[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

PAIN AT THE PUMP: POLICIES THAT SUPPRESS DOMESTIC PRODUCTION OF OIL AND
GAS

=======================================================================

HEARING

before the

COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

MAY 24, 2011

__________

Serial No. 112-54

__________

Printed for the use of the Committee on Oversight and Government Reform

Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana ELIJAH E. CUMMINGS, Maryland,
JOHN L. MICA, Florida Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee PETER WELCH, Vermont
JOE WALSH, Illinois JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Robert Borden, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director

C O N T E N T S

----------
Page
Hearing held on May 24, 2011..................................... 1
Statement of:
Jackson, Lisa P., Administrator, Environmental Protection
Agency; and David J. Hayes, Deputy Secretary of the
Interior................................................... 10
Jackson, Lisa P.......................................... 10
Hayes, David J........................................... 14
Letters, statements, etc., submitted for the record by:
Cummings, Hon. Elijah E., a Representative in Congress from
the State of Maryland, Democratic staff report............. 4
Hayes, David J., Deputy Secretary of the Interior, prepared
statement of............................................... 17
Issa, Hon. Darrell E., a Representative in Congress from the
State of California, staff report.......................... 28
Jackson, Lisa P., Administrator, Environmental Protection
Agency, prepared statement of.............................. 12

PAIN AT THE PUMP: POLICIES THAT SUPPRESS DOMESTIC PRODUCTION OF OIL AND
GAS

----------

TUESDAY, MAY 24, 2011

House of Representatives,
Committee on Oversight and Government Reform,
Washington, DC.
The committee met, pursuant to notice, at 9 a.m., in room
2154, Rayburn House Office Building, Hon. Darrell E. Issa
(chairman of the committee) presiding.
Present: Representatives Issa, Platts, McHenry, Jordan,
Chaffetz, Mack, Walberg, Lankford, Amash, Buerkle, Labrador,
Meehan, DesJarlais, Gowdy, Ross, Guinta, Farenthold, Kelly,
Cummings, Norton, Kucinich, Tierney, Connolly, Quigley,
Yarmuth, and Speier.
Also present: Representative Gibbs.
Staff present: Ali Ahmad, deputy press secretary; Michael
R. Bebeau, assistant clerk; Robert Borden, general counsel;
Lawrence J. Brady, staff director; Drew Colliatie and Nadia A.
Zahran, staff assistants; Adam P. Fromm, director of Member
services and committee operations; Linda Good, chief clerk;
Ryan M. Hambleton, professional staff member; Christopher
Hixon, deputy chief counsel, oversight; Mark D. Marin, senior
professional staff member; Kristina M. Moore, senior counsel;
Jeff Solsby, senior communications advisor; Sharon Meredith
Utz, research analyst; Krista Boyd, minority counsel; Lisa
Cody, minority investigator; Kevin Corbin, minority staff
assistant; Ashley Etienne, minority director of communications;
Jennifer Hoffman, minority press secretary; Carla Hultberg,
minority chief clerk; Chris Knauer, minority senior
investigator; Lucinda Lessley, minority policy director; Dave
Rapallo, minority staff director; Susanne Sachsman Grooms,
minority chief counsel; and Alex Wolf, minority professional
staff member.
Chairman Issa. Good morning, the committee will come to
order.
The Oversight Committee exists to secure two fundamental
principles: First, Americans have a right to know that the
money Washington takes from them is well spent. And second,
Americans deserve an effective, efficient government that works
for them.
Our duty on the Oversight and Government Reform Committee
is to protect these rights. Our solemn responsibility is to
hold government accountable to taxpayers, because taxpayers
have a right to know what they get from their government.
We will work tirelessly in partnership with citizen
watchdogs to deliver the facts to the American people and bring
genuine reform to the Federal bureaucracy. This is our mission.
Today's hearing is entitled, ``Pain at the Pump.'' But it
goes beyond that; pain at the pump is what the American people
see. The American people see an administration who said before
they came to Washington that we need European oil prices; we
need $8 a barrel gasoline. Although they've only gotten us to
$4 a barrel, we are clearly on a pathway to some day soon
having European-style cost of energy.
Worse than that, it is likely that energy will be imported.
It will represent jobs many miles away and governments that are
often hostile to us who profit from high oil prices. Having
failed to get cap-and-trade passed, it appears as though this
administration is finding alternative ways to achieve the
equivalent.
Secretary Chu before joining the Cabinet said, and I'll put
it on the screen, somehow we have to figure out how to boost
the price of gasoline to the levels of Europe. That is not my
statement; that is the administration's statement.
Additionally, the President has repeatedly as a candidate
said that there will be pain in transition, that prices will
skyrocket. These are not our words; these are the President's
words. So as we watch the cost skyrocket, as we watch
impediments to job creation here, particularly in onshore--I
repeat, onshore--oil and natural gas, we ask the question, are
we seeing by regulation what cannot be done by legislation?
Let us not forget, this committee has a long history of
going after agencies that fail to do their job on the other
side. Our history of going after Minerals Management Service,
although good, lacks only one conclusion; having proven that
MMS was unable to supervise properly the oil and natural gas
industry, that it was in fact an out-of-control entity, we
failed to get real reform under the Bush administration. We
then failed to get real reform under the Obama administration,
and the American people suffered in the Gulf.
This committee will do both, ensure that agencies meet
their obligation to allow the production and exploration of
minerals here in America while ensuring that they also meet the
safety requirements.
With that, I recognize the ranking member for his opening
statement.
Mr. Cummings. Thank you very much, Mr. Chairman.
And I would remind the chairman that this is our watch. We
are on the earth today, and we have a duty to leave a better
environment than the one we found when we were born.
I just want to take a moment to remember why we are here
today. We are not here because of a conspiracy theory that the
administration is deliberately increasing gas prices. And we
are not here because of so-called pre-moratorium or a de facto
moratorium on drilling permits, that does not really exist.
We are here because on April 20, 2010, a massive oil
explosion in the Gulf of Mexico killed 11 people and launched
the worst environmental disaster in the history of our country.
We all watched as the oil spewed into the water for days and
days and days. And for the entire summer, there was nothing we
could do but wait and pray.
Ladies and gentlemen, we are better than that.
Finally, after 87 days, it stopped, but not before
releasing 200 million gallons of oil, not before reaching 780
miles along the Gulf, not before devastating the Gulf's
commercial and recreational fishing industries, and not before
decimating the Gulf's travel and tourism industries, which
represent nearly half of the Gulf's economy, generating over
$100 billion a year, and are responsible for more than a
million jobs. We also represent them by the way. That is why we
are here. And we can never, ever, never, ever forget.
So, thank you, Administrator Jackson and Deputy Secretary
Hayes, for testifying today about the administration's efforts
to prevent this kind of disaster from ever happening again.
We are also here because of recent increases in the price
of gas, which has now surpassed $4 per gallon. These increases
make it harder for average Americans to get to work and for
small businesses to function. I remember--I remind members of
this committee that they are our constituents.
Chairman Issa issued a report today that essentially blames
the Obama administration for everything, including higher gas
prices. In fact, former Alaska Governor Sarah Palin has been
espousing this exact same theory for several months now.
The problem is that this theory has been debunked by
conservative and industry experts. For example, Michael Canes,
the former Chief Economist for the American Petroleum
Institute, said this, ``It's not credible to blame the Obama
administration's drilling policies for today's high prices.''
Ken Green, a resident scholar with the American Enterprise
Institute, said this, ``The world price is the world price;
even if we were producing 100 percent of our oil, we probably
couldn't produce enough to affect the world price of oil.''
Chris Lafakis, an economist at Moody's Analytics, said
this, ``There is absolutely no merit to this viewpoint
whatsoever.''
In other words, when you actually talk to experts who know
the industry and who know the facts, these arguments are
exposed as blatant attempts to score political points with no
basis in fact.
I also released a report today, and I ask unanimous consent
that it be made a part of the official record of today's
hearing.
Chairman Issa. Without objection, so ordered.
[The information referred to follows:]

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Mr. Cummings. Thank you, Mr. Chairman.
My report analyzed what industry, government, and academic
experts accurately believe is causing higher gas prices, and
that is excessive speculation by entities that have no
consumption interest in the underlying commodities and that
profit by doing nothing more than forecasting price trends.
The report's chief conclusion is that in order to make the
most significant impact on the lowering gas prices, our primary
focus should be on countering the growing impact of energy
speculation, rather than simply promoting the oil industry's
priorities of increasing domestic drilling.
As the report finds, addressing excessive speculation
offers the single, most significant opportunity to reduce gas
prices for American consumers. Experts, including oil industry
officials and investment firms, estimate that excessive oil
speculation could be inflating prices by 30 percent. But
increasing domestic drilling would impact prices by only 1
percent and then only after a decade or more.
In my opinion, this committee could have a much more
significant and immediate impact on the price of gas if it
stopped focusing solely on the oil industry's interest and
started focusing on real efforts to help American consumers.
Again I remind our committee, this is our watch. We are on
the earth today. We must protect our environment. We must
protect the fisherman. We must protect the tourism industry. We
must have balance.
And so, Mr. Chairman, I hope that you and I can work
together in a bipartisan manner to effectively and efficiently
conduct an investigation into these issues so that the American
people might have relief.
With that, I yield back.
Chairman Issa. I thank the ranking member.
I ask unanimous consent that the Politico article of April
26th, entitled ``EPA Chief: Gas Prices Not Our Fault,'' in
which the administrator says what appears to be the most
important factor at work is our dependence on imported energy,
be entered into the record.
Without objection, so ordered.
All Members will have 5 legislative days in which to put
their opening statements in, and with that, we move to our
panel of witnesses.
The honorable Lisa Jackson is the Administrator of the U.S.
Environmental Protection Agency. Our second witness, the
honorable David Hayes, is the Deputy Secretary of the
Department of the Interior.
As I have told both of our witnesses earlier, we are on an
unusually tight schedule. We will adjourn to be with the joint
session of Congress at 11 o'clock, and so I am going to execute
a very heavy gavel. I don't want to be unfair to anyone, but I
would like for everyone to understand that we will end each
round at 5 minutes, including each of the opening statements.
This is intended to give everyone an opportunity to be heard.
It will not be our usual talk until the zero and then expect an
answer.
So, pursuant to the committee rules, all witnesses must be
sworn before testifying.
Would you please rise to take the oath?
[Witnesses sworn.]
Chairman Issa. Let the record reflect that both witnesses
answered in the affirmative.
Please be seated.
With that, Administrator Jackson is recognized.

STATEMENTS OF LISA P. JACKSON, ADMINISTRATOR, ENVIRONMENTAL
PROTECTION AGENCY; AND DAVID J. HAYES, DEPUTY SECRETARY OF THE
INTERIOR

STATEMENT OF LISA P. JACKSON

Ms. Jackson. Thank you, Chairman Issa.
To you, Ranking Member Cummings and members of the
committee, thank you for inviting me to testify.
Americans are again suffering at the pump. Gasoline and
diesel cost more today than they did a year ago. As
ExxonMobil's CEO recently testified, the prices of those fuels
are a function of crude oil prices, which are set by global
supply and demand.
As a matter of geology, America will never control more
than a tiny fraction of the world's oil supply. Therefore,
America cannot prevent gasoline and diesel prices from rising.
Still, all else being equal, buying a barrel of American
oil is better than buying a barrel of foreign oil.
Last year, American oil production reached its highest
level since 2003, and President Obama recently announced steps
that the Interior Department is taking to increase safe and
responsible oil production here at home.
Deputy Secretary Hayes will describe those steps today.
For parts of the Outer Continental Shelf, Congress has
declared that a company cannot operate drilling equipment that
emits large amounts of air pollution without first
demonstrating through EPA permitting that the emissions will
not harm Americans. That requirement is not simply red tape
because a single exploratory drilling operation can emit as
much air pollution on a daily basis as a large oil refinery.
In 2007, Shell Oil began seeking from EPA's Region 10
Office air permits for exploratory drilling operations on the
Outer Continental Shelf off Alaska. Region 10 has since issued
five permits to Shell. An administrative court called the
Environmental Appeals Board remanded two of the permits last
December after Alaska residents had challenged them.
I am confident that we will give the board the analysis it
has called for in time for the permits to be upheld before the
start of the next drilling season.
I should note that on average, the board decides air permit
appeals in just over 5 months; that only four of the board's
more than 100 air permit decisions have ever been appealed to a
Federal court; and that none of the board's air permit
decisions has ever been overturned.
Currently there are only four pending air permit
applications for drilling on the Arctic OCS. That includes the
two that I just mentioned. We anticipate many more, though. So,
at the President's direction, the White House has formed a team
of relevant bureaus at the Department of Interior, the
Department of Commerce and EPA to coordinate closely and
prevent unnecessary delays.
Thanks to advances in drilling technology, including
hydraulic fracturing or fracking, America's potential natural
gas resource is nearly 50 percent larger than we believed it
was just a few years ago. The price we pay for natural gas is
not set on a global market the way the price of oil is, and
burning natural gas creates less air pollution than burning
other fossil fuels. So increasing America's natural gas
production is a good thing.
Fracking involves injecting chemicals underground at high
pressure and various substances come back to the surface with
the gas. It is not surprising then that Congress has directed
EPA to study the relationship between fracking and drinking
water. We are doing that with input from technical experts, the
public and industry.
In the meantime, EPA will step in, as necessary, to protect
local residents if drilling jeopardizes clean water.
With that said, State governments are appropriately the
first line of defense again harmful or unsafe drilling
practices.
We can mitigate the impact of high fuel prices on American
families and businesses by enabling them to travel the same
distances and conduct the same commerce on less gasoline and
diesel. The fuel efficiency standards that EPA and the
Department of Transportation established last year for new cars
and light trucks will save the average American driver $3,000
over the life of the car and conserve 1.58 billion barrels of
oil.
Additional standards that we will set this summer for
heavy-duty trucks will save a tractor trailer rig operator up
to $74,000 over the life of the rig and conserve another a half
a billion barrels of oil.
The increased biofuel production mandates that EPA set last
year will displace 7 percent of America's expected gasoline and
diesel consumption in 2022, while decreasing oil imports by
$41\1/2\ billion.
I am proud of the role EPA played to shield Americans from
the harmful economic impact of high gasoline and diesel prices.
EPA's core mission, though, is protecting Americans from
harmful pollution. That is what Congress has ordered EPA to do,
and that is what the American people expect. Even when gas
prices are high and the economy is still recovering, Americans
do not like it when their families and livelihoods are harmed
by industrial pollution that could have been avoided.
Thank you, Mr. Chairman.
[The prepared statement of Ms. Jackson follows:]

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Chairman Issa. Thank you.
Mr. Secretary.

