Onshore Oil and Gas Operations; Federal and Indian Oil and Gas Leases; Onshore Oil and Gas Order Number 1, Approval of Operations, 49913-49921 [2016-17400]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Land Management

[Federal Register Volume 81, Number 146 (Friday, July 29, 2016)]
[Proposed Rules]
[Pages 49913-49921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17400]


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DEPARTMENT OF THE INTERIOR

Bureau of Land Management

43 CFR Part 3160

[WO-300-L13100000.PP0000]
RIN 1004-AE37


Onshore Oil and Gas Operations; Federal and Indian Oil and Gas 
Leases; Onshore Oil and Gas Order Number 1, Approval of Operations

AGENCY: Bureau of Land Management, Interior.

ACTION: Proposed order.

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SUMMARY: The Bureau of Land Management (BLM) is proposing to amend its 
existing Onshore Oil and Gas Order Number 1 (Onshore Order 1) to 
require the electronic filing (or e-filing) of all Applications for 
Permit to Drill (APD) and Notices of Staking (NOS). Currently, Onshore 
Order 1 states that an ``operator must file an APD or any other 
required documents in the BLM Field Office having jurisdiction over the 
lands described in the application,'' but allows for e-filing of such 
documents in the alternative. This proposal would change that structure 
to make e-filing the required method of submission, subject to limited 
exceptions. The BLM is making this change to improve the efficiency and 
transparency of the APD and NOS processes.

DATES: Send your comments on this proposal to the BLM on or before 
August 29, 2016. The BLM need not consider, nor include in the 
administrative record for the final order, comments received after this 
date. If you wish to comment on the information collection requirements 
in this proposed order, please note that the Office of Management and 
Budget (OMB) is required to make a decision concerning the collection 
of information contained in this proposed order between 30 and 60 days 
after publication of this document in the Federal Register. Therefore, 
a comment to OMB is best assured of having its full effect if OMB 
receives it by August 29, 2016.

ADDRESSES: You may submit comments on the proposed order to the BLM by 
any of the following methods:
     Mail: Director (630) Bureau of Land Management, U.S. 
Department of the Interior, 1849 C St. NW., Room 2134 LM, Washington, 
DC 20240, Attention: 1004-AE37.
     Personal or messenger delivery: U.S. Department of the 
Interior, Bureau of Land Management, 20 M Street SE., Room 2134 LM, 
Attention: Regulatory Affairs, Washington, DC 20003.
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions at this Web site.
    You may submit comments on the proposed collection of information 
by fax or electronic mail to OMB by any of the following methods:
     Fax: Office of Management and Budget, Office of 
Information and Regulatory Affairs, Desk Officer for the Department of 
the Interior, 202-395-5806.
     Electronic mail: oira_submission@omb.eop.gov.
    On all submissions to OMB, please indicate ``Attention: Approval of 
Operations, OMB Control Number 1004-XXXX,'' regardless of the method 
used. If you submit comments on the proposed collection of information, 
please provide the BLM with a courtesy copy of your comments at one of 
the addresses shown above.
    Before including your address, telephone number, email address, or 
other personal identifying information in your comment, be advised that 
your entire comment--including your personal identifying information--
may be made publicly available at any time. While you can ask in your 
comment for the BLM to withhold your personal identifying information 
from public review, we cannot guarantee that we will be able to do so.

FOR FURTHER INFORMATION CONTACT: Steven Wells, Division Chief, Fluid 
Minerals Division, 202-912-7143 for information regarding the substance 
of the order or information about the BLM's Fluid Minerals Program. For 
information on procedural matters or the rulemaking process, please 
contact Mark Purdy, Regulatory Affairs Division, 202-912-7635. Persons 
who use a telecommunications device for the deaf (TDD) may call the 
Federal

[[Page 49914]]

Information Relay Service (FIRS) at 1-800-877-8339 to contact the above 
individuals during normal business hours. FIRS is available 24 hours a 
day, 7 days a week to leave a message or question with the above 
individuals. You will receive a reply during normal business hours.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures
II. Background
III. Discussion of the Proposed Order
IV. Procedural Matters

I. Public Comment Procedures

    This proposed order is administrative in nature and would not 
change the content of what must be submitted in an APD or NOS, only the 
method of submission; therefore, this proposed order has a 30-day 
public comment period. Please make your comments as specific as 
possible by confining them to issues directly related to the content of 
this proposed rule, and explain the basis for your comments. The 
comments and recommendations that will be most useful and likely to 
influence agency decisions are:
    1. Those supported by quantitative information or studies; and
    2. Those that include citations to, and analyses of, the applicable 
laws and regulations.
    The BLM is not obligated to consider or include in the 
Administrative Record for the final order comments received after the 
close of the comment period (see DATES) or comments delivered to an 
address other than those listed above (see ADDRESSES). Comments, 
including names and street addresses of respondents, will be available 
for public review at the address listed under ADDRESSES during regular 
hours (7:45 a.m. to 4:15 p.m.), Monday through Friday, except holidays.

