[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
DISCUSSION DRAFT H.R. ____, TO AUTHORIZE THE SECRETARY OF THE INTERIOR
TO RECOVER THE COST OF PROCESSING ADMINISTRATIVE PROTESTS FOR OIL AND
GAS LEASE SALES, APPLICATIONS FOR PERMITS TO DRILL, AND RIGHT OF WAY
APPLICATIONS, AND FOR OTHER PURPOSES; DISCUSSION DRAFT H.R. ____, TO
CLARIFY THE CATEGORICAL EXCLUSIONS AUTHORIZED BY THE ENERGY POLICY ACT
OF 2005 AND AUTHORIZE ADDITIONAL CATEGORICAL EXCLUSIONS TO STREAMLINE
THE OIL AND GAS PERMITTING PROCESS, AND FOR OTHER PURPOSES; DISCUSSION
DRAFT H.R. ____, TO AMEND THE MINERAL LEASING ACT TO AUTHORIZE
NOTIFICATIONS OF PERMIT TO DRILL, AND FOR OTHER PURPOSES; AND
DISCUSSION DRAFT H.R. ____, TO CLARIFY THAT BUREAU OF LAND MANAGEMENT
SHALL NOT REQUIRE PERMITS FOR OIL AND GAS ACTIVITIES CONDUCTED ON NON-
FEDERAL SURFACE ESTATE TO ACCESS SUBSURFACE MINERAL ESTATE THAT IS
LESS THAN 50 PERCENT FEDERALLY OWNED, AND FOR OTHER PURPOSES
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
Wednesday, June 6, 2018
__________
Serial No. 115-47
__________
Printed for the use of the Committee on Natural Resources
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
or
Committee address: http://naturalresources.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
30-350 PDF WASHINGTON : 2018
COMMITTEE ON NATURAL RESOURCES
ROB BISHOP, UT, Chairman
RAUL M. GRIJALVA, AZ, Ranking Democratic Member
Don Young, AK Grace F. Napolitano, CA
Chairman Emeritus Madeleine Z. Bordallo, GU
Louie Gohmert, TX Jim Costa, CA
Vice Chairman Gregorio Kilili Camacho Sablan,
Doug Lamborn, CO CNMI
Robert J. Wittman, VA Niki Tsongas, MA
Tom McClintock, CA Jared Huffman, CA
Stevan Pearce, NM Vice Ranking Member
Glenn Thompson, PA Alan S. Lowenthal, CA
Paul A. Gosar, AZ Donald S. Beyer, Jr., VA
Raul R. Labrador, ID Ruben Gallego, AZ
Scott R. Tipton, CO Colleen Hanabusa, HI
Doug LaMalfa, CA Nanette Diaz Barragan, CA
Jeff Denham, CA Darren Soto, FL
Paul Cook, CA A. Donald McEachin, VA
Bruce Westerman, AR Anthony G. Brown, MD
Garret Graves, LA Wm. Lacy Clay, MO
Jody B. Hice, GA Jimmy Gomez, CA
Aumua Amata Coleman Radewagen, AS Nydia M. Velazquez, NY
Daniel Webster, FL
Jack Bergman, MI
Liz Cheney, WY
Mike Johnson, LA
Jenniffer Gonzalez-Colon, PR
Greg Gianforte, MT
John R. Curtis, UT
Cody Stewart, Chief of Staff
Lisa Pittman, Chief Counsel
David Watkins, Democratic Staff Director
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
PAUL A. GOSAR, AZ, Chairman
ALAN S. LOWENTHAL, CA, Ranking Democratic Member
Louie Gohmert, TX Anthony G. Brown, MD
Doug Lamborn, CO Jim Costa, CA
Robert J. Wittman, VA Niki Tsongas, MA
Stevan Pearce, NM Jared Huffman, CA
Glenn Thompson, PA Donald S. Beyer, Jr., VA
Scott R. Tipton, CO Darren Soto, FL
Paul Cook, CA Nanette Diaz Barragan, CA
Vice Chairman Nydia M. Velazquez, NY
Garret Graves, LA Vacancy
Jody B. Hice, GA Raul M. Grijalva, AZ, ex officio
Jack Bergman, MI
Liz Cheney, WY
John R. Curtis, UT
Rob Bishop, UT, ex officio
------
CONTENTS
----------
Page
Hearing held on Wednesday, June 6, 2018.......................... 1
Statement of Members:
Gosar, Hon. Paul A., a Representative in Congress from the
State of Arizona........................................... 2
Prepared statement of.................................... 3
Lowenthal, Hon. Alan S., a Representative in Congress from
the State of California.................................... 4
Prepared statement of.................................... 5
Statement of Witnesses:
Baza, John, Director, Utah Division of Oil, Gas and Mining,
Utah Department of Natural Resources, Salt Lake City, Utah. 22
Prepared statement of.................................... 23
MacGregor, Katharine, Deputy Assistant Secretary, Land and
Minerals Management, U.S. Department of the Interior,
Washington, DC............................................. 26
Prepared statement of.................................... 27
Questions submitted for the record....................... 32
Martinez, Hon. Susana, Governor, State of New Mexico, Santa
Fe, New Mexico............................................. 7
Prepared statement of.................................... 8
McQueen, Hon. Ken, Secretary, Energy, Minerals and Natural
Resources Department, State of New Mexico, Santa Fe, New
Mexico..................................................... 9
Prepared statement of.................................... 11
Questions submitted for the record....................... 13
Willis, Dennis, Price, Utah.................................. 16
Prepared statement of.................................... 17
LEGISLATIVE HEARING ON DISCUSSION DRAFT H.R. ____, TO AUTHORIZE
THE SECRETARY OF THE INTERIOR TO RECOVER THE COST OF PROCESSING
ADMINISTRATIVE PROTESTS FOR OIL AND GAS LEASE SALES,
APPLICATIONS FOR PERMITS TO DRILL, AND RIGHT OF WAY
APPLICATIONS, AND FOR OTHER PURPOSES; DISCUSSION DRAFT H.R.
____, TO CLARIFY THE CATEGORICAL EXCLUSIONS AUTHORIZED BY THE
ENERGY POLICY ACT OF 2005 AND AUTHORIZE ADDITIONAL CATEGORICAL
EXCLUSIONS TO STREAMLINE THE OIL AND GAS PERMITTING PROCESS,
AND FOR OTHER PURPOSES; DISCUSSION DRAFT H.R. ____, TO AMEND
THE MINERAL LEASING ACT TO AUTHORIZE NOTIFICATIONS OF PERMIT TO
DRILL, AND FOR OTHER PURPOSES; AND DISCUSSION DRAFT H.R. ____,
TO CLARIFY THAT BUREAU OF LAND MANAGEMENT SHALL NOT REQUIRE
PERMITS FOR OIL AND GAS ACTIVITIES CONDUCTED ON NON-FEDERAL
SURFACE ESTATE TO ACCESS SUBSURFACE MINERAL ESTATE THAT IS LESS
THAN 50 PERCENT FEDERALLY OWNED, AND FOR OTHER PURPOSES
----------
Wednesday, June 6, 2018
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, DC
----------
The Subcommittee met, pursuant to notice, at 2:06 p.m., in
room 1324, Longworth House Office Building, Hon. Paul Gosar
[Chairman of the Subcommittee] presiding.
Present: Representatives Gosar, Lamborn, Pearce, Cheney,
Gianforte, Curtis; Lowenthal, Grijalva, Beyer, and Soto.
Also present: Representative Lujan.
Dr. Gosar. The Subcommittee on Energy and Mineral Resources
will come to order. The Subcommittee is meeting today to hear
testimony on four discussion drafts related to onshore oil and
gas energy development.
With unanimous consent, Mr. Lujan will sit and participate
through the duration of the hearing.
Without objection, so ordered.
Under Committee Rule 4(f), oral opening statements at the
hearings are limited to the Chairman, the Ranking Minority
Member, and the Vice Chair. This will allow us to hear from our
witnesses sooner and help Members keep to their schedules.
Therefore, I ask unanimous consent that all other Members'
opening statements be made part of the hearing record if they
are submitted to the Subcommittee Clerk by 5:00 p.m. today.
Without objection, so ordered.
I now recognize myself for a 5-minute opening statement.
STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF ARIZONA
Dr. Gosar. Last month, my colleagues across the aisle and
across the dome held a press conference at a gas station here
on Capitol Hill to call attention to the recent rise in gas
prices. A follow-up letter was also sent, calling on President
Trump to engage with OPEC and leaders from other oil-producing
nations, including Russia's Vladimir Putin, to increase world
oil production to remedy higher prices at the pump.
I actually agree with Senator Schumer on one point:
increasing oil supply would benefit hardworking Americans who
need low gas prices to get to work and make ends meet. But I
would argue that relying on Russia, Iran, and Venezuela to meet
our energy needs at home is not in the national interest, nor
in the environmental interests of the world. We can lower gas
prices and we can do it responsibly by increasing domestic oil
production on Federal and non-Federal lands here in the United
States.
Today, the Subcommittee will consider four bills that will
streamline the oil and gas permitting and leasing process on
our Federal lands, and do so in an environmentally sound
manner. Embracing policies that enhance our energy dominance
will strengthen our national and economic security, create
well-paying jobs, and more importantly, lower gas prices for
our constituents.
The first bill, sponsored by Representative Pearce, would
clarify language in the Energy Policy Act of 2005, also known
as EPAct 05, to expand the use of categorical exclusions in
approving permits and right-of-ways that will have minimal
environmental impacts. Although EPAct 05 authorized five
categorical exclusions for oil and gas, the previous
administration chose not to use them, even when a drilling
permit clearly qualified for an exclusion under the law.
This bill would require the Bureau of Land Management to
use categorical exclusions whenever they are applicable, and
updates the exclusions to reflect advances in drilling
technology. This minor update removes unnecessary bureaucratic
hurdles, allowing the BLM to focus more effort on those
drilling proposals that require rigorous environmental
assessments.
The second bill, also sponsored by Representative Pearce,
prohibits the BLM from requiring permits for oil and gas
drilling activities on private or state-owned surface, unless
the Federal Government owns over 50 percent of the mineral
estate impacted by such activities. Under the previous
administration, the BLM required operators to obtain Federal
drilling permits for surface impacting operations that occurred
on state and private land, causing significant delays and
uncertainty in the permitting process. These requirements
discourage energy development on non-Federal lands, imposing
unnecessary costs on private landowners and the states without
providing additional environmental benefits.
The third bill, sponsored by Representative Curtis, would
authorize an expedited oil and gas permitting process for
certain drilling operations. For oil and gas operations with
little or no environmental impact, operators can submit a
Notification for Permit to Drill, or NPD, instead of going
through the existing Application for Permit to Drill, or APD,
process. The bill will allow operators to proceed with the
drilling activities described in the NPD without further
approval from the BLM, so long as the BLM does not issue
objections within 45 days. Because permits for low-impact
drilling operations will move more quickly through the process,
BLM will be able to utilize its limited resources to prioritize
evaluating and approving drilling activities with a larger
environmental footprint.
The final bill would authorize DOI to recover the cost of
processing protests on lease sales. Currently, funds used to
process protests on oil and gas lease sales are drawn from
DOI's budget. Some of these protests are 1,000 to 1,500 pages
in length, and take months to process. Under this bill, DOI
will be authorized to assess a fee on each protest submitted to
aid in recovering the cost of processing such protests.
Today, we will hear from witnesses representing two energy-
producing states that will be directly impacted by these
legislative proposals. These witnesses will provide valuable
insight regarding whether and how these proposals will
streamline the permitting and leasing process managed by the
BLM in their states.
We will also discuss the impact of oil and gas production
on job creation and how inefficiencies in the permitting and
leasing process impact local economies.
[The prepared statement of Dr. Gosar follows:]
Prepared Statement of the Hon. Paul A. Gosar, Chairman, Subcommittee on
Energy and Mineral Resources
Last month, my colleagues across the aisle and across the dome held
a press conference at a gas station here on Capitol Hill to call
attention to the recent rise in gas prices. A follow-up letter was also
sent, calling on President Trump to engage with OPEC and leaders of
other oil producing nations, including Russia's Vladimir Putin, to
increase world oil production to remedy higher prices at the pump.
Well, I actually agree with Senator Schumer on one point--increasing
oil supply would benefit hardworking Americans who need low gas prices
to get to work and make ends meet. But I would argue that relying on
Russia, Iran and Venezuela to meet our energy needs at home is not in
the national interest--nor in the environmental interests of the world.
We can lower gas prices and we can do it responsibly by increasing
domestic oil production on Federal and non-Federal lands here in the
United States.
Today, the Subcommittee will consider four bills that will
streamline the oil and gas permitting and leasing process on our
Federal lands, and do so in an environmentally sound manner. Embracing
policies that enhance our energy dominance will strengthen our national
and economic security, create well-paying jobs, and importantly, lower
gas prices for our constituents.
The first bill, sponsored by Representative Pearce, would clarify
language in the Energy Policy Act of 2005 (``EPAct 05'') to expand the
use of categorical exclusions in approving permits and right-of-ways
that will have minimal environmental impacts. Although EPAct 05
authorized five categorical exclusions for oil and gas, the previous
administration chose not to use them, even when a drilling permit
clearly qualified for an exclusion under the law. This bill would
require the Bureau of Land Management to use categorical exclusions
whenever they are applicable, and updates the exclusions to reflect
advances in drilling technology. This minor update removes unnecessary,
bureaucratic hurdles allowing the BLM to focus more effort on those
drilling proposals that require rigorous environmental assessments.
The second bill, also sponsored by Representative Pearce, prohibits
the BLM from requiring permits for oil and gas drilling activities on
private or state-owned surface, unless the Federal Government owns over
50 percent of the mineral estate impacted by such activities. Under the
previous administration, the BLM required operators to obtain Federal
drilling permits for surface-impacting operations that occurred on
state and private land, causing significant delays and uncertainty in
the permitting process. These requirements discourage energy
development on non-Federal lands, imposing unnecessary costs on private
landowners and the states without providing additional environmental
benefit.
The third bill, sponsored by Representative Curtis, would authorize
an expedited oil and gas permitting process for certain drilling
operations. For oil and gas operations with little or no environmental
impact, operators can submit a ``Notification for Permit to Drill'' or
``NPD'' instead of going through the existing Application for Permit to
Drill or ``APD'' process. The bill would allow operators to proceed
with the drilling activities described in the NPD without further
approval from the BLM, so long as BLM does not issue objections within
45 days. Because permits for low impact drilling operations will move
more quickly through the process, BLM will be able to utilize its
limited resources to prioritize evaluating and approving drilling
activities with a larger environmental footprint.
The final bill would authorize DOI to recover the cost of
processing protests on lease sales. Currently, funds used to process
protests on oil and gas lease sales are drawn from DOI's budget. Some
of these protests are 1,000 to 1,500 pages in length and take months to
process. Under this bill, DOI will be authorized to assess a fee on
each protest submitted to aid in recovering the cost of processing such
protests.
Today, we will hear from witnesses representing two energy-
producing states that will be directly impacted by these legislative
proposals. These witnesses will provide valuable insight regarding
whether and how these proposals will streamline the permitting and
leasing process managed by the BLM in their states. We will also
discuss the impact of oil and gas production on job creation and how
inefficiencies in the permitting and leasing process impact local
economies.
______
Dr. Gosar. I recognize the gentleman to my left, the
Ranking Member, Mr. Lowenthal, for his 5 minutes.
STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Dr. Lowenthal. Thank you, Mr. Chairman, and thank you to
the witnesses for being here today.
I have concerns with all four of the draft bills we are
discussing today. My biggest concern is a common theme that
runs through all of them, and through this Administration's
approach to oil and gas on public lands.
Simply put, that theme is: let the industry do whatever it
wants and keep the public in the dark. It appears to be a
guiding principle of this Administration: government exists for
the benefit of the wealthy and the well-connected, while
everyday Americans are inconveniences that need to be silenced
or ignored.
Nothing demonstrates that better than the constant attacks
on the National Environmental Policy Act, also known as NEPA. I
will bet most people in the country have never heard of NEPA.
But NEPA is often the only reason that people hear about
anything else.
One of the foundational principles of NEPA is involving the
public in government decisions. People should be told what the
government intends to do in their communities, in their
neighborhoods, and in their backyards. And people should not
just be informed of decisions that have already been made, they
should have a voice in the process. But that ability is under
attack.
Earlier this year, the Bureau of Land Management reversed a
7-year-old policy and made it completely optional to involve
the public in the review of proposed oil and gas leases. The
BLM also shortened the time available to protest leases, from
30 days to just 10. Although maybe that is helpful, given that
one of today's bills would create a per-page fee for filing a
protest. With only 10 days to write one, chances are that it is
going to be shorter and cheaper.
Meanwhile, these bills would also mandate the broad use of
categorical exclusions for drilling permits--again, shutting
the public out of the process.
The problem with this approach isn't limited just to the
clear effort to make sure that the public sees, hears, and
speaks no evil when it comes to oil drilling. This is an attack
on the environment, as well.
The Government Accountability Office and others have shown
that the widespread use of categorical exclusions leads to
piecemeal development that creates far more surface disturbance
than necessary. These bills are effectively providing an
incentive for oil and gas companies to do more damage to our
public lands.
As with so many of the Republican energy bills in this
Committee, the underlying premise behind them is entirely
false. Despite the repeated claims by the Majority, oil
production on Federal lands is robust, and that is not because
of President Trump. Onshore oil production on Federal lands
went up 78 percent under President Obama. Companies hold over
14 million acres of oil and gas leases that aren't producing
oil or gas. They have also stockpiled nearly 8,000 drilling
permits that they are not using.
There are fewer pending drilling permits now than at any
time in the past decade. And, according to the most recent data
put out by the Bureau of Land Management with their new
computer system, they are able to process permits in only 50
days.
Waiving environmental laws and shutting the public out
simply to allow companies to drill faster is unnecessary and,
more importantly, it is wrong.
The Trump administration is relentlessly trying to remove
anything that might be a burden to the oil and gas industry.
But informing people of what is happening in their backyard is
not a burden. Giving people a voice is not a burden. And
responsible, balanced management of public lands is not a
burden.
Unfortunately, these bills don't reflect that, and I
believe they should be sent back to the drawing board.
Again, I thank the witnesses for being here, and I yield
back the balance of my time.
[The prepared statement of Dr. Lowenthal follows:]
Prepared Statement of the Hon. Alan S. Lowenthal, Ranking Member,
Subcommittee on Energy and Mineral Resources
Thank you, Mr. Chairman, and thank you to the witnesses for being
here.
