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

THE FUTURE OF U.S. OIL AND
NATURAL GAS DEVELOPMENT ON
FEDERAL LANDS AND WATERS

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

OVERSIGHT HEARING

before the

COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

Wednesday, November 16, 2011

__________

Serial No. 112-84

__________

Printed for the use of the Committee on Natural Resources

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COMMITTEE ON NATURAL RESOURCES

DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
PJon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
David Watkins, Democrat Chief Counsel
------

CONTENTS

----------
Page

Hearing held on Wednesday, November 16, 2011..................... 1

Statement of Members:
Coffman, Hon. Mike, a Representative in Congress from the
State of Colorado, Prepared statement of................... 34
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 1
Markey, Hon. Edward J., a Representative in Congress from the
State of Massachusetts..................................... 3
Prepared statement of.................................... 4

Statement of Witnesses:
Salazar, Hon. Ken, Secretary, U.S. Department of the Interior 5
Prepared statement of.................................... 7
Response to questions submitted for the record........... 9

Additional materials supplied:
Business First article entitled ``Shale leases in Wayne
National Forest delayed for fracking study'' dated November
15, 2011, submitted for the record by The Honorable Glenn
Thompson (R-PA)............................................ 51
Rivera, Hon. David, a Representative in Congress from the
State of Florida, Letter to President Barack Obama
submitted for the record from Hon. Ileana Ros-Lehtinen,
Hon. Albio Sires, Hon. Mario Diaz-Balart, and Hon. David
Rivera, Members of the U.S. House of Representatives....... 38
Virginia Congressional Delegation letter to Secretary of the
Interior Ken Salazar dated November 15, 2011, submitted for
the record by The Honorable Robert Wittman (R-VA).......... 26

OVERSIGHT HEARING ENTITLED ``THE FUTURE OF U.S. OIL AND NATURAL GAS
DEVELOPMENT ON FEDERAL LANDS AND WATERS.''

----------

Wednesday, November 16, 2011

U.S. House of Representatives

Committee on Natural Resources

Washington, D.C.

----------

The Committee met, pursuant to call, at 10:00 a.m. in Room
1324, Longworth House Office Building, Hon. Doc Hastings
[Chairman of the Committee] presiding.
Present: Representatives Hastings, Young, Gohmert, Bishop,
Lamborn, Wittman, Broun, Fleming, Coffman, McClintock,
Thompson, Rivera, Tipton, Gosar, Labrador, Noem, Southerland,
Flores, Landry, Johnson, Amodei, Markey, Napolitano, Holt,
Sarbanes, and Tsongas.
The Chairman. The Committee will come to order. The
Chairman notes the presence of a quorum, which under Committee
Rule 3[e] is two Members, and we have greatly exceeded that.
The Committee on Natural Resources is meeting today to hear
testimony on an oversight hearing on The Future of U.S. Oil and
Natural Gas Development on Federal Lands and Waters.
Under Committee Rule 4[f], opening statements are limited
to the Chairman and the Ranking Member of the Committee.
However, I ask unanimous consent that any Members that wish to
have an opening statement inserted in the record do so by the
close of business today, and without objection, so ordered.
I will now recognize myself for five minutes for my opening
statement.

STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WASHINGTON

The Chairman. I appreciate very much, Mr. Secretary, your
being here to talk about the future of oil and natural gas
production on Federal lands and Federal waters.
As this committee has regularly pointed out, U.S. energy
production is vital to creating jobs, strengthening our
national security and generating new Federal revenue. That is
why it is important to not only remove government hurdles
standing in the way of increased energy production but to
explore new opportunities and new areas for energy production.
There are two specific topics that I hope to focus on
today: the Interior Department's potential regulation of
hydraulic fracturing on Federal lands and the Administration's
new draft five-year offshore leasing plan that was unveiled
last week.
For the record, I asked the Secretary to testify before our
committee prior to the Interior Department issuing any new
regulations or requirements regarding fracturing, and I am very
pleased again that the Secretary is here at my request. At
least according to news reports, I understand that those new
regulations and requirements will come out at any time, and we
will pursue that later.
It is the responsibility of this committee to carefully
examine this issue and to ensure that any action taken by the
Administration is within the law and takes into consideration
the impacts on jobs, local communities, states, the revenue and
of course our economy.
Hydraulic fracturing is necessary to extract natural gas
and oil from unconventional shale resources. It has been
effectively regulated by states for over 60 years, and the
process today is responsible for 30 percent of our domestic oil
and natural gas production.
Given that President Obama has identified natural gas usage
as an area in which he wants to seek bipartisan cooperation, it
is concerning that the potential onerous regulations could
drastically curtail that cooperation and impede its development
and usage, but that is why we are having this hearing today to
explore that. Another proposal we will closely examine is the
Administration's draft five-year leasing plan for the OCS.
Let me start by reminding everybody that in 2008, both
Congress and President Obama lifted a decades long ban on new
offshore drilling. This created new opportunities off the
Atlantic and Pacific coasts for energy production, for job
creation and of course for new revenues for the Federal
Government. Unfortunately, these opportunities have been missed
I believe by this Administration. They have ignored the
bipartisan will of both Congress and the American people to
allow for new drilling off our coasts.
The Administration's draft plan only allows lease sales to
occur in areas that were previously open, and it indefinitely
delays the Virginia lease sale scheduled to take place next
year. I am sure we will hear about that in the hearing. With
this, the President has effectively put the moratorium back in
place, which left in 2008.
It should also be noted that this plan is approximately two
years late. The plan was supposed to be for the 2010-2015
timeframe with new lease sales starting in 2011. The
Administration punted the plan for six months and eventually
ended up delaying it for a couple years. Despite this two-year
delay, there are no new areas offered in the draft plan. The
Administration took an extra two years to then offer less than
what was originally proposed.
In contrast, the House has passed three bipartisan bills
that will create over a million new jobs by providing access to
our own U.S. energy and opening up new offshore areas for
drilling that contain the most oil and natural gas resources.
We will likely hear today that the U.S. oil and natural gas
production is at an all time high, yet that is true only
because of the actions and policies of past Administrations,
both Republican and Democrat Administrations, that allowed for
the leasing and production of our energy resources on public
lands, and of course we cannot ignore the significant oil boom
on private and state lands in North Dakota.
We will not be able to continue to meet our country's
energy and economic needs if restrictive policies are imposed
that lock up our energy resources and keep us at the mercy of
foreign sources with our energy needs. Once again, that is one
of the subjects that we want to explore for this hearing is to
look at what we can do on our public lands.
And with that, I yield back my time and recognize the
gentleman from Massachusetts, Mr. Markey.

STATEMENT OF HON. EDWARD MARKEY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MASSACHUSETTS

Mr. Markey. Thank you, Mr. Chairman, very much.
Mr. Secretary, it is a pleasure to welcome you back to the
Natural Resources Committee.
Last week you released a five-year plan for domestic
offshore oil and gas drilling, and I was very pleased that the
plan protects the East Coast and especially New England from
offshore drilling for at least the next five years.
The BP oil spill in the Gulf has many on the East Coast
renewing their opposition to drilling. However, I am concerned
that the plan does include new lease sales off of Alaska even
though the oil industry has not effectively proven that they
can respond to a spill in the icy, harsh conditions offshore in
the Arctic.
One example of the threats faced in Alaskan waters occurred
just last weekend as much of Alaska was thrashed with a
superstorm that produced 40-foot waves and 100-mile-per-hour
winds. Now, while the Administration has delayed those Arctic
lease sales until 2015, I will continue to monitor the progress
the industry makes in developing its response capabilities and
ensure that the Interior Department is holding the industry to
the highest safety standards in this sensitive area.
But all in all, this new five-year plan means that more
than 75 percent of all offshore oil and gas resources in the
United States will be made available to oil and gas companies,
yet the Republican Majority continues to claim that the
Administration is locking up our resources. In reality,
domestic oil production is at its highest level in nearly a
decade. Offshore oil production is higher than it was during
the final years of the Bush Administration, and natural gas
production is at an all-time high.
The great irony is that it is the Republican Majority that
is blocking access to the real resources American people need
right now, additional revenue to reduce our budget deficit. It
is the Republican Majority that is protecting the billions of
dollars we could retrieve from making oil and gas companies pay
their fair share for drilling on our public lands.
It is the Republican Majority that has opposed Democratic
efforts to close free drilling loopholes and unnecessary tax
breaks, and it is the Republican Majority that has consistently
voted against reforming the 1872 mining law to require mining
companies to pay a royalty to mine for gold and uranium or
other minerals on the public lands of the American people.
By protecting oil companies and preventing the government
from collecting the revenue it is rightfully owed for the
exploitation of our public resources, the Republicans are
making our debt negotiations look a lot worse than the NBA
lockout.
Later this week the Energy and Minerals Subcommittee will
hold a hearing on several Republican bills that would give away
more public lands, including the Arctic National Wildlife
Refuge, to pay for a transportation bill. Those bills won't
even come close to paying for the maintenance of our roads and
our bridges, but they will grease the skids for the oil
companies to continue making record profits.
This scheme is both short on funds and it is a bridge too
far, but that is not stopping them from trying to use funding
for our transportation projects as an excuse for railroad
giveaways to those interests in Congress. Enough is enough.
Rather than balancing our budget on the backs of seniors and
millions of Americans who are struggling, we should be ensuring
that oil companies are paying their fair share.
And that is why I am introducing legislation today that
will end the free ride for oil and gas and mining companies on
public land. The legislation would reduce the deficit by nearly
$19 billion over the next 10 years just by ending taxpayer-
funded giveaways for those companies. Rather than complaining
about a five-year drilling plan that opens up more areas than
oil companies could ever drill in that time, we believe that
the Majority should join with the Democrats in creating the 10-
year plan we need to reduce the deficit and pay down our debt.
I look forward to hearing from you, Mr. Secretary, and I
yield back the balance of my time.
[The prepared statement of Mr. Markey follows:]

Statement of The Honorable Edward J. Markey, Ranking Member,
Committee on Natural Resources

Thank you.
Mr. Secretary, it is a pleasure to welcome you back to the Natural
Resources Committee.
Last week, the Interior Department released a new five year plan
for domestic offshore oil and gas drilling.
I am pleased that the plan protects the East Coast, and especially
New England, from offshore drilling for at least the next five years.
The BP oil spill in the Gulf has many on the East Coast renewing their
opposition to drilling.
However, I am concerned that the plan does include new lease sales
off of Alaska, even though the oil industry hasn't effectively proven
that they can respond to a spill in the icy, harsh conditions offshore
in the Arctic. As one example of the threats faced in Alaskan waters,
just last weekend much of Alaska was thrashed with a super storm that
produced 40 foot waves and 100 mile per hour winds.
While the Administration has delayed those Arctic lease sales until
2015, I will continue to monitor the progress the industry makes in
developing its response capabilities, and ensure that the Interior
Department is holding the industry to the highest safety standards in
this sensitive area.
But all in all, this new five-year plan means that more than 75
percent of all the offshore oil and gas resources in the United States
will be made available to oil and gas companies.
Yet, the Republican Majority continues to claim that the
Administration is locking up our resources.
In reality, domestic oil production is at its highest level in
nearly a decade. Offshore oil production is higher than it was during
the final years of the Bush Administration. And natural gas production
is at an all time high.
The great irony is that it is the Republican Majority that is
blocking access to the real resources the American people need right
now: additional revenue to reduce our budget deficit.
It is the Republican Majority that is protecting the billions of
dollars we could retrieve from making oil and gas companies pay their
fair share for drilling on our public lands. It is the Republican
Majority that has opposed Democratic efforts to close free drilling
loopholes, and end unnecessary tax breaks. It is the Republican
Majority that has consistently voted against reforming the 1872 Mining
Law to require mining companies to pay a royalty to mine for gold,
uranium, or other minerals on public lands.
By protecting oil companies and preventing the government from
collecting the revenue it is rightfully owed for the exploitation of
our public resources, Congressional Republicans are making our debt
negotiations look worse than the NBA lockout.
Later this week, the Energy and Minerals Subcommittee will hold a
hearing on several Republican bills that would give away more public
lands, including the Arctic National Wildlife Refuge, to pay for a
transportation bill. Those bills won't even come close to paying for
the maintenance of our roads and bridges, but they will grease the
skids for the oil companies to continue making record profits. This
Republican scheme is both short on funds and a bridge too far.
But that is not stopping the Republican Majority from trying to use
funding our transportation projects as an excuse to railroad giveaways
to special interests through the Congress.
Enough is enough. Rather than balancing our budget on the backs of
our seniors and millions of Americans who are struggling, we should be
ensuring that oil companies are paying their fair share. That is why I
am introducing legislation today that will end the free ride for oil,
gas and mining companies on public land. My legislation would reduce
the deficit by nearly $19 billion over the next 10 years just by ending
taxpayer-funded giveaways for these companies.
Rather than complaining about a five year drilling plan that opens
up more areas than oil companies could ever drill in that time, the
Republican Majority should join Democrats in creating the ten year plan
we need to reduce our deficit and pay down our debt.
I look forward to hearing from the Secretary, and yield back.
______

The Chairman. I thank the gentleman for his opening
statement, and once again I want to thank very much Secretary
of the Interior Salazar for being here.
You know the rules. We talked a little bit and you want to
divide your time with your opening statement, and we certainly
want to do that. So, Mr. Secretary, I will recognize you for
your opening statement and for Mr. Abbey and Mr. Beaudreau. You
are recognized.

STATEMENT OF HON. KEN SALAZAR, SECRETARY, U.S. DEPARTMENT OF
THE INTERIOR; ACCOMPANIED BY HON. BOB ABBEY, DIRECTOR, BUREAU
OF LAND MANAGEMENT, AND TOMMY BEAUDREAU, DIRECTOR, BUREAU OF
OCEAN ENERGY MANAGEMENT

Secretary Salazar. Thank you very much, Chairman Hastings
and Ranking Member Markey and Members of this committee. I am
honored to appear before you today to engage in a dialogue
about the nation's energy future.
I am joined here at the table by Bob Abbey, who is the
Director of the Bureau of Land Management, which oversees 700
million mineral acres and about 250 million surface acres, and
by Tommy Beaudreau, who is the Director of the Bureau of Ocean
Energy Management, who oversees America's oceans and energy
production in America's oceans.
The President's plan with respect to energy has been in
place for some time, since the beginning of our Administration,
and we have a simple goal as he has often articulated, and that
is to secure the energy future of the United States of America.
His goal and our goal in the Administration is to power the
U.S. economy and to reduce our dependence on foreign oil.
The policy underpinnings of our goal are policy
underpinnings which have been debated for a long time, but
frankly the goals have eluded the American country, and the
American nation, for a long time to come. Those policy
underpinnings are the economic security of this country, the
national security of the United States and its environmental
security.
The question then is how do we get there and what is it
that we are trying to do to get us to achieve those goals and
those policy imperatives? We believe in a broad energy
portfolio. It is a broad energy portfolio that does include oil
and gas production. It includes alternative energy, such as
renewable energy, solar, wind, geothermal. It also includes a
new chapter on nuclear energy.
We also believe that we cannot just produce our way to
energy independence in our country, but we also have to use
less, and as a consequence of that, the fuel efficiency
programs that we have put into place are delivering record-
breaking efficiency programs with respect to transportation
fuels.
Oil and gas has been a key part of the Obama Administration
from the beginning. We are walking the walk, and the statistics
prove it. We have produced in 2010 the highest production since
2003 of oil on public lands. The Outer Continental Shelf has
increased in production one-third from 2008 until 2010, and
onshore oil we have seen a 5 percent increase on public lands
over the last two years.
The future production on public lands is something which we
support. We have moved forward with onshore leasing across the
country. In 2010, 33 lease sales and 3.2 million acres; 2011,
32 lease sales; 2012, 33 are scheduled as well. On the
offshore, we have offered 37 million acres. We have three more
lease areas that we will be putting on the market under the
current plan between now and the spring, and then in the 2012
to 2017 plan, there are 15 lease sales in that plan.
The results are that we are producing more and we are using
less, and we have gotten to the point where for the first time
in recent history we are importing less than 50 percent of our
oil from foreign countries.
Tommy Beaudreau will speak to the offshore OCS plan for
just a couple of minutes and Bob Abbey will speak to natural
gas infracting for just a couple of minutes, but I want to make
just a comment on the offshore OCS. The plan that we put
forward last year or last week, in my view, is a plan that
focuses on the known reserves and the known resources where we
have the infrastructure to produce oil and gas in America's
oceans, and it also looks to frontier areas, including the
frontier areas in Alaska.
On the natural gas effort, it is, as you said, Chairman
Hastings, an area where there can be bipartisan work because
our policy goal is to support natural gas usage here in this
country. But I have the view that the issue of fracking is the
Achilles' heel for our natural gas industry unless we can move
forward with a program that does disclose the chemicals that
are being injected into the underground. We are developing a
rule and are taking input from lots of different places to make
sure that it is a rule that does not push back on the bright
future for natural gas.
And with that, what I would like to do is to turn it over
to Director Abbey for a few comments on what we have been doing
on fracking.
[The prepared statement of Secretary Salazar follows:]

Statement of The Honorable Ken Salazar,
Secretary, U.S. Department of the Interior

Chairman Hastings, Ranking Member Markey, and Members of the
Committee, I am pleased to appear before you today to discuss important
components of our domestic energy future: the Proposed Outer
Continental Shelf Oil and Gas Leasing Program for 2012-2017; and
hydraulic fracturing and the Department of the Interior's role in
facilitating the responsible development of our nation's natural gas
resources.

Introduction
As the President has stressed, the Administration is committed to
promoting safe and responsible domestic oil and gas production as part
of a broad energy strategy that will protect consumers and reduce our
dependence on foreign oil. When President Obama took office, America
imported 11 million barrels of oil a day. The President has put forward
a plan to cut that by one-third by 2025, and we are on the right path.
We are already making progress towards that goal. Overall, oil imports
have fallen by 9 percent since 2008, and net imports as a share of
total consumption declined from 57 percent in 2008 to less than 50
percent in 2010. The Department of the Interior (DOI) plays an
important role in advancing domestic production.
To encourage production, the Administration is taking a series of
steps to leverage existing authorities. These initiatives are part of
the Administration's overall Blueprint for a Secure Energy Future, a
broad effort to reduce our dependence on oil by producing more oil and
natural gas at home and using cleaner, alternative fuels and improving
our energy efficiency.
America's public lands and Federal waters provide resources that
are critical to the Nation's energy security. At the Department of the
Interior, we are expanding development of cleaner sources of energy,
including renewables like wind, solar, and geothermal, as well as
natural gas on public lands. The Administration is also working to
facilitate the development of advanced coal technologies.
Domestic oil and gas production remain critical to our energy
supply and to reducing our dependence on foreign oil; their development
enhances our energy security and fuels our Nation's economy.
Recognizing that America's oil supplies are limited, we must
develop our domestic resources safely, responsibly, and efficiently,
while at the same time taking steps that will ultimately lessen our
reliance on oil. We are making significant progress toward these ends.
Total U.S. crude oil production was higher in 2010 than in any year
since 2003. Oil production from the federal OCS increased by a third
from 2008 to 2010. Oil production from onshore public lands increased 5
percent from 2009 to 2010. U.S. natural gas production is up 7 percent
from 2008, and is at its highest level in more than 30 years.
We are working hard to build on this success. In 2010, the Bureau
of Land Management (BLM) held 33 oil and gas lease sales covering 3.2
million acres and in 2011, BLM scheduled an additional 32 lease sales
and has held 28 to date. The BLM has scheduled an additional 33 lease
sales for 2012. In 2010, the Department offered 37 million offshore
acres in the Gulf of Mexico for oil and gas exploration and production.
And the 2012-2017 Outer Continental Shelf (OCS) Oil and Gas Leasing
Proposed Program, discussed in more detail below, makes more than 75
percent of undiscovered technically recoverable oil and gas estimated
on the OCS available for development.

