intensity of
development under government operation than might occur under
commercial operation.
For biological resources, there would be less destruction,
disturbance and fragmentation of endangered species habitat under the
No Action Alternative compared to the Proposed Action because it is
expected that fewer wells would be drilled under the No Action
Alternative. In addition, the level of mitigation required of Federal
agencies under the ESA is greater than that for private industry.
Furthermore, although future development cannot be predicted, at the
end of NPR-1's useful life as an oil and gas field, it is more likely
to be converted to wildlife habitat under government ownership than
under private ownership.
For cultural resources, again there would be less disturbance of
surface areas under the No Action Alternative than under the Proposed
Action. Further, the requirements placed on Federal agencies by the
National Historic Preservation Act to protect historic properties would
continue under this alternative.
For air resources and water resources, the lower rate and level of
intensity of development under the No Action Alternative would mean
fewer impacts to these affected environments than under the Proposed
Action or the Alternative to the Proposed Action. However, the
difference in impacts between the No Action Alternative and the
Proposed Action is not expected to be significant. The additional areas
of potential concern of geology and soils, hazardous waste management
and disposal, land use, noise, socioeconomic, energy conservation, and
environmental justice would not involve significant differences in
level of impacts between the No Action Alternative and the Proposed
Action. However, the implementation of mitigation measures in each of
the resource areas would reduce potential impacts to levels that are
less than significant.
Alternative to the Proposed Action
Development of NPR-1 by a private entity under the Alternative to
the Proposed Action would likely occur at the same rate and level of
intensity as the Proposed Action. However, the continuing government
interest in NPR-1, although not direct operation, would mean that
development would continue to be subject to the affirmative Federal
obligation to mitigate the environmental consequences of its actions,
especially for biological and cultural resources.
[[Page 66615]]
Again, the affected environment and the types of impacts to the
affected environment would be the same under both the Proposed Action
and the Alternative to the Proposed Action.
For biological resources, there would be the same destruction,
disturbance and fragmentation of endangered species habitat under the
Alternative to the Proposed Action as for the Proposed Action because
it is expected that the same number of wells would be drilled. However,
the higher levels of mitigation required of government agencies would
continue to apply and although future development cannot be predicted,
at the end of the field's life, it is more likely to be converted to
wildlife habitat under this limited amount of government ownership than
under complete private ownership.
For cultural resources, again there would be the same disturbance
of surface under the Alternative to the Proposed Action as the Proposed
Action. Further, the requirements placed on Federal agencies by the
National Historic Preservation Act to protect historic properties would
continue under this alternative.
For air resources and water resources, the similarity of the rate
and level of intensity of development likely for this alternative
compared to the Proposed Action would mean similar impacts to these
affected environments as in the Proposed Action. The impacts to
additional areas of potential concern of geology and soils, hazardous
waste management and disposal, land use, noise, socioeconomic, energy
conservation, and environmental justice would not be significantly
different from the impacts in these areas under the Proposed Action.
However, the implementation of mitigation measures in each of the
resource areas would reduce potential impacts to levels that are less
than significant.
Cumulative Impacts
Section 3416 of the Elk Hills Sales Statute directed the Secretary
to study four options for the disposition of the other Naval Petroleum
Reserves (other than NPR-1) 6 and to recommend to Congress
which option or combination of options would maximize the value of the
reserves to the United States. These options included:
---------------------------------------------------------------------------
\6\ The other Naval Petroleum Reserves include NPR-2 located
adjacent to NPR-1 in Kern County, California; NPR-3 located in
Natrona County, Wyoming; Naval Oil Shale Reserve Nos. 1 and 3
located in Garfield County, Colorado; and Naval Oil Shale Reserve
No. 2 located in Uintah and Carbon Counties, Utah.
---------------------------------------------------------------------------
(1) Retention and continued operation by DOE;
(2) Transfer to the Department of the Interior (DOI) for leasing;
(3) Transfer of all or part of the other reserves to another
Federal agency; and
(4) Sale of the interest of the United States in the other
reserves.
Included in these other reserves is NPR-2, which consists of
approximately 30,181 acres located immediately adjacent to NPR-1. The
Federal government owns approximately 35 percent of the acreage of NPR-
2, with the mineral rights associated with 9,224 of these acres leased
to seven oil companies under 15 active leases. DOE administers these
leases but has no active role in the day-to-day operation of NPR-2.