II. Background

    The BLM regulations governing onshore oil and gas operations are 
found at 43 Code of Federal Regulations (CFR) part 3160, Onshore Oil 
and Gas Operations. Section 3164.1 provides for the issuance of Onshore 
Oil and Gas Orders to implement and supplement the regulations found in 
part 3160. Onshore Order 1 has been in effect since October 21, 1983, 
and was most recently amended in 2007 (see 72 FR 10308 (March 7, 
2007)).
    Through this proposal, the BLM is proposing to modify Onshore Order 
1 to require operators to submit NOSs and APDs through the BLM's 
electronic permitting (e-permitting) system, as opposed to the current 
system, which allows either hardcopy or electronic submission. Under 
the proposed order, the BLM would consider granting waivers to the e-
filing requirement for individuals who request a waiver because they 
would experience hardship if required to e-file (e.g., if an operator 
is prevented from e-filing or is in a situation that would make e-
filing so difficult to perform that it would significantly delay an 
operator's APD submission).
    An APD is a request to drill an oil or gas well on Federal or 
Indian lands. An operator must have an approved APD prior to 
drilling.\1\ Prior to submitting an APD, an applicant may file an NOS 
requesting the BLM to conduct an onsite review of an operator's 
proposed oil and gas drilling project. The purpose of an NOS is to 
provide the operator with an opportunity to gather information and 
better address site-specific resource concerns associated with a 
project while preparing their APD package. Operators are not required 
to submit an NOS prior to filing an APD.
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    \1\ In some cases, operators are companies owned by individual 
Indian tribes. Such companies are usually established to produce the 
minerals owned by the tribe and, thus, are operated for the benefit 
of the tribe.
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    The BLM has recently experienced a decrease in the number of APDs 
received due to current market conditions. Historically, the BLM 
received an average of about 5,000 APDs per year for wells on Federal 
and Indian lands, of which Indian lands account for about 16%. In FY 
2015, the BLM received approximately 4,500 APDs. In FY 2016 to date, 
through the end of June 2016, BLM has received 1,010 APDs. In coming 
years, due to the recent drop in oil prices and persistently low 
natural gas prices, the BLM conservatively estimates that an average of 
3,000 APDs will be submitted per year. The BLM anticipates these market 
conditions to continue for the near term.
    Over the last few years, roughly half of the APDs submitted to the 
BLM were submitted using the e-permitting system (Well Information 
System, or WIS). The other half of the APDs were submitted in hard 
copy. The available data show that use of the BLM's e-permitting system 
for APDs and NOSs is common and broad-based among operators, and 
therefore is not a novel concept. More importantly, the data show that 
the use of e-filing has increased over time, with the rate nearly 
doubling from 26 percent in FY 2010 to 51 percent in FY 2014. As of 
2014, approximately 411 operators had used the BLM's legacy WIS to e-
file NOSs, APDs, well completion reports, sundry notices, and other 
application materials. Those operators represent an estimated 85 
percent of the operators that conduct drilling and completion 
operations on Federal and Indian leases nationwide.
    The BLM's legacy WIS system is a web-based application that 
operators can use to submit permit applications and other types of 
information electronically over the Internet. The WIS system was an 
extension of the BLM's current Automated Fluid Minerals Support System 
(AFMSS). AFMSS is a database used to track various types of oil and gas 
information on Federal and Indian lands, including the processing of 
APDs.

Automated Fluid Minerals Support System II

    The BLM has developed and deployed an update to its Automated Fluid 
Minerals Support System called AFMSS II. The APD module within AFMSS II 
replaces the legacy WIS system. In December 2015, the BLM began phasing 
in AFMSS II's APD module and conducting training for staff and 
operators. As of the date of this proposal, the APD module is fully 
operational, and the BLM anticipates that WIS will be phased out in the 
third quarter of calendar year 2016. Therefore, the BLM anticipates 
that the number of operators who use the APD module will continue to 
increase.

Efficiency and Transparency

    The goal of the AFMSS II system and the proposed amendments to 
Onshore Order 1 is to improve operational efficiency and transparency 
in the processing of APDs and NOSs by requiring operators to use BLM's 
updated e-permitting system as the default approach to APD filing. 
Although data show that voluntary use of the e-permitting system has 
increased over time, the proposal is necessary to move towards 100 
percent electronic APD submission.
    This shift presents potential advantages to operators, including 
operators owned by individual Indian tribes, because the new AFMSS II 
system is expected to streamline the application process. The system 
will expedite processing and enhance transparency resulting in savings 
to both operators and the U.S. Government by:
     Reducing the number of applications with deficiencies by 
providing users the ability to identify and correct errors through 
error notifications during the submission process;
     Utilizing the auto-fill function to automatically populate 
data fields based on users' previously submitted information;

[[Page 49915]]

     Allowing operators to track the progress of their 
application throughout the BLM review process;
     Facilitating the use of pre-approved plans, such as Master 
Development Plans and Master Leasing Plans; and
     Allowing users to directly interface with BLM 
applications.
    The AFMSS II system was developed in response to the Government 
Accountability Office's (GAO) and the Department of the Interior Office 
of the Inspector General's (OIG) recommendations in GAO report 13-572 
(GAO-13-572) and OIG report CR-EV-MOA-0003-2013 (Report No. CR-EV-MOA-
0003-2013). Both reports recommended that the BLM ensure that all key 
dates associated with the processing of APDs are completely and 
accurately entered and retained in AFMSS, and in any new system that 
replaces AFMSS, to help assess compliance with deadlines and identify 
ways to improve the efficiency of the APD review process. Additionally, 
the OIG report recommends that the BLM: (1) Develop, implement, 
enforce, and report performance timelines for APD processing; (2) 
Develop outcome-based performance measures for the APD process that 
help enable management to improve productivity; and (3) Ensure that the 
modifications to AFMSS enable accurate and consistent data entry, 
effective workflow management, efficient APD processing, and APD 
tracking at the BLM Field Office level. The APD module developed for 
AFMSS II addresses these recommendations from the OIG and the GAO.

III. Discussion of the Proposed Rule

    This proposal would revise existing Onshore Order 1, which 
primarily supplements 43 CFR 3162.3 and 3162.5. Section 3162.3 covers 
conduct of operations, applications to drill on a lease, subsequent 
well operations, other miscellaneous lease operations, and abandonment. 
Section 3162.5 covers environmental and safety obligations.