I have serious concerns with the four draft bills that we are
discussing today. The biggest concern is a common theme that runs
through all of them, and through this Administration's approach to oil
and gas on public lands.
Simply put, that theme is: let the industry do what it wants, and
keep the public in the dark. It appears to be the guiding principle of
this Administration: government exists for the benefit of the wealthy
and the well-connected, while every-day Americans are inconveniences
that need to be silenced or ignored.
Nothing demonstrates that better than the constant attacks on the
National Environmental Policy Act, also known as NEPA. I bet that most
people in the country have never heard of NEPA. But NEPA is often the
only reason that people hear about anything else.
One of the foundational principles of NEPA is involving the public
in government decisions. People should be told what the government
intends to do in their communities, in their neighborhoods, and in
their backyards. And people should not just be informed of decisions
that have already been made. They should have a voice in the process.
But that ability is under attack.
Earlier this year, the Bureau of Land Management reversed a 7-year-
old policy and made it completely optional to involve the public in the
review of proposed oil and gas leases. The BLM also shortened the time
available to protest leases from 30 days to just 10. Although maybe
that's helpful, given that one of today's bills would create a per-page
fee for filing a protest. With only 10 days to write one, chances are
it'll be shorter and cheaper.
Meanwhile, these bills would also mandate the broad use of
categorical exclusions for drilling permits, again shutting the public
out of the process.
The problem with this approach isn't limited to the clear effort to
make sure the public sees, hears, and speaks no evil when it comes to
oil drilling. This is an attack on the environment as well.
The Government Accountability Office and others have shown that the
widespread use of categorical exclusions leads to piecemeal development
that creates far more surface disturbance than necessary. These bills
are effectively providing an incentive for oil and gas companies to do
more damage to our public lands.
And, as with so many Republican energy bills in this Committee, the
underlying premise behind them is entirely false. Despite the repeated
claims by the Majority, oil production on Federal lands is robust. And
it's not because of President Trump.
Onshore oil production on Federal lands went up 78 percent under
President Obama. Companies hold over 14 million acres of oil and gas
leases that aren't producing oil or gas. They have also stockpiled
nearly 8,000 drilling permits that they're not using.
There are fewer pending drilling permits now than at any time in
the past decade. And according to the most recent data put out by the
Bureau of Land Management, with their new computer system they're able
to process permits in only 50 days.
Waiving environmental laws and shutting the public out simply to
allow companies to drill faster is unnecessary, and more importantly,
it is wrong.
The Trump administration is relentlessly trying to remove anything
that might be a burden to the oil and gas industry. But informing
people of what is happening in their backyard is not a burden. Giving
people a voice is not a burden. And responsible, balanced management of
public lands is not a burden.
Unfortunately, these bills don't reflect that, and I believe they
should be sent back to the drawing board.
I thank the witnesses again for being here, and yield back the
balance of my time.
______
Dr. Gosar. I thank the gentleman. I now want to recognize
our panel.
First of all, we have the Honorable Susana Martinez, the
Governor of the State of New Mexico--welcome; the Honorable Ken
McQueen, Secretary, Energy, Minerals and Natural Resources
Department, State of New Mexico--thank you; Mr. Dennis Willis,
private citizen from Price, Utah--thanks for coming; Mr. John
Baza, Director, Utah Division of Oil, Gas and Mining, Salt Lake
City, Utah--welcome; and Ms. Katharine MacGregor, Deputy
Assistant Secretary for Land and Minerals Management,
Department of the Interior, right here in Washington, DC.
Welcome back, Katie.
Let me remind the witnesses that under our Committee Rules
they must limit their oral statements to 5 minutes. But their
entire statement will be appearing in the hearing record.
Our microphones are not automatic, so you are going to see
a light system. For the first 4 minutes it will be green, then
it will turn to yellow. That gives you about a minute. When you
see the red, please try to summarize because we want to get to
questions.
With that, I would like to recognize Governor Martinez for
your 5 minutes.
STATEMENT OF THE HON. SUSANA MARTINEZ, GOVERNOR, STATE OF NEW
MEXICO, SANTA FE, NEW MEXICO
Governor Martinez. Thank you, Chairman Gosar, Ranking
Member Lowenthal, and Subcommittee members. Thank you for the
opportunity to speak with you today on an issue that is of
incredible importance and urgency to the state of New Mexico,
western states, and to the Federal Government.
Today alone, my state will lose out on approximately $2
million in tax revenue due to a backlog of applications for
permit to drill by the Bureau of Land Management in just our
state. This same delay in application approvals will cost the
Federal Government another $3.5 million in revenues, again, in
a single day.
But these applications are not just waiting a single day to
be approved. The average approval time for BLM permits in New
Mexico is 250 days, compared to just 10 days for the New Mexico
Energy, Minerals and Natural Resources Department to approve
those same permits. This has created a backlog of more than 800
BLM applications.
Over the course of a year, these delays add up to a $713
million loss of revenue for the state of New Mexico and a $1.3
billion loss for the Federal Government, with those amounts
increasing daily.
I know that many other states are facing similar delays. If
the Federal Government is losing $1.3 billion per year from New
Mexico alone, it should concern all of us to think what the
national loss in revenue must be.
A large share of our state's oil and gas royalties support
our public school system in New Mexico. At a time when we are
fighting to turn around struggling schools and ensure that our
school campuses are safe and they are secure, we should not be
letting a single dollar slip away.
It is not just education. Revenue from oil and gas activity
helps to fund all of our state's vital services, like law
enforcement, health and human service programs, emergency
management, and infrastructure construction.
In addition to impacting important services, delays in the
approval of permits also affect job growth and rural economic
development. Oil and gas activity contributes more than $11.3
billion to New Mexico's economy, and is responsible for more
than 100,000 jobs. Keep in mind, the population in New Mexico
is 2.1 million people.
Each backlogged permit represents New Mexicans losing out
on good-paying jobs and rural communities losing out on
economic growth. We need a solution that will streamline layers
of bureaucratic requirements and expedite the approval process.
Five of my western governors, my peers, and I have
presented four proposals to the Department of the Interior that
would ensure the timelier handling of regular, run-of-the-mill
applications for drilling permits. The draft legislation before
the Committee today contains many of the same principles as our
proposals, with one common objective: cut the duplicative and
bureaucratic Federal red tape that is hampering energy
production across the West.
When I took office in 2011, I inherited a $450 million
budget deficit, nearly 9 percent of my $5.2 billion budget. We
have made great progress since then. Our tax revenues are
rising rapidly, New Mexico's economy is expanding and
diversifying, and we have taken critical steps to protect the
long-term stability of our state budget while amassing an $800
million budget surplus without increasing a single tax on our
people or small businesses.
We have cut unnecessary government red tape and improved
efficiencies. We have expanded production in New Mexico, while
at the same time cracking down on polluters and levying more
fines than any prior administration did. And we are
implementing our all-of-the-above energy plan to aggressively
develop all sources of energy in New Mexico.
These four bills offer you an opportunity to improve
Federal processes in a way that will make a measurable
difference for all New Mexicans and millions of people across
the western United States and the rest of our country.
I thank you for your time and your consideration.
[The prepared statement of Governor Martinez follows:]
Prepared Statement of Susana Martinez, Governor of New Mexico
Chairman Bishop, Chairman Gosar, Ranking Member Lowenthal, and
Subcommittee members, thank you for the opportunity to speak with you
today on an issue that is of incredible importance and urgency to the
state of New Mexico, western states, and the Federal Government.
Today alone, my state will lose out on approximately $2 million in
tax revenue due to a backlog for Applications for Permit to Drill by
the Bureau of Land Management in New Mexico. This same delay in
application approvals will cost the Federal Government another $3.5
million in revenues, again, in a single day.
But these applications aren't just waiting a single day. The
average approval time for BLM permits in New Mexico is 250 days,
compared to just 10 days for the New Mexico Energy, Minerals and
Natural Resources Department to approve those same permits. This has
created a backlog of more than 800 BLM applications.
Over the course of a year, these delays add up to a $713 million
loss of revenue for the state of New Mexico and a $1.3 billion loss for
the Federal Government, with those amounts increasing daily.
I know that many other states are facing similar delays. If the
Federal Government is losing $1.3 billion per year from New Mexico
alone, it should concern all of us to think what the national loss in
revenue must be.
A large share of our state's oil and gas royalties support our
public school system, and at a time when we're fighting to turn around
struggling schools and ensure that our school campuses are safe and
secure, we shouldn't be letting a single dollar slip away.
It's not just education. Revenue from oil and gas activity helps to
fund all of our state's vital services like law enforcement, health and
human service programs, emergency management, and infrastructure
construction.
In addition to impacting important services, delays in the approval
of permits also affect job growth and rural economic development. Oil
and gas activity contributes more than $11.3 billion to New Mexico's
economy and is responsible for more than 100,000 jobs. Each backlogged
permit represents New Mexicans losing out on good-paying jobs and rural
communities losing out on economic growth.
We need a solution that will streamline layers of bureaucratic
requirements and expedite the approval process. Five of my western
governor peers and I have presented four proposals to the Department of
the Interior that would ensure the timelier handling of regular, run-
of-the-mill applications for drilling permits.
The draft legislation before the Committee today contains many of
the same principles as our proposals, with one common objective: cut
the duplicative and bureaucratic Federal red tape that is hampering
energy production across the West.
When I took office in 2011, I inherited nearly a half-billion
dollar budget deficit and we have made great progress since then. Our
tax revenues are rising rapidly, New Mexico's economy is expanding and
diversifying, and we have taken critical steps to protect the long-term
stability of our state budget while amassing an $800 million budget
surplus without raising taxes once.
We've cut unnecessary government red tape and improved efficiency,
we've expanded production in New Mexico, while at the same time
cracking down on polluters and levying more fines than any prior
administration did. And, we're implementing our all-of-the-above energy
plan to aggressively develop all sources of energy in New Mexico.
These four bills offer you an opportunity to improve Federal
processes in a way that will make a measurable difference for all New
Mexicans and millions of people across the western United States and
the rest of our country.
Thank you for your time and consideration.
______
Dr. Gosar. Thank you, Governor.
I now recognize Mr. McQueen for his 5 minutes.
STATEMENT OF THE HON. KEN McQUEEN, SECRETARY, ENERGY, MINERALS
AND NATURAL RESOURCES DEPARTMENT, STATE OF NEW MEXICO, SANTA
FE, NEW MEXICO
Mr. McQueen. Chairman Gosar, Ranking Member Lowenthal, and
members of the Subcommittee, thank you for the opportunity to
appear today to discuss oil and gas permitting on lands managed
by the Federal Government. The overwhelming majority of Federal
land ownership is concentrated in states west of the 100th
meridian.
In New Mexico, the Federal Government owns 35 percent of
the state's acreage, most of which is managed by the Bureau of
Land Management. Oil and gas production in New Mexico is
disproportionately produced on these Federal lands. In 2017, 57
percent of the oil and 65 percent of the New Mexico gas was
produced from the Federal mineral estate.
Today, the Permian Basin is one of the most active plays in
the world. In fact, 45 percent of the entire U.S. rig fleet is
currently working in the Permian Basin. The Basin stretches
across two states--25 percent of the Basin falling in New
Mexico and the remainder in Texas. Texas was blessed not only
with a larger portion of the Basin, but also with no Federal
lands.
This all works to New Mexico's disadvantage. In Texas, you
can have a permit and a well drilled quicker than you can
complete the APD Federal paperwork in New Mexico. The oil and
gas industry is a very cyclical business with wide,
unpredictable swings in activity. During the last price
collapse, New Mexico saw drilling rigs drop from 103 to 13 in
just 17 months.
That is why it is so important to provide as many permits
as possible while oil prices are high, as they are today. That
way, when we move into the next slow-down, having a larger
inventory of producing wells on-line will help buoy the state
through the down-cycle. My dad always told me to make hay while
the sun shines.
Because it seemed unlikely that a petition to redraw the
Texas-New Mexico border to locate more of the Permian in New
Mexico would succeed, we are here today encouraging you to
examine and address process inefficiencies that will help put
states like New Mexico with a heavy BLM presence on a more
level playing field with states like Texas, who still wonders
what BLM stands for.
These proposals developed by Governor Martinez and endorsed
by six other western state governors, including North Dakota,
Oklahoma, Utah, Alaska, Idaho, and Wyoming, offers a practical
and common-sense approach to addressing the mountain of
backlogged permits on Federal lands.
Currently, there are over 850 applications for permit to
drill, or what we call APDs, pending in the Carlsbad, New
Mexico BLM field office. That is the heart of the Permian
Basin. The BLM will eventually approve most, if not all of the
APDs. However, marshaling each APD through the present process
will take an average of 250 days. These delays present
significant cost to the Federal Government and the state of New
Mexico.
Given current oil and gas prices, over a 1-year period
these delays will cost the Federal Government over $1.3
billion, and New Mexico over $700 million. These revenues are
not deferred because of substantive FLPMA, NEPA, or other
objections. Rather, these revenues are deferred solely because
of process inefficiencies.
These proposals do not subjugate one statutory process to
another. Rather, they ensure that when circumstances call for
limitations on development, those limitations will be based on
substance and not process alone.
The first proposal right-sizes the geographic scope of a
BLM APD. Under current processes, field offices require an APD
for production and exploration activities situated on non-
Federal surface if the activity penetrates Federal minerals.
This proposal removes the APD requirement for production and
exploration activities situated on non-Federal surface if the
operator submits to BLM a state-issued permit to drill.
The second proposal introduces practical NEPA categorical
exclusions on certain activities conducted under the Mineral
Leasing Act. Importantly, the new categories of activities are
activities that mirror existing land use activities or are
categories of activities that have already undergone NEPA
analysis.
The third proposal is perhaps the most impactful, and while
novel in oil/gas context, it is not without precedent. The
proposal shares attributes with the well-known Clean Water Act
Section 404 nationwide permitting scheme, which has been in
existence for decades. Under the proposed program, an operator
submits a notification of a permit to drill in lieu of an APD.
The notification must include certain specified items. Assuming
a complete notification, the operator can move forward with its
proposed production activities, unless within 45 days it
receives notice that the Secretary of the Interior objects to
proposal and the production activity.
In conclusion, the problem with energy development in New
Mexico and similarly situated states is real. Waiting a year
for a permit is an economic poisoned pill. These bills, like
Governor Martinez's proposal, present practical and executable
solutions that eliminate process inefficiencies and get the
process of developing energy and an economy back on track. To
the extent that there are opportunities to pilot these or other
similar proposals on a regional or state level, New Mexico is
ready and willing to get started. Thank you.
[The prepared statement of Mr. McQueen follows:]
Prepared Statement of Ken McQueen, Cabinet Secretary, Energy, Minerals
& Natural Resources Department, State of New Mexico
introduction
Chairman Gosar, Chairman Bishop, Ranking Member Lowenthal, members
of the Subcommittee, thank you for the opportunity to appear today to
discuss oil and gas permitting on lands managed by the Federal
Government.
The Bureau of Land Management administers some 245 million surface
acres (a tenth of the U.S. land base) and 700 million subsurface
mineral acres. While no one here will be surprised by this fact, it
nevertheless is worth mentioning that the overwhelming majority of
Federal land ownership is concentrated in states west of the hundredth
meridian. Consider that the Federal Government owns 48 percent of
Wyoming, 61 percent of Idaho, 63 percent of Utah, 61 percent of Alaska,
and 80 percent of Nevada, whereas Federal ownership falls to nominal
levels as you move east, with the Federal Government owning only 1.8
percent of Texas, 1.1 percent of Illinois, 2.1 percent of Pennsylvania,
1.2 percent of Massachusetts, and 0.6 percent of New York.\1\ As
everyone here knows, Federal land ownership, with its complex
regulatory overlay, can stymie land use and development. With the bulk
of western states' lands falling under Federal ownership, the
conclusion is not a hard one to reach that in the context of land
management opportunities, western states are at a comparative
disadvantage to their eastern sister-states.
---------------------------------------------------------------------------
\1\ Federal Land Ownership: Overview and Data, Congressional
Research Service, March 3, 2017, (available at https://fas.org/sgp/crs/
misc/R42346.pdf).
---------------------------------------------------------------------------
In New Mexico, the Federal Government owns 35 percent of the
state's acreage, most of which is managed by the Bureau of Land
Management (BLM). Oil and gas production in New Mexico is
disproportionately produced on those Federal lands. Consider that in
2017, 57 percent of New Mexico's oil and 65 percent of New Mexico's gas
was produced from the Federal mineral estate.
Today the Permian Basin is one of the most active plays in the
world, in fact, 45 percent (477 rigs) of the entire U.S. rig fleet is
working in the Permian Basin. The Basin stretches across two states--25
percent of the basin falling in New Mexico and the remainder in Texas.
Texas was blessed, not just with a larger portion of the basin, but
also with no Federal lands. This all works to New Mexico's
disadvantage. In Texas you can have a permit and a rig on location
quicker than you can fill out the paperwork to drill a well on Federal
acreage in New Mexico.
The oil and gas industry is a very cyclical business, with wide and
unpredictable swings in activity. During the last price collapse, New
Mexico saw utilized drilling rigs drop from 103 to 13 in 17 months.
Why does this matter?
It's important to provide as many permits as possible while oil
prices are high, as they are today. That way, when we move into the
next slowdown, having a larger inventory of wells drilled and more
production on-line will help buoy the state through the down cycle.
Because it seemed unlikely that a petition to redraw the Texas-New
Mexico border to locate more of the Permian in New Mexico would
succeed, we are here today encouraging you to examine and address
process inefficiencies that will help put states like New Mexico, with
a heavy BLM presence, on a more level playing field with states like
Texas, who still do not know what BLM stands for. This proposal,
developed by Gov. Martinez, and signed on by five other western state
governors, offers a practical and common-sense approach to addressing
the mountain of backlogged permits on Federal lands.
When the BLM makes decisions for the multiple-use lands under its
management, specifically decisions regarding mineral development, the
decisions are primarily governed by three statutes--the Federal Land
Policy and Management Act of 1976 (FLPMA), the National Environmental
Policy Act (NEPA), and the Mineral Leasing Act. Often this collection
of statutes has been perceived to be anti-development in nature. This
perception is not in keeping with the statutory language. Consider the
purposes of the statutes.
