06-2371. Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases; Onshore Oil and Gas Order Number 1, Approval of Operations

AGENCIES:

U.S. Forest Service, Agriculture; Bureau of Land Management, Interior.

ACTION:

Further proposed rule; Reopening of comment period.

SUMMARY:

This further proposed rule amends the proposed rule published in the Federal Register on July 27, 2005 (70 FR 43349). The proposed rule would revise existing Onshore Oil and Gas Order Number 1 (see 48 FR 48916 as amended at 48 FR 56226 (1983)). The Order provides the requirements necessary for the approval of all proposed oil and gas exploratory, development, or service wells on all Federal and Indian (except Osage Tribe) onshore oil and gas leases, including leases where the surface is managed by the U.S. Forest Service (FS). It also covers approvals necessary for subsequent well operations, including abandonment. This further proposed rule amends the proposed rule by making the provisions on the Application for Permits to Drill or Deepen (APD) package processing consistent with the Energy Policy Act of 2005. In addition, this further proposed rule amends a provision in the proposed rule having to do with proposed operations on lands with Indian surface and Federal minerals. This notice also reopens the comment period for the proposed rule for 30 days.

DATES:

Send your comments on this further proposed rule and the proposed rule to the BLM on or before April 12, 2006. The BLM and the FS will not necessarily consider any comments received after the above date during its decision on the rule.

ADDRESSES:

Mail: Director (630), Bureau of Land Management, Eastern States Office, 7450 Boston Boulevard, Springfield, Virginia 22153.

Hand Delivery: 1620 L Street, NW., Suite 401, Washington, DC 20036.

E-mail: [e-mail].

Federal eRulemaking Portal: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:

James Burd at [phone] or Ian Senio at [phone] at the BLM or Barry Burkhardt at [phone] at the FS. Persons who use a telecommunications device for the deaf (TDD) may contact these persons through the Federal Information Relay Service (FIRS) at 1-800-877-8339, 24 hours a day, 7 days a week.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures

II. Background and Discussion of Further Proposed Rule

III. Procedural Matters

I. Public Comment Procedures

You may submit your comments by any one of several methods:

You may mail your comments to: Director (630), Bureau of Land Management, Eastern States Office, 7450 Boston Boulevard, Springfield, Virginia 22153, Attention: RIN 1004-AD59.

You may deliver comments to: 1620 L Street NW., Suite 401, Washington, DC 20036. You may e-mail your comment to: [e-mail]. (Include “Attention: AD59” in the subject line).

You may submit your comments via the Federal eRulemaking Portal at http://www.regulations.gov.

Please make your comments on the rule as specific as possible, confine them to issues pertinent to the proposed rule or the further proposed rule, and explain the reason for any changes you recommend. Where possible, your comments should reference the specific section or paragraph of the proposal that you are addressing.

The Department of the Interior and the FS may not necessarily consider or include in the Administrative Record for the final rule comments that we receive after the close of the comment period (see DATES) or comments delivered to an address other than those listed above (see ADDRESSES).

Individual respondents may request confidentiality. If you wish to request that the Bureau of Land Management (BLM) consider withholding your name, street address, and other contact information (such as: Internet address, fax or phone number) from public review or disclosure under the Freedom of Information Act, do not submit your comment electronically. You should prominently state at the beginning of your comment that you wish to request confidentiality.

You do not need to re-submit comments you submitted on the first proposal. Those comments are part of the administrative record of this rulemaking and will be considered in the final rule.

II. Background and Discussion of Further Proposed Rule

On August 26, 2005 (70 FR 50262) the BLM and the FS extended the comment period on the proposed rule that was published in the Federal Register on July 27, 2005 (70 FR 43349). On August 8, 2005, the President signed the Energy Policy Act of 2005 (Act). Provisions in the Act impact the timing of approval of APD provisions addressed in the original proposed rule. This further proposed rule would make the provisions in the Onshore Order (specifically Sections III.C.2. and III.G. of the Order) dealing with APD processing consistent with the provisions in the Act. This further proposed rule also modifies a provision in the proposed rule regarding proposed operations on lands with Indian surface and Federal minerals.