2012-2017 Offshore Oil and Gas Development Program
Here at the Department we have put in place a new set of rigorous
standards for safety and responsibility for the development of oil and
gas resources on the Outer Continental Shelf. These reforms to offshore
oil and gas regulation and oversight are the most extensive in U.S.
history, and strengthen requirements for everything from well design
and workplace safety to corporate accountability. They are helping to
ensure that the United States can safely and responsibly expand
development of its energy resources consistent with our stewardship
responsibilities.
Expanding safe and responsible oil and gas production from the OCS
is a key component of our comprehensive energy strategy to grow
America's energy economy, and will help us continue to reduce our
dependence on foreign oil and create jobs here at home.
As I mentioned above, the Proposed OCS Program for 2012-2017 will
advance safe and responsible domestic energy exploration and production
by making available for development more than three-quarters of
undiscovered oil and gas resources estimated on the OCS, and includes
substantial acreage for lease in regions with known potential for oil
and gas development. This Proposed Program promotes responsible
development and is informed by lessons learned from the Deepwater
Horizon tragedy and the reforms that we have implemented to make
offshore drilling safer and more environmentally responsible.
A key part of safe and responsible development of our oil and gas
resources is recognizing that different environments and communities
require different approaches and technologies. The Proposed Program
reflects this recognition, and accounts for issues such as current
knowledge of resource potential, adequacy of infrastructure including
oil spill response capabilities, Department of Defense priorities, and
the need for a balanced approach to our use of natural resources. The
majority of lease sales are scheduled for areas in the Gulf of Mexico,
where resource potential and interest is greatest and where
infrastructure is most mature. But it also includes frontier areas,
such as the Arctic, where we must proceed cautiously, safely, and based
on the best science available.
In Alaska and off its coast, the Proposed Program recommends that
the current inventory of already-leased areas in the Arctic should be
expanded only after additional evaluations have been completed, and in
a manner that accounts for the Arctic's unique environmental resources
and the social, cultural, and subsistence needs of Native Alaskan
communities.

Natural Gas and Hydraulic Fracturing
Onshore, our large reserves of natural gas, including significant
reserves contained in underground shale deposits, play a vital role in
our energy future.
I previously mentioned that natural gas is an abundant, domestic
fuel. The Bureau of Land Management alone oversees approximately 700
million acres of onshore subsurface mineral estate throughout the
Nation and many of those lands contain natural gas deposits.
Development of these natural gas resources has the potential to create
jobs.
Recent technology and operational improvements in extracting
natural gas resources, particularly shale gas, have increased gas
drilling activities nationally and led to significantly higher natural
gas production estimates for decades to come. Hydraulic Fracturing, or
``fracking,'' is a common technique that has been used in oil and gas
production operations for decades. Recent technological advances in
fracking have allowed industry to produce from reserves that previously
would have been inaccessible. Fracking is also used today by industry
to increase a well's ability to produce gas or oil in commercial
quantities. After drilling into the reservoir's rocks that contain
hydrocarbons, producers then use hydraulic fracturing to create a crack
or fracture so that oil and gas can more freely flow and thus increase
production.
According to the BLM, over the last decade, leasing and exploration
activities on BLM managed public lands has focused mainly on the
development of natural gas resources. The number of wells stimulated by
hydraulic fracturing techniques has been steadily increasing over the
years as oil and gas producers are developing geologic formations that
are less permeable than those drilled in the past. The BLM recently
estimated that approximately 90 percent of the wells drilled on public
lands that it manages are stimulated by hydraulic fracturing
techniques.
While operators are required by BLM regulations to ensure at all
times that water supplies are free or protected from contamination
during drilling and subsequent activities, the increasing use of
hydraulic fracturing has raised a number of concerns about the
potential impacts on water quality and availability, particularly with
respect to the chemical composition of fracturing fluids and the
methods used.
As we continue to increase production of this important domestic
energy resource, we are also taking steps to address concerns that have
been raised regarding potential environmental impacts associated with
these practices.
While my remarks focus on what we have been doing at the Department
of the Interior, I should stress that this is an Administration-wide
effort. We are working closely with the Department of Energy's Office
of Fossil Fuels and the Environmental Protection Agency in its study on
the question of potential water contamination issues associated with
hydraulic fracking.

Department of the Interior Actions
The Department has already undertaken a number of efforts to
explore and address some of the concerns about the potential negative
impacts of fracking.
Last November, I hosted a forum on hydraulic fracturing to examine
best practices to ensure that natural gas on public lands is developed
in a safe and environmentally sustainable manner. The forum brought
together major stakeholders to develop a way forward on natural gas so
that the United States can safely and fully realize the benefits of
this important energy resource.
Following that forum, the BLM hosted a series of regional public
meetings in North Dakota, Colorado, and Arkansas--states that have
experienced significant increases in natural gas development on Federal
lands or on leases issued by the BLM--to discuss the use of hydraulic
fracturing and how we can ensure that robust natural gas development
can continue on our public lands.
Throughout the past year, we have continued to work closely with
industry, other federal agencies and the public, closely evaluating the
suite of existing BLM regulations governing oil and gas development and
considering whether updates to those regulations may be warranted,
given the substantial increase in domestic production in recent years.
BLM's current regulations specific to hydraulic fracturing--or
stimulation operations--are in many ways outdated; they were written in
1982; and they reflect neither the significant technological advances
in hydraulic fracturing nor the tremendous growth in its use that has
occurred in the last 30 years.
Additionally, the outreach efforts we have made over the past year
have highlighted strong public interest in additional information about
hydraulic fracturing techniques, including the composition of the
fluids that are being used. As a result, BLM is considering revisions
to its current regulations that would address disclosure of the
chemicals used in the hydraulic fracturing process with necessary
provisions related to protecting trade secrets.
We are aware of a number of existing efforts underway in certain
states and of the national website, FracFocus (http://fracfocus.org/),
that provides a forum for developers to voluntarily disclose some
information. We are evaluating the various state requirements and
FracFocus and are looking at how best BLM might put in place a
disclosure system that is not duplicative but still protects the
important resource values that BLM is tasked with managing.
Our experience with the Deepwater Horizon oil spill and our
extensive outreach efforts over the course of the past year have
confirmed that wellbore integrity is of paramount importance in
guarding against the smallest leak to catastrophic well failures. For
this reason, BLM is also looking at wellbore integrity as a means to
minimize the risk of fracturing fluid leaking into water sources. In
addition, we are evaluating whether it would be beneficial to amend
existing requirements that govern the management of water that is
produced following development.
We recognize that a number of states around the country already
have in place important requirements to ensure the safety and
environmental performance of hydraulic fracturing.
As we move forward, we will continue to work closely with industry,
other Federal agencies, state agencies, tribes, and the public to
evaluate how best to update our requirements to reflect modern
technology while ensuring natural gas plays a robust role in our
domestic energy portfolio and is developed in a way that protects our
public lands.

Conclusion
The Department is working to secure our energy future by ensuring
the potential for clean energy development on our public lands and
waters is realized. And we are pursuing the safe and responsible
development of our conventional energy resources here at home.
Mr. Chairman, thank you again for the opportunity to be here today
to discuss the Department of the Interior's commitment and efforts to
reduce our dependence on foreign oil and create jobs through the
development of these important energy resources. I am happy to answer
any questions that you or the Committee may have.
______

Response to questions submitted for the record by Hon. Ken Salazar,
Secretary, U.S. Department of the Interior

Questions from Chairman Hastings:

1. As the Department of the Interior proceeds with creating and
implementing federal regulations on hydrofracking on federal
land, can you explain what the process will be for creating and
implementing these regulations and who will be consulted in the
process? Additionally, what specific job creation and
employment information does the Department take into
consideration when creating and implementing energy development
regulations?
Response: As the President has made clear, this administration's
all-of-the-above energy strategy includes strong efforts to safely and
responsibly increase production of our abundant domestic oil and gas
resources. As we continue to expand domestic natural gas production, in
large part made possible by improvements in technologies like hydraulic
fracturing, it is critical that the appropriate safety and
environmental protections are in place.
The proposed rule was published in the Federal Register on May 11,
2012, and is available here: http://www.doi.gov/news/pressreleases/
loader.cfm?csModule=
security/getfile&pageid=293916, An accompanying economic analysis is
available here: http://www.doi.gov/news/pressreleases/
loader.cfm?csModule=security/getfile&
pageid=293917. During development of the proposed rule, BLM sought
feedback from a wide range of sources, including tribal
representatives, industry, members of the public and other interested
stakeholders. Public comment on the proposal ends July 10, 2012, and
comments received will be used to further refine the proposal.
The proposed well stimulation rule was developed to provide common-
sense measures that will enhance public confidence in natural gas
development on public lands while also encouraging continued safe and
responsible exploration and production. In November 2010, Secretary
Salazar hosted a forum, including major stakeholders, on hydraulic
fracturing on public lands to examine best practices to ensure that
natural gas on public lands is developed in a safe and environmentally
sustainable manner. Subsequently, in April 2011, the BLM hosted a
series of regional public meetings in North Dakota, Arkansas, and
Colorado--states that have experienced significant increases in oil and
natural gas development on Federal and Indian lands--to discuss the use
of hydraulic fracturing on the Nation's public lands.
During these events, members of the public expressed a strong
interest in obtaining more information about hydraulic fracturing
operations being conducted on public and Indian lands.
The BLM has also been involved in active tribal consultation
efforts on this topic, including four regional meetings in January 2012
to which Tribal leaders from all Tribes that are currently receiving
oil and gas royalties and all Tribes that may have had ancestral
surface use were invited. These meetings were held in Tulsa, Oklahoma;
Billings, Montana; Salt Lake City, Utah; and Farmington, New Mexico.
BLM has been and will continue to be proactive about tribal
consultation under the Department's recently implemented Tribal
Consultation Policy, which emphasizes trust, respect and shared
responsibility in providing tribal governments an expanded role in
informing federal policy that impacts Indian tribes, including their
lands. The agency will continue to consult with Tribal leaders
throughout the rulemaking process.

2. In multiple meetings and hearings both here and the House we have
heard from very knowledgeable state officials that state
regulations are doing a sufficient job in regulating
hydrofracking while balancing the needs and concerns of the
community and environment while still allowing for the
development of shale gas and oil and job creation. What
deficiencies your department has found in state regulations
that warrant the federal government stepping in and creating
their own, sometimes duplicative, regulations?
a. How would these federal regulations work in conjunction with state
regulations that have already been successfully established?
Response: As stewards of the public lands, and as the Secretary's
regulator for oil and gas leases on Indian lands, the BLM has evaluated
the increased use of well stimulation practices over the last decade
and determined that the existing rules for well stimulation needed to
be updated to reflect significant technological advances in hydraulic
fracturing in recent years and the tremendous increase in its use.
The BLM recognizes that some, but not all, states have recently
taken action to address hydraulic fracturing in their own regulations.
The BLM's proposed rulemaking is designed to complement ongoing state
efforts by providing a consistent standard across all public and tribal
lands and ensuring consistent protection of the important federal and
Indian resource values that may be affected by the use of hydraulic
fracturing. The BLM is also actively working to minimize duplication
between reporting required by state regulations and reporting required
for this rule. The BLM has a long history of working cooperatively with
state regulators and is applying the same approach to this effort.
In keeping with longstanding practice and consistent with relevant
statutory authorities, it is the intention of the BLM to implement on
public lands whichever rules, state or federal, are most protective of
federal lands and resources and the environment. And regardless of any
action taken by the BLM, operators still would need to comply with any
state-specific hydraulic fracturing requirements in the states where
they operate.

3. Recently, the U.S. Forest Service proposed a total ban on
horizontal drilling for the George Washington National Forest
in Virginia, which sits atop significant Marcellus Shale gas
reserves. Has BLM or DOI consulted with the USFS or the
Department of Agriculture on addressing the concerns of the
Forest Service through regulation rather than through another
moratorium on drilling on public lands, which costs jobs and
government revenue?
Response: The President's energy strategy, Blueprint for a Secure
Energy Future, includes an all-of-the-above approach, including the
responsible development of both conventional and renewable energy
sources on our public lands. Contrary to the statements made in this
question, the draft Management Plan released in May 2011 makes almost
one million acres of the forest available for gas leasing and would
also allow for consideration of wind energy development in some areas.
As noted at the hearing, the BLM serves as a cooperating agency to
the ongoing analysis being undertaken by the USFS on the potential
impacts of oil and gas leasing within George Washington National
Forest. The process for determining the final oil and gas leasing
management plan for the George Washington National Forest is still
ongoing and we are working to ensure that the most current, and
technically accurate information is considered. While the draft version
of the plan would prohibit horizontal drilling in the forest, in
general federal land managers, including the BLM and the U.S. Forest
Service, recognize the importance of horizontal drilling as one tool
for development of oil and gas resources on public lands. A copy of the
BLM's written comment to the George Washington National Forest draft
Forest Plan is available at: http://www.fs.usda.gov/Internet/
FSE_DOCUMENTS/stelprdb
5366331.pdf.

4. In 2007, six 160 acre tracts of land were leased to three companies
for oil shale projects. These leases have the potential to be
expanded to as much as 5,120 acres. In 2009, BLM solicited a
second round of oil shale RD&D leases, however, the terms were
much less favorable to oil shale development and the potential
for lease expansion was decreased to only 480 acres. The result
was a lack of interest in the second round of leases as many
firms believed a commercial project could not be established on
that small amount of acreage. What new information did the BLM
have and what went into the decision making process that led to
the Department making such drastic changes to the lease terms
and how does the Department believe this will favorably advance
oil shale development?
Response: The November 2009 Federal Register notice announcing the
call for nominations that led to the three nominations (74 Fed. Reg.
56867; http://frwebgate1.access.gpo.gov/cgi-bin/
PDFgate.cgi?WAISdocID=iuIewL/0/2/0&WAISaction=retrieve) contains
information responsive to the question. While specifics are detailed in
the text of that notice, in general it states that the administration
wanted to review and reconsider aspects of the previous solicitation,
published in mid-January 2009, including lease acreage and the rules
that would govern conversion of an RD&D lease to a commercial lease,
particularly those related to royalty rates, and to solicit comments on
terms and conditions for any future leases. The notice also states the
intent of the second round of RD&D leases was to focus on the
technology needed to develop the resources into marketable liquid fuels
to inform future decisions on whether and when to move forward with
commercial scale development.

Questions from Rep. Rivera:

1. Recently, my staff contacted BOEM and BLM to try to get a list of
all incorporated-foreign-government owned companies that have leases in
the U.S. They were surprised to learn that the Department doesn't keep
a database of what companies are foreign-government owned. The
incorporated foreign-owned company is just mixed in with the regular,
private-owned companies. I believe it would be extremely useful to at
least be able to track those companies and what government owns them.
Therefore, I would like to request from the Department a list of all
incorporated foreign-government-owned energy companies that currently
have onshore and offshore leases on U.S. Federal lands and in U.S.
waters. For example, one that I am aware of is Statoil, a Norwegian-
State owned oil company operating in Alaska, the Gulf of Mexico, the
Marcellus Shale and other areas of the United States.
Along with the names of those companies, I would also like to know
which governments have an ownership-stake in those companies.
Furthermore, if it is possible to identify the scope of their
leases, production from their holdings, and in which state or
off what coast they are located, I believe that would be
helpful as well.
Response: Following the request for similar information made at
this hearing, both BLM and BOEM reviewed the laws applicable to their
leasing programs and again determined that the information kept by
Departmental bureaus would only reflect that corporate leaseholders are
appropriately incorporated within the United States. Under U.S. law,
corporations must be organized under the laws of the United States, the
States, the District of Columbia, or U.S. territories in order to hold
mineral leases, and both BOEM and BLM regulations require that
corporations bidding on federal leases qualify prior to bidding. See
bureau regulations at 30 CFR 556.35 and 556.46 (http://
frwebgate1.access.gpo.gov/cgi-bin/PDFgate.cgi?WAIS
docID=RnK8G5/1/2/0&WAISaction=retrieve (for offshore leases) and 43 CFR
3102.1 and 3102.5-1 (http://www.gpo.gov/fdsys/pkg/CFR-2010-title43-
vol2/pdf/CFR-2010-title43-vol2-sec3102-1.pdf (for onshore leases). For
these reasons, the specific information sought in this question is not
kept or maintained by the Department.

2. You've mentioned how you have reached out to Repsol regarding their
operations in Cuba since you have some influence over them due
to their U.S. holdings. Statoil, which also has U.S. holdings,
is also working with the Cuban regime to develop their energy
resources as well as giving them technical assistance. I would
also point out that Statoil has dealings with another State-
Sponsor of Terrorism, Iran. Is this Administration using their
influence on them as well? If so, how? If not, why not?
Response: The Department's role in the development of oil and gas
resources in Cuban waters is to ensure that our national interests,
particularly environmental interests in Florida and along the U.S.
coastline, are protected from any potential impacts of oil and gas
drilling operations there. Activities of the nature addressed by this
question fall under the jurisdiction of the State Department, which
recently has used new authorities, such as that provided in the
Comprehensive Iran Sanctions, Accountability, and Divestment Act,
signed into law on July 1, 2010, to persuade major multinational energy
companies to pledge to end their investments in Iran and provide
assurances not to undertake new energy-related activity there that may
be sanctionable.