FLPMA instructs the BLM to manage its resources ``based on multiple
use and sustained yield'' and in a manner that protects ``scenic,
historical, ecological [and] environmental'' resources and values.\2\
---------------------------------------------------------------------------
\2\ 43 U.S.C. Sec. 1701(a)(7)-(8).
---------------------------------------------------------------------------
NEPA instructs the Federal Government to cooperate with state and
local governments to ``foster and promote the general welfare, to
create and maintain conditions under which man and nature can exist in
productive harmony, and fulfill the social, economic, and other
requirements of present and future generations of Americans.'' \3\
---------------------------------------------------------------------------
\3\ 42 U.S.C. Sec. 4331(a).
---------------------------------------------------------------------------
The Mineral Leasing Act instructs the Federal Government to
``foster and encourage private enterprise in (1) the development of
economically sound and stable domestic mining, minerals, metal and
mineral reclamation industries, [and] (2) the orderly and economic
development of domestic mineral resources, reserves, and reclamation of
metals and minerals to help assure satisfaction of industrial, security
and environmental needs.'' \4\
---------------------------------------------------------------------------
\4\ 30 U.S.C. Sec. 21a.
---------------------------------------------------------------------------
FLPMA promotes multiple-use and sustained yield and the Mineral
Leasing Act encourages private enterprise and economic development.
These pro-development mandates are balanced by NEPA's environmental
considerations. NEPA is not, however, intended to stymie development,
rather implement a process to help find balance. Together these
statutes promote both development and environmental protection.
However, the current implementing processes under these statutes have
been largely co-opted by anti-development interests with the intent of
stalling and preventing through delay the multiple use sustained yield
mandate.
the proposals
Currently, there are over 800 Applications for Permit to Drill
(APDs) pending approval in the Carlsbad, New Mexico BLM field office--
the heart of the Permian. The BLM will eventually approve most, if not
all, of these APDs, however, marshalling each APD through the present
process will take an average of 250 days. These delays present
significant costs to the Federal Government and the state of New
Mexico. Given current oil and gas prices, over a 1-year period these
delays will cost the Federal Government over $1.3 billion and New
Mexico over $700 million. These revenues are not deferred because of
substantive FLPMA, NEPA, or other objections, rather these revenues are
deferred solely because of process inefficiencies.
The proposals before the Subcommittee eliminate process
inefficiencies. They do not subjugate one statutory purpose to another,
rather, they ensure that when circumstances call for limitations on
development, those limitations will be based on substance and not
process alone. Process for the sake of process should not be allowed to
frustrate the multiple-use and economic development mandates.
No Federal Permit Required for Production Activities on Non-Federal
Surface
The first proposal right-sizes the geographic scope of a BLM APD.
Under current processes, field offices require an APD for production
and exploration activities situated on non-Federal surface if the
activity penetrates Federal minerals or if the operation is unitized/
communitized with Federal minerals. Under these scenarios, production/
exploration activities situated entirely on private land would require
an APD and consequently NEPA process if, for example, the increasingly
common multiple-mile horizontal well-bore penetrates, even slightly,
Federal minerals, or if a well situated entirely on private surface
that never penetrates Federal minerals but is unitized with Federal
minerals.
This proposal removes the APD requirement for production and
exploration activities situated on non-Federal surface if the operator
submits to the BLM a state-issued permit to drill and the United States
owns less than 50 percent of the target minerals.
NEPA Categorical Exclusions
The second proposal introduces practical NEPA categorical
exclusions for certain activities conducted under the Mineral Leasing
Act. Importantly, the new categories of activities are activities that
mirror existing land-use activities or are categories of activities
that have already undergone NEPA analysis. For example, drilling an oil
or gas well at a well pad site at which drilling has occurred
previously, or drilling an oil and gas well at new well pad sites,
provided the new disturbance does not exceed 20 acres or the amount of
acreage evaluated in prior NEPA.
I would recommend a slight tweak to the proposal as presently
drafted and extend the time frame on current categorical exclusions to
10 years. This makes sense because the last two Resource Management
Plans have taken nearly 5 years to complete.
Notification of Permit to Drill (NPD)
The third proposal is perhaps the most impactful, and while novel
in the oil and gas context, is not without precedent. This proposal
shares attributes with the well-known Clean Water Act Section 404
nationwide permitting scheme, which has been in existence for decades.
Under the proposed program, an operator submits a notification of a
permit to drill in lieu of an APD, which notification must include
certain specified items, such as a surface use plan of operations, a
drilling plan, a well plat, evidence of bond coverage, the appropriate
fee, etc. Assuming a complete notification and that the operation meets
certain additional specified criteria, the operator can move forward
with its proposed production activity, unless within 45 days it
receives notice that the Secretary of Interior objects to the proposed
production activity.
Like the Clean Water Act Section 404 nationwide permitting scheme,
this proposal instructs the Secretary to develop regulations
establishing procedures that will implement the program and further
contemplates the preparation of a NEPA analysis as part of that
rulemaking. The effect is to adjust the timing of the NEPA analysis.
Rather than conducting NEPA upon receipt of an APD, the proposal
contemplates a large, umbrella NEPA review contemplating oil and gas
production activity within specified areas. Then, when an operator
intends to move forward with production activity at a specific site, it
must conduct a limited environmental review that must conclude that the
actions described in the notification do not pose a significant effect
to the environment or to threatened or endangered species.
conclusion
In conclusion, the problem with energy development in New Mexico
and similarly situated states is real. Waiting a year for a permit is
an economic development poison-pill. These bills, like Governor
Martinez's proposals, present practical and executable solutions that
eliminate process inefficiencies and get the process of developing
energy and an economy back on track. To the extent there are
opportunities to pilot these or other similar proposals on a regional
or state level, New Mexico is ready to get started.
______
Questions Submitted for the Record to the Honorable Ken McQueen,
Secretary, New Mexico Energy, Minerals and Natural Resources Department
Questions Submitted by Rep. Ben Ray Lujan
Question 1. In a presentation to the New Mexico legislature in
November 2017, Secretary McQueen presented figures purporting to
estimate the scope of the methane waste and pollution problem in New
Mexico, but these figures excluded the volume of methane leaked by the
oil and gas industry. Scientific studies have shown that these fugitive
emissions make up most of oil- and gas-related methane emissions. What
steps has the New Mexico state government taken to correct these
figures to fully account for all sources of oil- and gas-related
methane pollution and waste?
Question 2. During your confirmation hearing, Secretary McQueen,
you stated that you believed the infamous hotspot of methane pollution
over northwestern New Mexico--the most concentrated plume of methane
found anywhere in the country--was due to ``natural causes.'' Now that
scientific reports from top scientists at the National Oceanic and
Atmospheric Administration (NOAA), the University of Michigan, and the
University of Colorado have linked this pollution hot spot directly to
problems with oil and gas wells in the San Juan Basin, have you changed
your opinion?
Question 3. We have been informed that the state of New Mexico's
Energy, Minerals and Natural Resources Department requires oil and gas
operators to report monthly on their venting and flaring volumes, but
that this information is not available or easily accessible to the
public through the Oil Conservation Division's statistics website. Why
hasn't this agency provided this information to the public? Will you
provide summary statistics and public access to the raw data?
Question 4. On March 8, 2017, the Director of New Mexico's Oil
Conservation Division issued a letter to operators that indicated a
failure in compliance for operators reporting venting and flaring. What
has the state done to rectify this problem? What is the current status
of compliance?
Question 5. Governor Martinez's 2015 energy strategy listed methane
as a ``leading New Mexico emissions concern in the energy sector.''
What has the Martinez administration implemented since 2015 to address
this methane concern?
Question 6. The Governor's 2015 Energy Strategy went on to state
that the Oil Conservation Division ``will be collaborating with several
other state agencies to assess the economics and benefits to both the
state and industry of better capturing methane emissions.'' What is the
current status of that analysis?
Answers.
In 2015 Governor Susana Martinez directed then-Cabinet Secretary,
Dave Martin of the Energy, Minerals, and Natural Resources Department
to convene a joint industry-government task force to study methane
releases in New Mexico. The Governor's directive was to: (1) quantify
vented and flared volumes of methane in New Mexico and compare them to
surrounding states; (2) identify technological advancements that could
be employed to reduce vented and flared volumes; (3) consider possible
regulatory approaches that might reduce vented and flared volumes; and
(4) eliminate or adjust regulations that slow or otherwise impede
technological implementation/innovation that could reduce venting and
flaring. This Gas Capture Workgroup has met regularly since 2015.
Workgroup recommendations and ongoing efforts to reduce methane
emissions.
The Workgroup has delivered several recommendations to the New
Mexico Oil Conservation Division (OCD), all of which have been
implemented. The first recommendation requires operators to quantify
and report, monthly, non-transported, i.e. flared and vented, volumes.
Effective October 19, 2015, OCD notified all Operators to report non-
transported volumes on their C-115 production reporting. The change
became effective for the November 2015 production month, with the first
round of monthly reporting due no later than January 15, 2016.
The Workgroup also recommended that all operators submit a Gas
Capture Plan (GCP) to OCD with their Application to Drill (APD). The
GCP outlines and specifies how an operator intends to avoid flaring and
venting methane, which includes communicating with transport and
processing companies for the potential increase in the volumes. OCD
adopted this recommendation in May 2016. The New Mexico GCP form was
subsequently adopted by the BLM for Federal APDs in New Mexico.
Additionally, OCD regulations prohibit the venting or flaring of
methane. The production or handling of crude petroleum oil or natural
gas of any type or in any form, or the handling of products thereof, in
such manner or under such conditions or in such amounts as to
constitute or result in waste is prohibited. The exception to this
prohibition is for limited completion activities, which allows an
operator to flare or vent casinghead gas from a well for up to 60 days.
Using data compiled from monthly non-transported volume reporting,
the Workgroup evaluates reported volumes to help ensure compliance is
achieved. Investigation of operators failing to report found 56
instances among 15 operators where vented or flared volumes may not
have been properly reported. Follow-up continues with individual
operators to validate and ensure correct C-115 reporting. Considering
that approximately 60,000 active wells report monthly volumes in New
Mexico, the incidence of non-reporting is miniscule. Operators who fail
to report are subject to OCD enforcement, up to and including
suspension of their approval to transport. Addressing this observation,
OCD issued a notice to operators on March 8, 2017, reiterating the
reporting requirement.
During the time the Workgroup has existed, New Mexico has seen its
vented and flared volumes decreased by nearly 50 percent. Technological
innovation is the primary driver behind the reductions, with many
operators making significant expenditures to install new equipment,
such as low-bleed controllers. By utilizing new and more advanced
equipment as well as by adhering to evolving best-management practices,
continued shale drilling is not expected to contribute additional
volumes of methane. Furthermore, basic rules of economics mandate
methane recovery over venting or flaring--every molecule of methane
that is vented or flared is a molecule of methane that is not sold and
thus represents lost revenue to the producer.
Technological evolutions coupled with process innovations have and
will no doubt continue to provide increased reductions in methane
emissions. Some of the advancements and innovations driving the
reduction in vented and flared volumes in New Mexico include:
Proactivity by operators in constructing takeaway
facilities and pipelines in advance of drilling;
Replacement of high-bleed controllers with low-bleed
controllers;
Operator owned gathering system in the San Juan Basin,
facilitating blending of high-nitrogen gas before sales
point;
Pad drilling (one gathering line supports multiple wells);
Use of electric controllers on new facility installations;
Installation of solar powered controllers;
Well-site cryo unit to separate and collect hydrocarbon
liquids.
The Fruitland Coal outcrop is a significant source of naturally
occurring methane.
Regarding methane concentrations in northwestern New Mexico,
consider this context. Methane originates from multiple sources, some
man-made, some natural. Most of the data collected to date in northwest
New Mexico has either been from qualitative methods or simulation. The
San Juan Basin possesses a unique geologic feature--it is ringed on the
west and north by an outcrop of the Fruitland Coal seam. This feature
is a significant coal source and has been commercially mined for years.
The coal outcrop not only provides ready access to coal but emits
significant and steady volumes of methane. Certain voices have placed
blame for methane concentrations in the northwest at the foot of New
Mexico oil and gas producers, while ignoring the elephant-sized methane
emitter which is the Fruitland Coal outcrop.
As reported by the Colorado Oil and Gas Commission, in 2017, the
23-mile outcrop in LaPlata County, Colorado emitted 16,650 Mcf per day.
Consider that an additional 40 miles of the outcrop exists across the
Southern Ute Reservation and New Mexico. Those 63 miles of outcrop are
responsible for approximately 45,606 Mcf per day of methane emission,
which is equivalent to 77 percent of the total natural gas flared in
New Mexico in April 2018.
Impacts to Marginal Wells
The economic impact of methane mitigation must be weighed against
the value of continued production in marginal wells. At last count, New
Mexico had 17,451 marginal gas producers which make up 17 percent of
the state's total gas production. In the current price environment,
many of these wells produce marginal profits at best, so imposition of
additional operational costs will result in cessation of production
from these wells.
New Mexico is a leader in methane reductions.
The U.S. Energy Information Administration (EIA) provides estimates
of vented and flared volumes from several states. New Mexico compares
very favorably to other reporting states. The available data is charted
below:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
.epsThere are no lost royalties beyond the custody transfer site.
Finally, some have raised concerns about revenue that is lost from
methane that is leaked from transportation infrastructure, e.g.
pipelines. This concern is unfounded. The custody transfer of natural
gas generally occurs at the wellhead, meaning royalties are paid on
volumes measured at that point. In other words, royalties on volume of
methane leaked downstream of the custody transport site have already
been paid--there is no lost revenue to the state. The only lost revenue
on any methane that might be leaked downstream of the custody transfer
site are revenues lost to the owner of the gas.
______
Dr. Gosar. Thank you, Mr. McQueen.
I now recognize Mr. Willis for his 5 minutes.
STATEMENT OF DENNIS WILLIS, PRICE, UTAH
Mr. Willis. I thank the Subcommittee for the opportunity of
participating in today's hearing.
For 35 years, I was employed by the Bureau of Land
Management. I worked in many aspects of the oil and gas
program. And we always involved all stakeholders, regardless of
their welfare or political influence. Since retiring, I have
engaged in these processes as a board member of the Nine Mile
Canyon Coalition, a local non-profit. I am here today as a
private citizen and resident of Carbon County, Utah.
In Carbon County, we revel in a 130-year heritage of energy
development and production. We value industry's contributions
to our economy, but we also expect them to be a good neighbor.
We rely on the NEPA process to make sure companies learn about
potential conflicts and are aware of community sensitivities.
The most contentious project I worked on was the West
Tavaputs drilling project, a 140,000-acre project involving
Federal, state, and local agencies, several native tribes, 18
consulting parties, and we received over 58,000 public
comments. In the end, no appeals were filed. Utah's governor
proclaimed the effort energy development done right. And I am
sure, without NEPA, we would still be in litigation today.
NEPA is a wonderfully democratic law, assuring that the
public is not just informed of Federal actions, but can
participate and see a response to their input. There is no
justification for providing sweeping NEPA exemptions for an
activity as potentially harmful as oil and gas development. CXs
are for actions that do not have a significant effect on the
environment. They are not available because some industry finds
NEPA bothersome.
We should be encouraging the industry to use the piles of
unused permits and leases it already has.
Eliminating site-specific reviews also eliminates the
opportunity to modify proposals, minimize conflicts, protect
human health and safety, and safeguard critical resources.
Under the proposed notice and CX scheme, all BLM could do
would be to catalog the damage and commiserate with citizens
whose opportunities to enjoy public lands are unnecessarily
diminished.
These bills replace informed local decision making with a
top-down rulemaking from Washington, DC, something members of
this Committee have complained about for 40 years.
My daughter is getting married in August on public lands.
To get her recreation permit under a CX, her wedding party
cannot occupy more than 3 acres, remove vegetation, and cannot
exceed 14 days of occupancy. How should a driller be allowed to
bulldoze the same site to 10 acres, occupy the land for 50
years without any consideration of the consequences?
In Carbon County, a group of citizens want to develop some
mountain bike trails on public lands, so we worked with BLM
through the NEPA process, including placing trails around oil
and gas infrastructure. It is actually in a producing field. If
a small group of volunteers with no financial resources can
figure this out, surely the burden is not too great for the
paid professionals within the industry.
We often hear industry brag about its ability to use
technology to avoid harm. I, myself, have seen firsthand their
very impressive results with directional drilling, noise
reduction, visual mitigation, that sort of thing. Under the
proposed rules, the company won't even have to contemplate
using such techniques, nor could BLM even suggest them.
The proposed fees for protesting a lease are another
onerous attempt to silence local voices. The purpose of a
protest is to identify error in the agency decision. The more
errors, the more expensive it would be for the public to point
it out with the cost per page.
In the meantime, anybody can nominate a lease parcel at any
time for any reason. The nominator can remain anonymous. They
pay no fees. They are not obligated to bid the parcel if it is
offered for auction. And BLM incurs all the expenses of parcel
valuation and lease preparation. There should not be a fee for
reconsidering leasing for a good cause, but maybe there should
be one for nominating a lease.
These bills are a gift to the oil and gas industry at the
expense of public lands resources and the people who live with
and care about their public land heritage. Please don't claim
these bills make sense to the public, the public lands, to
those tasked with managing them, or for communities in the
West. Please don't move them forward.
Thank you for the opportunity to share my experience, and I
thank the Committee.
[The prepared statement of Mr. Willis follows:]
Prepared Statement of Dennis Willis, Price, Utah
I want to thank the Subcommittee for this opportunity to
participate in this hearing and in our exercise of democracy. For most
of 35 years, I was a public servant, employed by the Bureau of Land
Management. During my career I worked in many aspects of the oil and
gas leasing program. From the development of resource management plans
(RMPs) to the preparation of lease sales, the permitting of an
individual wildcat well to working on three environmental impact
statement (EIS) documents for full field development. I saw the value
of listening, learning and utilizing the good information and great
passion the public brought to the process. The processes outlined in
the Federal Land Policy and Management Act and the National
Environmental Policy Act (NEPA) work because they seek involvement from
all stakeholders regardless of the wealth, political influence, or
popularity they may or may not enjoy. Since retiring, I have been
involved in these processes as a member of the public and as board
member of the Nine Mile Canyon Coalition, a small, local non-profit
corporation. I am here today as a private citizen, a resident of Carbon
County, an area blessed with both mineral wealth and awesome, iconic
western landscapes. As the name suggests, my county has been heavily
reliant on the production of fossil fuels for about 130 years.