Definition of “Complete APD”

This further proposed rule amends the definition of “Complete APD” (see Section II., Definitions, of the Order) by requiring that an onsite inspection conducted jointly by the BLM, the FS if appropriate, and the operator be completed prior to the BLM designating the APD package as complete. Currently, in all circumstances, the BLM, and the FS if appropriate, conducts on-site inspections to determine if an APD package is complete. The BLM and FS intend to continue this practice under the amended Order since examination of existing on-the-ground circumstances is the only way to ensure that the information in the APD package is consistent with conditions at the proposed drill site and along the proposed access route. The proposed changes will make it clear that the BLM and FS intend to continue requiring on-site inspections as part of the APD approval process.

APD Processing

This further proposed rule amends Section III.C.2. of the Order dealing with APD processing because the APD process described in the Order is inconsistent with the process required by the Act.

Section 366 of the Act amends the Mineral Leasing Act (30 U.S.C. 226(p)(1)) to add a requirement that the Secretary notify an applicant within 10 days of receiving an APD either that the APD is complete or what additional information is required to make the application complete. While a 10-day notice provision was included in the Order proposed on July 27, 2005, it is now a statutory requirement.

Section 366 of the Energy Policy Act of 2005 contains other deadlines for processing APDs that were not addressed in the July 27, 2005 proposed Order. While the steps and requirements in the Act are similar to the proposed rule, the Act has two additional timing requirements that the Order must address.

First, the Act requires that the Secretary approve an APD 30 days after it is complete or notify the applicant of: (1) Any actions that the operator can take to get approval; (2) what steps, such as National Environmental Policy Act (NEPA) or other regulatory compliance, remain to be completed; and (3) the schedule for completion of these requirements. The proposed Order contained no specific time for making a final decision on the application.

Second, in those situations where the BLM delays the decision, the Act and this further proposed rule give the applicant two years to take whatever actions are identified in the 30-day notice. The Act amends 30 U.S.C. 226 by adding a new paragraph (p)(3)(B), and this further proposed rule also adds a new requirement, that the Secretary must make a final decision on the application within 10 days of the applicant's completion of these actions, if all other regulatory requirements are complete. The timeframes established in this section apply to both individual APDs and to the multiple APDs included in Master Development Plans. In addition, even though the time limits established in Section 366 of the Act are amendments to the Mineral Leasing Act and, therefore, do not apply to Indian leases, we are proposing to apply the same time limit procedures for both Federal and Indian leases.

The BLM does not approve Surface Use Plans of Operations for National Forest Service (NFS) lands. The FS notifies the BLM of its Surface Use Plan of Operations (SUPO) approval and the BLM proceeds with its APD review. For APDs on NFS lands, the decision to approve a Surface Use Plan of Operations or Master Development Plan may be subject to FS appeal procedures which may take up to 105 days from the date of the decision. Pursuant to the Mineral Leasing Act, as amended by the Federal Onshore Oil and Gas Leasing Reform Act of 1987 (30 U.S.C. 226(g)), proposed section III.C.2.b. provides that BLM may not approve an APD until the FS has approved the SUPO. This condition is consistent with Section 366 of the Energy Policy Act which provides that the Secretary shall issue a permit within 30 days only if requirements of other applicable law have been completed within that timeframe (30 U.S.C. 226(p)(2)). Therefore, in situations where the SUPO is not approved, the BLM will provide notice within the 30 day period that action on the APD will be deferred until the FS completes action on the SUPO.

Operating on Split Estate Lands With Indian Surface Ownership

This further proposed rule would modify Section VI. of the proposed rule by replacing the last sentence of the first paragraph of that section to make it clear that the section applies to lands with Indian surface and Federal minerals. It also explains that the operator is required to address surface use issues with the Bureau of Indian Affairs.

The proposed rule had addressed conferring with surface owners in the case of privately owned surface and Federal/Indian leases, as well as Indian oil and gas leases where the surface is in different Indian ownership. This further proposed rule proposes to apply the policy applicable to privately owned surface to all Indian surface and Federal oil and gas lease situations. Section VI. would require a good faith effort to reach a surface use agreement, and provide for the posting of a bond to protect against damages to crops and tangible improvements in the absence of agreement. This change merely codifies existing policy.