STATEMENT OF DAVID J. HAYES

Mr. Hayes. Thank you, Mr. Chairman, Ranking Member
Cummings, I appreciate the opportunity to give a short oral
statement and request that my written statement be submitted
for the record.
Chairman Issa. Without objection, so ordered.
Mr. Hayes. As you know, the President has emphasized the
importance of securing our energy future by pursuing a
multiprong strategy that includes increased domestic oil and
gas production, improved energy efficiency, and the production
of alternative fuels.
The President reviewed his comprehensive plan in the energy
blueprint document that he released last month. And when
discussing this plan, the President emphasized that there is no
quick fix to address high gas prices and that rather than
``rushing to propose action when gas prices rise, then hitting
the snooze button when they fall again, ``we need to pursue a
comprehensive strategy.
The Department of the Interior has a key role in this
regard in addressing today's and tomorrow's energy issues. Our
department, for example, is for the first time in history
permitting utility scale renewable energy projects on our
public lands and in our offshore waters. Last year, we
permitted more than 4,000 megawatts of renewable solar,
geothermal and wind projects, the equivalent of more than a
dozen medium-sized coal-fired power plants. At the same time,
however, our department is focused on increasing domestic oil
and gas production from our public lands and our offshore
waters.
The facts show that our emphasis on responsible oil and gas
development combined with the efficiency improvements that the
administration has introduced with our transportation fleet and
Administrator Jackson just referenced is paying off.
Over the past 3 years, our domestic oil and gas production
has gone up, while our imports have gone down. Oil imports in
2008 were 57 percent of the total oil consumed in the United
States, today it's less than 50 percent. Oil production is
higher in 2010 than it has been in any year since 2003.
Offshore oil production in the last 3 years has gone up by
a third, by approximately 200,000 barrels a year--million
barrels a year, and production onshore has gone up 5 percent
during the same period.
The President is committed to seeing this trend continue.
As you know, he has vowed to cut our oil imports by one-third
by 2025, down from the 11 million barrels per day that we were
importing when he took office.
At the Interior Department, we are taking a number of steps
to facilitate responsible oil and gas development in the United
States. First, we are providing industry with ample opportunity
to develop domestic oil and gas supplies. Offshore, in 2009 and
2010, our department offered 53 million and 37 million acres
respectively for leasing. Onshore, we held 29 lease sales in
2010; we have scheduled 33 lease sales for this year.
Notably, industry has not taken full advantage of the lands
we have opened up to them for development. Offshore, out of the
53 and 37 million acres offered, industry leaves 2.7 million
and 2.4 million acres respectively. And of the total offshore
leased average, fully 70 percent of the leased areas are idle.
Onshore, out of the 6\1/2\ million acres offered for lease
during our administration, less than half were leased. And 55
percent of the overall acreage that is leased is idle. That is,
22 million acres are currently available onshore for
development, leased and in the hands of domestic oil and gas
companies, but there is no exploration or development
occurring.
The President has initiated additional actions to further
incentivize the oil and gas industry to utilize these available
domestic oil and gas resources. He announced that last week in
his radio address, and it was amplified earlier this week by
the Secretary. Including the fact that leases in the Gulf
impacted by the moratorium are being extended by a year, leases
in Alaskan waters are being extended, new lease sales will be
scheduled for the Gulf of Mexico, with the first one occurring
by the end of year and two more before mid next year, the
President announced that BLM will have annual lease sales in
the National Petroleum Reserve Alaska, and we are looking for
ways to encourage industry to invest earlier in their leases by
considering financial and lease term incentives for early
development.
In our view, it makes no sense to have leased acreage
available to oil companies. And if oil companies are not going
to develop those leases, they should be put back and made
available to other companies who may make those investments. We
are confident that our continued focus on responsible oil and
gas development will maintain and accelerate the decline of oil
imports.
Despite this evidence, some have suggested that domestic
oil and gas development is in decline and that high gas prices
are due to limited production. Again, the facts tell a
different story. Ranking Member Cummings discussed the fact
that oil prices set on a global basis.
And let me say that our permitting is also not a
constraint. Today we have 7,000 approved permits to drill on
onshore resources that are sitting on the shelf and not being
used. Again, 22 million of acres have been leased and are
available for development.
In the offshore, as I will discuss in the Q and A, after
the Macondo well situation and the need to upgrade safety
standards, we are back in business in the Gulf, with 55 new
permits in the shallow water and 14 new permits in deep water.
In the shallow water, we are at approximately the same pace of
permitting that we were in 2009. And we are in a strong process
that we are strongly processing our deep water permits as well.
My time is up, I would like to just conclude by saying we
are increasing our oil and gas production at the same time that
we are reforming the former Minerals Management Service.
And Chairman Issa, I know you have had a personal interest
in that, and I hope I will have an opportunity to provide a
little more information in the Q and A about the pace of our
reform effort. Thank you.
[The prepared statement of Mr. Hayes follows:]

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Chairman Issa. Thank you.
I recognize myself for 5 minutes.
I first ask unanimous consent that the majority report be
placed in the record since it is exactly the opposite, no
surprise, of the minority report.
Without objection, so ordered.
[The information referred to follows:]