Section-by-Section Discussion of Proposed Changes

    This section of the preamble explains the handful of changes that 
the BLM is proposing to make to the existing provisions of Order 1. 
However, in order to provide context for the proposed changes, we have 
included the subsections where BLM's proposed changes are being made in 
their entirety--Where To File an APD, Where To File an NOS, and APD 
Posting. No other changes beyond the modifications proposed here are 
being made to those sections.
Where To File an APD
    The proposed revision to section III.A. would require operators to 
file APDs using the BLM's electronic commerce application, AFMSS II, 
for oil and gas permitting and reporting. The BLM hopes to move towards 
an electronic submission rate of 100 percent. Receiving a portion of 
the APDs electronically and a portion in hard copy introduces a number 
of inefficiencies and necessitates multiple records management systems. 
In addition, the BLM anticipates that submission through the e-
permitting system will improve processing times, public participation, 
and transparency.
Where To File an NOS
    Similarly, the proposed revision to section III.C. would require 
operators to file NOSs using the BLM's e-permitting system for oil and 
gas permitting and reporting. As for APDs, the BLM hopes to move 
towards an electronic submission rate for NOSs of 100 percent. As with 
APDs, receiving a portion of the NOSs electronically and a portion in 
hard copy introduces a number of inefficiencies and necessitates 
multiple records management systems. In addition, we expect that 
submission through the e-permitting system will improve processing 
times, transparency, and public participation.
APD Posting
    Section III.E.1. currently requires the BLM to post information 
about the APD or NOS in an area of the local BLM Field Office that is 
readily accessible to the public. Section III.E.1. also calls for this 
information to be posted on the Internet when possible, though this is 
not required. Currently, some offices are posting information about an 
APD or an NOS on their local Field Office Web site. Under the proposed 
revision to section III.E.1., the BLM would still post hardcopy 
information about the APD or NOS in the applicable BLM Field Office, 
but it would also post the information on the Internet in all cases. 
The BLM is making this change to increase consistency, transparency, 
and efficiency for both operators who file APD submissions and the 
public. In addition to revising section III.E.1. to require the BLM to 
post information about APDs and NOSs online in all cases, the BLM has 
also clarified that section to ensure consistency with 43 CFR 3162.3-
1(g), which requires the BLM to post certain information about an APD 
or NOS at least 30 days before approval for publication inspection. In 
addition to consistency with the regulations, this change is also 
consistent with the BLM's statutory obligations to protect confidential 
business obligation.
    Although this proposed revision would update how the BLM posts APD 
and NOS information, it would not change the type of information that 
would be posted, which is specified in 43 CFR 3162.3-1(g). This section 
already identifies what information should be posted: The company/
operator name; the well name/number; and the well location described to 
the nearest quarter-quarter section (40 acres), or similar land 
description in the case of lands described by metes and bounds, or maps 
showing the affected lands and the location of all tracts to be leased, 
and of all leases already issued in the general area. Where the 
inclusion of maps in such posting is not practicable, the BLM provides 
maps of the affected lands available to the public for review. In 
addition, as under the current order, this posting requirement would 
apply only to APDs or NOSs proposing to drill into and produce Federal 
minerals. The posting requirement would not apply to APDs or NOSs for 
Indian minerals, which are not made publicly available.
Waiver From Electronic Submissions
    Proposed section III.I. is a new section that would allow operators 
to request a waiver from the requirements in proposed sections III.A. 
and III.C. This section would be different from section X., which 
addresses the requirements for requesting a variance from this Order. 
Unlike a variance from the substantive requirements of Order 1, a 
waiver under this proposed order is limited to the means of submission 
of an APD (electronic or hardcopy). A waiver under section III. would 
also be different from a waiver under section XI., which addresses 
lease stipulations. Unlike a waiver from the requirement(s) of a lease 
stipulation, a waiver under this proposed order is not a permanent 
exemption from the BLM's requirement to file applications 
electronically. The BLM's approval of a waiver request under this 
proposed order would apply specifically to those applications 
identified in the waiver request. In connection with any request for a 
waiver under section III.I., the operator would need to explain the 
reason(s) that prevents it from using the e-permitting system. The 
waiver would be subject to BLM approval.
    Under the proposed order, the BLM would not consider an APD or NOS 
that the operator did not submit through the e-permitting system, 
unless the BLM approves a waiver from the e-permitting

[[Page 49916]]

filing requirement under proposed section III.I. The BLM understands 
that under certain circumstances the operator may experience a hardship 
that prevents use of the e-permitting system. When considering a waiver 
request, the BLM will evaluate each circumstance that serves as a basis 
for claiming a hardship. While the BLM cannot conceive of every 
scenario that may qualify as a hardship, for purposes of illustrating 
the waiver process, hardships are those conditions or circumstances 
that may prevent an operator from e-filing or would make e-filing so 
difficult to perform that it would significantly delay an operator's 
APD submission. In those exceptional cases, the BLM will review the 
operator's request and determine whether a waiver allowing the operator 
to submit hard copies is warranted.

IV. Procedural Matters

Considerations

    While the order would require that all operators e-file NOSs and 
APDs, as a practical matter, it would likely have a greater impact on 
operators that do not currently use the BLM's e-permitting system. 
Operators that already use the e-permitting system would likely 
continue to use the system, regardless of the proposed order, and 
therefore will not be impacted by the proposed changes.
    The proposed requirements are estimated to pose relatively small 
compliance costs (see discussion in the Affected Entities section) 
associated with administrative compliance and access to the BLM's e-
filing system, if an impacted operator has not used the BLM's e-
permitting system due to a limiting factor, e.g., if the operator has 
not purchased access to the Internet or if access is not available due 
to the remoteness of its location. These operators are likely to hire a 
permit agent to e-file the APD, acquire Internet access depending on 
the coverage and the availability of service providers, or find another 
work-around solution. While the proposed order places requirements on 
the mechanism by which the operators submit APDs or NOSs, it does not 
change the content required for either submission.
    The requirements may also result in cost savings to the impacted 
operators by reducing the amount of time spent correcting deficiencies 
in APDs. The filing of APDs through the modernized AFMSS II is expected 
to reduce the number of APD submissions that have deficiencies and, for 
APDs where deficiencies exist, reduce the time it takes for the 
operator to correct those deficiencies. Reduced APD processing times 
would benefit impacted operators in that they would be able to commence 
drilling and develop the mineral resources sooner. On Indian lands, 
this would be very beneficial to the tribes and Indian allottees since 
they are the direct recipients of the royalties generated from the 
minerals that they own.
    There will also be improved transparency during the application and 
review process for APDs that are e-filed. With the transition to AFMSS 
II, the operator is able to check the status of the APD, and the public 
is able to find and access information online, in one location. In the 
interim, the BLM continues to maintain hard copy records for APDs 
submitted in hard copy consistent with records management and retention 
requirements.

