Statement of David P. Smith,
Deputy Assistant Secretary for Fish and Wildlife and Parks
U.S. Department of the Interior
Regarding the General Accounting Office Report Titled
“ National Wildlife Refuges: Opportunities to Improve the Management and Oversight of Oil and Gas Activities on Federal Lands,”
Before the House Resources Committee
Subcommittee on Fisheries Conservation, Wildlife and Oceans

October 30, 2003


Mr. Chairman and Members of the Subcommittee, I am David P. Smith, Deputy Assistant Secretary for Fish and Wildlife and Parks. Thank you for the opportunity to provide the Department of the Interior’s (Department) views on the General Accounting Office’s Final Report (Report) on the management and oversight of oil and gas activities on units of the National Wildlife Refuge System (GAO-03-517). A copy of the Report was provided to the Department on September 23, 2003.

The Administration takes the recommendations contained in the Report seriously. My plan today is to provide you with some brief background material and offer some initial responses to the Report’s recommendations. In this regard, I should point out that, pursuant to 31 U.S.C. 720 and Departmental policy, we are in the process of developing a formal response to the Report which should provide a more detailed look at how we plan to address GAO’s recommendations. We will gladly provide the Subcommittee with a copy of that response as soon as it is available.


Oil and Gas Activities and the National Wildlife Refuge System

With the exception of refuge lands in Alaska where the federal government owns most of the sub-surface mineral rights, in many cases the U.S. Fish and Wildlife Service (Service) owns only the surface rights to lands within the National Wildlife Refuge System (NWRS). Where private interests own the sub-surface or mineral rights on these lands, it is their right by law to access those minerals. The Administration respects those rights in making management decisions and we have found that most of the owners of these sub-surface rights work cooperatively with the refuges.

Generally, the reason for this division of the surface and mineral estates is that often the mineral rights are either not for sale or are prohibitively expensive at the time the surface rights are purchased. In these cases, the surface rights are purchased independently from the mineral rights. This same approach has been used by several major private conservation groups, in part so they, too, can more easily acquire lands that are deserving of protection.

Department regulations require “to the greatest extent practicable,” that “all exploration, development and production operations” be conducted in such a manner as to “prevent damage, erosion, pollution, or contamination to the lands, waters, facilities, and vegetation of the area.” Further, “so far as practicable, such operations must also be conducted without interference with the operation of the refuge or disturbance to the wildlife thereon.” (50 C.F.R. Part 29.32)

According to the GAO Report, 155 of the 575 units administered by the Service have current or past oil and gas activities. The GAO found that, as of December 2002, there were 1806 active wells on 36 refuges, with most of those wells concentrated on just 5 refuges, and mostly in the State of Louisiana. Sixty-nine refuges contain an additional 2600 inactive wells. The Report also notes that at least one active pipeline is present over 107 units.

The Report cites information from the most recent 12-month reporting period showing that the active wells are responsible for producing 23.7 million barrels of oil and 88.2 million cubic feet of natural gas, about 1.1 and 0.4 percent of the Nation’s domestic oil and gas production, respectively. In 2001 prices, refuge-based production had an estimated commercial value of $880 million.

While this GAO Report has generated some interest, oil and gas activity on national wildlife refuges is not a new topic for Congress, the Department, or the Service.

During the 101st and 102nd Congresses, several hearings over existing and possibly incompatible uses of the refuge system were held in the former Committee on Merchant Marine and Fisheries, the Committee on Government Reform, and the Senate Committee on Environment and Public Works. This was accompanied by a GAO Report, and a detailed evaluation of all uses of the Refuge System was conducted by the Service and provided to the Committees. The nature and extent of oil and gas activities on refuges were reported during those hearings and addressed in the evaluation, along with a wide variety of other uses. At no point during this process did prior administrations or any of the Committees indicate this was a significant problem.

In addition, there were no proposals or amendments offered about oil and gas activity within the refuge system while the organic statute for the NWRS was being debated n the 104th and 105th Congress, and neither the 1996 Executive Order No. 12996, relating to the management of refuges, nor the National Wildlife Refuge System Improvement Act of 1997, P. L. 105-57, which significantly amended the basic NWRS authority, have any provisions on the issue.

This is most likely because Departmental regulations, found at 43 C.F.R. 3101.5-1 and adopted in the 1980s, prohibit developing federal mineral resources, including oil and gas, on national wildlife refuges outside of Alaska, except to prevent drainage. Development in Alaska is controlled by the Alaska National Interest Lands Conservation Act (ANILCA).