Questions from Rep. Coffman:

1. Mr. Secretary, what plans, and the analysis used for those plans,
if any, does your Department have to supplement the loss of
production, jobs, revenues and safety this delay of Keystone XL
will cause? I would like for you, Mr. Secretary, to develop and
send back to me and this Committee a written response directly
addressing these questions. My colleagues and I look forward to
your response and your plan to replace the losses the Keystone
XL delay will cause.
Response: The process related to the approval of a permit for the
Keystone XL pipeline falls under the jurisdiction of the State
Department. From the first days of this administration the President
has been focused on job creation and economic growth. And we at the
Department of the Interior have too, not only with regard to
conventional and renewable energy development, which the Department
estimate produced on Interior lands and waters results in about $230
billion in economic benefits each year, but we are also contributing to
the economy through other programs in the Department. According to a
2010 Department study, departmental programs and activities directly
supported over 2 million jobs and approximately $363 billion in
economic activity, and our parks, refuges, and monuments generate over
$24 billion in economic activity from recreation and tourism. The
American outdoor industry has estimated that 6.5 million jobs are
created every year from outdoor activities. Interior is at the
forefront of the Administration's comprehensive effort to spur job
creation by making the United States the world's top travel and tourism
destination. And hunting, fishing, and outdoor recreation contribute an
estimated $730 billion to the U.S. economy each year.
______

The Chairman. Director Abbey, go ahead.
Mr. Abbey. Thank you, Chairman Hastings. Thank you,
Secretary Salazar and Members of the Committee.
I am proud of the work that the Department of the Interior
is doing to diversify our nation's energy portfolio by making
greater use of renewable energy sources from our public lands.
Solar, wind, hydropower and geothermal will one day be major
sources for energy in this nation, and we are laying the
foundation for that to occur.
However, we are not naive, and for the foreseeable future
our nation will be dependent on oil, natural gas and coal.
Given this reality, the Department of the Interior has
undertaken much needed reforms in our own minerals program that
makes available appropriate public lands for mineral
development while providing greater certainty to industries
that the lands are being made available for leasing can be
developed and in a more timely manner.
Our reforms have already been successful in reducing
conflict, litigation and protests that had adversely affected
the development of oil and gas from public lands for years.
Today we have a more orderly process for leasing and developing
oil and gas. Parcels that are being leased today are the
parcels that have the greatest chance of being developed the
quickest.
And while oil and natural gas will be a primary component
of our nation's energy portfolio for years to come, the
increased use of hydraulic fracturing on both public and
private lands has understandably generated concerns among the
public about possible impacts to water quality and
availability. This was the primary concern that we heard from
local government officials and the public at community forums
that we hosted last spring in North Dakota, Colorado and
Arkansas.
Over 90 percent of all the wells that are being drilled on
public lands today are using this technology. It is therefore
important that we remain diligent in confirming the integrity
of the well bore prior to the hydraulic fracturing operation as
well as monitoring the well bore during the process to ensure
that underground water resources remain isolated and protected.
The Department of the Interior, as Secretary Salazar
alluded to, is committed to ensuring that development
activities occurring on the public lands are being conducted in
a safe and responsible manner that protects human health and
safety while bringing in a fair return to the American taxpayer
for the development of their mineral assets.
Secretary Salazar. And Director Beaudreau?
Mr. Beaudrau. Thank you, Secretary Salazar.
Chairman Hastings, Ranking Member Markey and Members of the
Committee, I thank you for the opportunity to appear before
this committee today to discuss our proposed Outer Continental
Shelf oil and gas leasing program for 2012 to 2017.
This is my first appearance before the Committee and so I
will start by introducing myself and my new agency. I am the
Director of the Bureau of Offshore Energy Management, BOEM,
which is responsible for managing the environmentally sound
development of conventional and renewable offshore energy and
ensuring that the American public receives fair value for the
use of our shared resources.
In June 2010, while the response to the Deepwater Horizon
spill was ongoing, I left my law practice to join the Interior
Department. For the past 17 months, I have worked with
Secretary Salazar and Director Bromwich to design and implement
our aggressive and sweeping reform agenda, which has made
offshore oil and gas development safer and our oversight of
industry more effective.
I grew up in Alaska where my father worked on the North
Slope for an oil and gas exploration company. I was raised to
enjoy and appreciate the outdoors--hiking, hunting and
fishing--in our last frontier and was deeply saddened by the
Exxon Valdez oil spill.
As an Alaskan, I know firsthand both the critical role
energy development plays in our economy as well as the
imperative that this activity be conducted safely and with
appropriate protections for the environment. This same balance
is the core mission and responsibility of my agency and is
fundamental to the proposed 2012 to 2017 offshore leasing
program that we published last week.
Under this five-year plan, we have scheduled 12 lease sales
in the Gulf of Mexico where the oil and gas resources are
abundant and well understood and the infrastructure to support
responsible development is mature. The first of these sales
under the new program is scheduled for next fall. We also have
scheduled three potential lease sales in the Alaskan OCS,
including one each in the Beaufort Sea and Chukchi Sea planning
areas.
We have designed the program so that these sales will be
deliberately tailored to the unique Arctic environment where
there is significant resource potential but also where careful
consideration must be given to protecting those sensitive
ecosystems and to respecting Native Alaskans' cultural and
subsistence reliance on the ocean.
We are embarking on a comprehensive outreach campaign to
engage with the public on the proposed five-year program. In
December, we will hold 13 public hearings in Gulf states,
Alaska and here in Washington, D.C. I will personally attend
the hearings in New Orleans, Washington and several Alaskan
villages so that I will hear firsthand the comments and
concerns of members of the communities most directly involved
with and connected to offshore oil and gas leasing.
Offshore energy is, and will continue to be, a critical
component of the United States' domestic energy strategy. I
join the Secretary in expressing appreciation for your
attention to the five-year program and the opportunity to
discuss it with you today.
The Chairman. Thank you very much, all three of you, for
your opening statements. We begin the questioning, and I
recognize myself for five minutes.
Mr. Secretary, there has been obviously a lot of discussion
on economic recovery. As you know, we have tried the idea of
stimulating the economy. I think the proof is in the pudding
that that simply hasn't worked. There needs to be a new way to
do it.
The approach that we look at, at least from my perspective
and I think a lot of Members--probably most Members on my side
of the aisle--is an effort to jumpstart the economy, and one
way to jumpstart the economy is to recognize how important
energy is to our economy. Energy jobs are good paying jobs, as
you well know, and there is also a national security aspect to
having American made energy.
The reason I say this in context with what we are talking
about today, and if you will put up the first slide that I
have? The first slide here shows the United States. Can you put
that slide up on the screen? There it is.
[Slide.]
The Chairman. After 2008, as you recall, for decades there
was a Presidential and a congressional moratoria on drilling on
the OCS. Both those moratoria went away at the start of this
Administration, so these were the opportunities that I alluded
to in my opening statement for production and is essentially
everything, as you can see there, in the green. The eastern
Gulf of course was closed off until I think 2012 or 2021,
whatever that figure is. That was the only one. Everything else
was an opportunity.
If you would put up the second slide now?
[Slide.]
The Chairman. Your draft plan essentially takes away all of
the Outer Continental Shelf on the Atlantic and part of what
was potentially open in Alaska, and it puts restrictions, more
restrictions, while it is open in Chukchi and Beaufort.
My question to you, in your opening statement, you said
that the President has said that natural gas is a broad part of
our broad energy portfolio, so when you contrast the two
together--if you put up the third slide, you can see them side
by side.
[Slide.]
The Chairman. I in all honesty, Mr. Secretary, think that
the plan compared to where the opportunities were going into
this Administration are maybe a kind word is underwhelming, and
I just want your comments on that.
Secretary Salazar. Thank you very much, Chairman Hastings.
Let me make two points on this.
The first is that I think it is important for this
committee and the Congress and the United States to not have
amnesia about the Deepwater Horizon and the Macondo well. It
was in fact a national crisis that gripped the U.S. Congress,
the President's leadership and the involvement of the
Administration and industry that basically brought the runaway
well under control.
What it showed was that there were significant issues that
raised the conclusion, which I hope you agree with, that the
oil and gas industry simply was not prepared to deal with that
kind of a blowout and so we have taken major steps with a major
overhaul of the Department of the Interior's former MMS agency
to make sure that we have the appropriate oversight, and we
will work closely with industry to develop the containment
strategies and the prevention strategies to be able to move
forward, to stand up production in the Gulf of Mexico once
again.
So, as we look at the maps that you have put up there,
Chairman Hastings, we have tried to move forward in a way that
is thoughtful given the lessons that have been learned from the
Macondo well. And so the targeting of the Gulf of Mexico, which
is a place where we have the best known available information
and the best infrastructure, is the best place to go for oil
and gas development, and that is why 12 lease sales have been
scheduled there.
In Alaska and in the Arctic, there are places in which we
don't believe we ought to drill. For example, Bristol Bay is a
place that we have put off limits for five years because of the
fact that it is the kind of place that we believe should not
move forward right now with oil and gas production.
On the other hand, when you look at the Beaufort and the
Chukchi Sea, it is a place where we need to develop additional
information and so we are doing that and doing it in a
thoughtful way.
The Chairman. All right. Thank you. I have one other
question, and it deals with the organic legislation that you
and I have talked about in the reorganization.
As you know, tomorrow we will be marking up that
regulation. Since you are here today, albeit on different
issues, how do you feel about the importance of codifying or
structuring that law as we have talked about, real briefly?
Secretary Salazar. Chairman Hastings, long before the
Deepwater Horizon I sat at this same table when I suggested to
this committee that organic legislation was needed for the then
MMS. I continue to believe that to be the case today.
The Chairman. Good. Thank you very much, Mr. Secretary.
Thank you for your responses.
The gentleman from Massachusetts, Mr. Markey?
Mr. Markey. Thank you, Mr. Chairman, very much. Over the
past 10 years in the leasing of the last 10 leases in the Gulf
of Mexico dating back to August of 2005, the Interior
Department has offered more than 39,000 tracts to oil companies
to drill. Of these, just 36,000 [sic] tracts received any bids
from oil companies. That means that oil companies are not even
bidding on 90 percent of the public lands offshore being
offered to them.
So, Mr. Secretary, if they are not drilling, if they are
not bidding for those leases, what is going on out there? You
have identified those as areas that could have oil under them,
and yet for 90 percent of those areas there is no bids at all
from the oil industry.
Secretary Salazar. The fact is that there are vast acreage
in the offshore that are already under lease and there is vast
acreage onshore as well that is under lease, but those places
are not yet being developed. And so one of the things that we
have done is to put in place incentives with respect to the new
five-year plan that hopefully will incentivize companies not to
sit on acreage and not develop it.
Mr. Markey. So, in the Gulf of Mexico lease sale in March
of 2010, more than 75 percent of the tracts that received bids
had only a single bid, and so that dearth of industry
competition is typical, unfortunately, of most offshore lease
sales. These are leases being offered in areas in the Gulf of
Mexico where there are nearly 80 billion barrels of oil and gas
reserves, but oil companies aren't bidding for the majority of
those leases. So, if the oil companies aren't bidding on the
vast majority of tracts offered in the Gulf, should we be
rushing to offer them new areas off our beaches in the East and
West Coast?
Secretary Salazar. Congressman Markey, our view on the
implementation of OCSLA, which is a law that I executed with
respect to offshore energy, is that we need to take into
consideration a number of different factors under the law.
On the Pacific, one of the requirements of the law is that
we take into consideration the position of the states, and the
States of Washington and Oregon and California are in strong
opposition to development in those areas. On the Atlantic,
there is a mix of opinion, and our decision has been to move
forward with developing additional information on the Atlantic
before there is any decision made about leasing with respect to
the Mid and South Atlantic.
Mr. Markey. Mr. Secretary, when the Department released its
five-year offshore drilling plan, The New York Times reported
that, ``David Hayes, the Deputy Interior Secretary,
acknowledged that the infrastructure did not now exist to
prevent or respond to a major spill in the Arctic. Mr. Hayes
said a response could be compromised by inclement weather, a
lack of deep harbors or shortage of appropriate vessels and
inadequate oil transportation resources. The Department was
addressing those concerns, he said, and as a result had
scheduled any possible lease sales in Alaska for the end of the
five-year lease program.''
That is The New York Times reporting. So, Mr. Secretary, if
the oil spill response infrastructure that Mr. Hayes has
outlined is still not in place in 2015, will the Department
move forward with those lease sales in Arctic waters?
Secretary Salazar. We can always pull those lease sales if
the infrastructure is not in place. We do have concerns about
the Coast Guard capability in the North Slope and in the North
Sea, and those are issues which we are discussing with
stakeholders, including the oil and gas industry.
Mr. Markey. The Department's press release announcing the
five-year plan stated, ``The Arctic sales are scheduled late in
the five-year period to facilitate further scientific study and
data collection and longer term planning for spill response
preparedness and infrastructure. The independent BP Spill
Commission also concluded that scientific understanding of
environmental conditions in sensitive environments such as the
Arctic is inadequate.''
What additional scientific study and data collection is
needed in the Arctic? And if it has not been completed by 2015,
will the Department move forward with those lease sales?
Secretary Salazar. That is a good point. We need additional
science to be developed, and I am going to have Director
Beaudreau answer a little bit on that question.
Mr. Beaudrau. Yes. My agency, the Bureau of Ocean Energy
Management, is responsible for overseeing an environmental
studies program that devotes millions of dollars to fund Arctic
research in particular. That research is being conducted with
respect to issues such as climate change, marine mammal
migration patterns and populations, as well as ocean currents.
All of this information is necessary to inform
decisionmaking as development in the Arctic proceeds and as the
scale of development may increase over time depending on the
lease sales and depending on our evaluation of the
preparedness. We will make those decisions at the appropriate
time in the leasing schedule and evaluate the science as it
stands at that time.
The Chairman. The time of the gentleman has expired. The
Chair recognizes the gentleman from Texas, Mr. Gohmert.
Mr. Gohmert. Thank you, Mr. Chair, and thank you, Secretary
Salazar for being here.
You had mentioned with regard to hydraulic fracking that
that was the Achilles' heel in the production of natural gas.
Now, when I came to Congress in January of 2005 we didn't know
the full extent of the Marcellus shale, the Haynesville shale,
the Barnett, all these shales that have produced tremendous
amounts of natural gas. It is a way we could become independent
from energy from people that don't like us.
And so we keep hearing what ultimately appears to be scare
tactics. We have had people say gee, after hydraulic fracking
we could smell natural gas in our drinking water. We have had
EPA overreact, and we found out that their actions were not
borne out by the scientific studies.
And it would certainly have been news to the people in New
London, Texas, in my district back in the 1930s that natural
gas in its natural state had any smell at all because they
didn't know it had a smell and that is why the basement filled
with natural gas, a spark set it off and created the worst
school disaster in American history. It was because that
legislation was put in place, as you are surely aware, that
began to require an injection of smell so that people could
smell natural gas once it was brought out into production.
So I am just curious. I know that there is a new study that
has been commissioned because apparently people aren't happy
with the ones that have said there is no relationship between
hydraulic fracking and gas in drinking water. Are you aware of
any current true scientific study that says otherwise?
Secretary Salazar. I am aware that there has been
contamination from oil and natural gas wells in two surface
water supplies, and that is why we----
Mr. Gohmert. I am talking about natural gas.
Secretary Salazar. Natural gas as well. When we speak
about----
Mr. Gohmert. Well, that is what the EPA director said, but
that wasn't borne out.
Secretary Salazar. Hold on, let me answer. Congressman, let
me answer, OK? We are talking with members of the industry as
well as others about moving forward with a thoughtful rule. The
policy objective that we have in place is to be supportive of
the natural gas industry. The President has----
Mr. Gohmert. Sir, you are not answering my question. My
question was very direct.
Secretary Salazar. The President has made----
Mr. Gohmert. Are you aware of any scientific studies? My
time is limited. I don't have time for this kind of thing.
Secretary Salazar. Well, if your time is limited, let me
give you the response. We, number one, support the development
of natural gas in this country.
Mr. Gohmert. That is not the answer, Mr. Secretary. Let us
move on----
Secretary Salazar. Number two, we want a responsible
development of----
Mr. Gohmert.--because you have no scientific studies that
show that it does that. That was the question. Whether or not
you support it was not the question. You can talk about that
later on your time.
Secretary Salazar. Congressman, I have to respond.
Mr. Gohmert. Now let me go to the Deepwater Horizon spill.
Secretary Salazar. I have to respond to you. You know, the
ear banging that you are engaging in is not helpful.
Mr. Gohmert. Sir, now you are using up my time to
filibuster, and you wouldn't answer the question. Do you know
of any scientific studies that support your position? Yes or
no?
Secretary Salazar. There has been contamination of wells
and----
Mr. Gohmert. So the answer is you don't know of any
scientific studies that document what you are alleging. Thank
you.
Let us move on to the Deepwater Horizon spill. We know that
there were about 800 egregious violations by BP on Deepwater
Horizon while Exxon and Shell and others had one or two. Why
was it that BP was allowed to keep drilling out in such a
hazardous situation with so many violations?
Secretary Salazar. Congressman, the fact of the matter is
that what happened to BP could have happened to other companies
as well.
Mr. Gohmert. There is no other company, Secretary, that had
that many egregious violations. And again, you are not
answering my question. Why were they allowed to do that? There
was no other company that had that many violations.
Secretary Salazar. Congressman, our goal is to stand up the
oil and gas industry in the Gulf of Mexico. We have succeeded
in doing that. The rigs are back to work.
Mr. Gohmert. You sure have. You stood it up.
Secretary Salazar. Back on the natural gas agenda, our
program is to develop a robust natural gas portfolio here in
this country. We are supportive of the industry and our rules--
--
Mr. Gohmert. Well, speaking of standing up to oil and gas,
one of the first things you did as Secretary, you came in and
declared that leases, 77 of them in Utah that had been a result
of a seven-year process were leased at a midnight hour and
therefore you reneged. You breached the agreement. You canceled
them and said you weren't going to allow that to happen at the
midnight hour.
Sir, were you aware of the seven-year process that took
place beginning in 2001 and leading up to the lease of those
Federal lands in Utah?
Secretary Salazar. Congressman, we believe that we ought to
drill in the right places with the right protections and we
ought not to be drilling in the vicinity of the scenery of our
national parks.
Mr. Gohmert. I am sorry, sir. Did you not hear my question?
My question was were you aware of the seven-year process
leading up to what you called the midnight hour lease of those
lands in Utah?
Secretary Salazar. It was a midnight hour lease, and I am
aware of the seven-year process, which had faults in it, which
ended up in litigation and which the court said was wrong.
Mr. Gohmert. Thank you. Thank you for answering that
question. I yield back.
The Chairman. The time of the gentleman has expired. The
gentlelady from Massachusetts, Ms. Tsongas, is recognized.
Ms. Tsongas. Thank you, Mr. Chairman, and thank you,
Secretary Salazar, for being here with us today. I remember at
our last meeting you committed to coming to Lowell,
Massachusetts, and I am going to follow up with you at some
point given our great national park there.
I was pleased to see your announcement earlier this week
naming Rear Admiral James Watson as the new Director of the
Bureau of Safety and Environmental Enforcement, and I know that
Admiral Watson previously served as a Deputy Commander of the
Coast Guard Atlantic Area Command and was designated as a
Federal on-scene coordinator for the all-of-government response
to the Deepwater Horizon disaster, and so I trust that he has
the experience and leadership to ensure that offshore drilling
is done in a safe and secure way.
I also want to commend the Department's commitment to more
thorough and comprehensive oil spill response plan review and
enforcement through BSEE. I know this Administration shares my
view that we simply cannot allow risky drilling to take place
in our public waterways without oil companies clearly
demonstrating their ability to prevent, mitigate or clean up
any type of accident. It was a harsh lesson we learned with
Deepwater Horizon.
That is why I have introduced the Safer Drilling Act, which
would require oil companies to have worst-case scenario
response plans and the financial and technical means to clean
up any spill before they drill for oil off our coasts.
However, as Congressman Markey has been discussing, your
Department has granted Shell Oil conditional approval of its
plan to begin drilling exploratory wells in the Beaufort Sea
off the North Slope of Alaska. I am concerned that Shell Oil's
response plan does not have an acceptable worst-case scenario
plan in place and am specifically concerned that the company's
worst-case plan is based on conditions in the Arctic in August
when storms are rare and there are not sustained periods of
darkness and sea ice cover is limited.
Given that this region is one of the harshest areas in the
world in which to drill for oil and that the proposed well
sites are subject to fierce winds and high seas in the fall, as
well as severe storms like the record storm that recently
battered the coast of Alaska, what will your agency do to
closely review and monitor Shell's proposed activities to make
sure the company has an adequate and comprehensive and worst-
case scenario plan in place?
Secretary Salazar. Thank you very much, Congresswoman. I
will come to Massachusetts, and we will visit the national park
together.
I thank you for the comments on Admiral Watson. He is a
rare person to come in to take on this kind of responsibility
that we have for America's oceans and energy development.
I am going to have Tommy Beaudreau respond to your question
on Shell.
Mr. Beaudrau. Yes. Thank you very much for that question.
As you noted, the approval of Shell's Beaufort plan was
conditional. Included among those conditions is that Shell
demonstrate the ability to contain any spill or blowout related
to their operation, and they will have to prove that to us
before they get a permit to drill.
They will also have to demonstrate before getting a permit
to drill that they have adequate spill response and that we are
satisfied with their spill response plan. Deputy Secretary
Hayes is currently overseeing a high-level interagency working
group that is focused on Shell's plan. Involved in that working
group of course is Interior, my agency, as well as BSEE, NOAA,
the EPA and the Coast Guard.
We have been engaged with Shell on specific issues and
concerns that we have with respect to their plan, and they will
have to satisfy us that they have adequately addressed those
concerns before they will get a drilling permit under that
exploration plan.
Ms. Tsongas. It is a very unique environment, so how do you
develop your standards for what is appropriate or what will
work, and what won't work, given the very difficult
circumstances up there?
Mr. Beaudrau. There are challenging circumstances there.
Our regulations set, I believe, a very high bar with respect to
spill response, and you have to pay attention to the particular
challenges in the Arctic when you evaluate the plan that is put
forward.
One of the issues that we are considering, for example, is
the length of the drilling season, to address the issue that
you referred to and the legitimate question. What are you doing
if there is an accident late in the drilling season? Those are
the types of issues that we are focused on with Shell right
now.
Ms. Tsongas. Can you imagine a situation in which your
Department considers every possibility and that Shell cannot
come up with a plan to deal with the worst-case scenario, in
which case you would not issue the permit?
Mr. Beaudrau. Again, they will have to satisfy us that
their plan is adequate to deal with the proposed operations
that they put forward.
Ms. Tsongas. Thank you. I yield back.
The Chairman. The time of the gentlelady has expired. The
gentleman from Colorado, Mr. Lamborn, is recognized.
Mr. Lamborn. Thank you, Mr. Chairman. Secretary Salazar,
thanks for being here. It is good to talk to a fellow
Coloradan.
As I am sure you know, increased regulations on an industry
lead to regulatory uncertainty, which hinders businesses being
able to expand and create jobs because it is harder to plan
their future. With oil shale in particular, a recent study
indicates that over 350,000 American jobs could be created by
the development of the oil shale.
However, your Department plans to issue hydrofracking
regulations, which would undoubtedly hinder this development,
but also in the past right after coming into office the
Administration changed the terms of oil shale leases, making
them so limited that industry has little interest in these
tracts of land.
Can you explain to this committee what economic analysis
was used, if any, in making these decisions, and do you take
job creation into effect when you issue regulations that have
the effect of creating uncertainty and limiting business
opportunities?
Secretary Salazar. Congressman Lamborn, I appreciate the
question and the fact is that oil shale and development of the
oil shale resources of Colorado, Utah and Wyoming are very
different from the issue of fracking of tight gases in other
formations around the country.
With respect to the oil shale of western Colorado, I think
it is important for everyone to remember that there are some
very significant questions that have not been answered,
including the impact on water supplies of the Colorado River
and other places, and so we have moved forward with pilot
projects to develop the research and development, and there are
a number of companies that are involved in at least Colorado
and Utah that have been developing tremendous research on the
oil shale potential.
With respect to your question on natural gas and fracking,
our program that we have not yet put out on the table, because
we are still in the process of developing, is not meant to
impede the development of natural gas. It is meant to support
the development of natural gas so that we don't end up in a
circumstance where we end up seeing the kinds of moratoria that
we are seeing proposed in different states around the country.
Mr. Lamborn. So does your Department use economic analysis
like jobs created or jobs lost?
Secretary Salazar. We see the work that we do in the
Department to be very connected to job creation and job
security in America, whether it is in the oil and gas arena or
whether it is in the conservation world.
We know the number of jobs that are created, and we have
economic analysis and reports that I have created over the last
several years that have been shared with Members of Congress as
well as with others that show the tremendous impact that we do
have on job creation in this country.
Mr. Lamborn. But that is in more general terms. You don't
apply that to particular regulations?
Secretary Salazar. We look at that. I mean, the economic
reality is something that we consider because of the fact that
the President and the Administration very much understand that
the main challenge that we face here in the United States of
America is job creation, so we think about it every day.
Mr. Lamborn. OK. Well, I wish it was linked to the actual
regulations when they were being formulated.
Changing the subject, you said, first of all, in your
written statement that oil production from the Federal OCS
increased by a third from 2008 to 2010. The clear implication
there is that this Administration is responsible for that in
some way.
Knowing that the lead time for bringing oil production to
the market from offshore can be five to 10 years when you
include the entire leasing and permitting process, how much of
this one-third increase that you claim, on behalf of President,
Obama began under President Obama and how much of it began
under the previous Administration?
Secretary Salazar. The policy of the United States,
including Presidents like President Clinton and President Bush
and President Obama, has been to move forward and develop the
oil and gas resources of the Gulf of Mexico, and about a third
of the domestically produced oil and gas now comes from the
Gulf of Mexico.
So we have moved forward with a program that has supported
the development of oil and gas and have weathered the major
storm of the Deepwater Horizon where many people were calling
for a shutdown of oil and gas production in the Gulf. And so
the fact that we are able to now have the rigs back at work in
the Gulf of Mexico given the national crisis that we went
through is something that I am very proud to have accomplished.
Mr. Lamborn. Well, my specific question is when you claim
on behalf of the President a one-third increase, how much of
that is he really responsible for, if any?
Secretary Salazar. I would say we are all responsible for
it. It is a shared accomplishment because the oil and gas
production that we are seeing in the Gulf of Mexico, which has
increased significantly over the last several years, is in
large part dependent on the discovery that the oil and gas
industry has made as it has moved into deeper waters. So
discoveries that are being made are good ones, and they are
efforts on both exploration and development that we support.
Mr. Lamborn. I like the fact that you say this is shared
and should continue from Administration to Administration and
from year to year, but when I see a claim being made that this
President is responsible for this one-third increase, I don't
see where that comes from.
Secretary Salazar. Well, the policy of the President is
clear on energy, and that is to develop a secure energy future
for the United States. As I said in my opening statement, it
does include oil and gas as part of that energy portfolio. We
are supportive of oil and gas development, along with
alternative energies and fuel efficiencies.
The Chairman. The time of the gentleman has expired. The
gentleman from Maryland, Mr. Sarbanes?
Mr. Sarbanes. Thank you for, Mr. Chairman. Thank you, Mr.
Secretary, for being here. We appreciate it.
Some of the questions you have been asked are, I think,
based on a faulty premise, which is that environmental
regulation and caution in terms of how we proceed with respect
to potential impact on the environment is inherently inimical
to economic development and jobs, when in fact there is a
tremendous amount of economic benefit that comes from smart
stewardship of our environment.
I mean, I come from a state obviously that places the
Chesapeake Bay as a number one treasure, and I have become more
familiar in recent months with a lot of the information about
how valuable the Chesapeake Bay is to the economy of Maryland
and the states in the Chesapeake Bay watershed.
I mean, I think the Chesapeake Bay watershed has been
valued at $1 trillion in terms of what it generates for the
economy. In terms of just the commercial seafood industry in
Maryland and Virginia you are talking about $2 billion in
sales, $1 billion in income, 41,000 local jobs. So, if we don't
do the right thing by these kinds of natural resources that we
have, we could also undermine tremendous economic opportunity
going forward, and I just wanted to put that on the record.
I am very concerned about the fact that we move carefully
and smartly with respect to the development of this hydraulic
fracturing process for extracting natural gas. I understand
that it represents a real opportunity, as do you, and as does
the Administration. Many regard natural gas as sort of the
bridge from traditional dependence on fossil fuels of a certain
kind to more renewable energy. So there is great potential
there. There is great promise. But if that promise is as
tremendous as it appears to be, we need to move I think in a
deliberate and careful way and make sure that this practice is
done properly and safely.
And if you look at the Marcellus shale, which is sort of
the recent gold rush opportunity that is being viewed from the
natural gas industry, the footprint it has over the Chesapeake
Bay watershed is substantial. You are talking about New York,
Pennsylvania, West Virginia, Virginia, western Maryland, parts
of western Maryland, that are implicated by this potential. So
we have to make sure that we are doing this in a smart and
prudent way.
And I commend you for wanting to get more information about
the process and, for starters, just what is in this composition
of chemicals that goes into the process. And as I understand
it, the agency is going to be insisting on more disclosure with
respect to those chemicals and I hope also monitoring the
effect of that on public lands. That can set a good standard
for how the industry ought to operate across the board both on
public lands and on nonpublic lands.
I do want to point out that the industry keeps asserting
that there is all this evidence that hydraulic fracturing can't
contaminate underground sources of drinking water, but very
recently the EPA has released some data, based on some study,
that it has been doing that in Wyoming, in Pavilion, Wyoming.
That suggests that there is an aquifer there that has benzene
levels--that is a known carcinogen--that were 50 times higher
than what is considered safe in terms of the threshold, and
they also found 2-butoxyethanol evidence there, which is
another cancer-causing chemical in the drinking water. So this
is a real potential harm that we have to be on the lookout for.
And I understand your testimony indicates the Department is
evaluating whether it would be beneficial to amend existing
requirements with respect to the management of water produced,
sort of the wastewater produced from hydrofracking. I was
curious when the Department is planning on making a decision on
whether to amend the requirements with respect to wastewater.
If you could just speak to that?
Secretary Salazar. Congressman Sarbanes, thank you for the
question. First, let me say I do agree that I think we can both
protect the environment and develop our oil and gas resources
on public lands and other places in the country.
With respect to fracking and the timeline for us moving
forward, we don't have a timeline. We are still in the process
of gathering information and putting together what will be a
proposed rule. But we have taken advantage of the information
that we have gotten from stakeholders, including a summit that
I had on hydraulic fracking or a forum that I had on hydraulic
fracking in the Department about a year ago, and so the pieces
of it are still coming together.
There are three general subject areas. One is well bore
integrity, the second is disclosure and the third would be
dealing with what we call the flowback water issues. But no
final decisions have been made, and there will be a continued
process to bring in the input from the stakeholders.
Mr. Sarbanes. Thank you.
The Chairman. The time of the gentleman has expired. The
gentleman from Virginia, Mr. Wittman?
Mr. Wittman. Thank you, Mr. Chairman, Mr. Secretary,
colleagues. Thank you so much for joining us today.
First of all, I want to thank you on behalf of the citizens
of the Commonwealth for your work in protecting and preserving
historic Fort Monroe there in Hampton, Virginia. That is I
think a great example of a collaborative approach where folks
get together, they see a need and that national monument
designation now that will be put in place will allow us to
preserve a very significant historic landmark there, and it
also shows how we can come together and do what is best for our
natural resources.
I am sure you agree that this is really a result of broad
citizen support and also a bipartisan approach from both
Federal, state and local officials, so it is a great
opportunity there and it was highlighted. I think it is going
to create jobs for the region and really it is a win/win
situation.
If you look at that as an example, I think it sets the tone
for what we can do with offshore gas and oil development. If
you look there in Virginia, you see the same situation. You see
broad citizen support. You see bipartisan support for
development of oil and gas in the offshore region there off of
Virginia. We think that is extraordinarily important as we go
forward.
It was disappointing when the announcement came out on the
2012-2017 Outer Continental Shelf Oil and Gas Leasing Program
that Lease 220 in Virginia was not included as part of that. As
you know, by excluding that, that takes away, I think, an
opportunity for us to responsibly develop our fossil fuels
offshore there, and we all know that it has a significant
economic impact, upwards of $20 billion annually and creates a
number of significant jobs, a great infrastructure there in
order to be able to support that.
I want to bring to your attention a letter from myself and
other colleagues from the Virginia congressional delegation to
ask you to reconsider that determination made on Lease 220.
And, Mr. Chairman, without objection, I would like that to be
entered in the record.
The Chairman. Without objection, it will be part of the
record.