Affected Entities

    All entities involved in the exploration and production of crude 
oil and natural gas resources on Federal and Indian leases and that 
submit APDs or NOSs after the effective date of the final rule would be 
subject to its requirements.
    We estimate that the proposed amendments would impact about 484 
operators,\2\ and that these operators might experience a small 
increase in administrative costs associated with submitting an APD and 
NOS to the BLM through the new APD module, due to the newness of the 
system. Operators that comply by submitting a waiver request that is 
accepted by the BLM might also experience a small increase in costs 
associated with preparing the waiver request. We estimate the annual 
average costs per operator to be approximately $3,920 per operator 
during the rule's initial implementation period; however, we expect 
those costs to decrease quickly over time as operators become familiar 
with the new AFMSS II submission system. In total, we estimate that the 
proposed amendments might pose annual administrative costs of $2.2 
million (about $1.9 million per year to the industry and $315,000 per 
year to the BLM) during the initial phases. We believe this is a 
conservative estimate of costs given the relatively high proportion of 
APDs already submitted using BLM's existing e-filing systems.
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    \2\ We examined AFMSS data over a 5-year period (from 2008 to 
2012) and found that there were 484 operators that completed wells 
on Federal and Indian leases. We believe that this pool of operators 
is a good basis for an estimate about the entities that are likely 
to file APDs in the future, and therefore be subject to the 
requirements.
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    In addition, we estimate that the proposed amendments would pose 
additional costs for those operators that currently do not use the 
BLM's e-permitting system. Specifically, those 73 entities \3\ might 
face additional compliance costs of $1,200 per operator per year for 
Internet access, using the conservative assumption that they do not 
already have such access. In total, these compliance costs could be 
about $90,000 per year for all 73 affected operators. The increased e-
filing rates that the BLM has observed during the rollout of the AFMSS 
II APD module suggest, however, that fewer than 73 operators would face 
these compliance costs.
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    \3\ According to BLM records, as of 2014, there were 
approximately 411 WIS users, representing 85 percent of the 
operators that would be subject to the proposed requirements. By 
extension, we can estimate that there are 73 entities that did not 
use WIS, representing 15 percent of the operators that would be 
subject to the requirements. These 73 entities were not users of the 
e-permitting system and will be most impacted by the rule.
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    We estimate that the proposed amendments would also benefit 
operators, since operators are expected to receive cost savings from 
more expedited APD processing. We estimate that receiving an APD via 
the e-permitting system rather than in hard-copy would reduce 
processing time by 27 percent or 60 days. Further, we estimate the cost 
savings to the operator of that increased efficiency to be $6,195 per 
APD. Given that the order would impact about 1,500 APDs per year, we 
estimate that the total cost savings could be about $9.3 million per 
year.
    Together, the total benefits are expected to exceed the total 
costs, and the rule is expected to result in total cost savings of 
about $7 million per year on aggregate. We expect these aggregate 
benefits to translate to individual operators. For purposes of 
illustration, even if we assume an individual operator incurs costs as 
result of the proposed amendments because they do not currently use 
BLM's existing e-filing system and have to learn the new system, such 
an operator would still be expected to receive a net cost savings on a 
per-APD basis, given that the cost savings will exceed the combined 
administrative and other compliance costs. On a per APD basis, we 
expect increased costs of $1,716 per year--$516 in administrative 
burden/compliance costs, plus $1,200 in other compliance costs. Those 
costs are expected to be offset, however, by cost savings of $6,195 per 
APD. Therefore, on net, an operator submitting one APD per year would 
be expected to realize a net reduction in costs of $4,479 ($6,195

[[Page 49917]]

minus $1,716). That expected net benefit would increase as an 
operator's familiarity with the new e-filing system increases, as 
administrative costs would be reduced by such familiarity.
    As noted elsewhere in the preamble, some operators are owned by 
individual Indian tribes. Those operators typically develop the 
minerals owned by and for the benefit of the tribe. We expect the 
impacts and benefits of this proposal to apply to these operators to 
the same extent and in the same manner as to other entities operating 
on Federal or Indian lands. On net, we anticipate that the benefits of 
permitting-time efficiencies associated with 100% e-filing, will 
significantly outweigh any costs, especially as operators become more 
familiar with the AFMSS II system.

Executive Order 12866, Regulatory Planning and Review

    The proposed order does not meet the criteria for economic 
significance under Executive Order 12866. The proposed order would not 
have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. The proposed order would not create inconsistencies or 
otherwise interfere with an action taken or planned by another agency. 
In addition, the proposed order would not materially affect the 
budgetary impact of entitlements, grants, loan programs, or the rights 
and obligations of their recipients.