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Chairman Issa. Mr. Secretary, you know, in this town,
everyone is entitled to an opinion, but not facts. Why can you
name one reason that in Alaska the Federal Treasury has
received $2.2 billion in Federal lease money during your
administration and additionally another billion has been
invested by the oil companies in exploration, and yet they have
gotten nothing back, in no small part because Shell and others
have been delayed in actually receiving the permit? So aren't
you willing to take at least some responsibility for the fact
that a lease is not a permit? And when you call it idle, are
you really saying it's idle? And this is the real question, are
they idle, or are they not yet producing? Would you please
explain yourself on your figures? Isn't it true your figures
are what you say idle, not yet producing, and it can well mean
that money is being invested?
Mr. Hayes. The term, as described in the report that was
provided to the President and I am sure your staff has
available, made it clear that by idle, it means that there is
no active exploration or production occurring.
Chairman Issa. Does that mean that there is no permit
request or environmental impact being done?
Mr. Hayes. There may be some activity, but there is no
exploration activity.
Chairman Issa. So, again, a lease costing $2.2 billion in
Alaska, the stockholders would sue and win if they were--if it
was not in the best interest of the company to do everything
they could to get a return on their $2.2 billion; isn't that
true?
Mr. Hayes. I can't speak to a shareholder's rights. I do
know that we are working with Shell very closely to address
their interests, and we have just in the last month received
exploration plans that we are processing for the potential
exploration of those permits next summer.
Chairman Issa. Right, which is 1 year later than it would
have been if they had been processed in a timely fashion.
You know, there is a belief that in fact prices are
artificially high because of speculators. I am not going to
debunk that. I am going to ask you a simple question. If we got
all of the resources, of oil and natural gas, from both Federal
and private lands that are estimated to be available, isn't it
true that we could be energy self-sufficient for 100 years?
Isn't that what all the studies show? I am not saying it is an
easy goal, but with fracking and other technology, isn't it
true we could raise at least 40 percent, which would put us
marginally within self sufficiency, if you include Canada, it
would make us self sufficient? Yes or no, isn't that true?
Mr. Hayes. I don't know if you are referring to technically
recoverable resources or economically recoverable resources.
Chairman Issa. Well, at $100 a barrel, isn't it more than
an enough to be economically recoverable, not just technically
recoverable?
Mr. Hayes. I really don't know the answer to that question.
Chairman Issa. OK, well, if you would answer for the record
I would appreciate it.
Mr. Hayes. Certainly will.
Chairman Issa. For the administrator, I have just a very
simple question. Both sides will have other questions that will
probably be more thoughtful in some ways. But in your opening
statement, you talked about the requirement to make sure that
these drilling rigs that were, ``as much pollution as a
refinery.'' Isn't it true that when China is drilling just
south of our border in Cuban waters, isn't it true that they do
just as much polluting or more than anybody producing just
slightly north of that in U.S. waters? Isn't it true that the
amount of global pollution will actually be higher if it is
produced outside the United States than if it is produced
inside the United States, yes or no?
Ms. Jackson. That is certainly possible. I don't know what
emissions come from Chinese rigs. What I can say is----
Chairman Issa. Oh, yes you do. You know that we have some
of the highest standards of emissions in the world, isn't that
true?
Ms. Jackson. Our standards are high because under the Clean
Air Act, passed by Congress, we are told to protect the health
of Americans, including from pollutants that are not global
pollutants; they can be quite local, like SO2, particulate
matter and smog, which can affect everyone from those on a
cruise ship in Alaskan waters to recreational----
Chairman Issa. I appreciate that, but isn't it true that
the primary pollutants, especially those that you were talking
about earlier in fact are global pollutants?
Ms. Jackson. They are certainly admitted globally, sir, but
have local impacts.
Chairman Issa. Last but not least, isn't it true that more
oil has been spilled in the Pacific by importation than by
actual drilling over the last 30 years?
Ms. Jackson. I don't have the figures.
Chairman Issa. I do. It has been.
I now recognize the ranking member.
Mr. Cummings. Let me make it clear, Administrator Jackson,
I want us to have high standards. I want us to set a model for
the world. We are--this is the United States of America, and we
are better than that.
On May 12, 2010, Rex Tillerson, the CEO of ExxonMobil,
testified before the Senate Finance Committee along with CEOs
of five other major oil companies. During this testimony, he
estimated that without excessive speculation, oil would be
adding--trading at $60 to $70 a barrel instead of roughly $100
a barrel. Are either of you familiar with these comments, Ms.
Jackson?
Ms. Jackson. Yes, sir.
Mr. Cummings. And you, Mr. Hayes?
Mr. Hayes. Yes, I recognize.
Mr. Cummings. Well, he is not alone. On April 11th, Goldman
Sachs issued a warning to its investment clients--now this is
Goldman Sachs--that says speculators may be inflating the price
of oil by as much as $27 a barrel, so that is very close to Mr.
Tillerson's estimate of about 30 percent.
Mr. Hayes, are you aware of that estimate by Goldman Sachs?
And are you aware, Administrator Jackson?
Mr. Hayes. I am, I am, Mr. Ranking Member. And I also note
that your staff paper laid this out in quite a bit of
persuasive detail.
Mr. Cummings. And you, Ms. Jackson?
Ms. Jackson. Yes, sir.
Mr. Cummings. U.S. Energy--let me turn to a different
estimate. The U.S. Energy Information Administration [EIA], is
the Nation's foremost independent--independent--source of
energy analysis. In 2009, EIA examined the potential impact of
expanding domestic oil drilling to the Outer Continental Shelf
of the Atlantic and Pacific Coasts and the eastern and central
regions of the Gulf of Mexico. EIA issued a report concluding
that there would be no, and I emphasize, no changes in gas
prices by the year 2020 and that there would be a decrease of
only 3 cents per gallon by the year 2030.
Mr. Hayes, are you familiar with the EIA estimate?
And Administrator Jackson, are you familiar?
Mr. Hayes. I am.
Ms. Jackson. Yes, sir.
Mr. Cummings. Well, let me put all of this together. On one
hand, you have oil company CEOs and investment banks saying
that excessive speculation may be inflating prices by 30
percent. Now that is the oil company CEOs and investment banks.
On the other hand, you have the Energy Information
Administration saying that opening up vast portions of the
Outer Continental Shelf will result in only a 3 cent difference
20 years from now.
So the question is, let me ask you both and let me ask you
as drivers and consumers, if you could save a dollar per gallon
or only 3 cents per gallon, you would save the dollar, wouldn't
you?
Ms. Jackson. Yes, sir.
Mr. Hayes. Yes, sir.
Mr. Cummings. Here is my point, this committee has a
tremendous and awesome opportunity to really help everyday
Americans, like the ones I saw going to work this morning in
Baltimore, getting up at 5:30 and filling up their tanks and it
costing them more. It is our duty to help them.
But we have limited resources, so we have to prioritize. It
seems to me that addressing excessive speculation offers a
much, much better opportunity to help lower gas prices rather
than focusing our efforts on expanding domestic drilling, which
will help oil company profits but will make little difference
on the price of gas as people try to get to work every day, try
to get to church on Sunday, try to take their kids to the
baseball game, they try just to go out, not go out to Disney
World from Baltimore but just go to the local Arby's and have a
lunch.
Even if these estimates are half of what the experts
predict, they still dwarf any conceivable cost benefit we get
from additional drilling.
Let me just close by quoting CFTC commissioner Bart
Chilton, on April 20, 2011, he said this, ``this is a Wall
Street premium on gas prices.''
He went on to say, every time folks fill up their tanks,
they can expect that several dollars are due to speculation.
I didn't say that; he said that.
And so I hope that we have a chance to investigate this
issue more in detail in the future. And I will say it until the
day I die: We have a duty as Members of this Congress to leave
our children with a better environment than the one we found on
the day we were born.
With that, I yield back.
Chairman Issa. I thank the gentleman.
We now recognize the gentleman from Utah, Mr. Chaffetz, for
5 minutes.
Mr. Chaffetz. My understanding is the Department of Energy
was created on April 1, 1977. I remember as a small child being
with my dad when we would go to the gas lines and couldn't get
gas. So we created this Department of Energy, but over the
course of time, when we were importing roughly, and it is very
rough numbers, 40 percent of our oil needs were being imported,
that number moved closer to 60 percent.
The Federal Government has failed under two different
types--very different types of administrations to wean our way
off of the need to import oil from overseas. And yet what I
find now is every time I turn around and you see companies
willing and wanting to invest heavily with the hope and the
idea and the speculation that they are going to be able to
actually produce some energy resources, and not just oil, but
natural gas, coal, those types of things, that it is the EPA
and the BLM, the Department of the Interior, that are putting
up so many road blocks that we can't extract the resources that
we have in our own very back yard.
Now one of my core questions here is particularly for the
BLM--I am from Utah; I am a Representative from Utah--is that
it appears that the administration in its frustration and in
its inability to actually have legislation passed is going to
go ahead and use its rulemaking authority and just bypass the
Congress and put up some rules and roadblocks and implement
things that would never pass this body. Even when the Democrats
had the House, the Senate and the Presidency, they couldn't
pass cap and trade.
The Red Rock Wilderness Act is something that has been
introduced many times here in Congress, it has never even come
close to being implemented. And then the Wild Lands Policy,
which kind of 2 days before Christmas was implemented, that
should be a flashing red light to the American public that
something was wrong when that was introduced.
My question for the Deputy Secretary here, in citing those,
isn't it the policy of the BLM to just go ahead and implement
this stuff anyway? I mean, at what point does the BLM say, OK,
we are going to use this information, and we are just going to
go with it anyway?
Mr. Hayes. Congressman, the intent of the reform efforts
that BLM has had is to provide more clarity for industry and
for other interests in how the public lands----
Mr. Chaffetz. But that clarity should by based on what is
passed in the U.S. Congress.
Mr. Hayes. Absolutely. Section 202 of the Federal Lands
Management Policy Act provides the authority and responsibility
for BLM to make the----
Mr. Chaffetz. But not before it becomes law, correct?
Mr. Hayes. It is law already.
Mr. Chaffetz. No, if something hasn't become law, if
something hasn't become law, then you are not supposed to be
doing it, right? Let's put up--let me deal with this first
slide here. This is the official map from the BLM, severe lake
tracks map, and it goes through with the number. In one of
those designations, if you look over at the right, it talks
about as one of the things the Red Rock proposal. Why does the
BLM issue an official map with the Red Rock proposal designated
on it when it has yet to become law?
Mr. Hayes. There is simply a map. There is no regulatory
implication to the Red Rock wilderness area at all,
Congressman. What we are trying to do is reduce the problem
that has developed in the last several years, when prior
administrations essentially leased whatever industry nominated
wherever, and the protest----
Mr. Chaffetz. You cannot--that is not true, that is such a
miscalculation. That is such a gross exaggeration of the
reality. You can you not sit here and say, they just leased
whatever. That is not true. There are rules and regulations and
they abided by those. It wasn't just sign up and you get it.
Mr. Hayes. The facts are----
Mr. Chaffetz. You are losing total credibility when you
make a statement like that.
Mr. Hayes. The facts are, Congressman, that in 1998, 1
percent of the leases nominated and in fact leased to industry
were protested. When we came into office, 48 percent of all
leases were being protested because of broadscale concerns that
BLM was not taking into account its multiple-use mission and
leasing in areas that made sense. We want to reduce the----
Mr. Chaffetz. My time--I have just a few seconds here, I am
sorry. On December 22, 2010, Secretary Salazar issued Special
Order 3310, which created the wildlands, but it was also the
policy of the Department of the Interior, it seems to have
actually implemented that even though when we pass the CR,
there is no funding for the wildlands. Is it the policy, yes or
no, to implement the wildlands? Is it the policy of the BLM to
actually implement----
Mr. Hayes. We will not implement the wildlands policy. We
will honor the congressional rider.
Mr. Chaffetz. Thank you. My time----
Chairman Issa. Would the gentleman yield? Should we on the
dais consider the amount of environmental leftists who sue and
protest is the basis for whether or not these are valid leases
or not? So a growth in lawsuits exponentially is in fact simply
a growth and a difference between the Clinton administration
and the Bush administration as far as who decides to sue,
right?
Mr. Hayes. I would say, Congressman, that it is indicative
of an additional challenge for industry and for other parties
to develop their oil and gas resources in an economic and
timely manner. No one wants that sort of litigation.
Chairman Issa. OK, my time has expired. The gentleman from
Illinois, Mr. Quigley.
Mr. Quigley. Thank you, Mr. Chairman.
Mr. Secretary, the world seems to be focus on just one
spill, the Horizon spill. Could you give some quick summary of
how much--how many spills take place in a routine year, not
just in water, but in Alaska, the degree of these, the incident
that took place in Prudhoe and the fact that this isn't just an
isolated incident as bad as it was.
Mr. Hayes. I would be happy, Congressman, to give you those
statistics for the record. I don't have them offhand. There are
a number of spills. Obviously, the Macondo Well was enormously
anomalous in its size, but there are routine spills that occur.
Mr. Quigley. In the ocean?
Mr. Hayes. Yes.
Mr. Quigley. And in Alaska, the same--hundreds in the
course of the year, correct.
Mr. Hayes. I am not sure there are hundreds that occur in
Alaska.
Mr. Quigley. I promise you, you will find that when you
give us these numbers. And the significant spills which have
taken place already, including Prudhoe Bay, you would pass that
on as well?
Mr. Hayes. Certainly will, Congressman.
Mr. Quigley. Ms. Jackson, I know you had limited time at
the beginning of your introduction, could you elaborate to a
certain degree on the issues with fracking and the concerns
that you have from your initial analysis of the issues?
Ms. Jackson. Certainly, sir.
First, let me start by saying that in general, States have
been regulating various aspects of oil and gas exploration and
recovery and are on the front lines of that.
EPA has certain authorities under the Clean Water Act and
the Clean Air Act. One of the things we are doing in addition
to our authorities as mandated by Congress is a study of
fracking to determine its impacts on drinking water.
That is very much in the minds of the American people and I
assume Congress, which is why they asked us to do it. So as we
do that study, the other thing we have said, because we will
not see initial results from that study until the end of next
calendar year, is that we will, when asked or when we become
aware of an issue that may be a violation of the Clean Water
Act, the Safe Drinking Water Act or the Clean Air Act, respond,
and we will provide guidance on those areas that are becoming
areas of concern or challenges for the regulated community as
we see our country move into fracking in new areas such as the
Marcellus Shale.
Mr. Quigley. It is not just the contamination of the water;
it is the amount, right? This is a country that is facing water
shortages in many areas, correct? The amount, the volume that
is used in this process.
Ms. Jackson. That is correct, sir. It takes millions of
gallons to frack a well. And what happens is that water is
injected. Oftentimes that is not a regulated activity at the
Federal level, but then the water has to come back. It is