The SEIS/PEIR examined the cumulative impacts of the Proposed
Action for NPR-1 in conjunction with three possible actions for NPR-2:
transfer to DOI; a No Action Alternative; and a sales alternative. The
analysis in the SEIS/PEIR indicated that the sales alternative for NPR-
2 coupled with the Proposed Action for NPR-1 could result in
significant adverse impacts to biological and cultural resources
because of the loss of the affirmative Federal obligation to protect
sensitive environmental resources on the additional land comprising
NPR-2. However, the SEIS/PEIR concluded that there would be no
significant adverse impact resulting from either transfer to DOI or the
No Action Alternative for NPR-2 because both actions would continue
Federal ownership of the land and the attendant protections for
critical environmental resources.
Based on the results of the study of options for the other Naval
Petroleum Reserves directed by the Act, in March 1997 DOE recommended
to Congress that NPR-2 be transferred to the Department of the
Interior's Bureau of Land Management (BLM) for management of the
surface rights under the Federal Land Policy and Management Act and for
possible leasing of currently unleased acreage under the Mineral
Leasing Act. As discussed in the SEIS/PEIR, the combination of the
Proposed Action for NPR-1 and the recommended action for NPR-2 would
produce no increased stresses on the critical biological and cultural
resources in the region and result in no significant adverse cumulative
impacts.
Congress has not yet authorized DOE to take any action with respect
to the future disposition of NPR-2.
Response to Comments Received After the Final SEIS/PEIR
Following publication of the Final SEIS/PEIR, DOE received a letter
dated November 26, 1997, from the Pacific Environmental Advocacy Center
(PEAC) notifying DOE that the Southwest Center for Biological Diversity
intends to file suit against DOE for failure to reinitiate consultation
with the FWS under section 7(a)(2) of the ESA before selling NPR-1.
PEAC asserted that DOE is required to reinitiate consultation with the
FWS independent of the authority contained in the Elk Hills Sales
Statute, to transfer DOE's incidental take permit to the purchaser of
NPR-1.
The issue of reconsultation was discussed extensively in the Final
SEIS/PEIR in response to several comments received (Final SEIS/PEIR,
pages 1-5 and 1-6). DOE explained in that discussion the basis for
concluding that a new consultation was not required. DOE's conclusion
is supported by an interpretation of the pertinent provisions of the
Elk Hills Sales Statute provided by the DOI Regional Solicitor. DOE
believes that PEAC has not provided any new information that would
change the conclusions contained in the Final SEIS/PEIR or in this
Record of Decision.
Decision
DOE has decided to proceed with the sale of all right, title, and
interest of the United States in the NPR-1 to Occidental, subject to
other requirements of law, including completion of a 31-day
Congressional review period with no adverse legislative action by
Congress. This action will allow compliance with the Congressional
direction contained in the Elk Hills Sales Statute of removing the
Federal government from the inherently non-Federal role of operating a
commercial oil and gas field and also maximizing the value of NPR-1 to
the United States. This decision also is based in part on the offer
submitted by Occidental being the highest offer received by DOE at the
conclusion of the bidding process in 1997, and the fact that the
Occidental offer exceeds the minimum acceptable sale price set by DOE
in consultation with OMB consistent with the provisions of section
3412(d) of the Act.
DOE has considered the information contained within the SEIS/PEIR
and comments received in response to the Draft SEIS/PEIR. In making
this decision, DOE has considered in particular: any potential adverse
impacts to threatened and endangered plant and animal species which are
found within NPR-1, as analyzed in the SEIS/PEIR; the decision by
Occidental to accept the transfer of and to be bound by the terms and
conditions of the
[[Page 66616]]
Biological Opinion issued to DOE by the FWS on November 8, 1995; the
intention of Occidental to implement thirty-three (33) mitigation
measures identified in a letter submitted to DOE on November 7, 1997,
and which are generally described above; and the mitigation of
potential adverse impacts to cultural resources through the
implementation of mitigation measures by DOE pursuant to a Programmatic
Agreement to be executed among DOE, the California SHPO, and the
Advisory Council on Historic Preservation.
Mitigation Action Plan
Section 1201.331(a) of the DOE regulations implementing NEPA (10
CFR Part 1021) states that DOE shall prepare a Mitigation Action Plan
that addresses mitigation commitments expressed in the ROD. A
Mitigation Action Plan regarding DOE's commitments for the divestiture
of NPR-1 is being developed to ensure implementation of all mitigation
commitments. Copies of the Plan may be obtained from Mr. Anthony Como
at the above address.
Issued in Washington, D.C. this 12th day of December 1997.
Patricia Fry Godley,
Assistant Secretary for Fossil Energy.
[FR Doc. 97-33208 Filed 12-18-97; 8:45 am]
BILLING CODE 6450-01-P