Regulatory Flexibility Act and Small Business Regulatory Enforcement 
Fairness Act

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA), generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act, unless the agency certifies that the rule 
will not have a significant economic impact on a substantial number of 
small entities (see 5 U.S.C. 601-612). Congress enacted the RFA to 
ensure that government regulations do not unnecessarily or 
disproportionately burden small entities. Small entities include small 
businesses, small governmental jurisdictions, and small not-for-profit 
enterprises.
    The Small Business Administration (SBA) has developed size 
standards to carry out the purposes of the Small Business Act and those 
size standards can be found in 13 CFR 121.201. The BLM reviewed the SBA 
classifications and found that the SBA specifies different size 
standards for potentially affected industries. The SBA defines a small 
business in the crude petroleum and natural gas extraction industry 
(North American Industry Classification System or NAICS code 211111) as 
one with 1,250 or fewer employees. However, for the natural gas liquid 
extraction industry (NAICS code 211112), it defines a small business as 
one with 750 or fewer employees.
    The BLM reviewed the SBA size standards for small businesses and 
the number of entities fitting those size standards as reported by the 
U.S. Census Bureau in the 2012 Economic Census. The data show the 
number of firms with fewer than 100 employees and those with 100 
employees or more (well below the SBA size standards for the respective 
industries). According to the available data, over 95% and 91% of firms 
in the crude petroleum and natural gas extraction industry and the 
natural gas liquid extraction industry, respectively, have fewer than 
100 employees. Therefore, we would expect that an even higher 
percentage of firms would be considered small according to the SBA size 
standards. Thus, based on the available information, the BLM believes 
that the vast majority of potentially affected entities would meet the 
SBA small business definition.
    We examined the potential impacts of the proposed order and 
determined that up to 484 small entities would be subject to the 
proposed order's requirements and could face administrative burdens of 
about $3,920 per entity per year. In addition, up to 73 small entities 
could face other compliance costs of $1,200 per entity per year. 
However, we estimate that the administrative and other compliance costs 
would be offset as a result of improved APD processing times. We 
estimate that cost savings from faster APD processing could be $6,195 
per APD. Moreover, we expect that the administrative burdens of the 
rule will lessen over time as operators become more familiar with the 
BLM's new e-permitting system.
    Based on this review, we have determined that, although the 
proposal would impact a substantial number of small entities, it would 
not have a significant economic impact on a substantial number of small 
entities. Therefore, a regulatory flexibility analysis is not required.
    This proposed order is also not a major rule under 5 U.S.C. 804(2) 
of the RFA, as amended by the SBREFA. This proposed order will not have 
an annual effect on the economy of $100 million or more. In fact, the 
BLM estimates that the benefits would exceed the costs, and that the 
rulemaking could result in net savings of $7 million per year. 
Similarly, this proposed order will not cause a major increase in costs 
or prices for consumers, individual industries, Federal, State, tribal, 
or local government agencies, or geographic regions, nor does this 
proposed order have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. This 
proposed order is administrative in nature and only affects the method 
for submitting APDs and NOSs. The BLM prepared a preliminary economic 
threshold analysis as part of the record, which is available for 
review.

Unfunded Mandates Reform Act

    Under the Unfunded Mandates Reform Act (UMRA), agencies must 
prepare a written statement about benefits and costs before issuing a 
proposed or final rule that may result in aggregate expenditure by 
State, local, and tribal governments, or by the private sector, of $100 
million or more in any one year.
    The proposed order does not contain a Federal mandate that may 
result in expenditures of $100 million or more for State, local, and 
tribal governments, in the aggregate, or for the private sector, in any 
one year. Thus, the proposed order is also not subject to the 
requirements of sections 202 or 205 of UMRA. This proposed order is 
also not subject to the requirements of section 203 of UMRA because it 
contains no regulatory requirements that might significantly or 
uniquely affect small governments, because it contains no requirements 
that apply to such governments, nor does it impose obligations on them.

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

    In accordance with Executive Order 12630, the BLM has determined 
that the proposed order would not have significant takings 
implications. The proposed order would not be a governmental action 
capable of interfering with constitutionally protected property rights. 
Therefore, the proposed order will not cause a taking of private 
property or require a takings implication assessment under the 
Executive order.

[[Page 49918]]

Executive Order 13132, Federalism

    This proposed order would not have federalism implications. The 
proposed order would not have substantial direct effects 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. Therefore, in accordance with Executive Order 
13132, a Federalism Assessment is not required.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    The BLM evaluated possible effects of the proposed order on 
federally recognized Indian tribes. Since the BLM approves proposed 
operations on all Indian onshore oil and gas leases (other than those 
of the Osage Tribe), the proposed order has the potential to affect 
Indian tribes, particularly those tribes with tribally-owned and -
operated oil and gas drilling or exploration companies, which currently 
submit APDs and/or NOSs. In conformance with the Secretary's policy on 
tribal consultation, the BLM has extended an invitation to consult on 
the proposed rule to affected tribes, including tribes that either: (i) 
Own an oil and gas company; or (ii) own minerals for which the BLM has 
recently received an APD. Over the years, oil and gas development on 
Indian and allotted lands has been focused in the States of Colorado, 
Montana, New Mexico, North Dakota, Oklahoma, Texas, and Utah. Based on 
BLM records, the BLM anticipates that there are nearly 40 tribes for 
which the BLM has received or will foreseeably receive APDs or NOSs in 
connection with the development of tribal or allotted mineral 
resources.

Executive Order 12988, Civil Justice Reform

    This rule complies with the requirements of Executive Order 12988. 
Specifically, this proposed order does not unduly burden the Federal 
court system and meets the requirements of sections 3(a) and 3(b)(2) of 
the Executive Order. The BLM has reviewed the proposed order to 
eliminate drafting errors and ambiguity and the proposed order has been 
written to minimize litigation and provide clear legal standards.

