In February, 1998, as mandated by Congress, the U.S. Department of Energy (DOE) completed the U.S. Government's largest divestiture ever, the sale of the Naval Petroleum Reserves Number 1 (NPR-1) in Kern County, California to Occidental Petroleum for $3.65 billion dollars. Before that sale could take place, under the National Environmental Policy Act and the California Environmental Quality Act, DOE had to examine the environmental impacts of the privatization and assess their severity. NPR-1 is the seventh largest oil field in the U.S. It contains habitat critical to a number of endangered species, as well as National Historic Register eligible cultural resources. Thus, the transfer from government to private operation had the potential to significantly impact the environment.

The paper will summarize the methodology and conclusions of DOE's Environmental Impact Statement/Environmental Impact Report on the differences between government and private development of NPR-1, which was prepared for the government by ICF Kaiser's Consulting Group. The paper will also summarize the government's conclusions on the expected environmental impacts of the differences in future development. The paper will summarize the mitigation measures that the government and the new owner agreed to adopt in order to reduce the expected environmental impacts of privatization. Included in this summarization will be a discussion of the unique terms and conditions for the protection of threatened and endangered species at NPR-1 required to be undertaken by the new owner. Finally the paper will draw possible lessons learned from the environmental analysis that might have implications for future private oil and gas operations on or near government owned lands.

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