We are aware that this further proposed rule may affect other provisions in the proposed Order. In the final rule we will conform the rest of the Order proposed on July 27, 2005, to be consistent with the amendments proposed in this notice as they pertain to the definition of “Complete APD,” the timeline for processing APDs, and the new provision on operating on split estate lands with Indian surface ownership. Furthermore, provisions in the final Order will supersede any inconsistent provisions of existing regulations, inasmuch as they will constitute a later exercise of Administrative Procedure Act rulemaking. To the maximum extent practical, we will identify such inconsistencies and include conforming amendments to titles 36 or 43, or both, of the CFR in the final rule. For example, the time line in Section III. C. 2. of the proposed rule would supersede that portion of 43 CFR 3162.3-1 that discusses processing times.

III. Procedural Matters

Executive Order 12866, Regulatory Planning and Review

The provisions of the proposed rule (see 70 FR 43349), including the further proposed rule, are not a significant regulatory action and are not subject to review by the Office of Management and Budget (OMB) under Executive Order 12866. The OMB makes the final determination under the Executive Order. The proposed rule and the further proposed rule will not have an effect of $100 million or more on the economy. They will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities. The proposed rule and the further proposed rule will not create serious inconsistencies or otherwise interfere with an action taken or planned by another agency. The proposed rule and further proposed rule do not alter the budgetary effects of entitlements, grants, user fees, or loan programs or the right or obligations of their recipients; nor do they raise novel legal or policy issues. The revision to the definition of “Complete APD” requiring onsite inspections would have no impact on operators since onsite inspections are currently required as part of the APD approval process. The provision on operating on split estate lands with Indian surface ownership is consistent with existing policy and practice and therefore would have no economic impact. The other revisions this rule would make to the Order primarily involve changes to the BLM's and the FS's administrative processes.

Regulatory Flexibility Act

Congress enacted the Regulatory Flexibility Act of 1980 (RFA), as amended, 5 U.S.C. 601-612, to ensure that Government regulations do not unnecessarily or disproportionately burden small entities. The RFA requires a regulatory flexibility analysis if a rule would have a significant economic impact, either detrimental or beneficial, on a substantial number of small entities. For the purposes of this analysis, we will assume that all entities (all lessees and operators) that may be impacted by these regulations are small entities.

The proposed rule and the further proposed rule address the BLM's and the FS's administrative processes involved in processing APDs. These changes are not significantly different from the existing Order and would not significantly impact operators or lessees. As a result of more clear rules, operators will have a better understanding of the BLM processes, and the timelines will lead to a reduction in processing time and some administrative cost savings for the BLM, the FS, and operators. The provision on operating on split estate lands with Indian surface ownership merely codifies existing policy. Therefore, the BLM and the FS have determined that under the RFA the proposed rule and the further proposed rule would not have a significant economic impact on a substantial number of small entities.

Small Business Regulatory Enforcement Fairness Act

The provisions of the proposed rule and the further proposed rule are not a “major rule” as defined at 5 U.S.C. 804(2). For the reasons stated in the RFA discussion, the proposed rule and the further proposed rule would not have an annual effect on the economy greater than $100 million; would not result in major cost or price increases for consumers, industries, government agencies, or regions; and would not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. Please see the discussion of “Executive Order 12866, Regulatory Planning and Review” above.

Unfunded Mandates Reform Act

The proposed and the further proposed rule do not impose an unfunded mandate on state, local, or tribal governments or the private sector of more than $100 million per year; nor do these proposed regulations have a significant or unique effect on state, local, or tribal governments or the private sector. The further proposed rule would codify decisions made by the Congress in the Energy Policy Act and the discretionary provisions would not have any significant effect monetarily, or otherwise, on the entities listed. Therefore, the BLM and the FS are not required to prepare a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.).

Executive Order 12630, Governmental Actions and Interference With Constitutionally Protected Property Rights (Takings)

The proposed rule and the further proposed rule do not represent a government action capable of interfering with constitutionally protected property rights. The further proposed rule has no potential to affect property rights as the changes it would make reduce burdens on regulated parties. Therefore, the Department of the Interior has determined that the rule would not cause a taking of private property or require further discussion of takings implications under this Executive Order.