flowback water, and that water and the disposal of that water
is an enormous amount of water as well as it can bring up
contamination, such as radiation, in low levels that may be in
the formation. That is part of what the study is looking at as
well in addition to quantity.
Mr. Quigley. Currently, to the limits of your knowledge at
this point, what happens to that water that comes back up?
Ms. Jackson. Well, a mixture of things, depending on the
area of the country, there are some places where there are just
enormous pools where this water is stored and where there is
some amount of concern about whether that will be regulated and
how those pools will be closed. In other areas, we learn that
recently--until recently, when the State of Pennsylvania asked
them to voluntary cease, that producers were sending the water
to publicly owned treatment works. That is a regulated activity
under the Clean Water Act. And so we have concerns and are
working with the State of Pennsylvania to ensure that is being
done according to law and to protect citizens, because those
publicly owned treatment works eventually discharge into
surface water, which can be drinking water. And in other cases,
it is put back down the hole in an underground injection
disposal or recycled and reused.
Mr. Quigley. Thank you.
I yield back.
Mr. Chaffetz. Will the gentleman from Illinois yield?
Mr. Quigley. Yes.
Mr. Chaffetz. Going back to Deputy Secretary Hayes, Beverly
Gorney, who is the spokeswoman for the Wyoming BLM State
office, who said this on April 21st, when asked why BLM pulled
six oil and gas drilling leases new Adobe Town, Wyoming, ``They
have everything to do with the secretarial order on
wildlands.'' Was she wrong or right?
Mr. Hayes. I don't know the specifics. All I do know is
that we have informed everyone in the department that we are
complying with the congressional rider dealing with wildlands.
Mr. Chaffetz. So there should be absolutely no activity in
any way, shape, or form anywhere within the BLM to try to
implement the wildlands.
Mr. Hayes. No designation of wildlands will occur while
that rider is effective, Congressman.
Mr. Chaffetz. And there should be no preliminary work on
putting that in place, correct?
Mr. Hayes. The order's focus is on the designation of land
as wildlands. The authority to inventory lands with wilderness
characteristics is clearly continuing under the Federal Land
Management Policy Act, but I repeat and to your point, we will
not designate any lands as wildlands in respect and compliance
with the congressional direction.
Mr. Chaffetz. Thank you.
Thanks to the gentleman from Illinois.
Chairman Issa. Thank you. We now go to the gentleman from
Pennsylvania, Mr. Meehan, for 5 minutes.
Mr. Meehan. Thank you, Mr. Chairman.
Administrator Jackson, thank you for taking the time to
appear before us today. I am not aware that we really had an
opportunity to speak with you before. In my district of
southeastern Pennsylvania, a big issue related to energy
relates to refineries. I have some 7,000 jobs that are tied to
the two refineries in my district, which is a good thing,
because according to your own report, the number of U.S.
refineries declined by almost half since the 1980's here in the
United States. And employment in the refining segment has
declined by 13 percent in the last decade. Now, most of those
refining opportunities have actually moved over to places like
India and China and Nigeria, where they are building new
refining capacity.
In fact, the refineries, as you point to health, and I
think that is an appropriate concern, are facing huge
regulatory challenges. One of my refineries has spent 20
percent of its total value in regulatory compliance. That is, a
$5 billion capitalized company spent $1.3 billion on compliance
just in the last recent, recent history. And I understand the
health, but what point in time, while health is an issue with
respect to people, at what point in time do the welfare of fish
start to take precedence over the creation of jobs?
Within one of my refineries, there is now a regulation
called clean water cooling water intake structures under
316(b), in which this one refinery is now being asked to put in
a cooling tower at the cost of $350 million, the effect of
which will be so that they can return the water back to the
Delaware River at a 2 percent or 2 degree warmer texture or
cooler temperature, because apparently the fish are thrown off
by the warmer water of 2 degrees.
The impact of that $350 million additional cost, may will
put that refinery that employs close to 2,000 people in my
district on the line at a point in time where jobs are at stake
and at risk of going overseas, would you please tell me
specifically how does the EPA decide whether the loss or
creation of jobs directly as a result of a regulation should be
part of a thorough economic analysis?
Ms. Jackson. Sir, thank you. I would just like to point out
that while the number of refineries has declined, refining
capacity in this country has actually increased. So we have
fewer refineries refining more and more product.
Mr. Meehan. Capacity here, but those jobs are going
overseas, so tell that to the people in my district.
Ms. Jackson. My point, sir, is there is as much oil
returning from refineries or more than 20 years ago. So what is
actually happening is that technologically, they are becoming
less employee-intensive and yet able to process more oil, and
that is not as a result of----
Mr. Meehan. Those are refineries in the Gulf Coast, I am
aware of that. I have refineries that have been operating for
50 years that are struggling to continue to compete, and most
of the struggle comes at virtue of the regulations. I am not
arguing with regard to--I am not making that point here today
because most of it relates to health. I am talking about the
welfare of fish.
Ms. Jackson. Well, sir, let me speak to that issue
directly. We recently proposed a rule--it hasn't been final--on
intake structures, not only for refineries but for power
plants. That rule relies heavily on the States. The States are
delegated authorities for implementation of the majority of
Clean Water Act permits. So although I don't know the specifics
of the permit that has been proffered by----
Mr. Meehan. You are saying this is a State of Pennsylvania
responsible for this?
Ms. Jackson. Sir, I will double-check those facts, but my
belief is that, having run a State program, States proffer
proposed permits based on their analysis of requirements.
I would offer this as well. It is not simply the welfare of
fish, as you put it, but the ecosystem health that the Clean
Water Act intends to restore.
Mr. Meehan. Where does the ecosystem of the health of the
7,000 jobs in my district come into play. I asked you a
specific question, whether the loss of creation of jobs
directly as a result of regulation is part of a thorough
economic analysis. I need a specific answer because, just on
May 4th, your deputy assistant, Mathy Stanislaus, specifically
said, we do not take a look at jobs. So I want to know the
answer; do you directly take a look at jobs?
Ms. Jackson. We have done it, sir, although we have not
done it in every example. Let me explain a little bit about
that.
We do an economic analysis if it is mandated by law. We
also do it in compliance with executive orders issued by the
President Clinton that have survived through three
administrations. Because of the times we are in, we have leaned
heavily into jobs analysis around the rules that have been
proposed under the Obama administration.
Chairman Issa. The gentleman's time has expired.
We now go to Mr. Yarmuth, if he is ready, for 5 minutes.
Mr. Yarmuth. Thank you, Mr. Chairman.
Welcome, Administrator Jackson and Deputy Secretary Hayes.
I have a question about in relation to oil supplies. Is
there to your knowledge a serious shortage of oil supplies in
the world right now?
Ms. Jackson. There is an increasing world demand for oil,
and certainly, in this country, I think as the deputy secretary
said, demand is down over the last year.
Mr. Yarmuth. And isn't it true that domestic production
under the Obama administration has actually increased?
Mr. Hayes. Yes, Congressman, it has. It has increased
substantially, and oil imports have declined by 7 percent in
the last 3 years.
Mr. Yarmuth. So, in fact, whereas we heard a lot about
``drill, baby, drill'' under prior administrations, the actual
evidence shows that production has expanded under this
administration where it actually hadn't under previous
administrations.
Mr. Hayes. That is correct, Congressman.
Mr. Yarmuth. When we are talking about prices at the pump,
and there are a lot of contributors to pricing in oil
companies--I know in my district, my attorney general, Jack
Conway, has on two separate occasions taken on refiners and
distributors, so that when we talk about gouging, and people
say, is there any evidence of gouging from big oil companies,
that is not the only aspect of gas pricing that we need to be
concerned about in terms of questionable activities; is that
right?
Mr. Hayes. That is correct, Congressman. As you know,
Attorney General Holder has a task force looking into all of
these issues.
Mr. Yarmuth. The other question--I don't want to belabor
oil pricing too much, but I did want to get that one point on
the record about domestic production. But on another subject
that the administrator and I have talked about a number of
times, in my State, a State that is a large producer of coal,
we are constantly informed by the industry that the EPA through
its actions is actually threatening employment in our State.
There are ads being run now in Kentucky that say, there are
18,000 good coal-mining jobs in Kentucky, and the EPA is
threatening those jobs.
Administrator Jackson, would you like to comment on the
question of EPA activity vis-a-vis the coal industry and
employment?
Ms. Jackson. Yes, thank you. I certainly can't answer for
those ads, but I do believe they are misleading.
What EPA is doing in Appalachia in particular is addressing
the water pollution issues associated with a practice known as
mountain top surface mining, mountain top mining, mountain top
removal mining. And in that practice, because of the way that
spoils, the remains of the noncoal portions of the mountain top
are disposed there are increases in solids in the water that--
selenium and other metals that peer-reviewed science and
literature continues to show over and over again are quite
problematic for the health of those ecosystems. And because
they are headwaters, it can become a problem for communities
downstream.
EPA has worked under draft guidance that we are about to
finalize after rounds of public comment to give clear guidance
to mining companies, to State officials, as to how we will
implement our authorities under the Clean Water Act to try to
minimize that pollution.
Mr. Yarmuth. And in terms of employment, you may not know
the figures, but 30 years ago, before mountain top removal
became a widespread practice in Appalachia, there were 55,000
coal-mining jobs in Kentucky. And in fact, going from 55,000 to
18,000 was not the result of any EPA action because EPA was
largely, until your administration, was largely basically
apathetic toward that process.
One of the things that I am constantly impressed with, with
regard to the mountain top removal issue, is that the citizens
of eastern Kentucky come to my office and bring water that they
took from wells on their property and so forth and out of their
tap, and it is water that no one would want to drink or want
their children to drink.
And so while I know that there has been a number of
initiatives before this House and before this committee to
basically incapacitate EPA in its ability to protect the
citizens of my State and their children, I would like to say
that if House Republicans or if anyone has a problem with our
environmental laws, they ought to make--take the initiative to
change the law. If they want to move to eliminate the Clean
Water Act or Clean Air Act, they ought to do that, instead of
taking the cop off the beat, which have been the steps
recommended by this House.
With that, I yield back.
Chairman Issa. The gentleman's time has expired.
We go to the gentleman from Texas, Mr. Farenthold, for 5
minutes.
Mr. Farenthold. Thank you very much, Mr. Chairman.
I did have a couple of questions. I would like to start
with Administrator Jackson. There are a lot of folks in Texas
who are kind of getting the impression the EPA has it out for
us.
We have had a pretty good system in place under the Clinton
administration; came up with a flex permitting system for
various refineries. Under that system, we saw a decrease over a
9-year period of 27 percent in total air emissions.
Now the EPA is stepping in and saying that flex permitting
system isn't good enough, and it is creating all sorts of
regulatory problems with the EPA trying to redo what we have
been doing pretty well for about 10 years.
I kind of subscribe to if it ain't broke, don't fix it. Can
you tell me why the EPA is unhappy with Texas and convince me
it is just something more than you guys don't like us very
much.
Ms. Jackson. No, sir, I certainly like Texas very much. I
have family members there.
Let me just go over a couple of things. It was actually the
George W. Bush administration that made the determination that
the flexible permits in the State of Texas did not comply with
the Clean Air Act. And it was then left to us in the Obama
administration to try to find a way out of that morass.
We have worked with the largest flexible permit holders.
And I was just briefed on this yesterday. And I believe, with
one notable exception, which we are still working on, we have
worked them to a place where their permits are now compliant
with the Clean Air Act.
It took work on their part, and so I want to commend the
regulated industry for that. And I think we are in a better
place. Because where that leaves us is with permits that are
enforceable under law, are transparent and also that give
industry the ability to do their job.
Mr. Farenthold. And now you all are also looking at it
permitting greenhouse gas emissions under Title V. It seems the
last Congress specifically said we really weren't interested in
doing that right now under cap and trade. Why are you all
pursuing that considering that even the last Congress wasn't
able to pass that out?
Ms. Jackson. Well, two things. First, we are not pursuing
cap and trade under the Clean Air Act. And it is my opinion, I
have said this before, that we cannot, and we will not.
We are pursuing regulation of greenhouse gas emissions
under the Clean Air Act because of a Supreme Court decision
that essentially found in 2007 that greenhouse gases were
covered under the Clean Air Act and that EPA needed to make a
determination as to whether or not greenhouse gasses cause a
threat to public health and welfare, which is the statutory
threshold for----
Mr. Farenthold. I apologize for cutting you off. I only
have a couple of minutes, and I wanted to go on to Mr. Hayes
for a second and talk about drilling in the Gulf of Mexico.
There has been a whole lot of hoopla on that. We are
spending a whole lot of time arguing about whether permits are
coming out at all and how fast they are coming out and all.
Isn't it true that Mexico has some drilling going on in the
Gulf of Mexico; China is undergoing--issuing leases just right
off our coast, basically, in the Gulf of Mexico, for various
oil companies to drill on Chinese and Mexican lands.
Mr. Hayes. Congressman, Mexico is looking at potential
deepwater drilling. The Secretary and I were in Mexico City
about a month ago meeting with the energy minister, and we are
actually working with them. And the President has indicated his
interest in applying the same safety standards that we are
applying in the United States.
Mr. Farenthold. And Cuba, as well, is doing it. I don't
think we are working as well with Cuba as Mexico.
Mr. Hayes. That is a fair point, Congressman. Cuba
apparently is considering oil drilling off the coast----
Mr. Farenthold. Wouldn't we be better off, rather than
spending all this time and money with the complicated
permitting process, focusing our efforts on spill response and
technologies to train people and get the equipment and
knowledge in place, so if there were something that happened,
be it in foreign waters or domestic waters, we could respond to
it and protect our coast? Wouldn't that be a better use of our
time and resources?
Mr. Hayes. Congressman, it certainly spill response is a
very, very important focus. But I think the primary lesson out
of the Presidential commission and other--the National Academy
of Engineering is that we have the capacity and should prevent
these occurrences from happening in the first place. And our
safety upgrades focus on that, and industry has responded.
Industry is able to meet the higher safety standards. And
frankly, they have not objected to the higher safety standards.
Mr. Farenthold. All right, well, I see I have only got
about 10 seconds left.
Chairman Issa. Would the gentleman yield?
Mr. Farenthold. Absolutely.
Chairman Issa. Earlier, you took credit for this high
level--the highest level since 2003. Aren't there two truths
about that, though? First of all, it takes about 5 years at
best case to get from the beginning of the process to drilling