In Carbon County we revel in our heritage of coal and oil and gas
production. We value the contributions those industries make to our
economy, tax base and employment. We also love our legacy of public
lands. Our ranchers use the land for livestock production; we enjoy
night skies and the rare experience of reading a book by the light of
the Milky Way. We use public lands to hunt, fish, hike, bike, go four
wheeling and teach our children and grandchildren. We live in the
desert; our scarce water resources and community watersheds are
precious. We enjoy jaw dropping, spectacular scenery. Archaeological
and historic sites tell the tale of people on these landscapes for over
8,000 years.
We welcome oil and gas development but with the expectation the
industry will be a good neighbor, considerate of community needs and
sensitivities. When oil and gas projects happen, we do not dedicate the
entire landscape to production. There is an expectation that other uses
and users will continue to enjoy the public lands without undue burden.
The NEPA process is how the oil and gas companies learn about the
potential user conflicts and community sensitivities. It is part of the
way we all stay good neighbors.
These bills are crafted solely to benefit the oil and gas industry
by allowing them to avoid Federal environmental law and ride roughshod
over local public interest. These bills shut out the local public from
participating in the management of their public lands. It also bars
participation of other Federal, state, and local agencies that
routinely participate in the NEPA process. It denies the right of the
public to freely petition their government, participate in the public
NEPA process and have their concerns heard and addressed. It removes
discretionary authority from the local public land managers and imposes
a one-size-fits-all directive from the Congress. It ties the hands of
land managers and local communities to identify, address and minimize
conflicts administratively, leaving litigation as the only avenue to
conflict resolution.
The most contentious oil and gas project I worked on in my BLM days
was the West Tavaputs Drilling Project. The West Tavaputs Plateau has
almost every resource category found on BLM lands. There are wilderness
issues, wild horses, deer, elk and bighorn sheep, outstanding
archaeology, endangered plants, birds and fish, sage grouse and the
list goes on. Every issue, resource and resource user conflict you can
imagine all occur on that one 140,000 acre project area. The West
Tavaputs EIS involved 5 Federal agencies, 5 state and local agencies,
several Native American tribes, and 18 consulting parties, including
local and national environmental groups. The draft EIS generated 58,000
public comments. Through the NEPA process, extensive outreach and
meetings with interested stakeholders concerning resource impacts and
alternative ways to address them, a final decision was reached. Nobody
got everything they wanted but everyone got their needs met. The
industry gave up some drilling locations and surrendered some leases.
Environmental groups made concessions on wilderness; archaeological and
sportsmen's groups also made compromise; and adversaries became good
neighbors. When it was all over, there were no appeals filed. Utah
Governor Gary Herbert proclaimed the effort as ``energy development
done right.'' Members of the Utah congressional delegation agreed.
Without the NEPA process bringing people to the table, the project
would still be in litigation today, 8 years after.
What might be fast and cheap for the energy industry may not be
good for local communities in the West. The existing process, while not
as fast as some would like, is effective at engaging communities,
forging cooperation and results in a western landscape we can all
thrive in.
The suite of bills we are discussing today are of great concern.
This legislation seeks to end the practice of local BLM decision making
based on site specific conditions and input from nearby communities and
the broader public. It would silence the ability of local citizens
contribute local knowledge and identification of community needs. These
bills would usurp informed, rational, local decision making with a top
down, one-size-fits-all, dogmatic rule imposed by Washington, DC. This
is exactly the type of action I have heard current and past members of
this Committee rail against for the last 40 years.
NEPA is one of this Nation's bedrock environmental laws. It is also
a wonderfully democratic law; assuring the public is fully informed of
Federal actions, assuring the public the opportunity to participate and
that public comments are not just received, but responded to. While it
is sometimes cast as a villain of bureaucratic red tape or ``paralysis
by analysis,'' it is important to remember the objectives is assuring
Federal decision makers are making fully informed, rational decisions
and the public is fully informed and allowed to contribute to the
decision-making process. In my opinion, the most important NEPA
regulation is found at 40 CFR 1500.1(c):
Ultimately, it is not better documents but better decisions
that count. NEPA's purpose is not to generate paperwork--even
excellent paperwork--but to foster excellent action.
There is simply no good reason to exempt the oil and gas industry
from NEPA review and block the public from the decision-making process
for development on publicly-owned lands.
categorical exclusions and notice of permit to drill
BLM is tasked with multiple use management accommodating all
competing resources. The site-specific review process affords the BLM
and the public the opportunity to review and modify proposals to
minimize conflicts between competing interests, protect human health
and safety, and safeguard critical resources. It also enables the BLM
the opportunity to make modifications and, enact appropriate and
reasonable drilling stipulations on development proposals. The proposed
CX expansion would eliminate these site-specific evaluations. It would
also eliminate the public's right to participate in the NEPA process.
Critically, the proposed legislation would eliminate BLM's
discretionary ability--in coordination with affected communities and
members of the public--to implement solutions that will help avoid
needless resource use conflicts. This proposal is a recipe for
increased conflicts over public lands, as if there were not enough of
that already. It takes away the opportunity to work through the NEPA
process, and will instead lead to increased conflict between
development and other uses of public lands.
The proposed use of a Notice system and categorical exclusions
(CXs) for oil and gas drilling permits are unwise and unwarranted. The
Council on Environmental Quality guidance on CXs is to define
categories of actions which do not individually or cumulatively have a
significant effect on the human environment and which are therefore
exempt from requirements to prepare an environmental impact statement
(40 CFR 1500.5k). In BLM they mostly cover minor administrative actions
like inventory and monitoring, or to transfer an authorization from one
entity to another where there is no change on the land. They are also
used to cover maintenance of existing facilities, placing directional
signs and the like.
Oil and gas wells simply do not fit the criteria for a CX given
that these activities are among the most impacting activities permitted
by BLM on a regular basis. They deserve the scrutiny provided by the
NEPA process. An oil and gas well site can have major impacts. The
associated access roads and pipelines that are affiliated with oil and
gas development can frequently have bigger impact issues than the wells
itself. The overarching consideration for creating a CX is a lack of
impact from the activity, not the project proponent finding the
application of NEPA a bother. And when BLM is deciding whether or not
to apply a CX, it is supposed to conduct a review to see whether known
extraordinary circumstances or, in the case of some CXs, other
information indicating environmental review is needed are applicable.
If they are present, the process ensures that the BLM can require
additional NEPA documentation in order to ensure a better decision.
This proposed legislation is also out of proportion with other BLM
CX provisions. For example, this proposal allows heavy equipment
surface disturbance on up to 10 acres individually and 150 acres
cumulatively. My daughter is getting married on public land in August.
For her wedding to obtain a recreation permit using a CX, the wedding
party cannot occupy more than 3 acres, removal of vegetation and earth
moving are not allowed, and occupancy of site is limited to no more
than 14 days. If a simple family wedding is held to a limit of 3 acres,
it begs the question why a drilling company could bulldoze the entire
site to 10 acres and occupy the area for upwards of 50 years.
These bills seem to assume that BLM has already evaluated the site-
specific impacts of drilling. But that is seldom the case prior to the
permitting stage. Rather, BLM's planning leasing and permitting
processes actually anticipate more intensive environmental analysis
prior to issuing permits to drill. When BLM conducts an RMP process,
the areas open to oil and gas leasing are drawn on a very large-scale
map with low resolution and the majority of lands are left open to
leasing. At the leasing stage, BLM may decide that the area is
generally suitable for leasing but under current BLM policy, there is
no requirement to conduct a detailed analysis of potential impacts. As
a result, when applications for permits to drill (APDs) come in, that
is the only time oil and gas development gets looked at on a site
specific, small scale, high resolution basis. BLM needs to retain
discretion at all phases of leasing and development to meet its
multiple use mandate, these lands are not presumably sacrifice zones
for oil and gas development. Yet, these bills would largely prevent BLM
from considering harm from drilling and from taking any measures to
prevent such harm.
The site-specific evaluation and NEPA review of APDs are critical.
Decisions to site wells commit resources for decades; they are long-
term, irreversible, irretrievable commitments of resources. They
frequently involve major alteration of the topography and landscape.
Conflicts can frequently be avoided by moving the well, sometimes by a
matter of feet; and, in other cases, BLM can find a more suitable site
for a developer within a few miles. Design changes can be incorporated
at the APD stage to minimize impacts to scenic resources, protect
water, reduce noise impacts, and prevent wildlife injury. Without the
application of NEPA, there is no opportunity for the local manager or
local land users to make changes or otherwise address and avoid
conflicts; this seems to virtually encourage litigation as the avenue
for resolution.
The proposed Notice and CX process provides no opportunity to
mitigate conflicts. A Notice may place a well on a National Historic
Trail or on an important scenic overlook. It may be located in
especially sensitive and critical wildlife habitat or a community water
source. Under the current process, BLM can address and mitigate these
conflicts. Under the proposed Notice/CX scheme proposed here, all BLM
could do is catalog the damage and commiserate with citizens whose
opportunities to enjoy public lands are unnecessarily diminished, if
they are notified at all.
There is also a basic fairness issues among public land users. In
Carbon County, a group of citizens formed a committee to develop some
singletrack mountain bike trails on public lands. These trails provide
recreational riding opportunities and helped to link towns and
communities. The committee worked through the NEPA process in
cooperation with the BLM. Public input was solicited, and through the
process we developed a better, more cohesive trail system than was
originally proposed. NEPA worked as intended, it required a look at
alternatives and resulted in a better project. NEPA on APDs work in
much the same way. If a small group of community volunteers with no
financial resources can wade through the system for a non-motorized
singletrack trail, surely the burden is not too great for the paid
professionals within the oil and gas industry. How do you explain to a
volunteer group their non-motorized trail, constructed with hand tools
requires a NEPA analysis but an oil company can bulldoze roads,
pipelines and operate a well pad without any NEPA consideration? Much
of our trail system is in a producing coalbed methane field. The trails
were placed to avoid industry infrastructure. With the proposed Notice
system and CXs, a drilling company could plop down facilities that
obliterate our trails with no consideration or mitigation.
There is simply no justification for providing an activity that is
as widespread and potentially harmful as oil and gas development with
such sweeping exemptions from the NEPA process. The oil and gas
industry already has thousands of unused drilling permits in Utah and
throughout the West, and millions of acres of idle leases, which raises
questions of why these bills are even under consideration and whether
this Committee should instead be examining ways to force the industry
to use the permits and leases it already has.
Additionally, as drafted, the CX provisions have a major logical
flaw. The proposed CX covers wells drilled in a field within 5 miles of
an existing well. It is obvious a 5-mile radius covers a lot of
country, approximately 78 square miles. That is 78 square miles where
BLM will not have the opportunity to review critical areas and
resources and the public will not have any say in the matter. An
example from our area is known as the Tavaputs Plateau. The plateau is
highly dissected by deep canyons. The canyon bottoms contain highly
sensitive riparian and archaeological resources. The company that filed
the original drilling proposal for this area requested multiple wells
in the canyon bottoms. Through the NEPA process, and after the public
provided information documenting the potential for impacts on cultural
and natural resources, it was decided there would be no wells in the
canyon and those targets would be drilled directionally from the top of
the plateau. Those canyon bottoms are well within the 5-mile radius.
The next Notification of a Permit to Drill could locate a well in the
sensitive canyon bottom. The proposed CX would eliminate the ability of
the local BLM office to require directional drilling from the plateau,
resulting in the loss of critical resources unnecessarily, and without
any mitigation. More broadly, the CXs included in the bills are so
sweeping and generally written that they would lead to many of the same
problems that plagued the use of the Energy Policy Act CXs. According
to a recent statement from the Government Accountability Office:
``These problems, in a nutshell, were that BLM did not have good
internal controls or guidance for how and when to use categorical
exclusions. Therefore they were using them inappropriately in many
cases and perhaps not using them when it was appropriate.'' \1\
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\1\ Energywire, June 1, 2018, ``Royalty panel recommendation could
rehash NEPA controversy'' https://www.eenews.net/energywire/2018/06/01/
stories/1060083159.
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We have often heard the industry brag about its ability to use
technology like directional drilling to avoid occupying sensitive
sites. I have seen their abilities in directional drilling, noise
reduction and visual mitigation firsthand and they are impressive.
Under the proposed Notice and CX process, the company will not have to
contemplate whether such techniques are appropriate and BLM would not
be in a position to even suggest them.
The proposed Notice/CX process eliminates the ability of the BLM to
manage public lands in areas with oil and gas activity. It will create
conflict and litigation where the conflict could easily be mitigated.
It denies the public and local citizens from having their rightful say
in the management of public lands.
protest process review
The proposed fees for protesting an oil and gas lease are onerous,
burdensome and a further attempt to silence the local public. The Nine
Mile Canyon Coalition has protested oil and gas leases in the past. But
the decision to protest is not arrived at easily and preparation of a
protest is difficult and stressful. Nobody files a protest frivolously
or as a gratuitous exercise of free expression. Protests are only filed
when the protester believes the BLM made a substantial error in their
evaluation of the lease nomination. It is a continuation of the public
participation in the NEPA process. The protest points out an error in
agency decision making, gives BLM the opportunity to correct it and
issue a better decision.
It is rather strange to have the BLM charge the public a fee for
pointing out and helping BLM correct its errors.
Once again, there is an inherent unfairness in the process. Anybody
can nominate any lease parcel at any time, for any reason, or no reason
at all. A nomination can be frivolous, arbitrary and capricious. Once
nominated, the BLM incurs all the expense of parcel evaluation and
lease preparation. The nominator pays no fees and is under no
obligation to bid on the parcel once it is offered. The nominator can
choose to remain anonymous. Once BLM makes a decision to lease, a
protester must present substantive reasons and show that the agency has
made demonstrable errors within 10 days to have BLM reconsider its
decision. The protester cannot choose to be anonymous. Requesting a
Federal agency to reconsider a decision for good cause should hardly be
the type of action requiring the public pay a fee. Why should the
public pay a fee for correcting/improving the work of an agency? It is
the nomination of a lease that should be subject to a cost recovery
provision (see Sec 304 of Federal Land Policy and Management Act).
Along with the proposed fees having a chilling effect on public
participation, the proposed structure is simply silly. The purpose of a
protest is to point out demonstrable error in the agency decision. The
more error, the longer the protest is likely to be. The proposed fee
structure provides and inducement for the BLM to do poor quality work
and then charge a fee to the public for correcting it.
minority federal minerals
While I do not have direct experience with these situations, the
proposed bill raises two concerns in need of further consideration.
1. The development and production of the Federal mineral estate is
a Federal action. The proposed legislation attempts to redefine Federal
action in this particular instance. I would question whether this is a
rational or proper determination. The Federal agency still is
responsible for resource recovery, and protection of other resources in
production of the Federal oil and gas, as well as for consideration of
cumulative impacts. This bill removes Federal responsibility for
everything but production verification and royalty recovery. The agency
should not be relieved of its responsibility to human health and safety
in the development of Federal minerals. The Federal agency must be able
to hold operators accountable if one of these wells blows out due to an
overpressure on the Federal lease or when down hole failures result in
the contamination of ground or surface waters.
2. The proposed bill seems to provide an incentive to game the
system. Using directional drilling techniques, an operator could fully
develop the Federal mineral estate while avoiding all BLM review and
oversight, and hence also all accountability to the public
conclusion
What the oil and gas industry sees as burdensome red-tape, are
critical protections, due process, rules of fair play, and economic
lifelines for other public land users. The rules of the game should not
be upended simply because of an inconvenience to one stakeholder, one
industry, or one interest; they need to work for all the stakeholders
at the table. What one industry sees as `red tape' another industry
sees as a lifeline, a local community sees as their ability to protect
community interests, and a parent sees as the future western landscape
and lifestyle their child inherits.
These bills are a pure gift to the oil and gas industry. An
expensive gift benefiting one industry at the expense of public lands
and resources, and detrimental to people who live with and care about
their public land heritage. Please don't claim these bills make sense
for the public or public lands or those tasked managing them, or
communities in the West. Please don't move them forward.
Thank you for the opportunity to share my experience as a retired
BLM employee, board member of Nine Mile Canyon Coalition, and resident
of Carbon County, Utah.
______
Dr. Gosar. Thank you, Mr. Willis.
I now recognize Mr. Baza for his 5 minutes.
STATEMENT OF JOHN BAZA, DIRECTOR, UTAH DIVISION OF OIL, GAS AND
MINING, UTAH DEPARTMENT OF NATURAL RESOURCES, SALT LAKE CITY,
UTAH
Mr. Baza. Chairman Gosar, Ranking Member Lowenthal, and
members of the Committee, thank you for the opportunity to
speak to you today. My name is John Baza, and I am the Director
of the Utah Division of Oil, Gas and Mining within the Utah
Department of Natural Resources.
My division of Utah State government, which I will refer to
as OGM, is the principal regulator for the petroleum and
mineral extractive industries in the state of Utah. Our
statutory charge is fostering the responsible development of
Utah's mineral resources, while avoiding impacts that are
detrimental to the public safety and welfare, and to preserve
the environment to provide subsequent use of the lands affected
by such development.
Because the bills being discussed today relate to oil and
gas activities on Federal lands, I will focus mainly on the oil
and gas regulatory processes that we perform pertaining to
those activities.
The approval of drilling and production operations on
Federal lands in Utah runs along two parallel tracks. One track
is the Federal BLM process of reviewing and approving drilling
applications for any well drilled upon a BLM mineral lease. The
second track is a similar state process performed by OGM that
not only includes permitting on Federal land, but on state,
tribal, and private land as well.
This state process is conducted under state law that
requires OGM to process drilling permits, and also be the
repository of public data related to the drilling production of
any well within the boundaries of the state. Companies doing
business in Utah often feel that this is redundant, requiring
separate drilling permit approvals from both the BLM and OGM
for wells drilled on Federal land in Utah.
To further compare the parallel processes, OGM has
developed a history of approving most applications to drill, or
APDs, in 30 to 90 days. Some APDs that are more complex or
sensitive may take longer, but these are the exceptions and not
the standard. Yet, for Federal lands, BLM drilling approvals in
Utah often take 12 to 18 months.
And lest you think the BLM process is more robust, that is
simply not true. I assure you that the OGM process that has
been in existence in one form or another since the year 1955 is
focused on achieving responsible development with due regard to
public health and safety and protection of the environment, and
has met those goals with remarkable consistency. In fact, I
would challenge anyone to compare wells drilled on Federal
leases adjacent to those drilled on state or private leases to
find any notable differences in operational conditions, land
use impacts, or potential for environmental impact from those
wells.