Executive Order 13132, Federalism

The proposed rule and the further proposed rule will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. The proposed rule and the further proposed rule will not have any effect on any of the items listed. As stated above, the proposed rule and further proposed rule principally deal with the requirements necessary for the approval of all proposed oil and gas exploratory, development, or service wells on all Federal and Indian (except Osage tribe) onshore oil and gas leases. In other words, the rules affect the relationship between operators, lessees, and the BLM and the FS but would not impact states. Therefore, in accordance with Executive Order 13132, the BLM has determined that this proposed rule does not have sufficient federalism implications to warrant preparation of a federalism assessment.

Executive Order 13175, Consultation and Coordination With Indian Tribal Governments

The BLM approves proposed operations on all Indian (except Osage) onshore oil and gas leases and agreements. The BLM has begun consultation on the proposed revisions to the Order and will continue to consult with tribes during the comment period on this further proposed rule. The provision on operating on split estate lands with Indian surface ownership merely codifies existing policy.

Executive Order 12988, Civil Justice Reform

Under Executive Order 12988, the Office of the Solicitor has determined that the proposed rule and the further proposed rule would not unduly burden the judicial system and that they meet the requirements of sections 3(a) and 3(b)(2) of the Order. We have reviewed these regulations to eliminate drafting errors and ambiguity. They have been written to minimize litigation, provide clear legal standards for affected conduct rather than general standards, and promote simplification. Drafting the regulations in clear language and working closely with legal counsel assisted in all of these areas.

Paperwork Reduction Act

This further proposed rule contains no new information collection requirements.

National Environmental Policy Act

The BLM and the FS have prepared an environmental assessment (EA) and have found that the proposed rule and the further proposed rule would not constitute a major Federal action significantly affecting the quality of the human environment under section 102(2)(C) of the NEPA, 42 U.S.C. 4332(2)(C). A detailed statement under NEPA is not required. The BLM has placed the EA and the Finding of No Significant Impact on file in the BLM Administrative Record at the address specified in the ADDRESSES section.

Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

In accordance with Executive Order 13211, the BLM has determined that the proposed rule and the further proposed rule will not have substantial direct effects on the energy supply, distribution or use, including a shortfall in supply or price increase. The rules would clarify the administrative processes involved in approving an APD and more clearly lay out the timeline for processing applications. It is not clear to what extent clarification of the rules will save the BLM, the FS, or operators administrative costs, but we anticipate that the cost savings will be minimal, as will any direct effects on the energy supply, distribution or use.

Executive Order 13352, Facilitation of Cooperative Conservation

In accordance with Executive Order 13352, BLM has determined that this rule primarily involves changes to the BLM and Forest Service administrative processes. This rule does not impede facilitating cooperative conservation; takes appropriate account of and considers the interests of persons with ownership or other legally recognized interests in land or other natural resources; has no effect on local participation in the Federal decision-making process; and provides that the programs, projects, and activities are consistent with protecting public health and safety.

Clarity of the Regulations

Executive Order 12866 requires each agency to write regulations that are simple and easy to understand. We invite your comments on how to make these proposed regulations easier to understand, including answers to questions such as the following:

1. Are the requirements in the proposed regulations clearly stated?

2. Do the proposed regulations contain technical language or jargon that interferes with their clarity?

3. Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?

4. Would the regulations be easier to understand if they were divided into more (but shorter) sections?

5. Is the description of the proposed regulations in the SUPPLEMENTARY INFORMATION section of this preamble helpful in understanding the proposed regulations? How could this description be more helpful in making the proposed regulations easier to understand?

Please send any comments you have on the clarity of the regulations to the address specified in the ADDRESSES section.

Authors

The principal author of this further proposed rule is James Burd of the BLM, Washington Office Fluids Group assisted by the staff of the BLM's Regulatory Affairs Group and the Department of the Interior's Office of the Solicitor.