production, so isn't all the credit for this new peak in the
previous administration; simply you haven't been here long
enough for anything you have done in the way of new leasing to
have any yield? Isn't that absolutely true that not one new
lease that you put out is today producing?
Mr. Hayes. I would say it differently, Congressman. There
has been a lot of focus suggesting the Obama administration has
been holding up permits, which are the last, the last event to
occur before the production occurs. The fact that production
has increased demonstrates the fact that we have in fact been
permitting both onshore and offshore.
Chairman Issa. The time I borrowed has expired.
The gentleman from Massachusetts, Mr. Tierney, is
recognized for 5 minutes.
Mr. Tierney. Thank you so much. I thank our witnesses for
being here.
I know that the chairman started off by talking about
speculation being what he thought was a belief that he wasn't
going to debunk, but in fact, as the chairman said before, we
are entitled to our own beliefs or opinions maybe but not
entitled to our own facts.
And I think when you have experts from outside, you have
industry officials and you have regulators all understanding
that speculation is about $27 on a barrel of oil, it is a
serious matter. And this casino of future speculators is
perhaps where I had hoped this hearing would have gone. And I
sent a letter to the chairman asking that he would do that, and
I hope he does get down to the real businesses of what is going
to make a difference of prices at the pump.
Now looking at this drilling idea, from what I see in the
U.S. Energy Information Administration, they say that if we
were to permit the Outer Continental Shelf of the Atlantic
Pacific Coast and eastern central regions of the Gulf of
Mexico, the resulting difference in gas prices at the pump
would probably be about 3 cents by 2030. I watched prices go up
and down about 10 cents of late on that. So 3 cents by the year
2030 seems pretty tiny.
Mr. Hayes, do you concur with that finding?
Mr. Hayes. Yes, Congressman, and it is due to the simple
fact that the U.S. production cannot affect the global oil
price in a meaningful way.
Mr. Tierney. I think those experts have said you are
absolutely right; there is a glut currently on oil. I think the
CEO of ExxonMobil stated as recently as last month that there
is no shortage of supply on the market. And so I guess
increased drilling really wouldn't lower the prices of oil and
gas; is that correct?
Mr. Hayes. That is correct. I will say, though, that it is
our policy to increase domestic oil and gas production
responsibly, because it is better to have a barrel produced
here in the United States than to import it.
Mr. Tierney. Well, let's talk about that for a second.
Interior Secretary Salazar just testified in front of the
Senate that about 70 percent of the tens of millions of
offshore acres currently leased to oil companies are inactive.
That includes about 24 million inactive leased acres in the
Gulf of Mexico, where I guess there is an estimated 11.6
billion barrels of oil and 59.2 trillion cubic feet of natural
gas that are technically recoverable, and they're going unused.
Why is the industry just sitting on those leases, Mr.
Secretary?
Mr. Hayes. It is not clear. The President has indicated an
interest in encouraging companies to utilize those leases, and
that was the subject of his radio address a week ago Saturday.
Mr. Tierney. Well, you know, the Secretary also testified
about onshore, that 57 percent of the leased acres--that is
about 22 million acres in total--are not being explored nor
developed. So what can the President do, what can the
department do, to encourage these companies to start using what
they have?
Mr. Hayes. One of the recommendations that the
administration has made is to change the lease term of the
Mineral Leasing Act of 1920. Now onshore, every lease is leased
for a full 10 years. It does not take 10 years to make a
decision of whether to invest or not. We would prefer to have
that lease term reduced. And thus, if a company does not,
decides not to invest, have the leases returned, so another
company that might be more willing to invest will do so.
Mr. Tierney. I look at this even more. And the Interior
Department as a report on oil and gas utilization. So they say
about 53 million acres were offered for sale in 2009. Under
this, administration 53 million acres--37 million acres, I am
sorry; 2.4 million acres were bid on and sold, so 5 percent. In
the central Gulf, 37 million acres were offered in 2010. Again,
this administration, 37 million acres; 2.4 million acres were
bid on and sold, so 6\1/2\ percent. Can you explain why these
companies aren't bidding on those leases and we have to listen
to ``drill, baby, drill'' and this administration won't this or
won't that in terms of 5 percent in one instance, 6\1/2\
percent in the other; what is the explanation for that?
Mr. Hayes. I can't explain why companies are not bidding. I
think our primary point, Congressman, is that our
administration is providing the opportunity, a robust
opportunity for domestic oil and gas production, and I think
those numbers make that point.
Mr. Tierney. Well, according to the EIA administrator,
there are already open to Federal and gas leasing about 95
percent of the technically recoverable oil and gas in the Outer
Continental Shelf; is that right?
Mr. Hayes. I am not familiar with the exact report, but I
assume so.
Mr. Tierney. Well, I guess I am having some difficulty
understanding why the oil and gas industry believes they don't
have enough of the taxpayers' land to work on already and were
given those numbers. Let me ask you this: What more can we do
about speculation. That seems to be the real problem and the
one that I hope the chairman will have a hearing on. If it is
$27 or $30 of every barrel, what can we do or what aren't we
doing about really focusing on the real problem?
Mr. Hayes. Well, Congressman, as you know, the President
has indicated a strong interest in addressing this issue and
has asked the Attorney General to set up a special strike force
to investigate potential speculation, and I know that group is
under way.
Mr. Tierney. All right. Thank you.
Chairman Issa. Sorry, that was not for you.
The gentleman from Tennessee, Dr. DesJarlais.
Mr. DesJarlais. Good morning, Administrator Jackson and
Deputy Secretary Hayes. I really appreciate your being here
today.
There are an awful lot of folks in Tennessee Four that are
obviously excited about you being here as well because
obviously, I had several calls back from the district, and we
have questions that were sent in on Facebook and other medium
to ask you, so we do really appreciate you being here.
One of the reasons I was sent to Congress was to help
create jobs. And as part of our Oversight Committee, I have
traveled Tennessee's Fourth District over the past several
months visiting businesses and industries and asking them, what
is standing in the way of job growth?
And almost unanimously the No. 1 thing that people were
telling me was to get government out of the way. And not
surprisingly, Administrator Jackson, the EPA often comes up,
that they feel that there are burdensome regulations that are
preventing job creation.
Now, when we started here earlier today, the ranking member
cited the Gulf oil spill, which was obviously very tragic. And
he said that it was our job and your job to never ever, ever,
never, never, ever allow that to happen again. Do you feel if
you had unlimited power and resources that you could prevent
that from never, ever happening again?
Ms. Jackson. No, sir, I can't guarantee that.
Mr. DesJarlais. How good are you guys? Because there is an
awful lot of power and rules and regulations that are being
levied on our businesses here that seem to be prohibiting job
growth. Do you feel like the EPA is doing a good job?
Ms. Jackson. In general, yes. One of the reasons I don't
believe I could guarantee that is because EPA does not
primarily regulate the safety of offshore drilling, so there is
nothing within EPA's authority that speaks to whether or not
those regs are safe. I think the deputy secretary has spoken to
that this morning.
Mr. DesJarlais. Just out of curiosity, because we had the
Secretary of Labor here on an earlier hearing, and they were
citing the mining accident in West Virginia that took so many
lives, and I had asked over the past 10 years, if they could
show me an improved safety record because of their inspections
and the fines that they levied, because they do go into these
mines and levy fines for any number of things, and then when
they leave, I assume that they are satisfied that the mine is
safe. But then there is a disaster, and it is always the mine's
fault; it is not the MSHA's fault. If there is a disaster
within the environment, does the EPA take responsibility? Do
they feel accountable for that?
Ms. Jackson. No, in general, in this country, the belief is
that the polluter is responsible, and it is the job of the
regulatory agency to set the rules of the game, if you will,
and to enforce them so there is a level playing field.
Mr. DesJarlais. I get the impression from the folks that I
am talking to that if you are going to wield that much power,
then maybe you ought to take some responsibility as well, so
that is just the opinion that I get. But the folks that are
engaged in calling--and I did want to get a couple of their
questions in. The Oversight Committee chairman reads our
mission statement before each hearing, and our goal is to work
with citizen watch dogs to deliver more efficient, effective
government that works for taxpayers, businesses and their
families. Many Americans are concerned that the EPA's mission
seems to be pitted against efficiency and effectiveness. We
invited you here today and we will invite you back to give you
a chance to show the taxpayers otherwise. This is your chance.
Ellen Wetherill, one of our citizen watchdogs from
Facebook, wants to know, is the goal of EPA to protect the
environment or to drive up fuel costs in order to force
Americans to modify their behavior?
Ms. Jackson. Our mission is to protect human health and the
environment, sir.
Mr. DesJarlais. OK. I hope she is satisfied with that
answer.
Not only does EPA regulation attempt to enact a cap-and-
trade scheme that couldn't even pass both Democrat-controlled
Houses of Congress, preventing the private sector from creating
good jobs, but no U.S. cap-and-trade plan would solve the
massive pollution generated by growing industrial countries.
This fact is not lost on America. Citizen watchdog Gary Delong
from Facebook wants to know, why is cap and trade viable when
in a few short years, India and China will produce
significantly more air pollution and cannot and will not be
held accountable, despite anything done by America?
Ms. Jackson. Well, please assure your constituents that EPA
is not implementing a cap-and-trade program.
But you might also, and I am happy to speak to him as well,
mention to him that market-based programs have been used
successfully in this country to control other pollutants, such
as SO2, the prime contributor to acid rain.
Mr. DesJarlais. And I want to get in one more. I am trying
to help these folks out. Citizen and watchdog Melody McMahon
Worthington from Facebook wants to know, why do we support the
subsidizing of drilling in Brazil and hamstring our companies
here at home?
Ms. Jackson. I do not know that we support the subsidizing
of drilling in Brazil. That is outside of my area of expertise.
Mr. DesJarlais. The President mentioned that he was looking
forward to being a major importer.
And I am about out of time, so I will go ahead and yield
back.
Thank you for answering those questions.
Chairman Issa. I thank the gentleman.
We now go to the gentleman from Northern Virginia, Mr.
Connolly, for 5 minutes.
Mr. Connolly. Thank you, Mr. Chairman.
And welcome both to Ms. Jackson and Mr. Hayes. I assume, by
the way, picking up on that last question, Administrator
Jackson, your silence, your--you ran out of time, you weren't
conceding that EPA hamstrings production domestically.
Ms. Jackson. Absolutely not, sir.
Mr. Connolly. And I assume from your previous answer in
terms of the mission of EPA, neither were you implying or
allowing an inference to be drawn that the choice you were
presented is in fact the choice. I mean, surely we can both
drill and produce and do it in an environmentally safe way. It
is a false choice to say it is one or the other, I would think.
What do you think?
Ms. Jackson. It is indeed a false choice. And in terms of
responsibility for our actions, I would point out to Dr.
DesJarlais that EPA is responsible for the fact that air
pollution is down 60 percent in this country over 40 years,
while our GDP has gone up 207 percent. So, by that metric, I
think we are effectively delivering for the American people.
Mr. Connolly. You know, listening to my friends sometimes
on the other side of the aisle, they want the narrative to be
that this administration is so environmentally conscious that
it has hamstrung the ability of domestic producers both in oil
and gas to produce.
So, Deputy Secretary Hayes, I just wonder if I could run
through some statistics with you and have you confirm or
correct them.
My understanding is that actually in the Bush
administration, production, domestic production actually fell
from 7.6 million barrels per day to 6.7 million. Is that
correct?
Mr. Hayes. I don't have those numbers handy, but I would
certainly be happy to confirm that, Congressman.
Mr. Connolly. And conversely, under the Obama
administration, production actually increased. It went from 6.7
million to 7\1/2\ million, essentially reversing the 1 million
barrels per day loss that occurred in the Bush administration.
Mr. Hayes. That is correct that production has increased
during the Obama administration.
Mr. Connolly. Now, we heard the chairman, for example,
which I want to applaud him for pointing out, that there is a
time lag between the issuance of permits and the actual
bringing on of product to the market, something many on our
side of the aisle have actually been trying to point out to our
friends on the other side of the aisle when they say, drill
here, drill now, allowing the impression with the public that
somehow it is magically going to change the price of oil, and
of course it isn't.
However, dealing with permit applications, it is my
understanding that in the last year of the Bush administration,
there were 5,000 applications listed, and under the Obama
administration last year, that went from 5,000 to 7,200. So the
permit applications actually went up significantly, is that
correct?
Mr. Hayes. I think you are referring to the applications
for permits to drill on BLM lands.
Mr. Connolly. That is right.
Mr. Hayes. And correct, the applications have gone up, and
we have actually--there was a significant backlog that we have
cut down significantly in the last 2 years.
Mr. Connolly. Now, also part of this narrative is that
President Obama has just caused an absolute moratorium after
the worst deepwater oil spill in American history and that
there is this de facto moratorium on Gulf Coast oil drilling.
Now, it is my understanding that actually Outer Continental
Shelf production has increased from 446 million barrels in 2008
to 600 million barrels last year. Is that correct?
Mr. Hayes. That is correct.
Mr. Connolly. So much for moratorium. Switching subjects
just a little bit, Ms. Jackson, there is a lot of talk and
promise about hydraulic fracture. Is there any evidence that
hydraulic fracturing, however, can affect aquifers and water
supplies?
Ms. Jackson. There is evidence that it can certainly affect
them. I am not aware of any proven case where the fracking
process itself has affected water, although there are
investigations ongoing and concerns----
Mr. Connolly. What kinds of chemicals are we concerned
about in terms of possible pollutants to water supply in the
fracking process?
Ms. Jackson. Well, you know, the actual--the contaminants
are not public in terms of the mixtures. But we do know that
they include things like benzene and toluylene, ethylbenzene,
xylene, compounds like that.
Mr. Connolly. And what is the problem with those chemicals?
Ms. Jackson. Well, those are listed hazardous waste
primarily because, for most of them, it is the effect on the
central nervous system, either to a baby in utero, meaning
birth defects or problems with the nervous system,
developmental disorders primarily.
Mr. Connolly. Is benzene a carcinogen?
Ms. Jackson. It is indeed, sir.
Mr. Connolly. And final question, the Marcellus Shale
formation that we are looking at, is it near any major urban
water supplies?
Chairman Issa. You can answer that briefly. The time is up.
Ms. Jackson. Yes, sir. New York City is concerned about it.
Obviously, it is upstream even of Washington, DC, supply.
Mr. Connolly. Thank you.
Chairman Issa. The gentleman from North Carolina, Mr.
McHenry, for 5 minutes.
Mr. McHenry. Thank you, Mr. Chairman. I certainly
appreciate it.
Now, there has been this discussion with restricting access
to domestic oil supplies that when policymakers on Capitol Hill
are trying to open up a greater amount of supply here in the
United States, that somehow that is supportive of big oil. But
really, the economic reality is counter to that. The economic
reality is that when you open up a greater amount of supply, it