So, it is reasonable to ask, if outcomes are identical,
then what justifies such vastly different processes to achieve
the same results? I believe that thoughtful and creative
thinkers could find ways to accomplish the necessary objectives
of requiring safe and protective oil and gas development on all
lands, including those on Federal mineral estate.
As I have reviewed the draft language for the bills in
question today, especially the proposed bill by Representative
Curtis of Utah, I feel that they are trying to accomplish those
same objectives. There needs to be an element of risk potential
included in the Federal drilling analysis and approval process.
If wells are to be drilled in lower-risk areas that have
already been analyzed for environmental impact or in well-
established areas of drilling and production, then let's find a
more streamlined path to resource development than what exists
today.
I believe that there are some missed opportunities for
valuable yet reasonable mineral resource development on Federal
lands if lengthy permitting processing times could be improved.
With this in mind, I provide OGM's support for the process
improvements suggested by the draft bills.
I might add that there may be more streamlining concepts
that could be considered, as suggested by the aforementioned
letter of Governor Martinez of New Mexico. This was a letter
dated January 16, 2018 from six U.S. governors, including
Governor Martinez and Governor Herbert of Utah, addressed to
Secretary Zinke of the Department of the Interior. For your
convenience, I have included that letter in my written
testimony.
Thank you again for your time, and I stand ready to answer
any questions.
[The prepared statement of Mr. Baza follows:]
Prepared Statement of John Baza, Director, Utah Division of Oil, Gas
and Mining, Utah Department of Natural Resources
Chairman Gosar, Ranking Member Lowenthal, and members of the
Committee, thank you for the opportunity to speak to you today. My name
is John Baza and I am the Director of the Utah Division of Oil, Gas and
Mining within the Utah Department of Natural Resources. My division of
Utah State Government (which I will refer to as ``OGM'') is the
principal regulator for the petroleum and mineral extractive industries
in the state of Utah. Our statutory charge is fostering the responsible
development of Utah's mineral resources while avoiding impacts that are
detrimental to the public safety and welfare, and to preserve the
environment to provide subsequent use of the lands affected by such
development. Because the bills being discussed today relate to oil and
gas activities on Federal lands, I will focus mainly on the oil and gas
regulatory processes that we perform pertaining to those activities.
The approval of drilling and production operations on Federal lands
in Utah runs along two parallel tracks: one track is the Federal BLM
process of reviewing and approving drilling applications for any well
drilled upon a BLM mineral lease. The second track is a similar state
process performed by OGM that not only includes permitting on Federal
land, but on state, tribal and private land as well. This state process
is conducted under state law that requires OGM to process drilling
permits, and also be the repository of public data related to the
drilling and production of any well within the boundaries of the state.
Companies doing business in Utah often feel that this is redundant,
requiring separate drilling permit approvals from both the BLM and OGM
for wells drilled on Federal land in Utah.
To further compare the parallel processes, OGM has developed a
history of approving most applications to drill (or APDs) in 30-90
days. Some APDs that are more complex or sensitive may take longer, but
these are the exceptions and not the standard. Yet for Federal lands,
BLM drilling approvals in Utah often take 12-18 months. And lest you
think the BLM process is more robust, that's simply not true. I assure
you that the OGM process that has been in existence in one form or
another since the year 1955, is focused on achieving responsible
development with due regard to public health and safety and protection
of the environment, and has met those goals with remarkable
consistency. In fact, I would challenge anyone to compare wells drilled
on Federal leases adjacent to those drilled on state or private leases
to find any notable differences in operational conditions, land use
impacts, or potential for environmental impact from those wells. So it
is reasonable to ask, if outcomes are identical, then what justifies
such vastly different processes to achieve the same results? I believe
that thoughtful and creative thinkers could find ways to accomplish the
necessary objectives of requiring safe and protective oil and gas
development on all lands, including those on Federal mineral estate. As
I have reviewed draft language for the bills in question today,
especially the proposed bill by Representative Curtis of Utah, I feel
that they are trying to accomplish those same objectives. There needs
to be an element of risk potential included in the Federal drilling
analysis and approval process. If wells are to be drilled in lower risk
areas that have already been analyzed for environmental impact or in
well-established areas of drilling and production, then let's find a
more streamlined path to resource development than what exists today.
To put these concepts in perspective, let me provide you with some
current statistics in Utah. There are 16,203 existing oil and gas wells
in Utah. Of these, 9,222 (57 percent) are on Federal lands, 2,947 (18
percent) are tribal, and 4,034 (25 percent) are on state or private
lands. For the state and private wells, OGM is the sole regulatory
authority monitoring the drilling and production from those wells. Yet
Federal minerals land area in Utah amounts to more than 66 percent of
land acreage in the state. This suggests that there may be some
``missed opportunities'' for valuable yet reasonable mineral resource
development on Federal lands if lengthy permit processing times could
be improved.
With this in mind, I provide OGM's support for the process
improvements suggested by the draft bills. I might add that there may
be more streamlining concepts that could be considered as suggested by
a January 16, 2018, letter from six U.S. governors (including Governor
Herbert of Utah) to Secretary Zinke of the Department of the Interior.
For your convenience, I have included that letter in my written
testimony.
Thank you again for your time and I stand ready to answer any
questions.
*****
ATTACHMENT
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
.epsJanuary 16, 2018
The Honorable Ryan K. Zinke
Secretary of the Interior
U.S. Department of the Interior
1849 C Street, NW
Washington, DC 20240
Dear Mr. Secretary:
Western states are home to abundant and diverse wildlife,
agricultural, water, cultural, and energy resources. However, efforts
to conserve, manage, and develop these resources have been stymied far
too often by federal bureaucracy and overreach. Because federal lands
comprise much of the West, we are at a disadvantage to states east of
the 100th meridian where federal land ownership accounts for less than
5 percent.
In the context of energy development, specifically our abundant oil
and gas resources, federal processes managed by the Bureau of Land
Management (BLM) are dearly costing our states and the federal
government. Consider that due to BLM permitting delays, New Mexico
fails to realize approximately $831,000 per day in state severance tax
and the federal government fails to realize approximately $1,473,000
per day in federal royalties. Annually, that's over $300 million lost
to New Mexico and over $500 million lost to the federal government from
lands located in New Mexico alone.
Working together, and representing six western states, we have
prepared the enclosed proposal, which will streamline the federal oil
and gas permitting process, while protecting our irreplaceable
wildlife, agricultural, water, and cultural resources.
Our proposal contains four specific streamlining opportunities:
1. A Permit by Rule process, which will allow operators to proceed
with development upon submission of an administratively
complete application;
2. Affirmative recognition by BLM that it will not exercise
jurisdiction over surface operations situated on non-
federal lands, regardless of whether the drilling operation
may contact federal minerals;
3. Renewed implementation of the 2005 Energy Policy Act NEPA
categorical exclusions; and
4. Delegation by the BLM of its review of drilling, completion,
recompletion, and plugging and abandonment to the relevant
state authority.
We are confident that our proposal will result in more efficient
deployment of federal and state personnel resources, reduce unnecessary
bureaucracy, continue to protect our lands and waters, and achieve
healthier local and national economies.
We encourage you to review and implement this proposal and look
forward to discussing further opportunities to streamline these
processes with you and your staff.
Sincerely,
Susana Martinez, Bill Walker,
Governor of New Mexico Governor of Alaska
C.L. ``Butch'' Otter, Doug Burgum,
Governor of Idaho Governor of North Dakota
Mary Fallin, Gary R. Herbert,
Governor of Oklahoma Governor of Utah
Enclosures
______
Dr. Gosar. Thank you, Mr. Baza. I now recognize Ms.
MacGregor for her 5 minutes.
Welcome back, Kate.
STATEMENT OF KATHARINE MacGREGOR, DEPUTY ASSISTANT SECRETARY,
LAND AND MINERALS MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR,
WASHINGTON, DC
Ms. MacGregor. Thank you, Chairman Gosar, Ranking Member
Lowenthal, and members of the Subcommittee. I am pleased to
join you to discuss the Department's efforts and
accomplishments on streamlining the Federal onshore oil and gas
leasing program, as well as the draft legislative proposals
before the Subcommittee.
Under President Trump and Secretary Zinke's leadership, the
Department has embraced innovation, best science, and best
practices to help unleash our Nation's vast domestic energy
resources.
The BLM has 26 million surface acres currently under lease,
including over 94,000 active wells on about 24,000 producing
leases. Collectively, public lands power millions of homes and
businesses, support approximately 200,000 jobs nationwide, and
in Fiscal Year 2017 generated approximately $2.2 billion in
Federal revenues.
Under Secretary Zinke's commitment to energy dominance, the
BLM now consistently conducts quarterly lease sales. In
calendar year 2017, the BLM held 28 onshore oil and gas lease
sales, an almost 30 percent increase from 2016. These sales
generated about $360 million in bonus bids, rentals, and fees,
an 87 percent increase over the previous year.
The BLM is working diligently to improve its permitting
process, and our efforts are beginning to show results. In
calendar year 2017, the BLM approved 3,293 applications for
permit to drill, or APD, on Federal and Indian lands, which
generated approximately $30.5 million in APD fees. The average
APD processing time for an administratively complete
application also continues to drop, now averaging 113 days, of
which 50 days was spent with the BLM. We hope to further
improve this figure.
We appreciate the Subcommittee's efforts to find reasonable
solutions to expedite leasing and permitting on Federal lands.
Representative Pearce's categorical exclusion draft
proposal revises Section 390 of the Energy Policy Act, or EPAct
05, clarifies the appropriate use of categorical exclusions,
and authorizes a number of new, common-sense CXs, as we call
them. This includes codifying existing ones that are already
being used by other agencies right now, today. CXs can be an
effective tool for reducing delays and costs associated with
permitting, especially in instances where operators are
improving or streamlining their operations and have minimal
environmental impact to their existing footprint.
The Department notes that a CX is not an exemption or a
waiver of NEPA review, but instead is a tool within the NEPA
review process. In many cases, it is likely that NEPA analysis
on a DOI project has occurred at least twice, providing both
sufficient environmental analysis and multiple opportunities
for public engagement.
Under Representative Pearce's permitting on non-Federal
land draft proposal, operators would no longer submit a Federal
APD if there is less than a 50 percent Federal mineral interest
and zero Federal surface disturbance. This would focus BLM
operations on where the estate is more fully within its
jurisdiction, update Federal authorities to catch up with
directional drilling technology, and it would reduce
duplicative state and Federal permit requirements. We
appreciate the inclusion of language that would maintain the
Department's authority to audit and invoke civil penalties for
any misreported production.
Finally, the cost recovery draft proposal directs the
Secretary to recover costs associated with processing
administrative protests received for leases, rights-of-way, or
APDs filed. In Fiscal Year 2012, 17 percent of BLM lease sale
parcels were protested. By 2017, that number grew to 88
percent.
To date, many BLM state offices are receiving protests on
every oil and gas parcel offered. And in some cases, the
protests are hundreds of pages, as seen right here. This one is
1,500 pages. This protest alone resulted in an 8-month delay,
this protest of $70 million in revenue to the state of New
Mexico. The protest requires significant BLM staff time, and in
many cases provide little to no tangible environmental
benefits.
The uptick in protests seem aimed at disrupting a lease
sale, which is not the intent of the protest period.
The potential tools provided by these draft bills will help
the BLM significantly reduce permit times and focus on complex
development scenarios.
The drafts also acknowledge innovative development
technologies that have reduced surface impacts nationwide, and
help to foster additional development on public lands. In turn,
this could contribute to increased revenues and energy
production to meet our Nation's energy needs.
Thank you for the opportunity to present this testimony. I
would be glad to answer any of your questions.
[The prepared statement of Ms. MacGregor follows:]
Prepared Statement of Katharine MacGregor, Principal Deputy Assistant
Secretary, Land and Minerals Management, U.S. Department of the
Interior
Chairman Gosar, Ranking Member Lowenthal, and members of the
Subcommittee, I am pleased to join you today to discuss the
Department's efforts and accomplishments about streamlining the Federal
onshore oil and gas leasing and permitting processes to address
backlogs and inefficiencies. The discussion drafts the Subcommittee is
considering today have the potential to further bolster our work to
streamline administrative processes, reduce duplicative actions, and
eliminate redundant procedural reviews, and we look forward to working
with the Committee as these bills are refined. Our shared goals are to
reduce burdens on industry and provide savings to the American
taxpayers without sacrificing environmental protections.
While all potentially affected Federal agencies have not had
sufficient time to meaningfully consider the details in the four
discussion drafts, the Department supports the goals of the discussion
drafts, to help modernize the Bureau of Land Management's (BLM)
application of NEPA reviews for leasing, permitting and other actions
associated with Federal oil and gas development. We appreciate the
Committee's focus on finding reasonable solutions to expedite leasing
and permitting on Federal lands. Under Secretary Zinke's leadership,
the BLM has made it a top priority to unleash the vast domestic energy
reserves on public lands in pursuit of America's energy dominance. By
reviewing and streamlining oil and gas regulations and policies that
encumber development, the Department is helping to lower energy costs,
create jobs, and keep our economy strong for generations to come.
public lands' contribution to energy dominance
The BLM manages about 245 million surface acres and 700 million
subsurface acres, located primarily in 12 western states. The BLM
administers this diverse portfolio of lands on behalf of the American
people, in coordination with the U.S. Department of Agriculture's
Forest Service, as part of the agency's multiple-use mission--including
energy and mineral development, livestock grazing, timber production,
recreation, and conservation, among others. Onshore oil and gas
production on BLM-managed public lands is a significant part of this
strategy and makes an essential contribution to the Nation's energy
supply--playing a significant role in supporting jobs for hardworking
Americans.
The BLM has 26 million surface acres currently under lease for oil
and gas development, including over 94,000 active wells on about 24,000
producing leases. The BLM oversees onshore oil and gas development on
Federal lands and lands held in trust for the benefit of various
tribes. Collectively, these lands contain world-class deposits of
energy and mineral resources, which power millions of homes and
businesses and support the broader economy. Sales of onshore oil and
gas from Federal and Indian lands accounted for approximately 5.3
percent of all oil and 9.3 percent of all natural gas production in the
United States in Fiscal Year (FY) 2017. The BLM's most recent economic
study estimates the Federal onshore oil and natural gas program alone
provides approximately $42 billion in economic output and supported
approximately 200,000 jobs nationwide.
Further, the BLM is a key revenue producer for Federal and state
governments by providing a significant non-tax source of funding to
state and Federal treasuries, and is an important economic driver for
local communities across the country. In FY 2017, production from
Federal lands generated approximately $2.2 billion in Federal
royalties, rental payments and bonus bids. Roughly 48 percent of this
revenue is shared with the state where the oil and gas activity is
occurring, while the rest goes to the U.S. Treasury. States and
counties in turn often use these funds to support the building and
maintaining of roads, schools, and other important community needs.
Under Secretary Zinke's commitment to the advancement of energy
dominance, the BLM now consistently conducts quarterly lease sales. In
calendar year 2017, the BLM held 28 onshore oil and gas lease sales.
This is almost a 30 percent increase from the 20 onshore oil and gas
lease sales held in 2016. These sales generated about $360 million in
bonus bids, rentals and fees--an 87 percent increase over the previous
year's results of $193 million. Among these sales, which together were
the highest in nearly a decade, rights to a total of 949 parcels,
covering 792,823 acres, were sold.
The BLM is also working diligently to improve its permitting
process and our efforts are generating real results. In calendar year
(CY) 2017, the BLM approved 3,293 Applications for Permit to Drill
(APDs) on Federal and Indian lands. By prioritizing permitting,
modernizing its databases, and shifting resources across the BLM
offices, the average APD processing time for an administratively
complete application continues to drop--now averaging 113 days of which
50 days was spent with the BLM. And it does not stop there. With the
Department managing 1 in every 5 acres of land in the United States,
the BLM also has a tremendous role in permitting pipelines, power lines
and right-of-ways (ROWs). To date, the BLM has approved roughly 360,000
miles of pipeline ROWs on public lands and approximately 10,000 miles
of pipelines ROWs on other Federal agency land.
path to american energy dominance
The Trump administration has made responsible energy development at
the Department a priority. Executive Order (E.O.) 13783 (Promoting
Energy Independence and Economic Growth) and E.O. 13795 (Implementing
an America-First Offshore Energy Strategy) have together called upon
the Department, and other Federal agencies, to increase access to and
reduce burdens on energy development on public lands. E.O. 13807
(Establishing Discipline and Accountability in the Environmental Review
and Permitting Process for Infrastructure Projects) ignited an
Administration-wide assessment as to how best to address inefficiencies
in current infrastructure project decisions that delay investments,
decrease job creation, and are costly to the American taxpayer. By
utilizing best science, best practices, and harnessing innovative
technologies, the BLM encourages investment on public lands to expedite
and increase domestic energy development, promote job growth, and keep
energy prices low for American families and businesses.
As a result, the Department has been proactive in these efforts,
specifically focusing on environmental reviews and permitting
authorizations for energy and infrastructure projects. One such example
is Secretarial Order (S.O.) 3355 (Streamlining National Environmental
Policy Act Reviews and Implementation of Executive Order 13807), which
provides a number of internal DOI directives to streamline
environmental reviews, including setting page and time limits on all
NEPA analysis.
Secretary Zinke also issued four S.O.s. to reduce unnecessary and
burdensome regulations while maintaining environmental protections and
public health. The most overarching one is S.O. 3349 (American Energy
Independence), which directed bureaus to examine specific actions
impacting oil and gas development, and any other actions affecting
other energy development. S.O. 3354 (Supporting and Improving the
Federal Onshore Oil and Gas Leasing Program and Federal Solid Mineral
Leasing Program) directed the BLM to hold quarterly oil and gas lease
sales, and to identify ways to promote the exploration and development
of Federal onshore oil and gas and solid mineral resources.
In addition, on May 31, 2017, Secretary Zinke signed S.O. 3352 to
jump-start Alaskan energy production in the National Petroleum
Reserve--Alaska (NPR-A) and update resource assessments for areas of
the North Slope, helping to unleash Alaska's energy potential. As a
result, on December 22, the Secretary released an updated resources
assessment for the NPR-A, which estimates technically recoverable oil
and gas resources to be 8.7 billion barrels of oil and 25 trillion
cubic feet of natural gas. Finally, most recently, the Department
issued S.O. 3360 (Rescinding Authorities Inconsistent with Secretary's
Order 3349, American Energy Independence) which rescinded several
reports and manuals that were inconsistent with current policy.