Paperwork Reduction Act of 1995

    The Paperwork Reduction Act (PRA) (44 U.S.C. 3501-3521) provides 
that an agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information, unless it displays a valid 
OMB control number. Relevant authorities (44 U.S.C. 3502(3) and 5 CFR 
1320.3(c) and (k)) provide that collections of information include any 
request or requirement that persons obtain, maintain, retain, or report 
information to an agency, or disclose information to a third party or 
to the public. This proposed order contains information collection 
requirements that are subject to review by OMB under the PRA. OMB has 
approved the existing collection of information associated with onshore 
oil and gas operations under control number 1004-0137 (expiration date: 
January 31, 2018). In accordance with the PRA, the BLM has asked OMB 
for a new control number for the information-collection provisions in 
this proposed order and is inviting public comment on that request. 
When this proposed order is finalized and becomes effective, the BLM 
intends to ask OMB to combine the requirements and burdens of this 
proposed order with existing control number 1004-0137. For reference, 
the current burdens for control number 1004-0137 (920,464 hours and 
$32.5 million in non-hour costs) can be viewed at https://www.reginfo.gov/public/. Those burdens for the existing control number 
are unaffected by this proposed rule.
    A copy of the information collection request may be obtained from 
the BLM by electronic mail request to Steven Wells at s1wells@blm.gov 
or by telephone request to 202-912-7143.
    Completion of the new collection of information request would be 
required to obtain or retain a benefit for the operators of Federal and 
Indian onshore oil and gas leases, or units or communitization 
agreements that include Federal and Indian leases (except on the Osage 
Reservation or the Crow Reservation, or in certain other areas). The 
frequency of the collection would be ``on occasion.'' The BLM has 
requested a 3-year term of approval for the new control number.
    The BLM requests comments on the following subjects:
    1. Whether the collection of information is necessary for the 
proper functioning of the BLM, including whether the information will 
have practical utility;
    2. The accuracy of the BLM's estimate of the burden of collecting 
the information, including the validity of the methodology and 
assumptions used;
    3. The quality, utility, and clarity of the information to be 
collected; and
    4. How to minimize the information collection burden on those who 
are to respond, including the use of appropriate automated, electronic, 
mechanical, or other forms of information technology.
    If you would like to comment on the information collection 
requirements of this proposed rule, please send your comments directly 
to OMB, with a copy to the BLM, as directed in the ADDRESSES section of 
this preamble. Please identify your comments with ``Approval of 
Operations, OMB Control Number 1004-XXXX.'' OMB is required to make a 
decision concerning the collection of information contained in this 
proposed order between 30 to 60 days after publication of this document 
in the Federal Register. Therefore, a comment to OMB is best assured of 
having its full effect if OMB receives it by August 29, 2016.

Summary of Proposed Information Collection Activities

    Title: Approval of Operations (43 CFR part 3160).
    Forms:
     Application for Permit to Drill or Re-Enter (Form 3160-3).
     Sample Format for Notice of Staking (Attachment 1 to 2007 
Onshore Order 1, 72 FR at 10338).
    OMB Control Number: This is a request for a new control number.
    Description of Respondents: Private sector oil and gas operators.
    Abstract: The BLM proposes to require e-filing of APDs and NOSs, 
and proposes a provision that would authorize applicants to seek a 
waiver from that requirement.
    Frequency of Collection: On occasion.
    Obligation to Respond: APDs and waiver requests are required to 
obtain or retain benefits. NOSs are voluntary.
    Estimated Annual Responses: 3,450.
    Estimated Reporting and Recordkeeping ``Hour'' Burden: 29,400.

Discussion of the Proposed Collection Activities

    APDs: As revised here, section III.A. of Onshore Order 1 would 
require an operator to file an APD and associated documents using the 
BLM's electronic commerce application for oil and gas permitting and 
reporting. In addition to amending Onshore Order 1, this would have the 
effect of revising OMB control number 1004-0137. As discussed above, 
the BLM plans to seek OMB approval to incorporate the burdens of this 
proposed order into control number 1004-0137 after this proposed order 
is finalized and effective.
    NOSs: As revised here, section III.C. of Onshore Order 1 would 
continue to provide that an NOS may be submitted voluntarily. Section 
III.C. would also require an operator who chooses to file an NOS to use 
the BLM's electronic

[[Page 49919]]

commerce application for oil and gas permitting and reporting. Except 
for the new e-filing requirement, this is an existing collection in use 
without a control number. The purpose of submitting an NOS is to 
provide an operator an opportunity to gather information and better 
address site-specific resource concerns associated with a project while 
preparing an APD package.
    Waiver Requests: Proposed section III.I. is a new section that 
would allow operators to request a waiver from the requirements in 
proposed sections III.A. and III.C. The request would have to be 
supported by an explanation of why the operator is not able to use the 
e-permitting system. In those exceptional cases, the BLM would review 
the operator's request and determine whether a waiver allowing the 
operator to submit hard copies is warranted.
    Although the proposed order would direct the method by which 
operators must submit an APD or an NOS, it does not direct operators to 
obtain, maintain, retain, or report any more information than what is 
already required by the existing Onshore Order 1. The BLM recognizes 
operators may encounter a learning curve as they familiarize themselves 
with the database system, like any new software system to which users 
must adapt. However, that learning curve is expected to be temporary.
    Furthermore, the BLM has sponsored multiple outreach strategies and 
training forums for its AFMSS clients, which should further mitigate 
the extent of industry's learning curve. These outreach efforts 
include:
     Easily accessible internet-based resources, including 
user-guides, audiovisual modules, user toolkits, and FAQs, that are 
available to operators or their agents, and
     Live trainings provided to users to allow for a more 
robust discussion with the BLM on how to use the system. The following 
table outlines the locations where the BLM has sponsored these 
trainings:

----------------------------------------------------------------------------------------------------------------
       Training location              Dates                         Operator/agent participation
----------------------------------------------------------------------------------------------------------------
BLM Offices...................  Jan-May 2016.....  Over 230 BLM Employees Trained.
Online Operator Training at     Dec 2015.........  Over 110 Operators Trained/47 Companies.
 the BLM's National Training
 Center, Phoenix, Arizona.
Online Operator Training and    Mar-May 2016.....  Over 150 Operators trained.
 Individual Sessions at the
 BLM's National Operations
 Center, Denver, Colorado.
----------------------------------------------------------------------------------------------------------------

    Nonetheless, the BLM provides an estimate of the incremental 
burdens of e-filing and waiver submittal, which are itemized in the 
following table. These burdens would apply to both tribally and non-
tribally-owned operators. In the case of APDs, these burdens are in 
addition to those estimated under OMB control number 1004-0137.