[NOTE: The letter submitted for the record by Mr. Wittman
follows:]

[GRAPHIC] [TIFF OMITTED] T1236.003

[GRAPHIC] [TIFF OMITTED] T1236.004

[GRAPHIC] [TIFF OMITTED] T1236.005

Mr. Wittman. I want to ask this. As you look across the
board with that broad bipartisan support, you look at the
Governor of Virginia, the Virginia legislature, local
officials, state officials have all said let us go forward with
Lease 220, and we have seen citizens in the area too. With that
widespread support, I am wondering why the Department
determined not to go forward with this in the 2012-2017 plan,
and I want to get some of your reasons behind that.
I also look too at some of the other reasons given in the
report as to why some of the other areas were opened up, such
as in the Pacific, and it talked about the broad support there
with local and state governments as a reason that those areas
were going to be opened up. I am wondering if the broad support
there in Virginia is less of a factor in making a determination
than broad support elsewhere when these determinations were
made? I would like to get your perspective on that.
Secretary Salazar. Thank you very much, Congressman
Wittman. Let me just say that I appreciate the work that you do
on the Migratory Bird Conservation Commission. You have been a
leader in conservation with Congressman Dingell and with
Senator Cochran as well as with Senator Pryor, and I appreciate
the time that you spend advancing the conservation agenda for
hunters and anglers in the United States of America.
With respect to Lease Sale 220 in Virginia, let me say that
since two years ago we have developed additional information
from the Department of Defense that shows that there are
significant conflicts between oil and gas development and the
military needs within the triangle that was included in the
Lease Sale 220.
And so our view is that we need to continue to develop
additional information to see if we can deconflict the
important mission of supporting the defense and military needs
of our country, which is also so important not only to the
country but to Virginia, and at the same time look at
developing additional information on the Atlantic with respect
to its oil and gas potential. But it is really, at this point
in time, in large part the conflict issues that were raised by
the Department of Defense with respect to Lease Sale 220.
Mr. Wittman. Well, let me ask this then. As the discussion
takes place not only about offshore gas and oil development but
also about wind development offshore, the discussions have
taken place on both about potential interference.
It seems that there is an accelerated discussion on the
wind side but not the same effort there on the oil and gas
development side. I would say that both of them obviously are
issues that we need to address with the Navy and other
branches, but that they ought to both be pursued at the same
time. I think both of the conflicts are very, very similar, and
to me they ought to be able to be taken up and those issues
taken care of in a fairly timely manner.
It seems like spreading this out over another five years is
less than what we are capable of. We are capable of sitting
down and getting those things done. I have spoken with the
leadership in the Navy who have said that they want to
aggressively pursue those discussions to make sure we get to a
point to make sure that we develop all of the potential in that
Outer Continental Shelf.
The Chairman. Real briefly, Mr. Secretary, if you want to
respond to that.
Secretary Salazar. You know, I don't have a disagreement
with respect to making sure that we are being, as Bob Abbey
often says, smart from the start, including in the Outer
Continental Shelf, and so our work with the Department of
Defense and the Navy will give us significant additional
information with respect to not only Lease Sale 220, but also
the seismic work that we are moving forward with will give us
additional information on the Atlantic.
The Chairman. The gentleman from Georgia, Mr. Broun, is
recognized.
Dr. Broun. Thank you, Mr. Chairman.
Mr. Secretary, the Environmental Protection Agency has
proposed and is in the process of enacting regulations
targeting traditional, inexpensive sources of energy. Utility
MACT, Boiler MACT, GHGs and CSAPR are among the more recent and
well-known examples which will result not only in an increase
in energy cost but result in more natural gas being used for
power generation and for industrial manufacturing. Are these
rules a factor when considering access for natural gas
production, and if not, why?
Secretary Salazar. I would refer those questions to
Administrator Jackson in terms of the EPA. Our own view is that
there will be a robust demand for natural gas.
Dr. Broun. Sir, what I am asking, and I apologize for
interrupting you, but please answer my question. Are you and
your Department considering the EPA rules? Is there any
communication between you and the EPA on the rules that they
are trying to enact, the regulations that they are trying to
enact, which are going to reduce production of inexpensive
energy? As you all look at energy production, particularly for
natural gas or for oil or anything else, are you having
communications with the EPA on considering their rules and
regulations that they are enacting on energy producers as well
as the resource development? Are you considering or
communicating with EPA in any way on this?
Secretary Salazar. Let me say that we look for ways in
which we can work with EPA to solve problems. So, for example,
on a major project in Utah, the Greater Natural Buttes Gas
Project, we put together a best practices program that included
EPA and Anadarko, the developer in that area.
As a result of those best practices solutions, we are going
to be able to protect the environment, and the company is going
to be able to move forward with development of in excess of
3,000 wells.
Dr. Broun. Mr. Secretary, you didn't answer my question. Do
you consider those regulations and do you have any
communication with EPA as you look forward to development of
energy resources that are under your jurisdiction?
Secretary Salazar. We have communications with EPA, but we
also recognize that EPA has its own authority, and
Administrator Jackson abides by the law and is moving forward
in implementing her responsibilities at her Department.
Dr. Broun. If these interagency communications do indeed
take place, would you agree that it is the apparent policy of
this Administration to increase the cost of energy and to
dramatically limit domestic access to those energy resources?
Secretary Salazar. I would disagree with that, Congressman
Broun. I believe that when you look at what we have done in
terms of moving forward with a robust energy portfolio for the
United States of America, I think the facts speak for
themselves.
Dr. Broun. Well, Secretary, I disagree with you on that
regard.
Secretary Salazar. I am surprised.
Dr. Broun. Well, the thing is what it appears to me is that
the policies of this Administration are increasing the cost of
all energy production. We are not having the access to an all-
of-the-above energy policy that will allow us to develop
natural gas, oil, clean coal technology as well as alternative
forms of energy.
I see very little communication between agencies, between
your agency as well as EPA. I see the EPA making rules without
consideration to the economic cost and even utilizing what
appears to me to be junk science in forming their regulations,
and so what I see coming not only from EPA but also your
Department are policies that are going to drive up the cost of
all goods and services because energy costs are going to go up.
I think it is absolutely disastrous. It is going to cost
thousands, if not millions, of jobs. It is going to hurt our
economy, and I highly recommend that you communicate with EPA,
you take into consideration these human elements of jobs and
economy as you all go forward in developing----
The Chairman. Would the gentleman yield?
Dr. Broun. Certainly.
The Chairman. It seems to me the line of questioning that
you are pursuing is very important because the response of the
Secretary was that both agencies have the responsibility. The
real collision course, potentially, is the issue of American
job creation and American energy production as it relates to
what EPA's influence is, and that seems to be a conflict.
I think your line of questioning, and correct me if I am
wrong, was very simply how is the interaction between Interior
and EPA and, for lack of a better word, what is supposed to be
the trump card as to what the policy is? Is that a fair way to
characterize what your statement was?
Dr. Broun. Absolutely, Mr. Chairman. And the answer I got
from the Secretary does not give me any confidence that there
is any communication.
The Chairman. Mr. Secretary, in that line of questioning,
if you could respond back to us in writing on that, the
Committee would be very appreciative of that.
Secretary Salazar. I will do that. And if I may just make a
comment here in response to Congressman Broun, Mr. Chairman?
The Chairman. Yes.
Secretary Salazar. We work closely with EPA on a number of
different issues. They have their own legal authority, but I
will give you two examples where we have worked very closely. I
mentioned the one in Utah where we are moving forward with
natural gas development in a place that had been stalled
because of litigation because of the best practices programs
that we have put together. With respect to many other issues,
including the issue of hydraulic fracturing, we have continued
dialogue with EPA on what we are doing and what they are doing
and so there is a tremendous amount of coordination that does
in fact occur.
The Chairman. The gentleman from Louisiana is recognized.
Dr. Fleming. Thank you, Mr. Chairman.
Mr. Secretary, as you know, I represent Louisiana,
northwest Louisiana, the area of the Haynesville shale. Just to
give you an idea of the impact that has had on us, we have had
an increase of close to 58,000 jobs just in 2009 alone, and
from 2008 to 2009 exploration companies invested over $11.5
billion and generated $642.3 million in state tax revenue.
Tremendous job impact. Tremendous economic impact. We are
talking about of course natural gas shale formations,
hydrofracking, which is necessary. That is the only way we can
get it out economically.
Hydrofracking has been around for 60 years. The EPA took a
look at it in 2005, found absolutely no problems with it. It is
under regulation in my state by DEQ. We have 10 to 20
regulators moving about constantly to make sure all the right
things are done. If there is a need to find out what is in the
hydrofracking fluid, I have no problem with that being provided
if needed.
Are you, sir, aware of any deaths or serious injuries to
humans as a result of the hundreds of thousands, if not
millions, of episodes, over the 60 years of hydrofracking that
has been performed?
Secretary Salazar. No, I am not.
Dr. Fleming. And do you, sir, know? Can you tell me what is
the depth of the typical aquifer, that is, the water supply
that is in the ground?
Secretary Salazar. I think across the country you would
find a great variance, and it will depend on the area that you
are doing the drilling. I understand very much that the zones
that are the hydrocarbon producing zones that produce natural
gas are generally below the water supply zones for domestic
usage.
Dr. Fleming. Right.
Secretary Salazar. And so that is why issues like well bore
integrity are so important as we move forward.
Dr. Fleming. Well, I am glad you mentioned that. How many
levels of casing is around a typical drilling rig in order to
protect the drill hole from the aquifer itself?
Secretary Salazar. Let me defer on that question to
Director Abbey to see if he knows the technical answer.
Mr. Abbey. Well, I don't know the technical answer, but I
do know that the Bureau of Land Management is quite firm----
Dr. Fleming. Wait. Let me interrupt you----
Mr. Abbey. OK.
Dr. Fleming.--because I have more questions.
Mr. Abbey. OK.
Dr. Fleming. These are very simple questions. How deep is
an aquifer? It is about 1,000 feet, gentlemen. This is
something that you guys should know.
Mr. Abbey. Well, the aquifers vary from region to region.
Dr. Fleming. Yes, but they are approximately in that range.
How deep do we drill when we get down to the shale? How deep is
that typically?
Mr. Abbey. Well, in some cases, it is as deep as 4,000
feet.
Dr. Fleming. OK. Two miles is actually more like it. So the
point being that the aquifer, the water supply itself, is way
up at the surface of the earth and all the activity where the
hydrofracking fluid is, which, by the way, is 99.5 percent
water and sand, is below the surface by about two miles
protected by rock formation. So I think that it is very easy to
understand why no one has had serious harm as a result of it.
We can speculate. We can talk about hypotheticals all the
time, but the point here is it is a regulated industry. It is
producing inexpensive energy and doing a great job. It is not
harming people. And certainly I would say that the Solyndra
affair has harmed more people than hydrofracking has in 60
years.
So I am really at a loss to understand why now the Interior
Department has got to jump in and begin regulating this. By the
way, sir, the rules have been promised to us and yet to come
out, but everything that the Interior Department touches--and
we will get on the OCS a little later, I have questions about
that--causes delay and higher cost of production.
So why is it now that in view of all this that I have
stated, why do now we now have to go out and add more red tape,
more regulations when this country is in desperate need of
jobs, good paying jobs, and lower energy costs?
Secretary Salazar. Congressman Fleming, I appreciate the
question, and I respectfully disagree with your conclusions.
The fact is that we believe that natural gas is a very
important part of our energy portfolio for the future. We also
believe that disclosure is something that needs to be looked at
so that we don't end up creating a circumstance where we see
moratoria created throughout the United States where we have
natural gas development. Well bore integrity is essential in
order to be able to assure that we don't have water quality
contamination.
Dr. Fleming. Sir, you don't even know how many layers of
casing go around a typical drill, so if the very top level
doesn't know the very basics of the technology, why is it that
you somehow feel you can insinuate yourself into the process?
Secretary Salazar. Congressman Fleming, having dealt with a
lot of oil and gas wells, including the Macondo well, there was
a huge question about well bore integrity on that particular
well. It is a question that you face with every single well
that is drilled.
And so the industry knows about well bore integrity and
that we require well bore integrity. And having that being a
part of what we do as a regulator is something that we are
examining. We have not yet reached a conclusion, but we support
natural gas development here in the United States.
Dr. Fleming. Thank you, Mr. Chairman. I yield back.
The Chairman. The time of the gentleman has expired. The
gentleman from Colorado, Mr. Coffman?
Mr. Coffman. Thank you. Thank you, Secretary Salazar, for
attending this hearing on the future of oil and gas development
on Federal lands. As a Member from Colorado, I am sure you
understand how I often hear from my constituents. I think you
were in my shoes once in a related role.
The valuable 8.4 million acres of land in Colorado
controlled by the Bureau of Land Management are subject to a
litany of Federal regulations that have gone well beyond their
purpose of protecting lands that have become economically
burdensome. Every day I receive correspondence regarding the
frustrations my constituents have with BLM and the land use
regulations that hamper or suspend otherwise viable mineral and
energy development.
Under the Obama Administration, these restrictions have
only inflamed an already tough situation while burdening an
economy with an in-state unemployment rate of 8.3 percent. This
committee has developed several proposals that not only relieve
restrictions on Federal lands to promote energy production,
environmentally responsible energy production, but have also
crafted policies that will aid in both our deficit crisis and
bringing down our high unemployment rate.
If this Administration is serious about solving these
problems, then I would think it would be more proactive in
working with the Natural Resources Committee. However, the
Members of this committee and I are continuously turned back by
the policies of the Department of the Interior and the
President's Administration that not only add to the regulatory
burden for domestic energy production--I am sorry. That only
add to the regulatory burdens for domestic energy production.
We could create jobs, move toward energy independence and
increase Federal revenues if we allowed development to take
place. This is no more apparent than in the recent decision by
President Obama and the State Department to delay the Keystone
XL Pipeline project. However, this is ill-advised, and this is
really a purely political decision by the President that will
do more than just economic harm, but it will have a grave
national security implication as well.
I was saddened that President Obama was persuaded in his
decision not by the economic benefits of the project but by far
left environmental interest groups. While the President waits
until after the election in November of 2012, millions of
Americans are looking for work now. The pipeline decision has
two very important impacts on Americans, both on national
security and the future viability of our economy.
First, as a Marine Corps combat veteran, I believe it is
imperative we take into consideration the national security
implications of our energy policy. The United States currently
imports roughly half--50 percent--of the petroleum we use, and
the Natural Resources Committee has been on the forefront of
trying to curb this dangerous dependence on foreign oil by
crafting logical domestic energy policies during the 112th
Congress. Like many of the proposals my colleagues and I have
put forth in this committee, the Keystone Pipeline project
would help our nation reduce our dependency on sometimes
hostile foreign sources of energy.
In 2010 alone, the United States imported over one trillion
barrels of oil to the United States from OPEC countries, many
of which have unstable governments. While I fully support
greater American production, this pipeline is not only in our
nation's best interest for national security but economically
beneficial to us as well. By increasing oil imports from
Canada, a secure, stable and longstanding friendly neighbor,
the United States will have less to import from volatile,
unstable regimes overseas.
Second, many of my constituents and some of your former
ones are looking to Congress for leadership. The national
unemployment rate is 9.1 percent, and there is very little
proof this number will improve in the coming months. That is
why it is so discouraging to see that President Obama and the
Department of the Interior have been so obstructionist when it
comes to domestic energy and mineral development.
Instead of working with the Natural Resources Committee,
your Department has been making misleading statements about
your energy record. You continue to praise the amount of
production and revenue that comes from oil and gas development
on public lands, but the BLM has not approved a major oil and
gas NEPA project on public lands in the West since 2010. In
your opinion piece in Politico on Monday, Mr. Secretary, you
mentioned that onshore oil production from public lands has
increased 5 percent.
The Chairman. Can you finish up real briefly, real quickly
if you would?
Mr. Coffman. Thank you, Mr. Chairman. I would like to enter
my statement in the record.
[The prepared statement of Mr. Coffman follows:]