In response to the Secretarial Orders, the BLM reviewed all
regulations related to domestic oil and natural gas development on
public lands--resulting in several rulemaking and policy changes. In
December 2017, the BLM sought to suspend or delay certain requirements
contained in its 2016 final Waste Prevention Rule as part of the goal
of reducing the burden of Federal regulations on energy development.
The suspension and delay stemmed from the BLM's determination that
immediate implementation of some parts of these rules would
unnecessarily burden energy producers, especially those operators of
marginal or low-producing wells. Shortly thereafter in February 2018,
the BLM announced a proposal to revise the 2016 final Waste Prevention
Rule, and is currently analyzing the comments it received from the
public. Further, in December 2017, the BLM published a final rule to
rescind the 2015 final rule on hydraulic fracturing after finding 32 of
the 32 states with Federal oil and gas leases have regulations that
address hydraulic fracturing. Finally, in January 2018, the BLM issued
Instructional Memorandum 2018-034 (Updating Oil and Gas Leasing
Reform--Land Use Planning and Lease Parcel Reviews). This new policy
simplifies and streamlines the leasing process, expedites offering of
lands for lease, and ensures quarterly oil and gas lease sales are
held.
Furthermore, the BLM is improving policies to minimize negative
impacts on wildlife during energy, transmission, and infrastructure
development to use the best available science and technologies. We
believe the Department's efforts to accelerate and streamline NEPA
compliance will also help continue to pave the path for American energy
dominance.
onshore oil & gas legislative discussion drafts
The Discussion Drafts the Subcommittee considers at this hearing
would expand the use of categorical exclusions for certain oil and gas
operations, revise processes for permitting on non-Federal surface
estate when the subsurface mineral estate is less than half Federal,
and authorize cost recovery for lease protests. While we have not yet
fully assessed the potential impacts of these changes and will need
time to coordinate with other affected agencies, I will outline some of
our initial thoughts on the bills.
Expanding Use of Categorical Exclusions (The CX Draft)
The CX Draft revises Section 390 of the Energy Policy Act of 2005
(EPAct 2005) to clarify the appropriate use of categorical exclusions
(CXs) from further NEPA analysis. The CX Draft also authorizes a number
of new CXs to improve processing of not only APDs, but also sundry
notices, lease reinstatements, ROW applications, and subsequent
modification applications.
The Department supports efforts to streamline the environmental
analysis process associated with energy development, and believes CXs
can be an effective tool for reducing delays and costs associated with
permitting. The Department is fully committed to fulfilling NEPA
responsibilities, but recognizes that some NEPA implementation has
become an overly complex paperwork exercise, rather than a tool used to
adopt sound decisions based on an informed understanding of
environmental consequences as originally intended by Congress.
We appreciate the sponsor's efforts to work with the BLM in tandem
to help identify opportunities to further increase efficiencies
associated with energy development. The EPAct 2005 authorized certain
CXs for activities conducted pursuant to the Mineral Leasing Act for
the purposes of oil and gas exploration or development. The use of
statutory CXs has helped reduce unnecessary paperwork and delays,
thereby better utilizing the agency's limited resources. The Department
notes that a CX is not an exemption or waiver of NEPA review, but
instead is a tool to be used to help fulfill the NEPA review process in
a more efficient manner. When used appropriately, CXs result in
efficient and streamlined approval of agency actions that, individually
or cumulatively, do not have significant impacts to the natural
environment.
By further clarifying the situations where it is appropriate to use
a CX and by providing consistent direction and authorization of when
the BLM can use this tool, the CX Draft appears to respond to concerns
identified by the U.S. Government Accountability Office. For example,
the lack of clarity on key elements of Section 390 of EPAct 2005 led to
differing interpretations, inconsistent application of the Section 390
CXs among BLM field offices, and resulted in increased litigation. The
Department supports clarifying that in instances where the BLM has
already done site-specific NEPA and does not significantly deviate from
that NEPA analysis, the bureau's requirements would be fulfilled.
The Department also appreciates the efforts of Congress to
recognize that there are many instances where operators have
opportunities to improve and streamline their operations in ways that
would have minimal environmental impact from their existing footprint.
An example of this includes adding new wells to an existing pad or
needing approvals for additional infrastructure within an existing
footprint. Providing the BLM with tools like these CXs, responds
directly to stakeholders' feedback that development on public lands has
become increasingly onerous and cost prohibitive.
Permitting for Non-Federal Surface Land (Permitting on Non-Federal Land
Draft)
The Permitting on Non-Federal Land Draft eliminates the requirement
that an operator submit to the BLM a Federal APD in instances where
surface drilling and production operations and facilities are located
on non-Federal surface estate if there is less than a 50 percent
Federal mineral interest. Under the bill, the operator would be
required to provide the Secretary of the Interior a copy of the state
approved drilling permit, and NEPA, the National Historic Preservation
Act (NHPA) and the Endangered Species Act (ESA) requirements for the
exploration, development or production of oil and gas would no longer
apply. The Permitting on Non-Federal Land Draft also specifies that
nothing in the bill alters the amount of royalties due the United
States from production of oil and gas or the Secretary's authority to
conduct audits and collect civil penalties.
The BLM appreciates the goal of this draft bill to focus the BLM's
review of Federal actions to Federal lands. The Permitting on Non-
Federal Land Draft bill would no longer require the BLM to analyze
surface impacts to private lands.
The BLM frequently encounters two different situations related to
the development of Federal oil and gas leases involving private lands.
First are the split estate operations where the drill site is located
on non-Federal surface lands overlying the Federal oil and gas
minerals. Second, as technology has increased, operations have allowed
for development from predominantly private surface to private minerals,
and only producing a marginal amount Federally-owned minerals. In both
instances no Federal surface is impacted, yet, under current law, the
BLM must require an APD for the Federal mineral production. For these
APDs, the BLM still fulfils requirements of NEPA, NHPA, and ESA.
We appreciate the sponsor's efforts to reduce redundant state and
Federal permit requirements and to eliminate uncertainty related to
these APD and environmental review requirements as directional drilling
technology has significantly reduced surface impacts. The Department
recognizes that in instances where there is minimal Federal interest,
it may not be necessary for the BLM to conduct NEPA and ESA review and
for NHPA consultation to be triggered. In these instances, the
Permitting on Non-Federal Land draft bill would explicitly state that
analysis and consultation on non-Federal surface would not be required.
The bill could allow the Department to better use its limited resources
while decreasing unnecessary analysis on non-Federal split estate
lands.
These changes could help reduce burdens on industry and the BLM by
making the planning and NEPA process more efficient and less expensive,
and could allow the BLM to focus on surface and downhole implications
where the estate is more fully within its jurisdiction. We also
appreciate the sponsor's inclusion of language intended to maintain the
Department's authority--via the Office of Natural Resources Revenue--to
audit and invoke penalties for any misreported production under Federal
Oil & Gas Royalty Management Act, in order to ensure that resources are
property accounted for and the American taxpayer is protected.
Cost Recovery-Eliminating Superfluous Protests (Cost Recovery Draft)
The Cost Recovery Draft directs the Secretary to recover costs
associated with processing an administrative protest received for
leases, ROWs, or APDs filed. The fees collected would help the BLM
recover considerable costs when processing significant numbers of
protests.
The BLM is committed to being a good neighbor that is responsible
and accountable to our stakeholders. This includes providing the public
ample opportunity to participate in the Federal decision-making
process. Current BLM regulations, however, allow any party to file a
protest on a BLM decision, including on a land use plan or on a
subsequent decision to include a parcel in an oil and gas lease sale.
While historically protests addressed parcel-specific issues unique to
the parcel in question, in recent years, the number and reasons for
protesting every parcel in the sale has increased and become broad-
based, non-parcel specific, and a method of disrupting the offering of
parcels at competitive sale. In FY 2017, 88 percent of parcels offered
for lease were protested, compared to in FY 2012, when only 17 percent
of parcels received protests. The number of parcels offered on the
original sale notice decreased from 2,247 in FY 2012 to 1,427 in FY
2017. To date, many BLM state offices are receiving protests on every
oil and gas parcel offered through the Competitive Lease Sale process.
While the BLM can still hold a lease sale for parcels with pending
protests, the protest must be resolved prior to the lease being issued.
This in turn can delay payment of the state's share of the bonus bids--
which occurred most recently in the state of New Mexico. In September
2016, BLM hosted a record-setting lease sale generating $145 million in
revenue, of which approximately $70 million was owed to the state under
the Mineral Leasing Act revenue sharing provision. As a result of the
number of protested parcels and the length of time it took to resolve
all protests, the disbursement to the state of New Mexico was delayed
by approximately 250 days.
This uptick in these protests and resulting use of BLM resources to
respond is a burden on oil and natural gas development on public lands.
The cost recovery draft may help reduce non-parcel specific protests by
encouraging interested parties to more carefully consider protests, and
allow the BLM to conduct business in a more efficient manner. The BLM
appreciates the Subcommittee's work to address this issue.
conclusion
The Department remains committed to promoting responsible oil and
gas production that helps create and sustain jobs, promotes a robust
economy, and contributes to America's energy dominance, while also
protecting consumers, public health, and sensitive public land
resources and uses. The BLM's oil and gas leasing program is a critical
component of the Nation's energy infrastructure and is an important
Federal revenue generator. The Department supports the goals of the
four discussion drafts to help streamline the BLM's permitting
processes and to alleviate administrative burdens on private landowners
by reducing unnecessary environmental analyses on non-Federal surface
estate. Thank you for the opportunity to present this testimony. I will
be glad to answer any questions.
______
Questions Submitted for the Record to Ms. Kate MacGregor, Deputy
Assistant Secretary, Land and Minerals Management, U.S. Department of
the Interior
Ms. MacGregor did not submit responses to the Committee by the
appropriate deadline for inclusion in the printed record.
Questions Submitted by Rep. Lowenthal
Question 1. What is the cost for the Bureau of Land Management to
process an expression of interest (EOI) for an oil and gas lease from
acceptance of the EOI to the date the parcel is offered? How many staff
hours are involved in each phase of the process?
Question 2. Please describe the precise steps that are taken under
current BLM policy for an Application for Permit to Drill (APD) that
will receive a categorical exclusion (CX) under Section 390 of the
Energy Policy Act of 2005 (for each of the three CXs that relate to oil
and gas drilling).
Question 3. What steps are taken to inform, and solicit comments
from, the National Park Service for leases or APDs that may potentially
impact units of the National Park System? How would those steps change
if the Department moves to common regional boundaries as envisioned in
the FY19 DOI Budget? Is the National Park Service notified of APDs that
will be processed using a Section 390 CX?
Question 4. Many Resource Management Plans (RMPs) are out of date,
written in a time before hydraulic fracturing and without the foresight
to contemplate domestic drilling on a scale it is now occurring. What
is the plan for undertaking new environmental review processes for out-
of-date RMPs? Given the Congressional Review Act elimination of the
Resources Management Planning rule (81 FR 89580), what steps is BLM
taking, or planning on taking, in order to improve the process of
updating RMPs?
Question 5. About a dozen of the oil and gas lease parcels in the
September 2018 lease sale in the BLM New Mexico (NM) Carlsbad Field
Office (FO) are in areas identified by the Federal Government as having
critical or high cave-karst potential in the areas adjacent to Carlsbad
Caverns National Park. Can you please outline the actions the BLM is
taking as part of this lease sale to protect sensitive and connected
cave/karst systems under the area?
Question 6. A March 2018 lease sale in the BLM NM Farmington FO was
deferred to allow for better study of the precious archaeological and
cultural resources in the area around Chaco Culture National Historic
Park. Can you please update us on the status of that effort and outline
opportunities for public comment and information during this process?
Question 7. Please provide the most current list of Entities in
Noncompliance with Section 17(g) of the Mineral Leasing Act.
Question 8. Since Fiscal Year 2002, how many protests, broken down
by year, resulted in modifications and/or suspensions of parcels?.
Questions Submitted by Rep. Pearce
Question 1. Protest Funding
1a. Does the BLM currently charge protesters in order to process
the protest?
1b. If not, where does the money to process these permits come
from?
1c. How long did it take and how much did it cost to process the
protest made to the September 2016 lease sale in New Mexico discussed
in the hearing?
Question 2. Carlsbad Field Office
2a. What was the average number of staffers in the BLM's Carlsbad
Field Office throughout 2017 and up to this point in 2018?
2b. How many APDs were received by the BLM Carlsbad office in 2017
and 2018?
2c. How many APDs were processed in 2017 and 2018? Please provide
monthly breakdowns if possible.
Question 3. AFMSS II
3a. How much was spent on developing AFMSS II by the BLM?
3b. What is the BLM doing to ensure that it works for the Carlsbad
Field Office?
Question 4. Non-Federal Surface
4a. How many APDs currently awaiting approval are for wells on non-
Federal surface that also affect less than 50 percent Federal minerals?
______
Dr. Gosar. Thanks, Ms. MacGregor. I thank the panel for
their testimony.
Reminding the members of the Committee that Rule 3(d)
imposes a 5-minute limit on the questions, I will now recognize
the gentleman from New Mexico, Mr. Pearce, for his 5 minutes.
Mr. Pearce. Thank you, Mr. Chairman. I appreciate you
yielding first to me. I have an amendment on the Floor we are
juggling, so thank you.
Ms. MacGregor, as I read the testimony of Mr. Willis, he
makes a statement there that they cause great concern because
they will bypass the local BLM office's capabilities to really
review. I just wondered if you would like to address that
particular insight that he offers there.
Ms. MacGregor. That this proposal would bypass our ability?
Mr. Pearce. Yes, the statement is that it is not going to
be good for local communities, it seeks to end a practice of
local BLM decision making.
Ms. MacGregor. Sure. I think it is important, as I pointed
out in my testimony, the fact that a categorical exclusion
would somehow prevent NEPA from occurring, environmental
analysis, local community input, is not true.
During the land management process, when we consider
multiple uses for those Federal lands, we do NEPA alongside
that. That includes a reasonable foreseeable development and
also has multiple opportunities for public comment in that
process.
So, in many ways, BLM will still be doing NEPA on all of
these acres prior to any action.
Mr. Pearce. What is the backlog from that Carlsbad office?
Do you happen to know that right now, approximately?
Ms. MacGregor. I do have that. I believe it is about 300
APDs, but I could pull that up for you right now.
Mr. Pearce. It may be closer to 800. That is OK. The idea,
though, is that it is taking a tremendously long time.
The Permian Basin sits right there in Texas, crossing the
border into New Mexico. And just so that our other witness
might have an understanding of the damage that it is doing, in
Texas they don't have quite the quality of oil, they don't have
quite the quantity of oil that we do in the Permian Basin right
there, right now. So, there are 380 rigs running right across
the border. You can see them running from New Mexico. We have
roughly 80 working in New Mexico. Each one of those penalizes
jobs, revenues--and you heard the testimony from Ms. MacGregor
that probably the cost to New Mexico is $70 million on one
well.
That really is what we are trying to drive at. This area
has multiple locations. It is not like it has never been
touched before. We have run multiple studies. Many times the
wells are separated by a half-mile, maybe a quarter of a mile.
So, it is actually just a very common-sense problem saying we
have already run the EIS, we have run the NEPA studies on all
these other locations. If we have one close enough, that maybe
we should lower the backlog just a bit, maybe we should let New
Mexico experience the growth of its economy that is there,
ready to happen, except for the Federal rules.
It is a huge question for us, and one that we are trying to
deal with.
The other bill that we have simply makes the assertion that
if the Federal Government owns less than 50 percent of the
mineral rights, that maybe we don't need an application for
permit to drill. Let's let the state rules work, let's let the
private rules work, whichever one that they are sharing with,
so these bills really are very common sense, trying to cut back
the bureaucracy to allow some of the efficiencies that we might
be able to accommodate.
Mr. McQueen, I don't know if you have done an in-depth
study. Have you been able to assess pretty much the cost in New
Mexico of these regulations that are standing in the way of
drilling projects moving forward in New Mexico?
Mr. McQueen. Mr. Chairman and Representative, we have
looked at those numbers, and I offered those numbers a bit
earlier in my testimony. But we estimate the impact of these
backlogged permits in the Carlsbad office to represent about
$1.3 billion per year to the Federal Government and about $700
million, $713 million, to the state of New Mexico.
Mr. Pearce. So, $700 million to the state of New Mexico.
Again, keep in mind that their budget is around $6 billion, so
you are talking a very significant impact on a state that
really struggles for revenue.
Again, these two bills are designed not to bypass anything,
not to cause great destruction in the environment, but to be
practical, common-sense approaches to how do we reach the
economic potential of a state where that potential is ready to
happen. It is just that the rules lie in the way of making it
possible.
I have heard estimates of as high as $1 million per rig,
just in daily income to the state, just by the tax basis of all
the crews that are working, all the services that are provided.
So, again, you are talking a huge economic impact to a state
that typically struggles for revenue. So, these bills, to me,
made common sense that we would introduce them, and we would
urge that the Committee look favorably on those.
With that, Mr. Chairman, I yield back.
Dr. Gosar. I thank the gentleman from New Mexico. The
gentleman from California is recognized.
You are going to get a little extra time, so don't worry.
Dr. Lowenthal. As it should be.
Dr. Gosar. The timer was asleep here, so I am sorry.
Dr. Lowenthal. That is quite all right.
Mr. Willis, I want to follow up on what you spoke about
before. Why is it so important to involve the public in
decisions about oil and gas development? You began to talk
about that, but tell me, why is it so important that they be
part of this process?
Mr. Willis. Basically, because none of us is as smart as
all of us, and when we get people to the table and working
through the process, projects get better.
Dr. Lowenthal. OK, so they may raise issues that the
companies or BLM may not even think about, that it just
improves the process is what you are saying.
Mr. Willis. Right. They frequently have new information
brought forward that the agency isn't aware of, yes.
Dr. Lowenthal. Thank you, Mr. Willis.
Ms. MacGregor, we sent you a questionnaire for the record
last year asking for an office-by-office breakdown of the
number of drilling permits approved but unused as of September
30, 2016. Over 9 months later, you responded with a number of
permits approved, but only in Fiscal Year 2016 that hadn't been
used.
You know permits are good for 4 years, and we asked you for
the number of unused permits as of 2016. So, that response
really didn't help us, or just a little bit, because it really
only gave 1 year.
Let me ask you a two-part question. Can you tell me the
total number of approved permits that haven't been used as of
the end of Fiscal Year 2017?