----------------------------------------------------------------------------------------------------------------
                                                  B. Number of           C. Hours per
            A. Type of response                    responses               response            D. Total hours
----------------------------------------------------------------------------------------------------------------
      Application to Drill or Re-Enter                \4\ 3,000                      8                 24,000
                                   43 CFR 3162.3-1 and Section III.A. of
                        Onshore Order 1
                           Form 3160-3
----------------------------------------------------------------------------------------------------------------
                     Notice of Staking                  \5\ 300                     16                  4,800
                          Section III.C. of Onshore Order 1
----------------------------------------------------------------------------------------------------------------
                        Waiver Request                  \6\ 150                      4                    600
     Section III.I. of Onshore Order 1
----------------------------------------------------------------------------------------------------------------
    Totals.................................               3,450                     28                 29,400
----------------------------------------------------------------------------------------------------------------

National Environmental Policy Act
---------------------------------------------------------------------------

    \4\ The estimated number of APDs submitted in a given year, 
based on historic data.
    \5\ Estimated as 10 percent of the roughly 3,000 APDs filed 
annually.
    \6\ Estimated as 10 percent of the 1,500 APDs likely to be 
impacted by the proposed order. BLM data show that half of APDs were 
already e-filed through the legacy WIS.
---------------------------------------------------------------------------

    This proposed order does not constitute a major Federal action 
significantly affecting the quality of the human environment. The BLM 
has analyzed this proposed order and determined it meets the criteria 
set forth in 43 CFR 46.210(i) for a Departmental Categorical Exclusion 
in that this proposed order is ``. . . of an administrative, financial, 
legal, technical or procedural nature . . . .'' Therefore, it is 
categorically excluded from environmental review under the National 
Environmental Policy Act, pursuant to 43 CFR 46.205 and 46.210(c) and 
(i). The BLM also has analyzed this proposed order to determine if it 
involves any of the extraordinary circumstances that would require an 
environmental assessment or an environmental impact statement, as set 
forth in 43 CFR 46.215, and concluded that this proposed order does not 
involve any extraordinary circumstances.

Data Quality Act

    In developing this proposed order, we did not conduct or use a 
study, experiment, or survey requiring peer review under the Data 
Quality Act (Pub. L. 106-554, app. C 515, 114 Stat. 2763, 2763A-153 to 
154).

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

    Under Executive Order 13211, agencies are required to prepare and 
submit to OMB a Statement of Energy Effects for significant energy 
actions. This Statement is to include a detailed statement of ``any 
adverse effects of energy supply, distribution, or use (including a 
shortfall in supply, price increases, and increase use of foreign 
supplies)'' for the action and reasonable alternatives and their 
effects.
    Section 4(b) of Executive Order 13211 defines a ``significant 
energy action'' as ``any action by an agency (normally

[[Page 49920]]

published in the Federal Register) that promulgates or is expected to 
lead to the promulgation of a final rule or regulation, including 
notices of inquiry, advance notices of proposed rulemaking, and notices 
of proposed rulemaking: (1)(i) That is a significant regulatory action 
under Executive Order 12866 or any successor order, and (ii) is likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy; or (2) that is designated by the Administrator of the 
Office of Information and Regulatory Affairs (OIRA) as a significant 
energy action.'' The proposed order would not be a significant 
regulatory action under Executive Order 12866 as it would not have a 
significant adverse effect on the supply, distribution, or use of 
energy. The proposed order has also not been designated by the 
Administrator of OIRA as a significant energy action.

Executive Order 13352, Facilitation of Cooperative Conservation

    The BLM determined that this proposed order involves changes to BLM 
processes. In accordance with Executive Order 13352, this proposed 
order would not impede facilitating cooperative conservation. The 
proposed order takes appropriate account of and respects the interests 
of persons with ownership or other legally recognized interests in land 
or other natural resources; properly accommodates local participation 
in the Federal decision-making process; and provides that the programs, 
projects, and activities are consistent with protecting public health 
and safety.

Authors

    The principal author of this proposed rule is Catherine Cook of the 
BLM, Division of Fluid Minerals, assisted by Mark Purdy, BLM, Division 
of Regulatory Affairs, and the Department of the Interior's Office of 
the Solicitor.

List of Subjects in 43 CFR Part 3160

    Administrative practice and procedure, Government contracts, 
Indian-lands, Mineral royalties, Oil and gas exploration, Penalties, 
Public lands--mineral resources, Reporting and recordkeeping 
requirements.

Janice M. Schneider,
Assistant Secretary, Land and Minerals Management.
    For reasons set out in the preamble, the Bureau of Land Management 
proposes to amend the appendix following the regulatory text of the 
final rule published in the Federal Register at 72 FR 10308 at 10328 
(March 7, 2007), corrected on March 9, 2007 (72 FR 10608), effective 
March 7, 2007, as follows:

    Note:  This appendix does not appear in the BLM regulations in 
43 CFR part 3160.