Statement of The Honorable Mike Coffman, a Representative in Congress
from the State of Colorado

Thank you, Secretary Salazar, for attending this hearing on the
matter of the future of oil and gas development on federal lands. As a
Member from Colorado, I'm sure you understand how often I hear from
constituents. The valuable 8.4 million acres of land in Colorado
controlled by the Bureau of Land Management are subject to a litany of
federal regulations that have gone well beyond their purpose of
protecting lands and have become economically burdensome. Every day I
receive correspondence regarding the frustrations my constituents have
with BLM, and the land use regulations that hamper or suspend otherwise
viable mineral or energy projects.
Under the Obama Administration, these restrictions have only
inflamed an already tough situation while burdening an economy with an
in-state unemployment rate of 8.3%. This Committee has developed
several proposals that not only relieve restrictions on federal lands
to promote energy production, but have also crafted policies that will
aid in both our deficit crisis and bringing down our high unemployment
rate. If this Administration is serious about solving these problems
then I would think it would be more proactive in working with the
Natural Resources Committee. However, the Members of this Committee and
I are continuously turned back by the policies of the Department of the
Interior and the President's Administration that only add to the
regulatory burden for domestic energy production. We could create jobs,
move towards energy independence, and increase federal revenues.
This is no more apparent than the recent decision by President
Obama and the State Department to delay the Keystone XL Pipeline
project. However, this ill-advised and purely political decision by the
President will do more than just domestic economic harm, but it will
have grave national security implications as well. I was saddened that
President Obama was persuaded in his decision not by the economic
benefits of the project, but rather by far left environmental interest
groups. While the President waits until after the election in November
of 2012, millions of Americans are looking for work now.
The Pipeline decision has two very important impacts on Americans;
both on national security and the future viability of our economy.
First, as a Marine Corps combat veteran, I believe it is imperative
that we take into consideration the national security implications of
our energy policy. The United States currently imports roughly 50% of
the petroleum we use and the Natural Resource Committee has been on the
forefront of trying to curb this dangerous dependence on foreign oil by
crafting logical domestic energy policies during the 112th Congress.
Like many of the proposals my colleagues and I have put forth in
this Committee, the Keystone Pipeline project will help our nation
reduce our dependency on sometimes hostile foreign sources of energy.
In 2010 alone, the United States imported over one trillion barrels of
oil to the United States from OPEC countries--many of which have
unstable governments. While I fully support greater American
production, this pipeline is not only in our nation's best interest for
national security, but economically beneficial as well. By increasing
oil imports from Canada, a secure, stable and longstanding friendly
neighbor, the United States will have less to import from volatile,
unstable regimes overseas.
Secondly, many of my constituents--and some of your former ones--
are looking to Congress for leadership. The national unemployment rate
is 9.1% and there is very little proof this number will improve in the
coming months. That is why it is so discouraging to see that President
Obama and the Department of the Interior have been so obstructionist
when it comes to domestic energy and mineral development. Instead of
working with us in the Natural Resources Committee, your Department has
been making misleading statements about your energy record. You
continue to praise the amount of production and revenue that comes from
oil and gas development on public lands, but the BLM has not approved a
major oil and gas NEPA project on public lands in the West since 2010.
In your opinion piece in Politico on Monday, Mr. Secretary, you
mentioned that on shore oil production from public lands has increased
5% from fiscal years 2009 and 2010 under the Obama Administration.
However, this claim is completely disingenuous because the stated
increase is due to leases sold during the Bush Administration. In fact,
under President Obama, leases have decreased from 2,416 in 2008 to
1,308 in 2010; a reduction of 1.3 million acres leased for production
and the lowest onshore acreage leased since 1984.
Sec. Salazar, the Keystone XL Pipeline project, like many of the
proposals developed in the Natural Resources Committee, would generate
increased economic activity. Keystone would deliver an estimated
700,000 barrels of oil a day, employ 20,000 direct construction
workers, generate $20 million in domestic spending and lessen the
precarious hold foreign nations have on us in with regards to energy.
Having traveled to the Middle East on four separate occasions courtesy
of the United States Marine Corps, the last issue is of particular
importance to me.
So let me ask you, Secretary Salazar, what plans--and the analysis
used for those plans--if any, does your Department have to supplement
the loss of production, jobs, revenues and safety this delay will have?
I would like for you, Mr. Secretary, to develop and send back to me and
this Committee a written response directly addressing these questions.
My colleagues and I look forward to your response and your plan to
replace the losses the Keystone XL delay will cause. Thank you, I yield
back.
______

Mr. Coffman. And, Mr. Secretary, if you could submit this
for the record since I was too long? Mr. Secretary, what plans
and the analysis used for those plans, if any, does your
Department have to supplement the loss of production, jobs,
revenues and safety this delay will have?
I would like for you, Mr. Secretary, to develop and send
back to me and this committee a written response directly
addressing these questions.
The Chairman. If you would do that? If you would do that,
Mr. Secretary, it would be very appreciative since we did go
over time on that one.
The Chair recognizes the gentleman from Florida, Mr.
Rivera.
Mr. Rivera. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here. It was great seeing you down south
in my district, in the Everglades, and thank you for all of
your efforts on Everglades restoration.
I would like to ask you about an issue that I think not
only impacts--it certainly impacts the ecosystem in South
Florida, but perhaps in the southeast region of the United
States, and that is oil drilling off the coast of Cuba. It is
my understanding that in order for a foreign government owned
company to operate in the U.S. and bid on leases in the U.S.
they must first be incorporated in the United States. Is that
correct?
Secretary Salazar. I don't know the answer to that
question.
Mr. Rivera. OK. Well, recently my staff contacted the
Bureau of Ocean Energy Management and the Bureau of Land
Management to try to get a list of all foreign government owned
companies that have leases in the United States. They were
surprised to learn that the Department doesn't keep a database
of what companies are foreign government owned. The foreign
government owned companies are just mixed in with the regular,
privately owned companies. So I believe it would be useful to
at least be able to track these companies and what government
owns them. Could you help me with that, get that information?
Secretary Salazar. We will. Let me ask whether Director
Abbey or Beaudreau have any information on that question.
Mr. Beaudrau. It is correct that in order to obtain a
Federal OCS lease a company needs to be registered in the
United States through the relevant State Department----
Mr. Rivera. Perfect. That is OK. I just want to make sure
that I can get the information on the foreign government owned
companies. If you could help me with that?
Mr. Beaudrau. Yes.
Mr. Rivera. That would be helpful. Thank you. A few months
ago, I believe in June, you were in Spain and spoke to Repsol
officials regarding their proposed drilling plans in Cuban
waters. Is that correct, Mr. Secretary?
Secretary Salazar. That is correct.
Mr. Rivera. And in that meeting or in any other meetings
you have had with Repsol officials did a topic come up to
reiterate U.S. policy on doing business with state sponsors of
terrorism or have any discussions to discourage their actions
in Cuba?
Secretary Salazar. You know, our focus, Congressman Rivera,
has been to make sure that we do everything within the legal
boundaries that we can operate in to protect the environment
and the people of the United States.
Mr. Rivera. So I would assume that to mean more of a
cooperative effort to make sure and protect the people of the
United States, which is important to make sure and do every
possible measure to do that. But you are telling me nothing was
ever done by you to discourage their participation in
collaborating with a state sponsor of terrorism in those
offshore oil drilling efforts?
Secretary Salazar. We do not have authority over other
countries on what they do with respect to their Outer
Continental Shelf----
Mr. Rivera. I understand that. You can't stop them, but did
you ever try to discourage them?
Secretary Salazar. Our program, Congressman Rivera, has
been to make sure that we do everything we can within our legal
power to make sure that we are protecting the people and the
environment of the United States.
Mr. Rivera. OK. Well, let us talk about the legal power.
Did you ever bring up having the Bureau of Industry and
Security also be allowed to inspect the rig to ensure that the
Export Administration Act and the Export Administration
Regulations 10 percent de minimis U.S. content rule were being
respected, speaking of legal authority? Has that issue ever
come up?
Secretary Salazar. Congressman Rivera, this is an issue
where the State Department and other agencies have the lead and
we are participating because of our expertise, but I do not
know whether those conversations took place and I don't have an
answer to your question.
Mr. Rivera. OK. Well, recently colleagues of mine here,
along with Chairman Ileana Ros-Lehtinen, sent a letter to the
President regarding this issue. Mr. Chairman, with your
permission, I would like to ask that that letter be submitted
for the record.
The Chairman. Without objection, it will be part of the
record.

[The letter submitted for the record by Mr. Rivera
follows:]

