DOE recently completed a Supplemental EIS/Program Environmental Impact Report (SEIS/PEIR) on the sale of Naval Petroleum Reserve (NPR) No. 1 (Elk Hills), a Federally owned oil field near Bakersfield, California (map, next page). Closing the sale, scheduled for February 2, 1998, is conditioned on completing several statutory requirements, including the NEPA process, antitrust review, and a 31-day Congressional review.

The NEPA review was an important step leading to the prospective agreement to sell NPR-1 to Occidental Petroleum Corporation for $3.65 billion—the largest Federal divestiture in U.S. history. Based on the Supplemental EIS, the Office of Fossil Energy will be able to incorporate protection for biological and cultural resources into its decision making.

After the October 6, 1997, announcement of DOE’s agreement to sell NPR-1 to Occidental, DOE Assistant Secretary for Fossil Energy Patricia Fry Godley observed: "The NEPA process significantly contributed to the success of the NPR sale process. The prospective new owner will implement mitigation measures, in particular those concerning biological and cultural resources, similar to DOE’s past practices. In addition, we involved Federal, State and local government entities as well as the public and private sector efficiently and meaningfully."

Tony Como, the NEPA Document Manager, noted that "the highly interactive EIS team met the challenge of producing a high quality document under a very ambitious schedule."

Combined Federal and State Environmental Review

DOE and the Kern County Department of Planning jointly prepared the SEIS/PEIR to meet both NEPA and California Environmental Quality Act (CEQA) requirements. The two agencies held joint public hearings on the Draft SEIS/PEIR. The combined process provided an effective framework for close and timely coordination among DOE and State and local agencies.

Potential Effects Warrant Mitigation

NPR-1 serves as important habitat for a variety of threatened and endangered species, including the endangered San Joaquin Kit Fox. The NEPA/CEQA process alerted Federal, State, and county agencies and the public to how increased commercial development of the oil and gas field could have significant impacts on threatened and endangered species and other biological resources. In addition, the optional provisions of the sales contract sensitized the oil and gas companies to the need for mitigation of significant environmental impacts to biological resources by providing for the transfer of an existing permit issued under Section 7 of the Endangered Species Act (ESA). Section 7 provisions ordinarily do not apply to nongovernmental entities, but the transfer was specifically allowed by the Act that authorized the sale. The advantage of a permit transfer is that a successful bidder would have a defined set of agreed-upon mitigation measures for immediate compliance with ESA, with time after the sale to obtain a commercial permit under ESA Section 10. Under the proposed sale agreement, Occidental Petroleum will assume DOE’s existing Section 7 permit and agree to the same mitigation measures that DOE has been required to implement at the site. 

The SEIS/PEIR also focused public attention on potential impacts to cultural resources—specifically two historic oil wells and several prehistoric sites of particular concern to Native Americans. DOE and Kern County are completing consultations and preparing a programmatic agreement with the California State Historic Preservation Officer and the Advisory Council on Historic Preservation concerning possible mitigation activities. Other issues addressed in the SEIS/PEIR include the potential impacts of increased oil and gas operations upon air and water quality.

Congressional Mandate Presents NEPA Challenges

The NPR-1 proposed sale demonstrates that Congressionally mandated divestiture does not diminish DOE’s responsibility under NEPA. The schedule for the proposed sale, however, posed challenges to DOE to ensure a full and timely NEPA review while managing the sales process to maximize the financial return to the government. DOE needed to be responsive to a schedule affected by market timing considerations, while striving to meet the Congressional deadline to sell NPR-1 by February 10, 1998. The NEPA review process proved to be a partner in a successful sale process. 

For more information, contact Tony Como, Office of Fossil Energy, at anthony.como@hq.doe.gov, phone (202) 586-5935, or fax (202) 287-5736.