Ms. MacGregor. I can tell you that the BLM estimates, as of
May 31, 2018, there were 2,606 pending APDs and 7,267 approved
APDs at that time that had not yet been drilled.
Dr. Lowenthal. All right, so approximately, as I said
earlier, there are 8,000 permits that have been approved that
are just sitting there, about 8,000, which is the lowest number
approved that we have had in almost a decade. Is that not true?
Ms. MacGregor. I am sorry, the lowest number of approved
APDs?
Dr. Lowenthal. The number that are pending approval, you
know, the number that are out there that are pending approval?
Ms. MacGregor. The total number today that are pending
approval are 2,603.
Dr. Lowenthal. And that is the lowest in a decade.
Ms. MacGregor. I don't have the annual numbers right in
front of me, but I could get that for you.
Dr. Lowenthal. But that is a low number if you look at it
over the last decade.
Ms. MacGregor. I would have to look at the numbers.
Dr. Lowenthal. All right, we would like to hear that
number.
And, also, will you provide the Committee with the
breakdown of all the permits that have been approved as of the
end of Fiscal Year 2017 by field office? Can you provide that
within a short period of time, say 30 days?
Ms. MacGregor. I believe we can do that.
Dr. Lowenthal. That would be very helpful, to follow that
up. Thank you.
Ms. MacGregor. I do have some stats, if you want them. In
2017, over $5 million was received by the BLM and we were able
to retain from expired APDs.
Dr. Lowenthal. Thank you. We look forward to seeing that.
Mr. Willis, I want to return. Do you think categorical
exclusions are appropriate for oil and gas drilling? And what
is the impact of eliminating the extraordinary circumstances
review?
Mr. Willis. I don't think CXs are appropriate for something
that has as much potential to be a long-term, irreversible,
irretrievable commitment of resources as a drilling operation
and since occupied the land for upwards of 50 years.
The Council on Environmental Quality guidance on CXs say
that they use those to identify categories of actions that
don't have potential to cause significant effects, and that
certainly is not the description of oil and gas development.
And in terms of extraordinary circumstances, that is a
process that in BLM CXs, everything that is proposed to be
authorized under a CX, BLM looks at to make sure that there
isn't anything that is special, unique, or unusual that would
make the CX not appropriate in that case.
Dr. Lowenthal. Thank you. So, it is fair to say that if BLM
doesn't look at extraordinary circumstances, there is more of
an analysis in installing a stop sign than in drilling an oil
well.
Mr. Willis. That would be correct.
Dr. Lowenthal. Thank you.
Governor Martinez and Secretary McQueen, in both of your
written testimonies, you mention the 800 pending permit
applications in New Mexico, and you both mentioned how much
money this is costing the state. That makes it sound like
companies are completely unable to get permits, and are sitting
around waiting for them.
But in my understanding, the data doesn't support that. In
the beginning of Fiscal Year 2016, drillers in New Mexico held
nearly 1,700 approved permits that they hadn't already used--
exactly 1,682. Then BLM approved another 891 drilling permits
that year; 618 of them, over two-thirds, went unused. So, I am
not too sympathetic about the 800 pending permits when there
are roughly twice that many approved ones that are already out
there just waiting to be used.
Does New Mexico receive any revenue from approved permits
that aren't being used?
Mr. McQueen. Mr. Chairman and Representative Lowenthal, let
me start with your last question first.
New Mexico does not receive any revenue for unused Federal
permits. I will say there are many reasons for having unused
permit inventory among oil and gas companies. New Mexico, for
example, has two predominant producing basins, the San Juan
Basin in the northwest and the Permian in the southeast. And
because of poor natural gas prices, we have seen the drilling
count in the San Juan Basin go from as high as 45 rigs to 3
rigs today.
So, companies reallocate resources based on a whole number
of factors, including product prices. In the southeast, in the
Permian Basin, we have seen a number of companies, new
entrances, new acquisitions by companies in the southeast. Each
company has their own idea of the best place to drill. So----
Dr. Lowenthal. Let me go on, and I will finish up with the
last part of the question.
Another interesting piece of data is that in Fiscal Year
2016, companies in New Mexico drilled 297 wells that they
didn't complete. That is, they drilled a hole, but didn't
produce any oil and gas from it. Presumably, they are sitting
on many of these, waiting for higher prices. So, then the same
question is, does New Mexico receive any revenue from wells
that are drilled but not producing any oil and gas?
Mr. McQueen. Mr. Chairman and Representative Lowenthal, New
Mexico does not receive revenue on oil and gas wells until
production begins. But, again, back in 2016, the reason for not
completing, or at least deferring completions on those wells,
was all related to the price of crude oil.
Dr. Lowenthal. Thank you. So, I think it is unfair to blame
the BLM for costing the state hundreds of millions of dollars,
when that is clearly not the issue here.
Thank you, and I yield back.
Dr. Gosar. I thank the gentleman. We may now have the
question answered for when will time stand still. It was 4:32,
and it was 10 seconds before that. So, that clock may not be
working, so you will get your cue from me.
I will now go to Mr. Lamborn from Colorado for his 5
minutes.
Mr. Lamborn. Thank you, and thank you all for being here.
Ms. MacGregor, it is good to see you again.
Governor, thank you for being here.
And you have all traveled, and I appreciate that.
One of the bills, in my opinion, would do a real common-
sense thing. It says that you don't have to do an APD, you can
do a notification if, for instance, it is in an existing field
which had already been assessed for environmental impact and so
on.
Does anyone here on this panel think that you should have
to go through the whole process over again in an existing
field?
Governor Martinez. No, I do not believe that it is
necessary. That is what causes the delays, causes the inability
for the industry to grow, causes the delay for people to be
hired at good-paying jobs.
You can have an 18-year-old who can earn $80,000 with a CDL
license in the oil and gas industry and be able to support
their families.
So, to do something again when it already exists is simply
duplication and a bureaucratic process that is unnecessary.
Mr. Lamborn. Thank you.
Mr. Willis?
Mr. Willis. I would like to respectfully disagree. I have
worked on a number of large-field NEPA projects, and it depends
on the degree of detail. If you have examined all the well
locations and looked at those, it probably doesn't make a lot
of sense to run each APD through full-on NEPA. But if you have
a field that was done more programmatically, and someone
decides they want to pop a well out there somewhere within the
5-mile radius of another well, and that location has not been
looked at site-specifically, it may well have some issues.
Mr. Lamborn. OK, thank you. I want to build on a question
that was asked.
Mr. McQueen, you were starting to answer this a few minutes
ago, and that is if an oil or gas company has in its inventory
permits that it is not actively drilling on, what might be some
of the explanations for that situation?
Mr. McQueen. Mr. Chairman and Representative, there are a
number of explanations for that, but each time an operator
drills a well, they learn more about the geology, they learn
more about the rock structure, they learn more about where the
better placement of these horizontal laterals should be made.
So, each time these operators increase their knowledge
base, they are re-evaluating every opportunity to drill. And in
some cases they find that their first choice for drilling a
well may not be the best choice. That is part of the reason
that operators go back and re-permit wells in different places.
There are also other logistical issues related to oil and
gas drilling, and operators many times can streamline their
operations by taking advantage of logistical opportunities.
For example, if you have a rig drilling in a field and you
have six or eight other locations adjacent to that location, it
is much more economic to move that rig to those locations and
drill them, rather than moving the rig maybe 100 miles to a
location where you do have a permit. So, there is a need for
flexibility, and there is a need for inventory, for operators
in looking at drilling oil and gas wells.
Mr. Lamborn. I sometimes have gotten the impression that
people that don't understand the situation assume that if there
are unused permits in the inventories out there, then it really
doesn't matter if there are huge delays going on, because it is
not that big of a deal, they must not care that much if they
are sitting on unused permits, or it is not that important from
a business perspective, or the government has already done its
job and so slow-downs don't really matter.
Would you agree with that line of reasoning?
Mr. McQueen. Representative, I would agree with that.
Unless you have worked in the oil and gas business, it is
really difficult to understand the complex logistics that are
required in order to pull off continued operations.
Back to your earlier question, another reason that
operators often elect to change locations is the availability
of infrastructure. In New Mexico, we have been trying to do
what we can to encourage operators to deliver their associated
natural gas to pipeline for sales. So, again, operators are
looking at locations that are closer to existing infrastructure
or anticipated infrastructure in order to get their products
sold.
Mr. Lamborn. Thank you. Thank you all for being here.
Mr. Chairman, I yield back.
Dr. Gosar. I thank the gentleman from Colorado. The
gentleman from Virginia, Mr. Beyer, is recognized for 5
minutes.
Mr. Beyer. Yes, thank you, Mr. Chairman, very much. And
again, thank you all for coming.
Principal Deputy Assistant Secretary MacGregor, Mr. Willis
wrote that the CX provisions in these bills have a major flaw,
a logical flaw, that the 5-mile radius, when you do p
R2, it ends up being 78 square miles where BLM
wouldn't have any opportunity to review critical areas and
resources, and the public not having any say in the matter.
When you think of a 5-mile radius, you don't think about it
being 78 square miles. And he points out that Tavaputs Plateau,
which is a plateau highly dissected by deep canyons--how do you
answer his objection that 78 square miles is far too large to
qualify for a categorical exclusion?
Ms. MacGregor. I believe, in referring to the 5-mile
radius, that is in the Curtis bill?
Mr. Beyer. Our audience is saying yes. Yes.
Ms. MacGregor. OK. We do not have formal comment on that
legislation, the draft bill, given that we received it on
Friday, but we are more than willing to work with the Committee
on every step, as required, and information that is needed.
I will say, when it comes to a categorical exclusion--and
again, to debunk the myth that somehow NEPA is not being done
at all--when we do our resource management planning through
FLPMA, we are required to do quite a bit of public comment,
work with our local communities, working with our governor's
office--we have a pending one in New Mexico right now that is
pretty important.
And on top of that, we do an EIS related to that. And,
again, in that EIS, that environmental impact statement, to
adhere to NEPA we evaluate quite a bit of different impacts to
those properties and to all of that acreage, including
promulgating a reasonable foreseeable development scenario that
in some cases accounts for pad size of development and other--
--
Mr. Beyer. Let me move on. The Governor, in her opening
statement, talked about the average of 250 days and the 800
permanent backlog, which, of course, makes BLM look really bad
right out of the box.
Yet, you talked about all the work you are doing. You have
it down to 113 days, 115 days, and only 50 days at BLM.
We have reduced it by 80 percent already with your
leadership. Do we actually need this legislation? Or are you
going to be able to do something very efficient just with
better management?
Ms. MacGregor. You are so kind, sir. By statute we are
required to do these APDs in 30 days. Federal law is telling us
to do these in 30 days. Sometimes we cannot even do the NEPA in
30 days, so we aspire to, working with our state partners, and
in accordance with the Secretary's priority to restore trust
with a lot of our local governments who are concerned about our
lags in permitting, potentially restricting rural economic
development, we are trying to improve our process.
I don't think it is good enough. We are going to try to do
better.
Mr. Beyer. Thank you very much.
Mr. Willis, one of the interesting pieces is this notion of
a no Federal permit required for production activities that are
on non-Federal surfaces. So, the drill is going on a non-
Federal surface, and with long horizontal shafts is accessing
Federal minerals.
Why does this not make sense? What is the public argument
that if deep down, thousands of feet, you are accessing or
unitizing Federal minerals, it should all be part of the NEPA
process, or subject to NEPA review, et cetera?
Mr. Willis. Well, for starters, the NEPA statute isn't tied
to land ownership as to what triggers NEPA. What triggers NEPA
is a Federal action. And I would hope that the leasing and
production of Federal minerals is a Federal action with some
Federal oversight.
The other thing is that even though it is taking place down
a hole, that doesn't mean that there isn't potential to be
affecting groundwater aquifers, surface water, all sorts of
other things that is in the interest of the Federal Government
to keep an eye on.
So, I would say, based on being a Federal action, and the
resources at risk, that it is reasonable for the Federal
Government to have a say in the permitting on that.
Mr. Beyer. I only have 30 seconds left. Can you talk about
the unintended consequence of charging a fee for those who
protest without anonymity, but allowing anyone to apply for a
permit anonymously with no fee?
Mr. Willis. Not quite sure how to answer that one, other
than the fact that the process appears to be fundamentally
unfair, and the whole protest fee--we don't routinely charge
people a fee for asking the Federal Government to correct its
mistakes.
Mr. Beyer. It was interesting, your comment about actually
incentivizing the Federal Government to make mistakes so that
they can generate revenue.
Mr. Chairman, I will yield back.
Dr. Gosar. For clarification, if you go to page 3 of the
draft, line 6, the question is very outlined: ``a developed
field, where there are existing oil and gas wells within a 5-
mile radius and for which an approved land use plan or
environmental review was prepared within the last 10 years
under the National Environmental Policy Act of 1969 (42 U.S.C.
4321) that analyzed such drilling operations as a reasonably
foreseeable activity.'' So, that is defined.
And also, it is for surface disturbances of less than 10
acres. So, just for clarification on your original point, those
are a part of that.
The gentlewoman from Wyoming is recognized for 5 minutes.
Ms. Cheney.
Ms. Cheney. Thank you very much, Mr. Chairman. Thank you to
all of our witnesses for being here today. I am in support of
all of these bills. I want to thank my colleagues, Mr. Curtis
and Mr. Pearce, in particular. I think that these proposals
really provide common-sense answers to help to streamline this
process and, frankly, help to clarify what the law is and how
we ought to be operating.
Governor Martinez, thank you, also. I was particularly
struck by your testimony and the simplicity of it, in terms of
explaining the real-world impact of the red tape that we are
facing. And I would commend it to anybody who hasn't read it.
It is short, to the point, and really gets at the economic
benefit of these resources and the detriment that is being
caused by the red tape. So, thank you very much for that.
As we have discussed, the issues of split estate in
particular are ones that are crucial for us in Wyoming. I want
to thank Deputy Assistant Secretary MacGregor for the work that
has already been done. In Wyoming, we have seen a tremendous
improvement in the timing, in terms of the APDs. We have seen
the backlog be diminished, which, I think, is a good thing.
But I would like to get some sense--I understand that the
Department has been supportive of some of these pieces of
legislation. You are reviewing Mr. Curtis'. But in the
meantime, while we are waiting on legislative action, could you
give me a sense of additional work the Department is going to
do and the kind of guidance that you are giving to the local
offices, in terms of split estate?
And as you do that, let me ask you to address Mr. Willis'
description just now, which I was struck by, which would
basically, it seemed like, extend Federal Government permitting
authority to basically any activity anywhere that deals with
minerals at all, regardless of the ownership of the minerals or
the ownership of the surface area.
Ms. MacGregor. I am happy to touch on that. And to that
point, for awareness, as far as the BLM goes, in total all-time
we have approved over 26,000 applications for permit to drill
on non-Federal surface land. To give you sort of perspective on
our workload, when we are getting through permits, these are
also permits that we are processing when there is zero Federal
surface disturbance.
But the Department is working on instruction memoranda and
guidance within the Bureau of Land Management to further direct
and help assist our field directors on the front lines
understand the use of statutory categorical exclusions that are
tools that have already been provided to us by the U.S.
Congress to help expedite a lot of these processes. I can
commit to you that that should be out by the close of business
today.
We are also working on further memoranda and internal
guidance to help clarify where BLM jurisdiction ends and
private land begins. And a lot of this is--when we talk about,
and others may describe us as circumventing NEPA through a
categorical exclusion, I think it is important to remember on
site-specific impacts that we are focused on where our
jurisdiction is.
A lot of these split estate tracks can be extremely
difficult. In some cases we have looked at, I have had our
office analyze and we have looked at some parcels where the
subsurface estate, we will own less than 2 percent of the
minerals, and yet an APD is still required.
So, I think there are some common-sense solutions that we
can work on together to make improvements to that process.
Ms. Cheney. Thank you. In terms of the guidance that you
mentioned that is coming out by close of business today, as you
know from time here in this Committee and now time in the
executive branch, we really did see during the last
administration an effort not to grant categorical exclusions
that were, in many ways, clearly justifiable by the law. I
think it is one of the things that--one of the pieces of
legislation Mr. Pearce is putting forward does, in terms of
making clear that those shall be granted.
Is it your view that the guidance that is being issued
today will be as strong an admonition in favor of abiding by
existing law, as we saw for 8 years, in terms of, frankly,
ignoring the law in order to stop the development of our fossil
fuels?
Ms. MacGregor. Absolutely. And it is important to
decipher--there is an important distinction between statute-
driven categorical exclusions and those that are promulgated
under regulations by CEQ. Those are statute-provided
categorical exclusions that direct us how to use them. They are
for our use by the U.S. Congress. It is the law of the land.
Ms. Cheney. Thank you very much.
I yield back, Mr. Chairman.
Dr. Gosar. I thank the gentlewoman. The gentleman from
Florida, Mr. Soto, is recognized for 5 minutes.
Mr. Soto. Thank you, Chairman. New Mexico recently approved
permits that do not require oil and gas wells to check for
leaks and methane or other pollutants.
Governor Martinez, does New Mexico think methane is harmful
to its residents?
Governor Martinez. Certainly there is a measure of making
sure that it is not harmful, flaring, et cetera, taking place.
We are not doing it in an irresponsible way because we do think
that in the production of the oil and gas in our state, the
producers live there and understand the damage or danger that
any kind of pollutant is also affecting their families.
Therefore, that is why I believe very strongly that they
protect the land in which they are drilling. And therefore, the
methane that may be produced is minimized as much as possible.
However, it is a product that does come from the production
of oil and gas, and I think that making sure that it is
minimized as much as possible is of importance to them.
Mr. Soto. Is this new methane leakage rule the reason why
it only takes 10 days now to get a permit in New Mexico?
Governor Martinez. No. Actually, when I took office there
were boxes and boxes and boxes of permits being requested by
the oil and gas industry of the state government, and they were
just not being addressed at all. And one way to destroy an
industry is to not give them a response at all, not an approval
or a denial.
So, we attacked those permits, and did them in a
responsible way, gave a response, and then gave them the
answers----
Mr. Soto. Thank you, Governor. Excuse me, my time is
limited. New Mexico's leaking methane law--according to Mr.
Pearce's bill, if the Federal permits for the land, if the land
is less than 50 percent owned, there will no longer be a
Federal permit.
Deputy Assistant Secretary MacGregor, would the new methane
leakage law in New Mexico apply to these Federal lands, if Mr.
Pearce's bill is passed?
Ms. MacGregor. Thank you for that question. That new
regulation is not final yet.