is the small guy that benefits. It is the small business owner.
It is the small trucking firm. It is the mom taking the kids to
school. It is the small guy that benefits when we have more
production, greater supply, which will lower the cost. And
those two things are inextricably linked.
Now, when we restrict supply, like administration policy,
especially this administration's policies have been, that
increases the profits for the big oil companies because they
have a smaller quantity of precious resource to access, and
therefore, they can charge more at the pumps. It seems to me
that the rhetoric coming out of this administration, while they
are saying they are increasing supply, is run counter to that;
the restrictions, the higher regulations.
You know, we all care about clean water and clean air, but
we also want to be able to drive our kids to school. We also
want to be able to have a job to go to so that we can make the
mortgage payment so we can provide for our families. And it
seems like this President, this administration, simply does not
get it.
And with that, I yield the balance of my time to the
chairman.
Chairman Issa. I thank the gentleman.
Mr. Secretary, on your Web site, the BLM Web site, it says,
``BLM are working with local communities, State regulators and
industry and other Federal agencies in building a clean energy
future by providing sites for environmentally sound development
of renewable energy on public lands.'' Are you familiar with
that?
Mr. Hayes. Yes, sir.
Chairman Issa. Why is it I can't--and it goes on about
solar and wind--I can't find anything about BLM represents the
greatest amount of resources of natural gas and oil of any land
owner, and in fact, it is the second largest revenue to the
U.S. Treasury. Why is it that what we are talking about here
today, the access to Federal lands, which I know you are saying
it is going up--our figures and our studies show maybe not so
much--why isn't it anywhere on your Web site? Are you not proud
of the availability of BLM land for natural resource
exploration and development and delivery?
Mr. Hayes. We are absolutely proud of it, Congressman, and
Mr. Chairman.
Chairman Issa. Well, why is it not on your Web site?
Mr. Hayes. Well, it is probably more importantly in our
budget. We are spending at least 80 percent of our BLM budget
on conventional oil and gas compared to renewable energy.
Chairman Issa. That is because that is what pays. The
revenue that the taxpayers are receiving far exceeds your
budget, and it is coming from oil and natural gas. It is not
coming from windmills.
Mr. Hayes. We are proud of both things, Mr. Chairman. We
are proud of the fact that until this administration, there was
no large-scale renewable development on the public lands. And
we have responded to the market demand, particularly in
California, and have provided siting opportunities for
thousands of megawatts of utility scale, so we are proud of
that.
Chairman Issa. We look forward to seeing if those sitings
actually turn into production in California. So far, we are not
doing so well, as California has been watching our attempt to
get to the 2020 plan.
Earlier, the ranking member was talking about various
figures. I have one that concerns me. EIA, earlier recognized
as an authority, has downgraded production in the Gulf of
Mexico by 250 barrels per day over each--or 250,000 barrels per
day for each of the next 2 years. Are you concerned about that
precipitous drop in production in the Gulf.
Mr. Hayes. I should say, Mr. Chairman, there is no question
that because of the Deepwater Horizon disaster, the oil spill,
and the need to upgrade our safety standards, which the
Congress, Presidential commissions and others agreed needed to
happen, that there has----
Chairman Issa. Just to weigh in, hasn't a Federal judge
said that your moratorium was wrong? And after that was forced
to be lifted by Federal action, didn't you then go to Alaska
and do the same thing so that it requires Federal action again?
Mr. Hayes. No, sir. A Federal judge in Alaska confirmed,
there was no moratorium in Alaska.
Chairman Issa. Well, let's talk about the Gulf. You had to
be ordered to undo a moratorium that was overly broad and held
at.
Mr. Hayes. No, sir.
Chairman Issa. Well, we will consider the record. I don't
want to have you say anything that ultimately would be bad,
considering you are under oath.
With that, we go to the gentlelady from California, Ms.
Speier, for 5 minutes.
Mr. Tierney. Mr. Chairman, if I might, just a personal
point of privilege, if you are going to make an assertion that
a witness may not be telling the truth, the least you could do
as a matter of decency is allow him to respond.
Chairman Issa. To the gentleman, I cut him off because in
fact the record of the court action speaks for itself. And if
he is going to say that somehow what they were ordered as
unreasonable and overly broad isn't part of the problem, I
didn't want to have him go any further in that.
Mr. Tierney. He is an adult and he is quite conscious. If
you want to cut someone off to save them, then don't
editorialize. In fairness to the concept----
Chairman Issa. The gentleman is no longer recognized.
The gentlelady from California, it is your time. The
gentlelady controls the time.
Mr. Cummings. A point of order, Mr. Chairman.
Chairman Issa. State your point of order.
Mr. Cummings. Mr. Chairman, you have basically implied that
this gentleman may be lying.
Chairman Issa. No, I did not.
Mr. Cummings. Yes, you did. You should give him an
opportunity to answer the question. I mean, let me tell you
something. This is about the integrity of this committee.
Chairman Issa. The gentlelady's time is now running.
Mr. Cummings. And I said it from the beginning, I am not
going to allow people to come in here to be called all kinds of
things and not being treated fairly. Now, this man has to go
home. He is got people watching this. And I ask you to give him
an answer--give him an opportunity to answer the question you
asked him.
Chairman Issa. It is not a point of order.
The gentlelady's time is running.
Ms. Speier. Mr. Chairman--Mr. Hayes, would you like to
continue your comments, please?
Mr. Hayes. Thank you, Congresswoman.
The moratorium was lifted on October 10th by the Secretary
of the Interior after a series of public meetings in which we
concluded that the basis for the moratorium were satisfied. And
as the chairman said, the litigation record speaks for itself.
Ms. Speier. Do you have anything further to say?
Mr. Hayes. No. Thank you.
Ms. Speier. All right.
You know, for all the talk about expanding the drilling
opportunities in this country, if we were to do everything in
the fantasies of every oil executive's mind, we are still
looking at oil production that wouldn't be on line until 2020-
2030, is that correct?
Mr. Hayes. Certainly some oil production is in the out
years.
Ms. Speier. And having that oil drilled would actually have
the effect of lowering the cost of gas at the pump by 1
percent, is that correct?
Mr. Hayes. The EIA study indicated, that was quoted
earlier, suggested that.
Ms. Speier. So for all this hyperbole going on in this
hearing room today, it would suggest that if we allowed every
CEO of every oil company in this country to drill everywhere
they wanted to drill, that the most that consumers would see
would be in my State, which is about $4 a gallon, a 4 cent
reduction, and that would be in out years. It wouldn't be this
year. It wouldn't be this month. It wouldn't be tomorrow.
Correct?
Mr. Hayes. That is correct, Congresswoman.
And that is why the President has focused on the importance
of looking forward and having an energy economy that doesn't
just focus on oil and gas production domestically, although we
will focus on that, but also focuses on efficiency, alternative
fuels and a clean energy future.
Ms. Speier. So I have the, I guess, audacity when I first
got elected to Congress to introduce my very first bill, which
was to lower the national speed limit in this country by 5
miles, except in rural areas. So, in rural areas, it could
continue to be at the higher speed, but lower it to 65 in other
areas. It would, if I am recalling correctly, reduce the actual
cost of gas to the consumers today as much as 40 cents or 50
cents on the gallon, is that true?
Mr. Hayes. I am not familiar. I know that going slower
saves gas.
Ms. Speier. And also, if I recall correctly, it would save
maybe 3,000 to 4,000 lives a year, is that correct?
Mr. Hayes. It sounds plausible. And I defer to
Administrator Jackson, who says yes.
Ms. Speier. Ms. Jackson, would you like to respond?
Ms. Jackson. Well, I can certainly respond on the savings.
One easy way for people to save money is by slowing down. On
EPA's Web site, there is a page that talks about things you can
do, including maintenance on your car, the speed you drive, how
you drive, that can actually have a total effect, if I am
recalling correctly, of around 50 or so cents a gallon.
Ms. Speier. All right. Mr. Chairman, I would like to submit
for the record a letter signed by 54 of my colleagues and
myself asking both Attorney General Holder and Chairman Gensler
to immediately start an investigation of price speculation. I
don't necessarily think we need a strike force or a study or
another evaluation; I think it is time for an investigation. I
would like to submit this for the record.
Chairman Issa. Without objection, so ordered.
[The information referred to follows:]
[Note.--The information referred to was not provided to the
committee.]
Ms. Speier. And let me just see if there is any other
questions I might--I guess I would like to have Mr. Hayes speak
to us about what is being done to streamline the royalty
process.
Mr. Hayes. Thank you for asking that question.
We have had a very vigorous reform effort on the royalty
collection side. This is an area that has been of special
interest to the chairman, and I appreciate his leadership in
this area. Two main reforms: No. 1, we eliminated the royalty-
in-kind program that we believed provided potential abuse in
terms of nontransparent collection of royalties. And then,
second, we are announcing today an initiative on royalty
simplification. We are asking for comment on a proposal that
would involve using market-based pricing for the basis of
royalty calculations, rather than the current system that looks
at transaction-by-transaction, case-by-case evaluation of
transportation and processing costs, a lot more potential for
expense by industry and the agency and also potential abuse, so
we are announcing that today.
Chairman Issa. Thank you.
The gentlelady's time has expired.
The gentleman from Pennsylvania Mr. Kelly, for 5 minutes.
Mr. Kelly. Thank you, Mr. Chairman.
Ms. Jackson, and also Mr. Hayes, thanks for being here
today.
I know it is not always comfortable to sit here and try to
answer questions that we throw at you. But coming from Western
Pennsylvania, Marcellus Shale was obviously a great opportunity
for Pennsylvania and for the country. My concern is right now
DEP is sitting on a lot of permitting.
And the big question is the water, the fracking water. Now,
fracking is 60 years old; it is not new. We know that Marcellus
Shale is 5,000 to 7,000 feet below the surface. It really
doesn't affect some of the water tables in the aquifers.
However, I know there is a question about wastewater and
what happens with it. A lot of it has to do with DEP-approved
regulations for wastewater people to do the treating, and they
make a lot of money doing that. If you were to check DEP, all
the rivers in Western Pennsylvania, everybody is right at where
they should be; there has been no substantial change in it. My
question is, why all of a sudden is the EPA interested in what
is happening in Pennsylvania with the DEP? Because there really
isn't an instance there to question has there been any water
contamination, or am I wrong on that?
Ms. Jackson. I am not aware of any water contamination
associated with the recent drilling. There has certainly been
issues I am aware of in Western Pennsylvania around surface
water contamination and other issues like mining, especially in
West Virginia on the Monongahela.
EPA is involved for two reasons, sir: One, because the
State is a delegated authority under the Clean Water Act. They
run most aspects of the water program in Pennsylvania but not
all. For example, EPA runs the industrial pre-treatment program
in the State of Pennsylvania, which is the program that
regulates what drillers are allowed to send to wastewater
treatment plants. So it is a shared jurisdiction; although my
understanding is that the staff are working together and that
EPA staff in general believe that the State should be the
frontline agency.
Mr. Kelly. But they haven't found any examples of any real
dangers right now, and they are working well within DEP
regulations. It is just all of a sudden EPA is involved. And I
have to tell you, when I am back home in the district, the EPA
doesn't really sit well with a lot of those folks. And it is
about job creation. It is about opportunity.
We are really looking at things that are kind of crazy. And
I noticed today that the talk is about, are we getting gouged?
Are we getting gouged? And I think most would go to oil. But
nobody questions gold and silver commodities and why they are
rising in prices, and are we getting gouged there. I think a
little bit is disingenuous as to what it is that we are trying
to regulate, who makes too much money, who is making too much
money in such and such. We do have a tendency to demonize
others and we really don't get to the problems that are at
hand.
I will tell you this, at 4.16 in Mcf, and that is on NYMEX
on natural gas futures right now, there is a great opportunity;
it is a great buy right now. I know permits are available. But
I got to tell you, for investors, it is the uncertainty of what
is happening with regulation that keeps people from going
forward. And I think we all know that. Because the only people
that don't worry about a positive return on investment is the
U.S. Government. All the rest of us really are driven by the
fact that we actually have to have a positive return on it. And
I understand why we have regulations, so that is fine.
But I do want to ask you this. The NPDES, or the National
Pollutant Discharge Elimination System, right now backlog in
their office, the PA DEP has sent 75 draft permits to the EPA's
Philly region office, OK? As of May 2nd, 22 permits have been
issued; 53 are pending some sort of review. According to the
DEP, EPA's intervention has increased the DEP's workload and
has extended an already lengthy burdensome process. So what is
the end game, and how can we speed up this permitting?
Ms. Jackson. Well, sir, we are happy to work with the State
to ensure efficient oversight and review of permits. I am not
aware of exactly which permits you are referring to.
Let me simply say to you and your constituents. As EPA
administrator, I see the incredible potential in natural gas. I
think it is important for our country. And I look at it through
the lens of my job and duties, which is its potential to
decrease pollution.
So the only thing that I see as our job is to work with the
State, with regulators, with communities, to respond to their
concerns, because public acceptance of safe and responsible
exploitation of resource, in a good way--exploitation in a good
way--is key to having it happen.
Mr. Kelly. Excuse me for interrupting. There is a very
highly motivated and very mobile group that show up at these
different community meetings. It isn't always the people that
live in those communities. They are highly motivated; they are
highly organized, and they are very vocal. They are addressing
problems that really don't exist right now. And in fact, if you
were to go back and look at what Mr. Krancer says and other
people in Pennsylvania, they are more concerned with facts than
they are with fear. But what it is doing is it is driving a
market perception or a public perception out there that
Marcellus is dangerous and is affecting drinking water. It
simply is not true.
And with that, I yield back my time, Mr. Chairman.
Chairman Issa. I thank the gentleman.
We now go to the gentleman from Florida, Mr. Mack, for 5
minutes.
Mr. Mack. Thank you, Mr. Chairman.
And I also want to thank the witnesses for being here
today. And I know it can be uncomfortable and difficult at
times, and we do respect and value your time for being here.
That being said, uh-oh. I listened to--Mr. Hayes, I
listened to your opening statement, opening testimony, and I
got to tell you that I am positive that if there are people in
my district who listened to that, they would be quite angry.
Because in your statement, basically what you said is that
everything is so rosy and it is really the oil company's fault.
They have the potential to drill; they are just not doing it.
They have the potential to drill for oil and natural gas; they
are just not doing it. No one believes that. Absolutely no one
believes that.
Now, you can get creative in the way that you present the
information and you can sugarcoat it and present it in a way
that may support your position, but no one believes it.
Let me ask you this question. You keep talking about that
under the current administration there is more opportunities to
drill, more leases, all that kind of stuff. So would you say