Oil and gas development at national wildlife refuges today occurs under two scenarios. It is either as the result of private mineral rights retained prior to or at the time the Service acquired the land, in which case our ability to regulate the oil and gas development may be limited, or it occurs as the result of drainage of adjacent federal oil and gas resources, in which case the development occurs under federal lease and permit requirements, including conditions to ensure habitat protection. In those cases where private rights are retained, we must allow these owners to access their mineral rights, because otherwise we must purchase them at fair market value. Neither prior administrations nor Congress has proposed to spend the money necessary to acquire these outstanding mineral rights.

A similar situation occurs with respect to pipelines, which were either present at the time the Service acquired the land or they were constructed under permit from the Service following a compatibility determination and with the terms and conditions the Service determined was appropriate.

In the case of prior rights or pipelines, the Service was aware of the presence of the retained oil and gas rights or of the pipeline at the time it acquired the property, and determined that the potential benefits of including the area with a National Wildlife Refuge outweighed whatever impacts might result from the presence of that right or pipeline. Similarly, previous administrations have testified that the problems associated with oil and gas activities on refuges are generally not significant enough to warrant the central collection of additional information related to this issue.

GAO Findings and Recommendations

Generally, the GAO found that the Service had not assessed the cumulative environmental impacts of oil and gas activities on refuges, and that, due to differences in authority and lack of guidance, resources, and training, the Service’s management and oversight of oil and gas activities varies from unit to unit.

The Report offers several recommendations, including that the Secretary direct the Service to:
• Collect and maintain better data on the nature and extent of oil and gas activities and the effects of these activities on refuge resources;

• Determine the level of staffing necessary to oversee oil and gas operators and seek adequate funding to meet those needs;

• Ensure adequate staff training; and

• Provide staff guidance and oversight of the Service’s land acquisition process to ensure the identification of problems and potential clean up costs prior to acquisition.

The Report also recommends that the Secretary direct the Service to work with the Office of the Solicitor to determine the Service’s existing authority to issue permits and set reasonable conditions regarding outstanding mineral rights and report to Congress on the results of that determination. Finally, the Report recommends that the Administration seek any necessary additional legislative authority over those rights, and over reserved mineral rights, so that it can apply a “consistent and reasonable set” of controls over these activities on refuge lands.

The Department’s Initial Response

As stated above, we are currently in the process of developing our comprehensive formal comments to the recommendations contained in the GAO Report, and will provide the Subcommittee with a copy of that document as soon as it is available. For purposes of this hearing, however, I offer the following observations.

It is important to note that many of these particular refuge lands have had oil and gas activities for decades, in some cases dating back more than 70 years. GAO recognized this in its report. This is not the manifestation of a new problem; instead, it is an issue that has challenged us for many years. This is not to say that there are no problems in the present. In general, however, we believe we are doing well in our management of this longstanding and complex issue.

We are already taking steps to respond to the GAO’s recommendations. For example, the Service is developing a handbook to address the management of oil and gas activities on refuge lands. Once completed, we expect to provide training on these issues in regions where oil and gas activities take place in refuges.

We are also committed to collecting better data on the impacts of oil and gas activities on refuges. Furthermore, in instances where the Service has the authority to permit this activity, we will find ways to strengthen the application of that authority consistent with both state and federal law. Where the Service does not have that authority, we will explore options with applicable state and federal regulators. Finally, we will continue to work with owners of mineral rights underlying our refuges in our ongoing efforts to build partnerships and minimize the adverse impacts of these activities on fish and wildlife resources.

However, we must acknowledge that oil and gas exploration is only one NWRS management issue that we, as resource managers, must consider as we continue to address operations needs across the entire system. The President has requested substantial increases in funding in recent years to address priority operational needs on our refuges. At the same time, we are addressing other very real threats to our refuges. For example, the damage caused by invasive species affects refuges from the State of Alaska to the Caribbean Sea. Invasive species have caused significant declines of protected species and degraded millions of acres of refuge lands, waters, and wetlands. The Service has taken management actions to control invasive species on over 300 separate refuges.

Finally, we do not believe that additional legislative authority to address the management of oil and gas activities on refuges is necessary. Oil and gas development technology has improved greatly over the past few decades. A substantial number of the problems identified in the Report were caused by techniques that are no longer used by industry, and impacts to the land often occurred before the land was purchased and designated as a refuge. We believe that we are able, under our existing authorities, to effectively manage and oversee oil and gas development activities on our national wildlife refuges.

Conclusion

We take seriously the recommendations contained in the Report, and will continue to work to address all of the challenges that our managers and our refuge resources face.

Mr. Chairman, this concludes my statement. I am happy to answer any questions that you or other Members of the Subcommittee might have.