[GRAPHIC] [TIFF OMITTED] T1236.001

[GRAPHIC] [TIFF OMITTED] T1236.002

Mr. Rivera. Thank you. I think it is of great concern by
the lack of effort in this Administration, whether it be your
agency, State Department or anyone else, that no effort has
been made to prevent a state sponsor of terrorism to drill
approximately 60 to 70 miles off of Florida's coast and
providing economic aid and comfort to the dying Castro
dictatorship.
And I hope that in the future the Administration will do
everything to make sure that companies comply with sanctions
that apply to businesses that do cooperate with sponsors of
state terrorism by perhaps in your agency withdrawing leases on
Federal lands and waters. That could be a start to certainly
send a signal that this type of activity is certainly frowned
upon, collaborating with terrorist regimes.
Finally, Mr. Chairman, I would like to draw attention with
my colleagues to legislation I have introduced with Congressman
Ros-Lehtinen and Congressman Diaz-Balart and Representative
Sires, the Foreign Oil Spill Liability Act, that would apply
the same Oil Pollution Act responsibilities and liabilities and
Clean Water Act penalties that a domestic responsible party
would face to a foreign responsible party for a spill that
pollutes U.S. waters and beaches. The penalties and liabilities
would be triple. Currently the burden is much lower on foreign
spillers, forcing the American taxpayer to cover the cleanup
costs.
Members can contact my office if they wish for more
information on that legislation. That is all I have. Thank you,
Mr. Secretary.
The Chairman. I thank the gentleman, and his time has
expired. The Chair recognizes the gentleman from Texas, Mr.
Flores.
Mr. Lamborn. Here, this one works.
Mr. Flores. All right. Well, I am just going to yell.
Secretary Salazar, Director Abbey----
The Chairman. I would ask, Mr. Flores, move to a microphone
so we can pick this up since we have----
Secretary Salazar. You could always move to this side,
Congressman Flores.
Mr. Flores. One of the things to note is there is lots of
room over there.
The Chairman. I would discourage that, however.
Mr. Flores. Well, don't worry. I won't do that. Secretary
Salazar, Director Abbey and Director Beaudreau, thank you for
joining us today. I have several questions. I will get through
these as quickly as I can. I would like to start out by asking
the staff to put up a chart that has lead times for leasing and
drilling and production.
[Chart.]
Mr. Flores. And while we are waiting on that, let me read
to you what OCSLA specifies in terms of leasing plans. It says
a leasing plan is supposed to, and I quote, ``best meet
national energy needs for the five-year period following its
approval or disapproval.''
Now, if we look at this chart up here, there are two red
diamonds and a green diamond at the operable time points to
look at. If you see up toward the left-hand side of the chart,
you will see the red diamond says Lease Sale. Then if you drift
down about four and a half years to the middle of the chart,
you will see a green diamond that shows where a discovery is
made, and then if you go down to the lower right-hand corner of
the chart, you will see a red diamond that shows when first
production begins.
The average time period from the lease sale to the first
production is nine and a half years, so for this Administration
to take credit for a 30 percent increase in oil production I
think goes beyond the pale. But this is important because it
leads into the next part of the question.
Bonus revenues are the direct indicator of lease sale
activity. In 2008, our bonus revenues to the Federal Government
were $9.7 billion. Last year it was about $1.2 billion, and
this year it is less than $100 million. Now, in light of that
and this chart, what does the Department of the Interior
project that oil production is going to be from the offshore in
light of your new lease sale?
And then we will drill into that a little further. What is
it going to be in terms of employment activity, oil and gas
prices, GDP impact, things like that? What economic analysis do
you have that backs up your proposed leasing plan, particularly
with respect to production?
Secretary Salazar. Congressman Flores, under the Outer
Continental Shelf Lands Act there are a number of different
factors and considerations that have to be taken into account,
and the energy needs of the Nation are one of those factors
that we do take into account.
We see robust production going on in the Gulf of Mexico
today. That is production that has been coming on line and will
continue to come on line, and our expectation is that with 12
additional lease sales in the next five-year period in the Gulf
of Mexico that we will see robust production, especially with
the kind of discoveries that are being made. We are making
additional lease sales, additional acreage available, in order
to continue that development.
Mr. Flores. Do you have any production numbers, production
estimates that you can share?
Secretary Salazar. Let me ask Director Beaudreau. We
probably do. Tommy?
Mr. Beaudrau. Yes. The EIA puts out production estimates
that speak for the Administration in terms of production
forecasts.
Mr. Flores. I am going to run out of time here. Have they
baked in the last lease sale plan?
Mr. Beaudrau. No, they haven't baked in the last lease sale
plan, but what they do reflect is projections both offshore and
onshore based on areas under current production with----
Mr. Flores. OK. Well, what we need to do is, to the extent
you can put this together, I would like to see an analysis that
bakes in the current lease sale plan because that is important
since the rubber meets the road in terms of production, and
lease sales, as you can see from this chart, are the ultimate
prerequisite to production from public lands and public waters.
I want to go through sort of area by area on the approach
that was taken of putting together this plan. In Alaska, it
says that there are single sales in each of Beaufort and
Chukchi to take into account the significant inventory of yet
undeveloped leases in frontier areas. Now, just in a couple of
words, why are those areas undeveloped today?
Secretary Salazar. They are undeveloped, frankly, because
there is not the infrastructure up there to develop them and
the findings have not been made at this point in time to be
able to move forward with that full term development.
Mr. Flores. Or it could be permits, right? It could be
permits too? For instance, Shell has been trying for years to
get a permit in Chukchi Sea and can't get it from the EPA, so
our Federal Government is causing that problem. That is why it
is undeveloped.
Let us go to the next one. In the Pacific, it says areas
off the Pacific coast are not included in the proposed program,
which seeks to accommodate the recommendations of Governors of
coastal states and state and local agencies, an important
priority established by OCSLA, right?
OK. Off the Pacific we paid attention to the Governors and
local interests that said we don't want you to drill here and
so you said OK, we are not going to drill here, right?
Secretary Salazar. That is one factor. It is an important
OCSLA factor. There are other factors involved as well.
Mr. Flores. OK. Now let us move to the Atlantic. In the
Atlantic it says a number of specific considerations supported
the Secretary's decision to not include these areas, including
lack of infrastructure, blah, blah, blah.
Now Virginia has specifically said we are ready to go, we
would like to drill. Now the reason that was given is, and let
me put this in sort of a real estate developer's terms. I am
going to go develop a new subdivision, and you are saying that
because the developer hasn't put in the streets and sewer
systems and so forth we are not going to sell them the land.
That doesn't make sense. That is backwards. You have to have
the leases as a prerequisite before any of the infrastructure
is there, right?
Secretary Salazar. Congressman Flores, the reality of
Virginia is what I spoke to with Congressman Wittman in his
questioning, and that is that you have very significant
conflicts with the military needs, which are so important to
the country. We are not going to do anything that is going to
step back on supporting the needs of the Navy.
Mr. Flores. OK.
The Chairman. The time of the gentleman has expired.
Mr. Flores. Thank you for the 10-minute grace.
The Chairman. Yes. The Chair recognizes the gentleman from
Louisiana, Mr. Landry.
Mr. Landry Thank you, Mr. Chairman.
Mr. Secretary, I want to commend you and thank you and your
staff for getting involved and helping me get a meeting down in
the regional office in New Orleans because I believe that it is
important for Congress. It is Congress's role to regulate the
regulator, and so I appreciate you getting involved and seeing
that it is important to allow congressmen to go down there and
visit the regional offices and so forth, so I thank you.
I don't know if you had a chance to read The Wall Street
Journal today because there was an article that said that crude
cruises just shy of $100. If you read through the article, you
will see that the reason that crude prices are escalating,
according to The Wall Street Journal, which is a periodical
that Director Bromwich liked to use about a month ago in
telling us that the Gulf was back to work, says that the reason
that crude prices are up is that domestic supplies are on their
way down. They are predicting that domestic production--I am
sorry, domestic production--is on the decline.
You see, last year I sent out a comment that I don't think
the Administration understands. You can't turn the oil and gas
industry on and off like a light switch, and I think that this
article is one of many that are going to start to prove that I
am right and prove that your guys are really putting us in a
precarious situation because if oil is at $100 a barrel today,
OK, when we are at the slow driving season, when gasoline
prices start to decline, God help us in May and June and July,
which of course is at the time when your boss is going to be
running, which I think he is very sensitive to. So I think that
this is an opportunity for us to recognize that we have to
increase our production and open up some additional areas.
Now the lease sales can create significant revenue for the
Federal Government. We have heard that. What kind of impact
would Lease Sale 222 if allowed to move forward make on our
economy, on our demand for energy in this country?
Secretary Salazar. Lease Sale 220 in Virginia?
Mr. Landry No, no. Yes. 222 I think it is.
Voice. 222 is the eastern Gulf.
Secretary Salazar. 222 or 220?
Mr. Landry 222.
Secretary Salazar. 222. Is that one of our lease sales?
Voice. Upcoming in the eastern Gulf.
Secretary Salazar. It is an upcoming lease sale in the
eastern Gulf that was opened up under the GOMESA Act of several
years ago.
Mr. Landry Right. But it is not being conducted in 2012.
Secretary Salazar. It is part of our 2012 to 2017 plan.
Mr. Landry But the lease sale is not going to be conducted
in 2012. It is not going to be auctioned this year. I mean next
year.
Secretary Salazar. Let me ask Director Beaudreau.
Mr. Beaudrau. There will be a western Gulf lease sale on
December 14 of this year.
Mr. Landry Right.
Mr. Beaudrau. Next year in May or June there will be a
consolidated central Gulf sale, which, as reflected in the
national assessment that Ranking Member Markey displayed at the
beginning of this hearing, is actually the richest area in the
Gulf. That consolidated sale will take place in May or June of
2012.
Mr. Landry So you are saying that 222 actually will occur
next year? I mean, it is just a yes or no because I don't have
a lot of time.
Mr. Beaudrau. Yes. We are putting out as a matter of fact
this week----
Mr. Landry OK.
Mr. Beaudrau. We will be putting out a notice on that sale.
Mr. Landry Great. Thank you. Let me ask you this question.
Did you consider in your five-year plan addressing the needs of
those players indirectly affected by the oil spill and
subsequent moratorium such as shallow water operators and lease
extensions? That is kind of where I am trying to go here.
I know that you all gave some extensions to about 99
percent of those stakeholders in deepwater, but we have gotten
no answer as to those shallow water players, whether those,
because they were indirectly affected, if we would extend their
leases as we did the deepwater players.
Secretary Salazar. Let me answer one of your questions, and
that is on the dollars and the value of crude in The Wall
Street Journal article, and I will have Tommy respond directly
to your last question.
The price of oil is set on the global market, and the
program that we have put out both onshore as well as offshore
is one that is going to bring additional energy production here
in the United States.
Mr. Landry Wait. I hate to stop you. I mean, that is
partially true, but Brent Crude has actually been--there has
been a significant gap between Brent Crude and Texas
Intermediate, which is over at Cummings. And so the price, in
this article, you will see that the price that I am talking
about is the American crude that is being priced on the NYMEX.
So they are saying that the reason that it is going up is
because domestic supplies are going down, so that is in effect
directly based upon domestic production--not on worldwide
production, on domestic production--because when Libya was
taken off the market the Brent Crude shot up. So you see, you
actually are able to see the differences between the two.
Secretary Salazar. I would only say, Congressman, that the
facts speak for themselves. We are moving forward with
production of oil and gas, and we continue to produce more
today than was being produced even two years ago.
The Chairman. The time of the gentleman has expired. The
gentleman from Nevada, Mr. Amodei?
Mr. Amodei. Thank you, Mr. Chairman.
Good morning, Mr. Secretary. I have gone over your opening
statement, and I have just got a couple questions based on
that. You indicated in the introduction that the President had
stressed the Administration is committed to promoting safe and
responsible domestic oil and gas production as part of a broad
energy strategy that will protect consumers. Protect consumers
from what?
Secretary Salazar. We need to make sure that we address the
goal of the nation's energy security. That is the essence of
the President's blueprint on energy, and at the heart of it is
national security, economic security and environmental
security. It is an issue that has been debated for a long time.
The fact is that we in this Administration are making real
progress on all aspects of getting this energy security.
Mr. Amodei. So it is kind of protecting from those three
things, national, economic and environmental security? National
defense, economic and environmental security? Those are my
words, not yours, but generally that is in the ballpark?
Secretary Salazar. Well, I don't know what specific
language you are referring to in the statement. Maybe you can
refresh my memory.
Mr. Amodei. Well, I don't want to spend a lot of time on
it, but your statement says one of the objectives is to protect
consumers, so I want to know what you are protecting consumers
from as a result of what we are discussing here today.
Secretary Salazar. I think consumers are being protected in
a variety of ways under our energy plan, including the fact
that this President has been able to achieve the highest fuel
efficiency efforts in the history of the United States of
America, and that was with support of the auto industry as well
as many others who were involved in those decisions. So the
fact that we are becoming a nation that is actually producing
cars that are being now sold through a healthy auto industry is
one of those ways in which the consumers are being protected.
Mr. Amodei. OK. Thank you. If you have anything to follow
up on that in terms of the economic things, if I could get that
offline, I would appreciate it in terms of jobs, whether it is
energy production, whether it is auto production, whatever
other protections. I know this is a limited timeframe. If you
want to elucidate on that in writing greater, I would
appreciate that.
I also note later on when we are talking about the fracking
issues, I am on page 4 of your statement, the third from the
bottom paragraph. Maybe Mr. Abbey will understand my
sensitivity to this. There is a line there that says, ``In
addition, we are evaluating whether it would be beneficial to
amend existing requirements that govern management of water
that is produced following development.''
Now everybody knows there are no coastlines on Nevada, and
Mr. Abbey can understand there is a little bit of energy
production in the silver state, but when a guy whose state
relies extensively on groundwater sees a Federal agency
starting to talk about management of water that is produced
from drilling, I would like you to elucidate on that.
Is this the first step into getting into state water law,
wherever it may be? Give me some sense of what management of
water produced following development of what is drilling means
because I am interested in knowing where that is headed.
Secretary Salazar. Thank you, Congressman. It is not at all
an effort to get into state water law. Water law is in the
sovereign nature of the state.
I want Director Abbey to talk about the flowback water
issue for just a minute because it is an issue that I think you
are probably most concerned about.
Mr. Amodei. Well, you know what? I appreciate your answer,
and that hits what I want to hit. As much as I look forward to
talking to Mr. Abbey, Mr. Chairman, with your permission, I
would like to yield back the rest of my time to the gentleman
from Texas, Mr. Flores.
Thank you, Mr. Secretary.
The Chairman. The gentleman from Texas is recognized.
Mr. Flores. In the latest lease plan there is a proposal to
change the form of the lease, and I am concerned about what we
have here. Let me ask you this. Did you get any public or
stakeholder feedback on your proposed changes?
Secretary Salazar. Director Beaudreau?
Mr. Beaudrau. Yes. We specifically engaged industry,
including API, on the lease form prior to publication of the
lease form. We received a letter from API laying out questions
and concerns they had about the amendment and then I invited
API in to sit down, go over the issues with me and with my
staff, and we did that before making any final decisions about
the lease form.
Mr. Flores. OK. I have read the same letter, and it doesn't
look like many of the concerns that they had were addressed. In
particular, one of the areas I am concerned about is the
proposed changes to Section 1 of the lease form. It looked like
they are totally unlawful with respect to Section 5(a) of
OCSLA. I am concerned. I mean, how are we going to implement a
lease form that has an unlawful provision?
Mr. Beaudrau. The amendment to Section 1 of the lease form
is not unlawful. In fact, it essentially states a truism, which
is that an operator who acquires a lease is subject to
regulation and any changes in regulation that may occur in the
future that do not specifically conflict with the terms of that
lease.
That is an inarguable position in my view, and yet it is a
position that companies have pursued in litigation. So this is
to make completely clear that in addition to the requirements
of the lease operators are required to comply with our
regulations. Most responsible companies wouldn't have an
objection to that.
Mr. Flores. Well, there are other----
The Chairman. The time of the gentleman has expired. I want
to let everybody have an opportunity. The Chair recognizes the
gentleman from Ohio, Mr. Johnson.
Mr. Johnson. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here today.
Mr. Secretary, you are probably aware that I introduced
legislation called the World War II Memorial Prayer Act of 2011
that would direct you or a future Secretary of the Interior to
place a plaque or an inscription of the prayer that President
Roosevelt prayed with the Nation on the morning of D-Day.
On November 3, Director Abbey testified before one of our
subcommittees on behalf of your Department regarding H.R. 2070,
this piece of legislation, and in the Department's testimony
Director Abbey testified, and I quote, that ``placing the
President's prayer, D-Day prayer, on the World War II Memorial
will necessarily dilute this elegant memorial's central message
and its ability to clearly convey that message to move, educate
and inspire its many visitors.''
Mr. Secretary, do you agree with your Department's
assessment that by adding President Roosevelt's D-Day prayer to
the World War II Memorial that it would dilute the message of
the memorial? Yes or no, because I have a lot of other
questions.
Secretary Salazar. Let me just give you an answer to your
question, and that is----
Mr. Johnson. It is a simple question. Do you agree with
your Department's position as expressed by Mr. Abbey?
Secretary Salazar. Congressman Johnson, we have to follow
the law, and that is what we do.
Mr. Johnson. No. The law has been amended twice. No. We
know what the law is. The law is what Congress gives you----
Secretary Salazar. Yes. And so if you want to change the
law----
Mr. Johnson.--and what you are responsible for
implementing.
Secretary Salazar.--you can change the law as happened with
Senator Dole's practice put up in the----
Mr. Johnson. No, I don't want you to quote me the law. I
want you to answer my question. Do you agree with your
Department's testimony that it will dilute the central message
of the World War II Memorial?
Secretary Salazar. I agree that the law----
Mr. Johnson. Yes or no? Do you agree with your Department's
testimony that it will dilute the central message of the
memorial?
Secretary Salazar. I have not seen the testimony. I am
certain that they are abiding by the law, and if you will----
Mr. Johnson. No, I am not interested in the law. We know
what the law is because we give you the law. What I want to
know is do you agree with your Department's position and the
Administration's position that putting on the World War II
Memorial Franklin Roosevelt's D-Day prayer will necessarily
dilute the central message of the World War II Memorial?
Secretary Salazar. I have not seen the testimony,
Congressman Johnson.
Mr. Johnson. I am telling you what the testimony is, and
Mr. Abbey is sitting right there. Mr. Abbey, can you
acknowledge to Mr. Secretary that that is what you said?
Secretary Salazar. Congressman Johnson, this is a matter--
--
Mr. Johnson. Yes or no, Mr. Secretary?
Secretary Salazar. This is a matter which is within the
province of the National Park Service, and I think it is unfair
for you to----
Mr. Johnson. OK. You are not going to answer my question.
Secretary Salazar.--ask Director Abbey that question.
Mr. Johnson. You are going to filibuster, just like you
have done so many other times today, and you are not going to
answer the question.
Secretary Salazar. I would be happy to work with you to
find a congressional resolution to your issue.
Mr. Johnson. All I want is an answer from you. Your
Department has said that putting that prayer on the memorial
will necessarily dilute the central message of the memorial. Is
it your position and do you concur with that position? Will
putting the President's----
The Chairman. If the gentleman would suspend? I know that
this is important to him and I want to know that answer also.
There appears to be a conflict. But I do want to at least be
respectful because the topic of this hearing was energy
development and not that. But I do think, Mr. Secretary, there
needs to be a response to that because there clearly is a
conflict here.
So I just wanted to bring things back. I know the passion
that the gentleman from Ohio has on this, and I certainly share
that passion. Mr. Johnson, you can proceed.
Secretary Salazar. If I may, let me answer that in a more
specific way then, Congressman Johnson. The first thing is, in
my own personal view, it does not----
Mr. Johnson. OK. That is all I need to know. Thank you.
Secretary Salazar. Number two, in order to----
Mr. Johnson. I have other questions.
Secretary Salazar.--be able to move forward with what you
have suggested, it would take an act of Congress to do that.
Mr. Johnson. And that is what we are going to give you.
That is what we are trying to give you here.
Mr. Secretary, did you have the Solicitor's Office prepare
a written opinion regarding the legality of merging the Office
of Surface Mining with the Bureau of Land Management?
Secretary Salazar. I had many conversations with the
Solicitor, and I am comfortable----
Mr. Johnson. Have you gotten a written opinion from them?
Secretary Salazar. What we are doing is lawful.
Mr. Johnson. Have you got a written--we will determine
whether it is lawful or the courts will I guess. Somebody will.
I submit to you that it is not under SMCRA, but have you asked
for and received a written opinion by the Solicitor?
Secretary Salazar. I have had many legal discussions----
Mr. Johnson. Have you asked for and received a written
opinion by the Solicitor? Because the last time this subject
came up of a merger there was a written analysis which
basically said you don't have the authority to merge
departments like this. So have you received a written opinion
from the Solicitor?
Secretary Salazar. I will tell you what my legal conclusion
is.
Mr. Johnson. No, I don't want your legal conclusion. I want
to know if you have gotten one from the Solicitor.
Secretary Salazar. I have gotten legal opinions from the
Solicitor.
Mr. Johnson. Have you got a written opinion? Yes or no?
Secretary Salazar. Congressman Johnson, I am absolutely
clear that we are----
Mr. Johnson. I am not interested, sir, in your opinion
right now.
Secretary Salazar.--staying within the bounds of the law.
Mr. Johnson. I am not interested in your opinion because we
already know what that is. I am interested in have you----
Secretary Salazar. And I am frankly not interested in your
ear banging. It has no basis in the law.
Mr. Johnson.--received or asked for a written opinion from
the Solicitor? Yes or no?
Secretary Salazar. I am very comfortable in the legal
position that we are taking, and we are staying in the bounds
of the law.
Mr. Johnson. Mr. Chairman, it is clear we are not going to
get any answers here today. Maybe you can get one. Thank you. I
yield back.
The Chairman. The time of the gentleman has expired. The
Chair recognizes the gentleman from Pennsylvania, Mr. Thompson.
Mr. Thompson. Thank you, Chairman.
Mr. Secretary, today natural gas is I believe $3.32 per
cubic foot. It is available to citizens of this country. A few
years ago it was definitely over $12, $13 a cubic foot, not
that long ago. Today we have access to clean, reliable,
affordable, American-produced energy. And as I look at what
made that difference, what made that possible, it really comes
down to private lands and private citizens and, frankly, not
public lands and government employees, I don't think, have
contributed to this in any way.
So my question for you, the first question that I have, is
if the Marcellus shale and other domestic production that
provided these affordable, clean energy for our citizens were
on Federal lands instead of private lands, would natural gas
prices be at a low of $3.32 today?
Secretary Salazar. I think it has been a combination of
production from both private lands and public lands, and there
is significant production of natural gas from tight sands. And
as Director Abbey stated in his opening statement, 90 percent
of the wells that are being drilled----
Mr. Thompson. But my question was----
Secretary Salazar. Let me just finish. The ones that have
been drilled on public lands are in fact using hydraulic
fracturing, and that is part of the----
Mr. Thompson. And I understand that, but when you look at
it, it is the private lands today because of what the private
land has been doing under the jurisdiction of the states and
have been doing safely.
This transitions to my next question for Mr. Abbey. Mr.
Abbey, in your verbal testimony you talked about hydrofracking
and ``understandably raised concerns.'' So just real quick, I
just want to just delve into that a little bit. How many years
have we been hydrofracking, has hydrofracking been used?
Mr. Abbey. Several decades.
Mr. Thompson. Yes. Sixty. That qualifies. Sixty. How many
wells worldwide have been hydrofracked since the advent of
hydrofracking?
Mr. Abbey. I don't know the answer as far as worldwide.
Mr. Thompson. Let me help you. Two million.
Mr. Abbey. Thank you.
Mr. Thompson. You are welcome. How many wells have been
hydrofracked in the United States of America out of that two
million?
Mr. Abbey. I don't know.
Mr. Thompson. Let me help you there. Half of those, one
million wells.
Mr. Abbey. Thank you.
Mr. Thompson. You are welcome. What is the scientific data?
Let me back up. I skipped one. What is the number of incidents
specifically that have created problems from hydrofracking
itself, the actual process of hydrofracking?
Mr. Abbey. I can speak to Federal wells. We are not aware
of any incident as a result of hydrologic fracturing on public
lands.
Mr. Thompson. OK. Great. Thank you. My next one. What is
the scientific data validating the concerns that you referenced
in your testimony?
Mr. Abbey. It is the number of wells that are being drilled
today using hydrologic fracturing.
Mr. Thompson. But the scientific data showing,
demonstrating actual incidents and problems, you said that
there were zero incidents on Federal----
Mr. Abbey. On Federal wells.
Mr. Thompson. On Federal lands. And so my last question for
you with this is coming back to your statement----
Mr. Abbey. Yes.
Mr. Thompson.--how do you define understandably?
Mr. Abbey. By listening to the public.
Mr. Thompson. OK. OK. All right. I am not even going to go
there. Let us move on to number two.
I am going to submit, Mr. Chairman, an article for
unanimous consent on shale leases in the Wayne National Forest.
Recently the United States Forest--and I know we are
talking to the Interior Department. Bear with me. U.S. Forest
Service proposed a total ban on horizontal drilling for the
George Washington National Forest in Virginia, and this article
talks about shale leases in Wayne National Forest delayed for a
fracking study. I just want to clarify. Based on our past
hearings, I believe that when it is public lands subsurface--
oil, gas, minerals--falls under the jurisdiction of the BLM. Is
that correct?
Mr. Abbey. That is correct.
Mr. Thompson. In the national forest?
Mr. Abbey. Yes.
Mr. Thompson. So given that clarification, given the
situation with the Forest Service proposing a total ban on
horizontal on public subsurface owned by the taxpayers, George
Washington National Forest, and now we have the Wayne National
Forest in Ohio which sits atop significant Marcellus shale gas
reserves, has the BLM or the Department of the Interior
consulted with the United States Forest Service or the
Department of Agriculture on addressing the concerns of the
Forest Service through regulation rather than through another
moratorium on drilling on public lands, which costs jobs and
government revenue?
And frankly, my specific question is hasn't this forest
supervisor stepped way outside the grounds of his or her
responsibility and jurisdiction of----
Mr. Abbey. Well, I will let the Forest Service answer that
question, but let me share with you the fact that the Bureau of
Land Management serves as a cooperating agency to the analysis
that is performed by the U.S. Forest Service as it relates to
oil and gas drilling in leasing.
It is our finding in both situations that horizontal
drilling is an appropriate action on those Federal minerals. We
do refer back or defer back to the surface managing agency to
make the final determination, but our analysis indicates that
horizontal drilling would be appropriate.
Mr. Thompson. And I appreciate that. That was reaffirming
actually what was shared in the Agriculture Subcommittee
hearing.
Mr. Abbey. Yes.
Mr. Thompson. Thank you.
The Chairman. The gentleman asked unanimous consent to
insert an article in the record. Without objection, so ordered.
Mr. Thompson. Thank you.