List of Subjects

36 CFR Part 228

• Environmental protection; Mines; National forests; Oil and gas exploration; Public lands-mineral resources; Public lands-rights-of-way; Reporting and recordkeeping requirements; Surety bonds; Wilderness areas

43 CFR Part 3160

• Administrative practice and procedure; Government contracts; Indians-lands; Mineral royalties; Oil and gas exploration; Penalties; Public lands-mineral resources; Reporting and recordkeeping requirements

For the reasons set out in the preamble, the Bureau of Land Management proposes to amend the Appendix following the regulatory text of the proposed rule published in the Federal Register at 70 FR 43349 as follows:

1. In the Appendix following the regulatory text of the proposed rule, further amend the definition of “Complete APD” in section II, on page 43357, by revising the first paragraph of the definition as follows:

Complete APD means that the information in the APD package is accurate and addresses all of the requirements identified in this Order. The onsite inspection verifies important information that is part of the APD package and is a critical step in determining if the package is complete. Therefore, the onsite inspection must be conducted before the APD package can be considered to be complete. The APD package must contain:

2. Further amend section III.C.2. of the Appendix following the regulatory text of proposed rule by revising paragraph III.C.2, on page 43357, to read as follows:

2. Processing.

The timeframes established in this subsection apply to both individual APDs and to the multiple APDs included in Master Development Plans and to leases of Indian minerals as well as leases of Federal minerals.

(a) Within 10 days of receiving an application, BLM (in consultation with the FS if the application concerns NFS lands) will notify the operator whether or not the application is complete. The BLM will request additional information and correction if necessary. If an onsite inspection has not been performed, the applicant will be notified that the application is not complete. Within 10 days of receiving the application, BLM or the FS if appropriate, in coordination with the operator and Surface Managing Entity, including the non-Federal surface owner in the case of split estate minerals, will schedule a date for the onsite inspection (unless the onsite inspection has already been conducted as part of a Notice of Staking). The onsite inspection will be held as soon as practicable based on schedules and weather conditions. If there is enough information to begin processing the application, BLM (and the FS if applicable) will process it up to the point that missing information or uncorrected deficiencies render further processing impractical or impossible. The operator has 45 days after receiving notice from BLM to provide any additional information necessary to complete the APD, or the APD may be returned to the operator.

(b) Within 30 days after the operator has submitted a complete application, including incorporating any changes that resulted from the onsite inspection, the BLM will:

(1) Approve the application, subject to reasonable conditions of approval, if the requirements of the NEPA, NHPA, ESA, and other applicable law have been met and, if on FS lands, FS has approved the SUPO; or

(2) Notify the operator that it is deferring action on the permit.

(c) The notice of deferral in paragraph (b)(2) of this section must specify:

(1) Any action the operator could take that would enable BLM (in consultation with the FS if applicable) to issue a final decision on the application. The FS will notify the applicant of any action the applicant could take that would enable the FS to issue a final decision on the SUPO on NFS lands. Actions may include, but are not limited to, assistance with:

(A) Data gathering; and

(B) Preparing analyses and documents.

(2) If applicable, a list of actions that BLM or the FS need to take before making a final decision on the application, including analysis required by NEPA or other applicable law and a schedule for completing these actions.

(d) The operator has two years from the date of the notice under paragraph (c)(1) of this section to take the action specified in the notice. If all analyses required by NEPA, NHPA, ESA, and other applicable laws have been completed, BLM (and the FS if applicable), will make a decision on the permit and the SUPO within 10 days of receiving a report from the operator addressing all of the issues or actions specified in the notice under paragraph (c)(1) of this section and certifying that all required actions have been taken. If the operator has not completed the actions specified in the notice within two years from the operator's receipt of the paragraph (c)(1) notice, BLM will deny the permit.

(e) For APDs on NFS lands, the decision to approve a SUPO or Master Development Plan may be subject to FS appeal procedures. Under current FS appeal procedures, resolution of the appeal may take up to 105 days before that decision can be implemented. BLM cannot approve an APD until the appeal of the SUPO is resolved.

3. Further amend section VI. of the Appendix following the regulatory text of proposed rule by revising the last sentence of the first paragraph on page 43362 to read as follows:

This section also applies to lands with Indian surface and Federal minerals. The operator must address surface use issues with the Bureau of Indian Affairs.

Dated: March 2, 2006.

Dale N. Bosworth,

Chief, USDA—Forest Service.

Dated: February 24, 2006.

Johnnie Burton,

Acting Assistant Secretary, Land and Minerals Management.