that, on average, the Obama administration has had more leases
or less leases than the Bush administration?
Mr. Hayes. I don't have the exact number of leases. I know
that in terms of the number of acres that have been leased,
that the numbers are quite similar, both administrations.
Mr. Mack. So, on average, in a year between the Obama
administration and the Bush administration, the average acres
is similar?
Mr. Hayes. That is certainly true, I believe, Congressman.
I want to check the numbers, but it is certainly true on the
offshore.
Mr. Mack. Let me just tell you the figures that I have.
Mr. Hayes. Sure.
Mr. Mack. Under the Obama administration, the average acres
leased per year is 1.63 million; under the Bush administration,
it is 3.66 million. I don't think those are close.
But that being said, again, I think that just points to the
fact that on one hand, you are taking credit for the past
administration's work, and then, on the other hand, you are
saying that it is the oil company's fault that they haven't
drilled or they haven't done what they need to do, that somehow
there is this, all of these acres out there for them to drill
and that they own leases to and that they are ready to go, but
they just haven't done it. Isn't that not true?
Mr. Hayes. If I can please explain. Thank you for raising
this issue.
0the primary reason why we are laying out these facts on
how much acreage has been made available and how many permits
we have processed is to respond to the argument that our
administration somehow has inappropriately restricted the areas
for oil and gas leasing and that we have been the cause for
what is perceived to be but is not in fact the case a decline
in domestic oil and gas production. With regard to the reasons
why oil companies and gas companies may or may not drill, that
is largely a business issue.
Mr. Mack. My time is limited, so let me ask you this, do
the oil companies have the ability to go find where the oil
reserves are, apply for a lease and a permit to drill in that
area, or is it the administration sets the areas in which they
can explore to see if there is any oil, which one of the two?
Mr. Hayes. It varies in the offshore. Traditionally the
entire central and western Gulf have been made available.
Mr. Mack. Isn't it true, though, that there are areas in
which are available for exploration of oil and there are some
areas that are off limits? In other words----
Mr. Hayes. Certainly, certainly.
Mr. Mack. So here is my point. If you say to the oil
companies that--basically if you offer them crap, you get crap,
and that is just the way it is. If you say to them, you can
drill in these areas that there is no oil to drill for and then
blame them for not drilling, that is the problem. And that is
the picture that you are painting. That is what people back
home are hearing. It is why they are frustrated with
government.
Chairman Issa. The gentleman's time has expired.
The gentleman from Oklahoma, Mr. Lankford, is recognized
for 5 minutes.
Mr. Hayes. May I respond, Mr. Chairman?
Chairman Issa. If you want to respond. I didn't see a
question there, but if you have a response, please.
Mr. Hayes. I would just like to make a point that there are
certain areas that we believe are not appropriate for drilling,
very close to national parks, for example, other sensitive
areas.
But the fact that we have 40 million acres onshore, many of
which are in prime oil and gas territory--Wyoming, Utah, etc.--
areas with history and infrastructure, suggest--and the Gulf
experience--suggests that we are offering industry prime areas
for production. Thank you.
Chairman Issa. I thank the gentleman.
Mr. Lankford.
Mr. Lankford. Thank you, Mr. Chairman.
This is one of those areas apparently we are not going to
solve today. I would like to request, Deputy Secretary Hayes,
that you would sit down with some of the folks from oil
companies and we try to resolve this together at a table, and
that we have a hearing saying, we don't understand why these
companies aren't drilling in these areas and what the permit
and the process. It might be a very informative conversation
for us to get everybody together and all get under oath and all
start trying to talk this out and be able to resolve it and get
everybody together. Would you be open to that kind of
conversation?
Mr. Hayes. We would be delighted to do that. We have had a
number of conversations in the Interior Department with CEOs of
oil companies. And in fact, the President's suggestions on how
to facilitate more production have come out of the kinds of
discussions we have had with CEOs.
Mr. Lankford. You mentioned several times about production
being at this highest level since 2003. Can you name a specific
action that Interior or EPA took in 2008 and 2009 to give us
this large production in 2010? Which specific action would you
point to and say because we did that in 2008 and 2009, now we
have this great production.
Mr. Hayes. I think I can point to probably thousands of
actions. The fact that we processed at least more than 5,000
APDs in----
Mr. Lankford. So those came on line within a year and they
were out producing revenue?
Mr. Hayes. Typically they do, yes. Typically those are the
onshore productions that come on line.
Mr. Lankford. It seems to me the market has driven this.
When oil went to about $100 a barrel, it is amazing how much
production suddenly occurred. And it seems to be that Interior
is taking credit for a hundred bucks a barrel what really
happened when the market drove that up.
Mr. Hayes. No, that is a very fair point, Congressman.
Mr. Lankford. Well, that is why it is frustrating for me to
keep hearing, you know, we have this great production. We have
this great production; we didn't have it in the Bush
administration. We have a $100 barrel of oil. Every marginal
well that is out there is now pumping oil. And we seem to be
confusing apples and oranges here. When we start talking about
production, our production is at an all-time high. Production
is not the issue at this point. Great, I am glad we have
production, but a lot of those are marginal wells. Those are
other wells that are already drilled. We need to talk about
future exploration, and a lot of this conversation seems to be
future exploration we are talking about; you are responding
with production. And so that's two different things in that. We
need to talk about what happens 5 years from now, 10 years from
now. What is coming on line with that.
Let me ask you a question to both of you on this. The
President put out Executive Order 13563, which deals with
regulation and regulatory review, looking backward on it. Both
of your agencies, have you already submitted your paperwork for
that? That should be coming out in the next week and a half,
those public documents as preliminary. Do both of you have
those reviews complete?
Ms. Jackson. EPA has.
Mr. Hayes. Yes.
Mr. Lankford. Great. Terrific. Look forward to getting a
chance to go through that. A major part of that statement,
which was a great statement from the president, is talking
about all the regulations need to promote predictability and
reduce uncertainty in our regulatory environment. If there is
any area that I can tell you from energy companies that I talk
to and I interact with in my district, it is the sense of
uncertainty. We don't know what the regulations are going to
be. The rumors run wild.
And while you can say we haven't done that, there is the
perception. Let me give you a ``for instance.''
And Administrator Jackson, you mentioned multiple times
about natural gas is terrific. But if you talk to natural gas
companies, they have no idea what is happening in this frack
study. And there is a large sense of founded fear that natural
gas fracking is about to be crushed, and they can't seem to
find any response back on it. Since 1949 in Oklahoma, we have
been doing natural gas fracking and oil fracking. This is a
long-term use process. And I would invite anyone to come to
Oklahoma and drink our water and look at our beautiful land and
breath our air and see it as a terrific State. And as you
mentioned before, these State-preferenced permits seem to being
pulled back somewhat, and it is creating a sense of uncertainty
in it.
My colleague Mr. Meehan earlier mentioned about the 316(b)
permits, and you deferred that immediately to the States and
said that is a State issue. I can tell you in my State, for the
energy companies in my State, they are struggling with EPA
right now over 316(b) because there are minnows, there are bait
minnows being killed in one of their cooling ponds, and they
are being pushed toward creating a cooling tower, costing
millions of dollars, which will be passed onto ratepayers for
their own cooling pond. It is not creating certainty in what
prices are going to be, where they can invest and what they can
do.
So, on the other side of that, dealing with the State
preference is not consistent with the actual actions on the
field and doing a 316(b) with regional Haze requirements. My
own State has put up a proposal for dealing with regional Haze;
it is being rejected by EPA. And so those dynamics don't
practice out in real life. It is coming out in your testimony,
but in real-life examples in my district and in my State, those
things don't actually occur.
So I have a significant I guess issue with some of your
testimony and what is actually happening on the field.
Ms. Jackson. Well, sir, I am happy to answer some of those
factually. First, with respect to the natural gas companies and
their concerns about the study, which again was asked for by
Congress--they asked us to do it--that study has been publicly
scoped. We had several listening sessions and meetings and
hearings to hear input on how the study should be scoped. We
have gone through peer review of the scope of the study in a
very public forum to do it. In fact, the scope is not yet set
for that very reason. So I am perplexed as to how they could
not know what this study is about, because we have gone to
great pains to make it a very transparent process.
Chairman Issa. The gentleman's time has expired.
Mr. Lankford. I apologize. That is fine.
Chairman Issa. And I know--you can answer for the record if
you don't mind. I realize he had a lot of good questions there.
The gentlelady from the District of Columbia, Ms. Holmes
Norton, is recognized for 5 minutes.
Ms. Norton. Well, some of us value the seafood from the
Gulf region. I think it is the very best, so I am particularly
interested in the effect of the Gulf's oil spill on that part
of the economy, which I understand is almost half of the
economy, a million jobs or so.
In your view, has the tourism industry, for example, fully
recovered from the oil spill?
Ms. Jackson. I think as we enter this summer season, we
will find out. So far, I hear bookings are up. I think if you
speak to business owners along the coast, though, they feel as
though last summer put them, because things were so depressed,
last summer has put them in a place where they may never be
able to recoup those losses, and some businesses are still
potentially marginal.
Ms. Norton. What has the effect--when you see these
merchants who used to go out for lobsters and the rest on TV,
you hear a kind of pessimism in them, a sense that the rest of
the country thinks they are not recovered, that they may never
get back to where they were. What is the continuing effect of
the oil spill regarding the safety of that seafood around the
country?
Ms. Jackson. The seafood in the Gulf has been tested, is
widely tested. And FDA and NOAA both agree that seafood is
safe. The Gulf fishermen and shrimpers still struggle with a
bit of a stigma. And of course, the most recent issue that is
affecting their livelihood is the horrible flooding throughout
our country. That has meant a lot of fresh water in their
oyster beds, which may threaten them. It has nothing to do with
the spill, but it is certainly another blow to their
livelihood.
Ms. Norton. Well, poor Louisiana, they have two big
industries; one is seafood, and the other is oil, all in the
same spot.
Chairman Issa. Would the gentlelady yield for just a
second?
Ms. Norton. I will be glad to, Mr. Chairman.
Chairman Issa. Just so you know in advance, next Thursday,
we will be having a hearing as a result of all our trips to the
Gulf, so we will provide you with additional information that
is going to be very focused on the plight of the Gulf.
Ms. Norton. That is very important to know, because I think
we need some statistics on, are they selling as much in
seafood? Are people coming to this great tourist region as much
as possible?
Do you think--let's go through like the oil industry, the
other part of that economy--do you think that the oil spill
has, because of its mammoth nature, has damaged the reputation
of the oil industry in the Gulf, or as a whole, have they
recovered?
Mr. Hayes. If I can speak to that. I think the oil industry
has shown significant resilience and commitment to meet the
higher safety and environmental requirements that were put in
place after the Gulf disaster and is committed for the long
term to continue to develop the----
Ms. Norton. But what about its reputation? In that area, is
this industry trusted once again?
Mr. Hayes. I can't speak to that.
Ms. Norton. Mr. Chairman, I hope that when you say the next
hearing, we will have some sense of these two industries, how
they are perceived in the region and how they are perceived in
the country, since we have this anomaly that these two
industries dominate the Gulf Coast, and we would need some
perception of what the biggest oil spill, loss of 11 lives in
our history----
Chairman Issa. And we will send you an advance memo before
the end of the week so that you can have additional input into
it.
Ms. Norton. I appreciate that, Mr. Chairman.
I yield to the ranking member.
Mr. Cummings. Just one question. Thank you, gentlelady, for
yielding.
Chairman Issa and the oil industry lobbying groups have
asserted that the administration intensely delayed the
permitting process to discourage offshore drilling. Mr. Hayes,
can you just address that concern directly. Did you or the
current administration intentionally delay any permits in order
to discourage offshore drilling?
Mr. Hayes. No, sir, we did not.
Mr. Cummings. I see my time is up.
Chairman Issa. The gentleman from Florida, Mr. Ross, is
recognized for 5 minutes.
Mr. Ross. Thank you, Mr. Chairman.
Ms. Jackson, thank you very much for being here.
I appreciate your testimony. It is an opportunity for me
being from central Florida, where we have quite an involvement
of the EPA--we have a phosphate industry, a lot of agricultural
industry--and to ask a self-serving question. We have had some
situations where EPA has been there, of course, doing radon
studies, flyovers, and my office has tried to get some
cooperation and find out what is going on. So I would just ask
you personally if you will cooperate with me so that I might
respond to my constituents back home as to what is going on
with regard to EPA's investigation, not only of radon but also
of water quality studies.
Mr. Hayes. Sir, I am happy to meet with you or to get you
whatever information you are looking for.
Mr. Ross. Thank you.
The other thing I want to talk to you about briefly,
because I notice in your bio, you talk about that you and your
staff of more than 17,000 professionals are working across the
Nation to usher in a green economy. And I think that is pretty
important as we are talking about oil and gas exploration, our
dependence on such and the production of such from within our
domestic borders. But more importantly to me is that if we are
going to usher in a green economy, it has been my feeling that
we need to do so by way of competition, market forces, as
opposed to mandates, meaning that I don't think that it is
appropriate that we force a green economy on people that are
neither prepared to accept it or able to pay for it.
Again, I talk to you about my district coming from a strong
agricultural area. In an area where we have farmers that are
looking at alternative crops, such as grasses, algae, crops
that make up biofuels, my concern is that we have, you know,
from a regulatory standpoint, choked so much of our industry.
Is there anything that the EPA is doing to incentivize or
encourage a green economy by way of alternative fuel sources
that are biofuels and not edible fuel sources either?
Ms. Jackson. Absolutely, sir. Under the Energy Independence
and Security Act, EPA is required to develop renewable fuel
standards for the country, and we have done that and will do it
as called for by law. Those standards mandate certain amounts
of biofuels to be mixed in with our fuel supply. And of course,
that displaces gasoline in our fuel supply. In addition, EPA
has again by law required to review an application for a waiver
to increase the amount of ethanol and gasoline.
Mr. Ross. But why is it just ethanol? I mean, why aren't we
looking--really, I mean, are we not affecting other market
forces, food crops, food sources and supplies when we are using
anedible fuel crop for a fuel source? I mean, is the EPA doing
anything to look at other alternative green fuels that are
biofuels?
Ms. Jackson. Well, certainly EPA is working to, in addition
to their renewable fuels work at our Ann Arbor laboratory,
which works quite closely with vehicles, we are looking at the
impacts of various fuels. We have quite an extensive scientific