[The article submitted for the record by Mr. Thompson
follows:

[GRAPHIC] [TIFF OMITTED] T1236.006

The Chairman. The gentleman's time has expired. The
gentleman from California, Mr. McClintock?
Mr. McClintock. Thank you, Mr. Chairman.
Mr. Secretary, you have been in office now for nearly three
years, as has this Administration. I look at the overall
approach that you have taken to energy production. You have
delayed the Keystone XL Pipeline now indefinitely. You have
imposed an economically devastating drilling moratorium in the
Gulf. You have obstructed oil development in the Arctic. You
have just issued a highly restrictive offshore leasing plan.
You are attempting to destroy major hydroelectric dams at
enormous cost.
I am just wondering, how do these actions help the U.S.
economy? How do they help Americans find jobs that they so
desperately need?
Secretary Salazar. Congressman McClintock, I would disagree
with your conclusions and your assertions. The fact of the
matter is that we have moved forward with a robust energy
program that has a very diverse energy portfolio.
Mr. McClintock. This is what you describe as a robust
energy program?
Secretary Salazar. We are moving forward with development
and----
Mr. McClintock. Let me ask you this. How do these actions
reduce our dependency on foreign oil?
Secretary Salazar. The facts I think speak for themselves.
If one observes the truth of the facts, we are importing less
oil than we were several years ago, the first time in a long
time that we got to an import level that is less than 50
percent.
Mr. McClintock. Yes, but you and I both know that that is
the result of----
Secretary Salazar. That is the result of efficiency.
Mr. McClintock.--a 10-year timeframe that began 10 years
ago, and what we are now watching is the Administration
systematically shutting off our future oil development by these
actions.
Let me go on. Attempting to----
Secretary Salazar. I respectfully disagree.
Mr. McClintock. I understand. According to Wood Mackenzie,
opening up the additional areas included in the original
offshore leasing plan and exempted from your announced plan
could result in the addition of approximately 30 billion
barrels of oil equivalent, $24 billion in government revenues
per year and 550,000 jobs for the American people.
In fact, if you look at the overall energy situation,
returning to pro development policies would produce $800
billion in government revenue, 35.4 billion barrels of oil
equivalent, nearly 1.5 million U.S. jobs. What is needed to
convince this Administration that our people desperately need
jobs, permanent taxpaying jobs?
Secretary Salazar. Congressman McClintock, we are committed
to job creation in this country. It is the number one issue
that the President focuses on every day. We in the Department
of the Interior are proud of the record that we have in job
creation both with respect to oil and gas and global energy.
Mr. McClintock. We have 9 percent unemployment in the
country. We began this Administration with 7.8 percent. I am
not sure that is a record I would be proud of with all due
respect.
Let me ask you one final question here. Jack Gerard,
president of the American Petroleum Institute, wrote to the
Speaker and the Senate Majority Leader two days ago. In
critiquing the plan you have released, he writes:
``Potentially very large oil and natural gas resources in
the Atlantic, Pacific and eastern Gulf of Mexico were left out
of the Department's plan. Comments from the Department suggests
this was at least in part because accurate, updated estimates
of the resource potential in those areas are not available.
That argument, however, presents a Catch-22. Information on the
resource potential in these areas is old and incomplete, yet
without the possibility of a lease sale companies will not
invest in the costly exploratory work needed to get more
accurate and comprehensive data.''
What is your response to that?
Secretary Salazar. I respect Mr. Gerard very much, but he
obviously is voicing the point of view of the trade
association. The fact is we do need additional information in
many places, including on the Atlantic, and we are moving
forward to develop that additional information.
Mr. McClintock. Finally, I would just like to say that your
assurances that all of these anti-energy policies present a
robust energy plan for America, that you are very concerned
about job creation except when it comes to the 1.5 million jobs
that we could create if you would simply get out of the way.
I am reminded of something Leo Tolstoy wrote about the
Czar's government. He said, ``I sit on a man's back, choking
him and making him carry me, and all the while I assure he and
anyone who will listen that I am very sympathetic of his plight
and I am willing to do everything I can to help.'' Except by
getting off his back. I yield back.
The Chairman. The gentleman yields back his time, and the
Chair recognizes the gentleman from Colorado, Mr. Tipton.
Mr. Tipton. Thank you, Mr. Chairman. Mr. Secretary,
Directors, I appreciate you being here as well.
Mr. Secretary, and perhaps this might apply to you as well,
Director Abbey, I would like to ask you about an issue that is
important in our part of the world in western Colorado in
particular.
As you know, Mr. Secretary, right now the Bureau of Land
Management is in the process of taking public comment on a
draft resource management plan for the planning area overseen
by the Colorado River Valley Office. And again as you know,
most of that planning area covers more than 500,000 acres of
public lands in an energy rich area of western Colorado.
This happens to also be, obviously, a very economically
challenged area right now. We have Grand Junction, and it was
just reported in The New York Times that this regional economic
hub in western Colorado leads the Nation in job losses. These
are tough economic times, and folks are trying to get their
arms around the plan that the BLM is asking for comment on.
The expiration of the comment period has been a 90-day
comment period. It is going to expire around the end of the
holidays here. I know the BLM frequently extends the comment
period when requested, and a number of stakeholders out in
western Colorado in particular either have or soon will make a
request that the BLM with respect to the Colorado River Valley
plan extend that comment period.
Is this something that you would support? And if so, when
do you think that we might be able to have a definitive answer
on extending that comment period?
Secretary Salazar. Director Abbey?
Mr. Abbey. Congressman, if you would, if you would send me
a written request, I would certainly entertain it, and the
likelihood of approving that request would be granted.
Mr. Tipton. Likelihood of approving it. Thank you, Director
Abbey.
Mr. Abbey. You bet.
Mr. Tipton. I certainly appreciate that. I would like to go
back to a couple of questions and revisit them.
Secretary Salazar, you talked in your testimony and in
terms of answering a few questions about well bore integrity
and the importance of being able to protect that. You also
commented that we do not have one instance of the fracking
process getting into our water reserves, into the water table.
Do we have any examples to where well bore integrity has been
breached when it comes to protecting water in terms of the
fracking process in the United States?
Secretary Salazar. Congressman Tipton, there are examples
of well bore integrity and contamination of wells. With respect
to hydraulic fracking and the contamination of wells----
Mr. Tipton. Right.
Secretary Salazar.--there is a possibility that water could
be contaminated if a well does not have well bore integrity and
so that is why it is important that this----
Mr. Tipton. We just heard--I think Congressman Thompson had
just mentioned that we have had well over a million wells
drilled with fracking.
Mr. Abbey. In the United States.
Mr. Tipton. In the United States. Have any of those shown
any well bore lacking integrity when it comes to the fracking
process?
Secretary Salazar. Congressman Tipton, I think that the
most important thing that we could do in a bipartisan way is to
move forward in a manner that supports the natural gas industry
and allows an abundantly available domestic resource to be
used. In my view, some of these issues will have to be
addressed in order for us to be able to move forward with a
robust natural gas domestic energy supply.
Mr. Tipton. Right. I respect your statement on that, and
the answer effectively was no, we haven't had any problem with
the integrity when it comes to the fracking process. And I
agree with the bipartisan end of it as well because we all want
clean air, we all want clean water and to be able to protect
that as well.
But all of our states have decades of experience when it
comes to dealing with well construction and fracking. In fact,
the Interstate Oil and Gas Compact Commissioner has a program
called STRONGER--are you familiar with that--to help ensure
that state regulations are up-to-date and that the states are
fully supported in those regulatory efforts.
Why do you think the Department of the Interior is going to
be able to do a better job than our states in terms of
regulating that? A lot of us believe that nobody cares more
than the people at home when it comes to being able to protect
those issues. We have those regulatory processes in state. Why
are you pushing for the Department of the Interior?
Secretary Salazar. We have a responsibility, Congressman
Tipton, to make sure that we are protecting the lands on behalf
of the American people, and in so doing it is important that we
assure that oil and gas drilling and production is done in a
safe and responsible manner.
Mr. Tipton. And as it applies to fracking, apparently that
job has been done.
Secretary Salazar. I would say that you have an open
question with respect to several of these issues, and that is
why we have been involved in a long process that began with a
forum that I hosted at the Department of the Interior to take a
look at this issue.
I will also say that the industry in many ways has decided
that disclosure is also important, so part of the website and
the FracFocus program that they put together is a part of that.
We have seen states from Wyoming to Texas move forward with
disclosure programs, and so we have not landed yet on what kind
of disclosure we might require. That is part of the ongoing
process that we have under consideration.
Mr. Tipton. Great. If I could have the Chair's indulgence?
The Chairman. The time of the gentleman has expired.
Mr. Tipton. OK. Thank you.
The Chairman. The gentlelady from California, Mrs.
Napolitano?
Mrs. Napolitano. Thank you, Mr. Chair. I am glad to see
you, Mr. Secretary. It has been a while. I hope you haven't
forgotten us in California.
Secretary Salazar. I never forget California. I don't even
forget Washington.
Mrs. Napolitano. Well, I will be calling you. One of the
things that is brought to my attention is The Washington Post
today indicated that Chevron has halted drilling off the coast
of Brazil because of an underwater oil leak. The operator is
Transocean, the same company who was operating the Deepwater
Horizon rig. Do you have information on that, number one? What
can you tell us about it? And if Transocean is the one that had
another oil spill offshore resulting from oil well drilling
operations, should we be taking another look at their
operations?
Secretary Salazar. Congresswoman Napolitano, I am not
familiar with this most recent story that you allude to.
I will say this, that at the end of the day we know that
developing oil and gas in the oceans of the world is not a
risk-free activity, and it therefore requires us both in the
Executive Branch as well as in Congress to make sure that we
are moving forward with safe and responsible oil and gas
development, and that is why we have led the largest overhaul
in the nation's programs on offshore energy development.
Mrs. Napolitano. Thank you. It is a real serious possible
way of doing business by Transocean that we should possibly
continue to look at their operation.
But earlier the gentleman from Texas showed a chart that I
wasn't here to see, but I understand it was shown, detailing
the steps that must be taken in order to move a lease from
first production and the average time of the company after
being awarded a lease to the first production shown to be 9.5
years. But the steps outlined require and interpret 3-D and
other data and find partners to share cost to drill an
exploratory well and then contract the drill rig. Almost all of
these steps are actions to be taken by the company, not the
government, is that right?
Secretary Salazar. Director Beaudreau?
Mr. Beaudrau. A lot of those steps do require actions by
the companies. Even seismic surveys, however, go through a
permitting processing that my agency and the Interior
Department is involved with. But the big picture and the big
answer is that we have initiated a number of pro development
initiatives to encourage early operation of these leases, early
exploration, early development of the leases. That is reflected
in the lease terms that we have applied and will apply in the
upcoming Gulf of Mexico sales.
Mrs. Napolitano. Thank you. But in response to my question,
wouldn't it be to the oil companies' benefit to speed up their
completion of these steps if they wanted to begin producing
more quickly?
Mr. Beaudrau. Yes, and we are implementing policies to
encourage them to do that.
Mrs. Napolitano. Mr. Secretary, should we not be looking at
incentives then to shorten these lease times and to move the
production forward quickly?
Secretary Salazar. Congresswoman Napolitano, the answer to
that is yes. In fact, those are some of the reforms that have
been made by the Bureau of Ocean Energy Management as we move
forward. It is our view that we ought not to have idle acreage
that is sitting out there, and we ought to do everything we can
to move forward with encouraging oil and gas production in the
right places and in the right ways.
Mrs. Napolitano. Thank you very much. I came in late
because I was at the Transportation hearing on hydrofracking,
and some of the questions that are being put back and forth is
that EPA is being too heavy-handed in some areas and that
states should have the right to be able to implement their own
standards.
My concern, and I voiced this, was that some of the pools
left behind by the water that is used contains carcinogens and
some other nonbeneficial byproducts. They insert back into the
earth supposedly. They state that it does not hurt the aquifers
because these are at a lower level than the underwater streams
and rivers.
But isn't there an issue that we should not standardize,
because one size doesn't fit all, but allow EPA to work with
all the states to be able to implement things or rules that are
going to protect the environment, protect the drinking water
quality of folks and still be good for business?
The Chairman. Real quickly, Mr. Secretary.
Secretary Salazar. The answer is that we need to move
forward----
Mrs. Napolitano. Thank you.
Secretary Salazar.--in a way that protects the health of
people and the environment, and we are doing that and at the
same time moving forward with a program that will in fact
support natural gas development, and we support hydraulic
fracking because, frankly, that is the answer to what kind of
domestic production we are getting today from natural gas. And
as Director Abbey testified earlier, 90 percent of all of our
natural gas wells being drilled and producing in the Federal
lands are all using hydraulic fracturing.
The Chairman. The time of the gentlelady has expired. The
gentleman from Idaho, Mr. Labrador?
Mr. Labrador. Thank you, Mr. Chairman. Mr. Secretary,
thanks for being here.
You made a couple statements today. You say we continue to
produce today more than two years ago. The facts speak for
themselves. You also said in your testimony that we have had
higher production. I just want to make sure that the facts do
speak for themselves.
Do you agree or disagree with Congressman Flores, who said
that it takes about 9.5 years to get from lease to production?
Do you agree with that statement?
Secretary Salazar. I agree that it takes time. I don't know
the specifics of his chart and I hadn't seen it until today,
but from the point in time where the acreage is made available
and going through the exploration phase, it is a multiple year
program.
Mr. Labrador. And you would agree that it is more than two
years or three years, correct?
Secretary Salazar. From the point of making the lease sale
to the point of production, yes.
Mr. Labrador. Correct. Regardless of whether it is because
the company delayed or because you have all these procedures
that are required by law, it is more than two or three years to
get from a lease to production, correct?
Secretary Salazar. That is correct.
Mr. Labrador. So every time I have been here, and I don't
come from an oil producing state, but every time I have been
here in the Natural Resources Committee, I have had somebody
from the Administration come here trying to take credit for the
high production of oil. That just doesn't make any sense to me.
If it takes more than two or three years to get from lease to
production and we have the highest production right now, isn't
it true, because we want to get to the facts, isn't it true
that this is based on actions from the previous Administration,
not from the current Administration? Is that true?
Secretary Salazar. Congressman Labrador, what I would say
is I love the potatoes from your state, but they are not as
good as the ones from Colorado or Washington.
Having said that, let me say that we have moved forward
with an oil and gas production program----
Mr. Labrador. I understand that you are claiming you have
moved forward.
Secretary Salazar.--that is developing oil and gas.
Mr. Labrador. Yes.
Secretary Salazar. Let me just give you an example to
support the facts as I have stated them. There was a huge
outcry from many people that we should have shut down even the
production side during the national crisis of the Deepwater
Horizon. We did not do that.
And we have worked very hard. Some people on my staff have
worked 18 hours a day, six, seven days a week, to make sure
that we had the kind of program within the Department of the
Interior that can allow safe oil and gas drilling and
production to move forward. We are at that stage, and the
acreage that we are making available this year and next year
under the new plan will continue that program forward.
Mr. Labrador. But let us just talk about the facts because
you said we want the facts. The facts are that whatever oil
production we have today is because of actions that happened
before this Administration. Is that not true?
Secretary Salazar. The facts are that it included the
contributions not only of this Administration under President
Obama's leadership but also President Clinton and President
Bush and President Reagan and President Carter. It goes back a
long ways.
Mr. Labrador. OK. So then if we had certain actions that
happened before this Administration where we were seeing the
number of leases going up higher and higher and higher,
wouldn't it be also true if the number of leases is going down
that we would have less oil production five to 10 years from
now?
Secretary Salazar. Our view is that given the price of
oil--over $90, almost at $100--that you are going to see a
significant increase in oil and gas production. There are huge
amounts of public lands and America's oceans and onshore that
we have made available. Much of that will be coming into
production because the greatest incentive frankly for oil and
gas companies is the price of oil.
Mr. Labrador. OK. I am going to change topics here. I am a
firm believer that we should shrink the size of our Federal
Government--I think you and I agree with that--and we should
consolidate programs, but my questions relate to your proposed
reorganization of the Office of Surface Management and the
Bureau of Land Management.
I only have a minute here. Explain to me how the structure
will be reorganized. Will you be creating a position that
directly reports to you, the Secretary of the Interior, and
adding another bureaucratic layer of reporting?
Secretary Salazar. We are looking at the reorganization
right now. No decisions have been made. We need to make sure
that our employees are involved as well as stakeholders that
have followed OSM.
We will stay within the law of SMCRA. SMCRA requires that
we have a Presidentially appointed, Senate confirmed,
independent agency to carry out the duties of SMCRA. That is
what OSM will do. And so Director Abbey and Director Pizarchik
are putting together a plan, and we will not have that plan
until February. I appreciate any comments that this committee
may have in terms of how we look at this reorganization because
there are no final decisions that have been made.
Mr. Labrador. When Director Abbey presented to some of the
staff here in Congress he talked about how one of the reasons
provided for the merger was the great things about abandoned
mine land reclamation that OSM could offer to BLM. Have you
ever seen this document, ``Abandoned Mine Lands: A Decade of
Progress Reclaiming Hardrock Mines''?
Secretary Salazar. You know, I don't know whether I have
seen that, but I have seen similar types of documents.
Mr. Labrador. I ask unanimous consent for this to be
included in the record.
I think BLM knows quite a bit about how to handle abandoned
mines, and I don't think that they need to learn anything from
OSM, but I just----
The Chairman. Without objection, that will be part of the
record.
[The document entitled ``Abandoned Mine Lands: A Decade of
Progress Reclaiming Hardrock Mines'' has been retained in the
Committee's official files.]
The Chairman. The time of the gentleman has expired. The
Chair recognizes the gentleman from Alaska, Mr. Young.
Mr. Labrador. Thank you.
Mr. Young. Thank you, Mr. Chairman.
Mr. Secretary, welcome here. As you see, my hat that I am
wearing, I am supporting the Obama energy program. It is called
a propeller because there is no energy program. You are not as
guilty, though, as other agencies within this Administration. I
do think you have made some steps forward, but I will tell you
that you are not the only player in town. You have EPA, Lisa
Jackson, an organization that is trying to subvert your
authority, and they will probably do it because they have more
clout in the White House.
So the energy program the Obama Administration has is
nothing as far as producing energy. I know you don't agree with
me, but I keep saying that we have been importing--and it is