Appendix--Text of Oil and Gas Onshore Order

    Amend the Onshore Oil and Gas Order Number 1 by revising 
sections III.A, III.C, and III.E, and adding section III.I to read 
as follows:

Onshore Oil and Gas Order Number 1

* * * * *

III. Application for Permit To Drill

* * * * *

A. Where To File

    The operator must file an APD and associated documents using the 
BLM's electronic commerce application for oil and gas permitting and 
reporting. The operator may contact the local BLM Field Office for 
information on how to gain access to the electronic commerce 
application.
* * * * *

C. Notice of Staking Option

    Before filing an APD or Master Development Plan, the operator 
may file a Notice of Staking with the BLM. The purpose of the Notice 
of Staking is to provide the operator with an opportunity to gather 
information to better address site-specific resource concerns while 
preparing the APD package. This may expedite approval of the APD. An 
operator must file a Notice of Staking using the BLM's electronic 
commerce application for oil and gas permitting and reporting. 
Attachment I, Sample Format for Notice of Staking, provides the 
information required for the Notice of Staking option.
    For Federal lands managed by other Surface Managing Agencies, 
the BLM will provide a copy of the Notice of Staking to the 
appropriate Surface Managing Agency office. In Alaska, when a 
subsistence stipulation is part of the lease, the operator must also 
send a copy of the Notice of Staking to the appropriate Borough and/
or Native Regional or Village Corporation.
    Within 10 days of receiving the Notice of Staking, the BLM or 
the FS will review it for required information and schedule a date 
for the onsite inspection. The onsite inspection will be conducted 
as soon as weather and other conditions permit. The operator must 
stake the proposed drill pad and ancillary facilities, and flag new 
or reconstructed access routes, before the onsite inspection. The 
staking must include a center stake for the proposed well, two 
reference stakes, and a flagged access road centerline. Staking 
activities are considered casual use unless the particular activity 
is likely to cause more than negligible disturbance or damage. Off-
road vehicular use for the purposes of staking is casual use unless, 
in a particular case, it is likely to cause more than negligible 
disturbance or damage, or otherwise prohibited.
    On non-NFS lands, the BLM will invite the Surface Managing 
Agency and private surface owner, if applicable, to participate in 
the onsite inspection. If the surface is privately owned, the 
operator must furnish to the BLM the name, address, and telephone 
number of the surface owner if known. All parties who attend the 
onsite inspection will jointly develop a list of resource concerns 
that the operator must address in the APD. The operator will be 
provided a list of these concerns either during the onsite 
inspection or within 7 days of the onsite inspection. Surface owner 
concerns will be considered to the extent practical within the law. 
Failure to submit an APD within 60 days of the onsite inspection 
will result in the Notice of Staking being returned to the operator.
* * * * *

E. APD Posting and Processing

1. Posting

    The BLM and the Federal Surface Managing Agency, if other than 
the BLM, must provide at least 30 days public notice before the BLM 
may approve an APD or Master Development Plan on a Federal oil and 
gas lease. Posting is not required for an APD for an Indian oil and 
gas lease or agreement. The BLM will post information about the APD 
or Notice of Staking for Federal oil and gas leases to the Internet 
and in an area of the BLM Field Office having jurisdiction that is 
readily accessible to the public. If the surface is managed by a 
Federal agency other than the BLM, that agency also is required to 
post the notice for at least 30 days. This would include the BIA 
where the surface is held in trust but the mineral estate is 
federally owned. The posting is for informational purposes only and 
is not an appealable decision. The purpose of the posting is to give 
any interested party notification that a Federal approval of mineral 
operations has been requested. The BLM or the FS will not post 
confidential information.
    Reposting of the proposal may be necessary if the posted 
location of the proposed well is:
    a. Moved to a different quarter-quarter section;
    b. Moved more than 660 feet for lands that are not covered by a 
Public Land Survey; or
    c. If the BLM or the FS determine that the move is substantial.

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.
    If there is enough information to begin processing the 
application, the 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.
    a. Within 10 days of receiving an application, the BLM (in 
consultation with the FS if the application concerns NFS lands) will 
notify the operator as to whether or not the application is 
complete. The BLM will request additional information and correction 
of any material submitted, if necessary, in the 10-day notification. 
If an onsite inspection has not been performed, the applicant will 
be notified that the application is not complete.

[[Page 49921]]

Within 10 days of receiving the application, the BLM, in 
coordination with the operator and Surface Managing Agency, 
including the private 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 participants' schedules and weather conditions. The 
operator will be notified at the onsite inspection of any additional 
deficiencies that are discovered during the inspection. The operator 
has 45 days after receiving notice from the 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 appropriate requirements of the NEPA, National 
Historic Preservation Act, Endangered Species Act, and other 
applicable law have been met and, if on NFS lands, the FS has 
approved the Surface Use Plan of Operations;
    2. Notify the operator that it is deferring action on the 
permit; or
    3. Deny the permit if it cannot be approved and the BLM cannot 
identify any actions that the operator could take that would enable 
the BLM to issue the permit or the FS to approve the Surface Use 
Plan of Operations, if applicable.
    c. The notice of deferral in paragraph (b)(2) of this section 
must specify:
    1. Any action the operator could take that would enable the 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 Surface Use Plan of Operations 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 the BLM or the FS need 
to take before making a final decision on the application, including 
appropriate analysis under NEPA or other applicable law and a 
schedule for completing these actions.
    d. The operator has 2 years from the date of the notice under 
paragraph (c)(1) of this section to take the action specified in the 
notice. If the appropriate analyses required by NEPA, National 
Historic Preservation Act, Endangered Species Act, and other 
applicable laws have been completed, the BLM (and the FS if 
applicable), will make a decision on the permit and the Surface Use 
Plan of Operations 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 2 years from 
the operator's receipt of the paragraph (c)(1) notice, the BLM will 
deny the permit.
    e. 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. The BLM cannot approve an APD until the appeal of 
the Surface Use Plan of Operations is resolved.
* * * * *

 I. Waiver From Electronic Submission Requirements

    The operator may request a waiver from the electronic submission 
requirement for an APD or Notice of Staking if compliance would 
cause hardship or the operator is unable to file these documents 
electronically. In the request, the operator must explain the 
reason(s) that prevents it from using the electronic system. The 
waiver request is subject to BLM approval. The BLM will not consider 
an APD or Notice of Staking that the operator did not submit through 
the electronic system, unless the BLM approves a waiver.

[FR Doc. 2016-17400 Filed 7-28-16; 8:45 am]
 BILLING CODE 4310-84-P