arm that looks at and supports private sector research on
biofuels. And I believe that biofuels for the ag sector is a
huge area of potential economic growth, yes.
Mr. Ross. The other question, and I will pose this to both
of you, is that being from Florida and 90 miles away from our
southernmost border city there, Cuba, and Cuba, as we talked
about earlier, is starting to look at offshore oil exploration.
That will be just as close as the Deepwater Horizon was to
Florida. Are we doing--do we know how far along Cuba is, Mr.
Hayes, Secretary Hayes?
Mr. Hayes. The company that may go first in terms of
drilling off of Cuba is a Spanish company called Repsol that
also does business in the United States. And they have been in
and talked to our department about their plans. And my
understanding is that they are potentially planning to drill
later this year.
Mr. Ross. Is there anything that we can do in terms of
remediation or at least enforcement of regulation to make sure
that what is being done there is in accordance with what we
require in our offshore drilling?
Mr. Hayes. This is a matter, Congressman, that is really in
the province of the Department of State and not the Interior
Department, so, unfortunately, I am not sure of the answer to
that question. I do know that the Department of State is
involved in this issue and following it closely.
Mr. Ross. Would it be safe to say that the only hope that
we have now is just a strong remediation program that will be
located somewhere off the coast of Florida in the event of a
spill?
Mr. Hayes. Well, our hope is that Repsol in particular,
which knows and follows our own safety requirements, would do
the same if they were to drill in Cuban waters.
Mr. Ross. Thank you. I'll yield back.
Chairman Issa. Would the gentleman yield?
Mr. Ross. Yes, sir.
Chairman Issa. For the administrator, if I had the
Department of Energy here, I would have three agencies, all of
whom are studying fracking and its effects on water, wouldn't
you agree when the President said we should eliminate
duplication, that the three agencies that are all studying
fracking right now should consolidate behind one of you, rather
than three redundant studies?
Ms. Jackson. No, because I don't agree that the studies are
redundant. And rather than consolidate, I would agree that we
should coordinate, which is what we are doing.
Chairman Issa. I hope so.
I recognize the gentlelady from New York, Ms. Buerkle.
Ms. Buerkle. Thank you, Mr. Chairman, and thank you to both
of our guests this morning for your being willing to sit here
and take this, answer our questions.
I had some prepared questions, but I first want to just
refer to some of the comments you just made.
Ms. Jackson, I heard you say that the polluter is
responsible, it was in response to Mr.--or Dr. DesJarlais'
question. And I am concerned that you are looking at coal
industry and the oil industry and natural gas as a polluter
rather than a job creator and someone who--these industries are
the backbone of this country. They employ millions of people.
They are a great source of revenue, great source of tax revenue
for the Federal Government. They are not the enemy. And my
sense is, and when I talk to the small businesses and the
larger businesses in my district, that the EPA has moved from
being someone who advises and helps and helps a business get on
track and comply with all of these, just a whole host of
regulations; now their sense is that the EPA views this
business as the enemy. And that is a concern, because now we
move from being helpful to that business in making them be
compliant to being punitive. And that is the feeling that is
out there in this country. And that is--we, many of us here,
came to Congress, came to Washington, because of our concern
regarding jobs in the economy in this Nation. The last thing we
need to do is to be discouraging to the job creators.
And my sense is when the EPA takes on this aura of being
punitive rather than being helpful, and I heard you mention
about, well, we want to work with the community, we want to
work with the businesses, that is not the sense I am getting
out there from these people who are right on the front lines.
So I would like you to comment on that and your sense of
whether the EPA has moved from being let's help people versus
we are just going to be punitive.
Ms. Jackson. Well, two points, Congresswoman. First, I
believe you might be taking my comments a bit out of context.
The question from Dr. DesJarlais was about who was responsible
for pollution. And so my answer referred to polluters because
the question was in the context of when pollution happens.
Please don't take that to mean that I believe that all
businesses are polluters, far from it. The vast majority of
businesses in this country comply with our environmental laws.
They are good stewards. They want to be great stewards.
Oftentimes many of them that I have met with, and I have met
with dozens and dozens of CEOs of large and small companies,
come in and want to comply.
And I do not believe that EPA has moved into a place of
being punitive.
However, we have very much so set ourselves on the path of
doing our job. What I said when I became administrator is that
EPA was once again going to protect the health of the American
people, not look the other way if there is pollution or if
there is an opportunity to ensure that pollution doesn't
happen.
Ms. Buerkle. Well, then what is the problem? Is it a PR
problem? Or when I hear from these businesses that the EPA, and
we were fortunate enough to have in-district hearings from
Oversight and Government Reform. We talked to members of the
agriculture community, dairy farmers. And their biggest problem
was with the EPA. So maybe it is a PR problem. But my sense
from the folks in the district is that it is more than that.
I also want to talk about Deputy Secretary Jackson, you
mentioned--or Hayes, I am sorry--you mentioned about
businesses, and it is really a business decision whether or not
they drill or whether or not to produce oil. But I want to
emphasize that uncertainty is the enemy of growth, uncertainty.
When these businesses don't know what regulation or what tax is
coming down the pike, that is the problem. So they hunker down
and they won't take a risk. And so my message to both of you is
for the economic recovery of this country, for job creation,
send a message to our businesses of certainty that you are not
there to penalize them or to punish them. You want to encourage
them because this Nation needs to create jobs. We need to get
the American people back working. And with that, I yield back
my time.
Chairman Issa. I thank the gentlelady.
The gentleman from Idaho, Mr. Labrador, is recognized.
Mr. Labrador. Thank you, Mr. Chairman.
Administrator Jackson, I--last--I think it was Friday,
Thursday or Friday, I received a Google alert that surprised me
a little bit. In the newspaper ``The Hill,'' they quoted you as
saying that--apparently you were on ``The Daily Show.'' And on
``The Daily Show,'' you responded to a largely GOP claim that
the EPA is overzealously pursuing regulation. And your response
was as follows: It is definitely an inside the Beltway line of
reasoning, she said, and Washington is a place where industry
interests pedal a narrative that transforms the Beltway into a
fact-free zone. And then you said, outside Washington, and this
is what made me laugh a little or maybe you were just joking
because you were on ``The Daily Show'': 95 percent of the
American people say they want government; they see one of the
roles of government is protecting the air and their water, she
said in the interview.
So do you really believe that the problems with the EPA are
inside the Beltway line of reasoning, or were you just cracking
a joke because you were on ``The Daily Show?''
Ms. Jackson. Well, you should watch it, rather than read
about it.
Yes, I believe that 95 percent of the American people, as I
stated during that show, believe that it is a role of
government to protect them, to keep their air and water clean,
to protect their health.
Mr. Labrador. Do you also believe that it is only inside
the Beltway where people are concerned about the EPA?
Ms. Jackson. No, I believe people have concerns, and I
believe it is my job and EPA's job to try to address those
people where they are.
But I also believe that progress is made when we get
outside of Washington, as I did when I visited your fine State
and spoke to people directly about what is really happening--
no, we are not regulating cow flatulence. No, we are not
regulating milk--versus the myths that are spun up by
professional special interests inside this Beltway to scare
people.
Mr. Labrador. The irony of that moment for me is that I
went into a meeting right after I received the Google alert,
and the first thing that the gentleman, who was a businessman,
not a politician--he is not a career politician. He is not a
regulator. He is just a regular businessman. The first thing he
said is, can we get rid of the EPA? I am sick and tired of the
EPA destroying jobs in America and destroying this country.
So how is it that you can say on a show that it is an
inside the Beltway mentality, where it doesn't matter who I
talk to in Idaho, whether it is Republican, Democrat,
Independent, they have a problem with the overzealous
regulation of the EPA?
Ms. Jackson. First, let me correct an error in the record,
I thought you said Iowa. If you are from Idaho, I haven't
visited your State. So I am very sorry for that. That is a
mistake.
Mr. Labrador. That is what I thought. That is OK.
Chairman Issa. You should visit, not just read about it.
Ms. Jackson. I am happy to go. I have actually been, but I
haven't been recently, so that would have been an inaccurate
statement in the record.
Mr. Labrador. That is OK.
Ms. Jackson. I am happy to visit.
You know, I am happy to speak to this gentleman and happy
to speak to constituents.
What I would say is, I would like it understand the
reasoning behind that, because there are constituents in your
State who preserve and protect air quality or water quality,
clean up Superfund sites. We are quite busy on a range of
issues. And so although I do not doubt that people have
concerns about our agency, and as I also said on that same
show, we can certainly do our jobs better and more
effectively--we look for opportunities to do so--the poll shows
that 95 percent of the American people think that the reason
the EPA is there, which is to protect their health, is a
function of government that should happen, that no one----
Mr. Labrador. And I think I would agree with you that it is
a function of government that should happen, but the problem is
the overzealous regulation. And the overzealous interpretation
of regulation, that is killing our jobs and killing our
industry and killing our economy.
And I think I would invite you to come to Idaho, and I
would invite you to talk to the businessmen, to the mayors, the
Republicans, Democrats, Independents. The first thing I talk to
every mayor about in Idaho, it doesn't matter what party they
belong to or whether they are nonpartisan, is about the EPA and
about how much money it is going to cost them, the issues with
phosphorus, the issues with the water. We have cities in Idaho
that are concerned that over the next 10 years, it is going to
cost them over a billion dollars to remediate some of the
things that is only going to improve the water by 1 percent or
half of a percent.
So these are concerns that we really have that are going to
cost jobs, that are going to cost the economy. And I think that
you need to be maybe more concerned about what is happening
outside of the Beltway, because it seems to me that inside the
Beltway, all of your friends are telling you that nobody is
concerned about the EPA.
Now Deputy Secretary Hayes, just a quick question, you keep
mentioning that we have actually increased production of oil.
What is the reality about what happened after Macondo in the
Outer Continental Shelf, has production of oil increased or
decreased in that area?
Mr. Hayes. In the Gulf, it has remained about steady at
about 50 million barrels per month. In November 2008, the
production I believe was 48 million barrels per month. The last
year we have monthly records is December of last year; it was
49 million barrels a month. It is anticipated, as was discussed
before, that there will be a slight erosion, potentially later
this year or next year, in terms of production because of the
delay in permitting that was necessary because of the disaster.
We hope to make up for that however with new discoveries that
are now being drilled.
Chairman Issa. The gentleman's time has expired, and I
thank the gentleman.
Mr. Gibbs, I thank you for your presence here.
If you will have all of your questions, if you want to ask
one question before we go sine die, I will certainly allow it.
I just want to be respectful that the House Rule is once the
joint session starts, we must adjourn.
Please.
Mr. Gibbs. Thank you, Mr. Chairman.
I will try to be quick.
Talk about the markets and the price, one thing I would
like to just comment on that, uncertainty leads to the futures
market with the people in the market. The market is
functioning, because this administration is putting out a lot
of uncertainty. And one area I want to key on is a week and a
half ago, my committee, the Water Resource and Environment,
your subordinate Ms. Nancy Stoner testified, Administrator
Jackson. And it is appalling to me that here we had a coal
operation in West Virginia that went through 10 years of
environmental impact study, went far beyond what they needed
do, got their permit in 2007 from the Army Corps of Engineers.
And the EPA was working in concert with them. This
administration came in in 2010 and revoked that permit after
they spent $100 million in investment. She testified, when I
asked the question, was State EPA in West Virginia, were they
in support of the revocation; she said, no. Did the Army Corps
of Engineers give any new evidence that they were in permit
violation or there's any problems? The Army Corps did not
supply any of that evidence. What basis does your
administration have to go forward to revoke that permit under
law?
Ms. Jackson. The Clean Water Act, sir, and protection of
water quality. And let me say for the record that permit had
been issued by the Corps of Engineers over EPA's strong
comments that we believed that it did not comply with the Clean
Water Act.
Mr. Gibbs. I think currently under the Clean Water Act,
when the Corps issued that permit, the EPA if they had
objections, they could have vetoed that permit at that time,
and they did not do that. Is that correct?
Ms. Jackson. EPA did not at that time, but that it was
during the Bush administration. After President Obama was
elected and we were called on by the courts to defend that
permit----
Mr. Gibbs [continuing]. Time here. This sets a very
dangerous precedent, because this was 3 years after the permit
was given, so you are creating huge uncertainty across all
sectors of the economy because who is going to come in and risk
capital? And what banks are going to loan money knowing that at
the whim of an administration, any administration can come in
and revoke a permit? Who is going to take that risk? So you are
creating more uncertainty. If you want to bring down gas
prices, you need to put certainty out in the market. And you
can't have actions like what happened at the Spruce Mine in
West Virginia. That is creating uncertainty. I have other
examples; the permit that has been delayed, delayed and delayed
up in Alaska, for a large oil company to get to the lease lands
that they have leased. They have been stopped by the EPA and
the Corps to build an 8-mile road that the State of Alaska
wants. The oil company is going to pay for it and no taxpayer
expense, and this administration has put a roadblock.
So I continually hear in my committee of road blocks,
barriers put up against the industry to develop these natural
resources responsibly, because clearly there is an attempt by
this administration to not want to develop these natural
resources.
Chairman Issa. I thank the gentleman.
Pursuant to the House Rules, the gentlelady can answer
briefly. We are going to have to recess, and the balance of
both his questions and answers, I would appreciate you
answering for the record.
So, please.
Ms. Jackson. And I will submit a longer answer for the
record.
Let me simply just make three statements. This
administration has not any intent to increase uncertainty in
the market. In fact, many of the rules we have done have been
intended to finally answer questions, many of them long
overdue.
With respect to the Spruce Mine case, this administration
was forced with a decision either to defend a permit in court
that EPA had never agreed was given properly or to exercise its
right under the Clean Water Act to veto it.
And finally, happy to give some answers on Alaska for the
record.
Chairman Issa. I appreciate it. And I appreciate all the
Members' time, and you really went past the hour and 45 that we
said; it is a little over 2. As the Prime Minister takes the
floor, we are going to stand adjourned, and I appreciate your
answering questions for the record.
[Whereupon, at 11:10 a.m., the committee was adjourned.]
[Additional information submitted for the hearing record
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