just not this Administration--for the last 20 years about
between 300 and 400, up to $500 billion a year. We import that
much oil, and that money goes abroad. So every barrel of gas,
every cubic foot of natural gas and every barrel of oil makes
us less dependent.
And I have to say that one of the things that I have never
forgotten, and I think you can understand this. The gentleman
said when we turn to foreign lands to supply our energy needs,
then I can't help but feeling that somewhere along the way we
have surrendered something of our freedom. That was a quote by
Manuel Lujan, Jr., a congressman on this committee and the
Secretary of the Interior. And that is what we have done.
And I hope you understand that as the Secretary of one of
the largest landholdings in the world that we need really
cooperative working with states and with the industry to make
sure we are not losing our freedoms overseas. That is a little
speech.
But having said that, though inadequate, I will take and we
appreciate your scheduling some additional oil and gas leases
in the Arctic, but what steps are you taking to assure timely
review and processes that will permit applications again with
Interior and other agencies concerning the leases? In this
regard, I understand the Obama Administration has undertaken
and met a cooperation effort concerning Alaskan energy. Where
does that stand, and can you provide us with some concrete
timelines?
Secretary Salazar. Congressman Young, first of all, I
appreciate your leadership on Alaska on so many different
issues, and let me say that we are moving forward with a robust
energy program that does include oil and gas and renewables and
other things that very much affect your state.
With respect to Alaska and the Arctic, the President has
designated the Department of the Interior and my Deputy
Secretary, David Hayes, to ensure that there is coordination in
the permitting processes with respect to Alaska, so we are on
track.
Mr. Young. Can you do me a favor? Again, I go back outside
your agency and outside the state. When EPA or the Corps of
Engineers and recently the Colville River deal, when they get
involved and they stop the process which you are putting forth,
let me know where I can be of help to you. Is that good?
Secretary Salazar. I appreciate that, and I will just
reiterate one thing on that, Congressman Young. The position
that Deputy Secretary David J. Hayes is occupying today
essentially allows Interior through the Deputy Secretary to
bring together all those agencies so that we have an effective
and efficient permitting process.
Mr. Young. OK. Now regarding the draft EIS and
comprehensive conservation plan for ANWR, why hasn't the United
States Fish and Wildlife Services listed oil and gas
development in the coastal plain as an alternative decision to
be considered rather than just including additional wilderness
designations?
Secretary Salazar. Our position has been, and is today,
that drilling in the Arctic National Wildlife Refuge is not
appropriate.
Mr. Young. My point is now remember the no more clause. I
actually think your Fish and Wildlife agency is stepping over
their lines, and we will eventually find out in court. The no
more clause is very clear. It is not going to go through this
Congress anyway. Don't kid yourself. You are wasting money.
But what bothers me is I understand that certain national
environmental groups have garnered a million signatures
recommending wilderness status on the coastal plain. Most of
these are communications that have a standard form. How will
the public comments be evaluated, especially since so many of
them appear to be virtually identical in nature? Do you follow
what I am saying? This is a million signatures. Are you going
to listen to that, or are you going to listen to the Alaskans?
Secretary Salazar. It is very important for us on our
entire conservation agenda, Congressman Young, to make sure
that we are listening to the local communities and so Alaska is
a world unto itself in terms of its beauty and its potential.
And as you may have noted in the wilderness and national
conservation report that we sent to Congress, I did not include
anything in there on Alaska because Alaska has its own unique
set of circumstances that need to be considered.
Mr. Young. Thank you. When I become emperor I might
consider you as Secretary of the Interior, but that probably
won't happen for a while. You have to understand that.
What are you doing to coordinate the BLM's December 7 lease
sale and NPRA with the state's onshore and offshore sale at the
same time, the same day? Are you working together?
Secretary Salazar. Director Abbey?
Mr. Abbey. We are working very close together, Congressman.
In fact, I received a statement the other day from the state
complimenting the actions of the Bureau of Land Management and
the coordination that we are doing with them.
Mr. Young. Good.
The Chairman. The time of the gentleman has expired.
Mr. Young. Can I take my propeller off now? This is for the
Obama energy plan now. I want you to know I am supporting Mr.
Markey. I want to tell you right now I am supporting the Obama
energy program.
The Chairman. I am sure he is thrilled with that.
Mr. Secretary, I know we had----
Secretary Salazar. I thought he was taking off his
propeller because I had convinced him about the correctness of
our robust energy program.
The Chairman. Listen, you can interpret that any way. Mr.
Secretary, we had as a close a hard time of 12:30, but Mr. Holt
came in and Mr. Southerland has been sitting very patiently.
With your indulgence, those will be the last two questioners
and we should get you out of here as close to that time if that
is OK. Well, it is going to be OK because we have to do it that
way. Mr. Holt is recognized for five minutes.
Mr. Holt. Thank you. Mr. Secretary, good to see you, and it
was good to see you in Patterson, New Jersey, at our new
national park in New Jersey. Thank you for coming.
Several different questions. First of all, I wanted to
really look at this question of whether the energy extraction
industry is our best place to look for jobs with Exxon Mobil
and Chevron and Shell and BP and so forth over the last half
dozen years earning hundreds of billions, between $500 billion
and $600 billion in profits. Over that same period, their
workforce shed 11,000 workers. The Bureau of Labor Statistics
and the Department of Labor says, ``Employment in oil and gas
extraction is expected to decline by 16 percent through 2018.''
Now you are all on record and in practice promoting
production. In fact, production is up along with these profits,
but it also seems to go along with a loss of jobs. Are we
looking in the wrong place? Are some people here looking in the
wrong place for jobs?
Mr. Flores. Will the gentleman yield? Will the gentleman
yield? Right here.
Mr. Holt. I would like to get an answer to the question
first. Thank you.
Secretary Salazar. Thank you very much, Congressman Holt.
It was an honor to be with you in Patterson Falls, New Jersey.
Let me just say that there is significant profits that are
obvious to everybody that oil and gas companies are making. You
know, the fact is that we have record prices in oil. We have
major discoveries that are being made.
We also know that the future of the United States for the
foreseeable future will depend on developing additional oil and
gas resources and so we are supportive of that policy. It is
part of the energy portfolio that President Obama has announced
in his energy blueprint.
Mr. Holt. Thank you. Secretary, with regard to the oil and
gas leasing off of Virginia, which of course we in New Jersey
think of as leasing off of New Jersey because it is a few days'
oil slick drift from our productive beaches, isn't it true that
the footprint of the lease overlaps significantly, in fact
almost entirely, with critical military training areas and with
shipping lanes and overflight areas?
Secretary Salazar. Congressman Holt, there are critical
areas within the Lease Sale 220 area in Virginia, the triangle,
which is something which is very important to our country, and
it is a significant part of the reason why Lease Sale 220 was
not placed on the 2012-2017 plan.
Mr. Holt. Thanks. On another matter involving the Atlantic,
the legislation that was before this committee, H.R. 1231,
talked about subsidizing seismic surveys in the Atlantic. Do
you think it is a good idea to ask taxpayers to provide
subsidies for oil companies to conduct seismic surveys?
Secretary Salazar. Congressman Holt, I am not familiar with
H.R. 1231. I will say this, that we believe that developing
additional information will allow us to make more informed
decisions in places like the Atlantic where we have such a
dearth of information.
Mr. Holt. Let me just add my editorial comment that I
wonder why in the world we should ask the most profitable
companies in the history of the world to go to the taxpayers
for assistance in this.
We have asked and Director Bromwich testified that he
supported our idea of asking the heads of the oil companies--
BP, Halliburton, Transocean and Cameron and so forth--to
testify before this committee about the Deepwater Horizon
disaster. Do you believe the CEOs from these oil companies
should testify? Would that help the public get useful
information about this?
Secretary Salazar. Congressman Holt, I don't have an
opinion on that. I do believe that there have been significant
investigations that have been conducted, including the most
recent investigation by the joint investigative team that
included the Coast Guard and the Department of the Interior,
and those results are comprehensive and they tell you the
sequence of what happened and the specific regulations that we
believe were violated in the Macondo well blowout last year.
Mr. Holt. Thank you, Mr. Secretary.
The Chairman. The time of the gentleman has expired. The
gentleman from Florida, Mr. Southerland?
Mr. Southerland. Thank you, Mr. Chair.
Mr. Secretary, thank you for being here and thank you for
the delay of going over a little bit. I know time is precious.
I would like to read a statement:
``There has been extremely negative reaction to the
decision regarding Keystone in the United States because this
pipeline and this project is obviously what is in the best
interest not just of the Canadian economy but also the American
economy. Therefore, based on the decision by this
Administration, Canada will seek to join the new Asian Trade
Bloc as it tries to increase energy exports to the region
following the U.S. decision to delay the approval of
TransCanada Corporation's $7 billion Keystone XL Pipeline.''
With that statement, my question to you is how does the
American worker benefit if this Canadian sands oil goes to
China and other parts of Asia?
Secretary Salazar. Congressman Southerland, let me just
first say that Canada is one of our best trading partners, and
we have a great relationship with Canada on a variety of
issues.
With respect to the Keystone XL Pipeline, it is by law a
process which has been led by the State Department. They have
listened to the input from many places, including the Governor
of Nebraska and Senator Johanns, who have legitimate concerns
about conservation consequences on farming.
Mr. Southerland. No, I understand. I know time is precious
for me and you. How does this decision help or harm the
American worker?
Secretary Salazar. Well, I don't think it does because no
decision has yet been made. The fact is that the process is----
Mr. Southerland. But the time value of money. And unlike
some people that question here, I come from a business
background and I understand time is money and speed is profit.
So, if that is the case--and business owners understand that,
job creators understand that--how does this decision delay, OK,
hurt profits, hurt the ability of the American worker to be
able to put food on their table?
Secretary Salazar. You know, I will refer the question to
the State Department because it is the Department of the
government that is in charge of the process.
Mr. Southerland. But let me say this, Mr. Salazar. I have
learned in your testifying you are an incredibly bright man.
You have an opinion. You even shared your opinion on the prayer
that the other Member questioned earlier. You certainly have to
have an opinion, a person in your place, how this affects the
American worker.
Secretary Salazar. My factual conclusion, Congressman
Southerland, is that no decision has yet been made and there
are----
Mr. Southerland. The decision to delay.
Secretary Salazar. There are strong arguments as to why
this pipeline should go forward.
Mr. Southerland. OK.
Secretary Salazar. There are legitimate concerns----
Mr. Southerland. All right.
Secretary Salazar.--as to why it should not go forward, but
there will be a process here and a decision will be
forthcoming.
Mr. Southerland. So is it good for the American worker that
a decision is not made farther down the road? Is it better for
a worker to have a job today, or is it better for a worker to
have a job maybe two years from now?
Secretary Salazar. I think it is important to get it right,
and that is what the Department of State is doing.
Mr. Southerland. Yes, but for the person that is
unemployed, for the person that is trying to feed his family,
provide food, provide shelter. If that person does not have a
job and this person could perhaps have a job with this project,
if that person doesn't have a job, is that person benefitting
if we wait until two years down the road?
That is common sense. You don't need to be the Secretary of
an agency to figure that one out. Do you agree with that?
Secretary Salazar. I think it is important that it be the
right decision----
Mr. Southerland. Right.
Secretary Salazar.--and with the right level of input and
the right level of----
Mr. Southerland. I am sure the American worker really
appreciates the answer to that question.
And bringing that real close to home, in Panama City,
Florida, we have Berg Pipe, and in Tallahassee, Florida, we
have EXP, which is an engineering firm that has worked very
hard on this project. Last week Berg Pipe let go 100 workers in
Panama City, and with this delay there is a better than average
chance that EXP will let go 100 workers, so that is over 200 in
my district. And I guess what would you say to them, because
these workers are being let go as a result of this delay. What
would you, if you were the one giving them the pink slip and
sending them out the door, what would you say to them?
Secretary Salazar. What I would say, Congressman
Southerland, is that the pipeline industry is something which
is a robust industry here in this country. We have thousands
and thousands of miles, including many that have traversed our
public lands that we have authorized, and no one has yet made a
judgment on whether or not the Keystone XL Pipeline is moving
forward. The fact is there are arguments on both sides, and the
State Department is moving forward with a process to make sure
that they get a right decision.
Mr. Southerland. And I am sure you understand why there is
this massive disconnect between the 200 people that you just
gave that answer to and their aggravation with inside the
Beltway because what you just did is you just gave them a
political speech, and they don't know where their next paycheck
is going to come from. That falls on deaf ears.
And I tell you, Director Abbey stated earlier that he
listens to public sentiment to validate his decisions. If the
public supports Keystone, then isn't the President's decision a
total disregard to the American people and its workers? I state
absolutely, and I wish the Administration and the President of
the United States would use your same standard of listening to
the sentiment of the American worker. Obviously they have not,
and it just aggravates the fire out of me that all we have is
your statement to those 200 workers, and unfortunately it
doesn't put food on the table. Thank you. I yield back.
The Chairman. The time of the gentleman has expired. I have
learned through the magic of instant communications, Mr.
Secretary, that you are breathlessly awaiting some questioning
from Mr. Bishop of Utah, so I will recognize Mr. Bishop for
five minutes.
Secretary Salazar. That is great. I always enjoy my
conversations with Congressman Bishop. I have been to Utah more
times than I have been to Washington, I will have you know.
The Chairman. That is why I couched it exactly that way.
Mr. Bishop. I think you were psychic in asking to accept my
question. This pains me in some way, but when somebody does
something correctly I think kudos need to be given. I have seen
your wilderness proposals. I have not viewed all of them, but I
have viewed the ones in Utah. I still need to talk to the
people in those particular areas, but on the surface it seems
that you and Director Abbey and Juan Palma in Utah have done a
proper job in trying to identify wilderness areas in my state,
so I want to thank you. Don't answer because you will screw it
up. I just want to thank you.
Secretary Salazar. On that note, I was going to ask the
Chair if he would adjourn the hearing so we could make some
history here today.
Mr. Bishop. However----
Secretary Salazar. I knew there was a however coming.
Mr. Bishop. Now turning into my Don Young mode, the
Interior Department did send out a news release back a week ago
talking about the amount of revenue that was coming from energy
production on public lands and you stated, or the Department
stated, ``The revenues will also support much needed projects
that create jobs, critical infrastructure improvements and
funding for education.''
And here is where I want to go off as a former teacher.
Some of my colleagues I understand have already talked to you
about the 77 leases, which was one of your first decisions in
office. We have talked about oil shale demonstration projects
that have been slow walked by the Department.
The fact of the matter is schools in the United States, 13
of the 15 slowest growth areas, states with the slowest growth
in their public education funding, are found in the West, which
are so-called public land states. And it is not even close.
States east of Denver have grown their education funding at a
90 percent plus rate.
Those of us in the West, it is a 40 percent plus rate. It
is almost two to one because we have the benefit of basically a
land czar that deals with our particular areas. The bottom line
is unless the resources in our states are developed in the
West, our kids are hurt. They are put at a decided
disadvantage. You recognized this in the press release when you
said this money goes to funding education.
There are some actions that have decreased. That 77 leases
not only destroyed an area which by redistricting I will get
the chance to represent, so you will be talking to me more I am
afraid, but it also hurt the overall education funding of the
State of Utah unnecessarily. So I want you to know that if the
West is going to develop an adequate funding base for their
education needs they must have the resource development that
takes place on public lands in the West. We can't have it both
ways.
So I am assuming that you will support that in view of the
newsletter and also support the APPLE bill, which I have, which
deals directly with the ability of helping western states fund
their education by doing those things that were promised those
western states when they actually became states in their
organic enabling acts.
Now this is the one I think I can ask a direct question and
answer very briefly. I have read in a news report that the
Department is planning to do restrictions on hunting
opportunities on public lands, specifically Forest Service and
BLM lands. Is the Department currently planning or working on
any types of restrictions on hunting on public lands?
Secretary Salazar. Congressman Bishop, not to my knowledge.
We have a program where we work with and support hunting and
fishing and boating and all the uses of our public lands
because of the importance of the job creation that comes, 6.5
million plus jobs just from outdoor recreation alone. Your
state is I think Exhibit A in terms of some of those economic
benefits that come. So, to my knowledge, there is not that kind
of policy in----
Mr. Bishop. Can I throw that to Director Abbey? Do you know
of anything in your agency that is working on those kinds of
restrictions that were in the press?
Mr. Abbey. We are not working on any kind of restrictions
on hunting and fishing on public lands.
Mr. Bishop. Thank you. I appreciate that, and I hope that
if you support our energy development in the West so that we
can actually fund education for kids I have the opportunity of
again thanking you and complimenting you for a correct
decision.
Secretary Salazar. Thank you very much.
Mr. Bishop. I yield back.
The Chairman. I just noted that he yielded back his time
with a compliment. That is very complementary. Thank you. Two
of them, yes.
Well, that concludes our hearing. I want to thank you,
Secretary Salazar, for coming in and Director Abbey and
Director Beaudreau for coming. As you can see, there are a
number of different opinions here, but that is what these
hearings are designed for is to get that out and come to some
conclusions.
I will ask this. There were several Members, just because
of time constraints, that have questions. Mr. Broun had a line
of questioning that I intervened with vis-a-vis the
relationship between EPA and Interior, and if you could respond
back with that one? I know Mr. Landry may have some further
questions, Mr. Flores. Mr. Tipton I think referenced those. As
those come in to you, if you could respond in a very timely
manner so that we can have that and make it a part of this
record I would appreciate it. Could you do that?
Secretary Salazar. We will do our very best, and I will
direct Christopher Mansour, our Director of Congressional
Affairs, to follow those closely and provide the responses.
The Chairman. If I run into him, I will tell him that you
said that so we can expect that.
And finally, I ask unanimous consent to enter a copy of an
August 2001 draft analysis, which includes a draft Solicitor's
opinion, of a much smaller consolidation proposal between OSM
and MMS that was referenced by Mr. Johnson in his comments to
be included in the record.
Without objection, that will be included with the record.
[NOTE: The August 2001 draft analysis submitted for the
record by Mr. Hastings has been retained in the Committee's
official files.]
The Chairman. Nothing to come before the Committee, again
the Committee stands adjourned. Thank you again for being here.
[Whereupon, at 12:43 p.m., the Committee was adjourned.]