Mr. Soto. I am not talking about the Federal regulation.
What Mr. Pearce's bill would say is that there would be no
requirement of Federal permit if there was less than 50 percent
of the land owned by the Feds. So, would it then kick to the
New Mexico rule in those cases, if Mr. Pearce's bill is passed?
Ms. MacGregor. I believe, as is the case today in most of
the western lands and western states, there are two--there is a
Federal APD for anything touching Federal minerals, and there
is also a state APD.
States, in many cases, work under the auspices of the Clean
Air Act and the Clean Water Act to enforce many of those
provisions, which are not directed to us to enforce.
When it comes to issuing the APD, I believe how it would
work under Congressman Pearce's bill would be that an APD at
the state level adhering to state laws and then, of course,
adhering to the Clean Water Act and Clean Air Act, would be
transmitted to the Department of the Interior, to the BLM, and
we would take that as accounting for----
Mr. Soto. Thank you.
Studies show that New Mexico is losing between $182 million
to $244 million in lost methane a year. Governor, are those
methane losses factored into this $700 million in lost revenue?
And are environmental clean-up costs and health care costs
from New Mexicans breathing polluted air factored into the lost
revenue that we are talking about here today?
Governor Martinez. If I may, I will defer to Secretary
McQueen, please.
Mr. McQueen. Representative, those numbers are based on a
number of assumptions that probably don't hold up to the test.
In New Mexico, gas is sold at the wellhead.
Mr. Soto. OK, and so I understand, since I have limited
time, you dispute those numbers.
Last, NASA in 2014 discovered a 2,500-square-mile methane
hot spot over the Four Corners region of New Mexico. Does New
Mexico have an obligation to states like Florida, who, because
of climate change, face severe weather and natural disasters in
rising seas? Is there not an obligation for your state to care
about my state and others?
I will leave that to the Governor for my remaining time.
Governor Martinez. I think every state certainly should be
very interested and care about their environment, their state
in which they live, work, raise their children, and employ
others. I strongly believe that we are very responsible. We
have taken measures.
The technology that this industry has done and invested in
to make matters better is far better than any other industry I
have seen, because it interests them because they live there,
and they want to make a better product and make it safer for
them to live there.
I do not see them skimping and making sure that their
ability to drill is in any way, that they are not turning their
money around re-investing in how do they do it better, and
leave a smaller imprint or footprint on a land.
So, I am very supportive of this agency, not just because
of the revenues, but also because it is something that makes us
independent, as a state and as a country, for the fuel that we
have in our state, great minerals, and that exist in one single
state that we would love to be a part of for our national
security.
Dr. Gosar. I thank the gentleman. His time has expired.
The gentleman from Utah is recognized for his 5 minutes.
Mr. Curtis. Thank you, Mr. Chairman and Mr. Ranking Member.
And special thanks to our witnesses, every time we do this, I
really appreciate your willingness to travel.
Mr. Willis, you come from my district, and welcome. It is
nice to have you here, as well. I think your very presence
demonstrates the difficulty of these issues, and I appreciate
your messages today.
I would like to direct my comments to Mr. Baza.
I appreciate you coming from the district, as well. I have
been thinking about your testimony and this gap in time
between--I think you said 12 to 18 months it can take to go
through the Federal process, and the state of Utah is doing it
in 30 to 90 days. I would like you to articulate a little bit
about the differences in the processes, what some may say is
missing from that process, if anything. And why are you able to
do it in such a reduced amount of time?
Mr. Baza. Mr. Curtis and members of the Committee, I do
believe that I am very expert on the way the state of Utah does
business. I am less expert on how the BLM does business.
Mr. Curtis. OK, fair enough.
Mr. Baza. To make that comparison may be somewhat unfair.
But I think if you looked at our process and what we accomplish
in 30 to 90 days, it is very environmentally sensitive. We have
people out on the ground who live and work in those areas that
are actually inspecting those wells prior to drilling to ensure
that the environmental impacts and the land use impacts are
minimized for every well that is drilled.
And we take great pride in that process, and we don't want
to shortcut any of it for the citizens of Utah. I do believe
that if we were to model some of what we do at the BLM's level,
there could be some time frames that could be shortened.
Mr. Curtis. You make a good point, and I don't want to put
words in your mouth, so I will let you decide if you agree with
me on this. A lot of times in Utah we feel like we actually do
care about the land, and actually better sometimes than those
far away. And I am assuming you would agree with the fact that
those in Utah who are doing this permitting in 30 to 90 days do
care about the environment and want to make sure it is done
well.
Mr. Baza. Absolutely. We live and work in those areas, and
we want them to be as pristine as possible.
Mr. Curtis. We have heard a little bit about New Mexico and
the impact specifically in New Mexico. Are you familiar enough
with the delays and the impact in Utah, and how that is
impacting Utah?
Mr. Baza. Not specifically, but I certainly could go find
some information and get back to you very quickly.
Economic development is a very touchy thing in Utah. We
don't have the number of rigs operating in Utah that are going
on in New Mexico, although we are seeing more production from
state and private lands in the last few years than we have ever
seen. Much of that is due to new horizontal drilling
technology, which is catching on like wildfire.
We see a great window of opportunity into the future of
developing more resources like that, but we have to be careful
that the impedance that comes from the Federal side doesn't
dissuade operators from making those investments in Utah.
Mr. Curtis. Is it accurate to say that the rural part of
Utah is disproportionately impacted by this, most of this is
happening in rural Utah?
Mr. Baza. Yes, correct. There is no real drilling going on
in the urbanized areas, it is all in the rural communities.
Mr. Curtis. Yes, where we are struggling.
The state of Utah, it has been mentioned here, this letter,
with five other states sent a letter to Secretary Zinke
advocating for legislation that is actually pretty similar to
this draft legislation.
Are you familiar with that letter? Can you tell us a little
bit about why the letter was sent, and how it is felt this will
impact Utah?
Mr. Baza. Yes, I am familiar with that letter, and it is
part of my written testimony I have submitted. The letter is
actually very detailed, in terms of what procedures should be
followed. I think your bill and the other bills that are coming
out of the Committee today are much more broadly based, in
terms of what can be done to improve the processes.
In the bill that you proposed, I believe it is wise to look
at triaging APDs that come into the Federal Government. Not all
Federal lands are created equal. And I think that we could look
at what are the lower-risk areas that could be developed much
quicker than devote our time to the more sensitive areas and
those APDs that will be more complex.
Mr. Curtis. Thank you. I appreciate all of you. I am out of
time, and I will yield, Mr. Chairman.
Dr. Gosar. I thank the gentleman from Utah. The gentleman
from Arizona, Mr. Grijalva, is recognized for 5 minutes.
Mr. Grijalva. Thank you, Chairman Gosar, I appreciate it.
And thank you to the witnesses.
Secretary MacGregor, back to the line of questioning that
Ranking Member Lowenthal started having to do with the unused
drilling permits, much of that has been explored already.
My question, or maybe it is a request, of those permits, do
we have a company-by-company, individual-by-individual
breakdown of the holders of those permits?
Ms. MacGregor. I don't believe I have that information.
Mr. Grijalva. Is that information available?
Ms. MacGregor. It is not readily available. I think we
could try to get it.
Mr. Grijalva. The reason I ask is about the redundancy of
it, that someone after that 4-year period, the 2, and then the
automatic 2, then after 4 years are we seeing the same
companies, same names being consistently the ones that are
renewing permits over and over again that have already been
permitted to drill?
Ms. MacGregor. That is a good question, and I have spent
some time in Wyoming talking to our reservoir management team
on that. Because I think what companies are starting to do is
apply for a lot of these APDs in tranches, and planning for a
potential long waiting period for the APD to be filed. So, they
might file a bunch of APDs expecting that it might take a
couple of years.
Mr. Grijalva. OK.
Ms. MacGregor. In some cases, I think we have some that
have been pending for over 5 years when I started in January.
Mr. Grijalva. I am talking specifically about those that
are unused that have the drilling permit, per se.
But I ask that because other motivations might be market
motivations, speculation, holding on to something.
Do you support any kind of concept now or in the future
about using them or losing them, and allowing the opportunity
to be extended to others who might more readily be prepared to
utilize that?
Ms. MacGregor. I think that is an interesting concept. It
is pretty much how we operate right now.
When an APD is issued, a company has 2 years. It can be
renewed once, and then you are done and we keep all of the
revenue associated with the filing of that APD. And that is
why, in 2017, we still have $5 million that went to the BLM and
to the Treasury from expired APDs.
Mr. Grijalva. OK, but you see my point? Once knowing who
they are and what is the lack of--I can't find the right word--
recidivism of the people applying over and over again for
these, it would be good to be able to make some sort of
analysis about that, and possibly promote a use it or lose it
concept that hasn't been promoted as readily as it should.
Anyway, Secretary McQueen, part of the discussion today is
NEPA, public participation, fee for protest. What is the
process in New Mexico regarding public participation?
Resembling NEPA? Something different? If you could, just maybe
outline how the public and New Mexico gets involved in the
decision making when you are issuing a permit or siting
something.
Mr. McQueen. In New Mexico, most of the permits that would
fall under our jurisdiction are either state or private leases.
And the state land office in New Mexico is responsible for
overseeing the environmental review of state leases.
Mr. Grijalva. At what point does the public interject
itself into that process? When do they have the right to know
about what is going on in New Mexico?
Mr. McQueen. All of our regulatory proceedings in New
Mexico are open for public comment.
Mr. Grijalva. And there is a protest period, and then there
are comment periods, and all that?
Mr. McQueen. There is an opportunity to make public comment
through our hearing process. Yes, sir.
Mr. Grijalva. And, again, for Mr. McQueen, for extraction
of let's say minerals on state land, does New Mexico collect
royalties on that?
Mr. McQueen. Representative, yes, they do.
Mr. Grijalva. What is it?
Mr. McQueen. The oil and gas royalties are set by statute
in New Mexico, and those have changed through the course of
time. But they varied between 12.5 and 20 percent royalties on
state lands.
Mr. Grijalva. Since we hear a lot about the states leading
by example, do you feel that the Federal Government should also
be charging some form of royalty on all the minerals that are
extracted from its public lands?
Mr. McQueen. Representative, I believe the Federal
Government is receiving royalty on oil and gas that is being
produced.
Mr. Grijalva. No, I am talking about mineral extraction.
Dr. Gosar. The gentleman's time is expired.
Mr. Grijalva. Thank you.
Dr. Gosar. I thank the gentleman. The gentleman from New
Mexico, Mr. Lujan, is recognized for 5 minutes.
Mr. Lujan. Chairman Gosar, Ranking Member Lowenthal, thank
you for the indulgence of allowing me to sit on the Committee
today, even though I am not a member of the Committee, at least
not a current member of the Committee.
Mr. Gosar, it was an honor to serve with you and Mr.
Grijalva and Mr. Lowenthal before.
Governor Martinez, while I know we are here on permitting,
I am going to take this opportunity to ask a different question
at the top. And I want to thank you for going down, as you have
done with other natural disasters in New Mexico, to see the
impacted area on Saturday. And I know that your team has been
on the ground there with all the firefighters, over 36,000
acres that have been burned in and around Cimarron, northern
New Mexico, Eagles Nest, Ute Park, into Colfax County.
What I wanted to ask, Governor, is does the state of New
Mexico have the resources it needs to address this fire? And do
you expect to make any additional requests of FEMA or the
Federal Government?
Governor Martinez. Thank you, Mr. Chairman and
Representative Lujan. Yes, the state does have the resources,
and we do receive those resources and have asked for FEMA
requests, as well.
We have about 500 firefighters fighting this fire. It will
continue to burn for probably another 1\1/2\ to 2 weeks. But we
are trying to and have been successful in making sure that the
community of Cimarron, Ute Park are also protected, we have not
lost life and/or property, except for outhouse type of
buildings, where people do not live. So, we do feel strongly
that our budget is healthy and is able to participate in the
percentage that we put in when we make those FEMA requests.
Mr. Lujan. I appreciate that, Governor. And I know we were
all pleased when FEMA accepted the state of New Mexico's
request for the fire management assistance grants, as well.
But the reason I wanted to ask that question is I know I
have visited with many of my colleagues, and we all stand ready
to make sure we are working together. But thank you for your
leadership in that effort.
On the permitting side, Secretary McQueen, I am going to
push back a little bit. Congressman Grijalva asked some
questions about public notification and comment procedures from
the state of New Mexico. What sort of public notification and
comment procedures does the state have when it receives
drilling permit applications?
Mr. McQueen. Representative Lujan, our public comment
period related to oil and gas operations largely fall within
the LCD hearing process. So, for a typical oil and gas permit
that is applied in southeastern New Mexico, typically there
wouldn't be a public comment in that.
Mr. Lujan. If I may, I want to seize on that. My research
says there is basically none. And I think that the notion that
there can be public comment when there are no requirements is
one of the challenges that we have that we need to correct.
We hear a lot about how much more quickly states can
process drilling permits, but I think that we also have to
acknowledge that there should be a process that allows the
public to comment, as well. And I think that is something that
needs to be addressed in New Mexico.
Governor Martinez, in responding to Congressman Soto's line
of questioning around methane, what requirements does the state
of New Mexico have in place, in your words, to minimize methane
exposure and waste?
Governor Martinez. It is my understanding, Mr. Chairman and
Representative Lujan, that the flaring is one of those issues,
and that they are trying to recapture, and using technology
through the industry to make sure that that is being used in a
different way, and so that we are not having those issues.
Mr. Lujan. Since my time is going to expire, you said try
to capture. Is there a requirement in New Mexico for capturing
of methane?
Governor Martinez. No, but the responsibility--well, I----
Mr. Lujan. No is the correct answer. I mean I appreciate
that.
And Secretary----
Governor Martinez. I don't know that it is the correct
answer, and I would like Mr. McQueen to----
Mr. Lujan. Well, Secretary McQueen, if I could, you also
pushed back on the basis of the numbers that Darren Soto
presented to you, the 570,000 tons of methane each year due to
intentional emissions, unintentional leaks and flaring of gas,
$182 to $244 million. If those numbers are incorrect, what are
your numbers?
Mr. McQueen. The state is currently venting about .1
percent of its total gas production and about 1.2 percent of
its total gas production is being flared.
Mr. Lujan. How much is that costing the state?
Mr. McQueen. If you compare those numbers to peer oil and
gas states, you will find that those are very comparable
numbers.
Mr. Lujan. How much money is New Mexico losing because we
don't have any requirements to capture this?
Mr. McQueen. Well, natural gas is selling for $1.60, $1.70
an----
Mr. Lujan. Mr. Chairman, as my time expires here, I think
that those are some questions I will work with the Committee to
submit.
We need to get some answers here, because we cannot just
push back on estimates that are being put forth that there is
not a response associated with what has been calculated.
It has been admitted that this methane is not being
captured in New Mexico, it is being wasted, and we know that
there is revenue being lost. We need to maximize this. In New
Mexico, every dollar counts.
So, Mr. Chairman, again I thank you for the indulgence. I
will work with you and the Committee to see if we can get some
answers to these questions, as well.
Dr. Gosar. I thank the gentleman.
Mr. Lujan. I thank you so much for being here, as well.
Dr. Gosar. Thank you. I am going to recognize myself to go
last.
First of all, I need to clear up a couple things because
there is some confusion as to what these bills actually do and
what type of drilling operations actually qualify for the
permitting mechanisms that we create under these bills.
Mr. Willis states in his testimony that under the new NPD
process, ``a notice may place a well on a national historical
trail or in especially sensitive and critical wildlife habitat
or a community water source.'' I want to make it perfectly
clear that these operations are not what we are talking about
here in this language. We are talking about drilling activities
that pose no significant effects to human environment,
threatened or endangered species, or cultural or historical
properties. The bill makes this perfectly clear.
The Secretary also has the ability to object to an NPD
based on these grounds, and require consultation under the ESA
or NHPA to remedy such concerns with additional conditions if
so needed. We are not exempting anything under NEPA. These
drilling operations are ones for which the BLM has already
conducted the study under the NEPA, and are in areas where the
drilling has actually occurred, and they are eligible for a
categorical exclusion, or a study is produced to show that
there are no such impacts.
Once again, Mr. Willis, please make sure that you
understand. You have been with the BLM. You should be able to
read this and understand that. So, get the facts straight.
Secretary MacGregor, under the bills we have here before
you today, it would allow the Department of the Interior to
recover the cost of processing leases through the assessment of
administrative processing fees. How many lease sales are
protested? And can you describe the type of objections these
protests are making in the BLM lease sales?
Ms. MacGregor. Absolutely. To date, I mean in Fiscal Year
2017, nearly 88 percent of all leases were protested. And I
think it is important to decipher a protest period is not the
public comment period. On multiple occasions leading up to a
Federal lease sale, there are several different opportunities
for the public to share their opinion, and we want that. In
many cases, we have published our notice of potential lease
sale, put the acreage out, and then, when we conduct the actual
lease sale, sometimes 5 to 10 percent of the acreage has
already been deferred because of the public comments that we
have received. And we really try to get ahead of that before
the lease sale is actually conducted.
The protest period comes after the lease sale has been
conducted. And again, that, in some cases, has significantly
delayed our ability to adhere to our revenue-sharing
obligations under the Mineral Leasing Act and provide states
like New Mexico, in the case of 2016, waiting over 7 months to
get a $70 million payment.
But, again, our staff, when we discuss this concept that
you are sharing with us in the form of a draft bill, we have
looked at some protests where, in fact, there have been copied-
and-pasted sections where a protest has been filed in Wyoming
and identically filed in the state of Colorado or New Mexico.
And if the intent of some of these protests is to stop the
lease sale from occurring, that is an abuse of what protests
are supposed to be. We would like to focus on protests where it
is a rancher who has a serious concern with something going on
in proximity to his lands.
But if it is an attempt through 1,500 pages of our review--
and we have letters outstanding to Mr. Lowenthal and others--to
get through these, and then be able to make a payment and have
our staff spend hours to do that, that is a little bit
different. And we do charge, I mean there are FOIA fees. We
have had a multitude of FOIAs, and that hasn't prevented anyone
from filing FOIAs with the Department, God knows, because we
have quite a few right now.
We respect public comment, we absolutely want to ensure
that. But when it gets abused and over 88 percent of our leases
are protested, I think we have a little bit of an issue
developing.
Dr. Gosar. Can you give me a range of time in which those
challenges take to resolve?
Ms. MacGregor. Well, this is just a bad example, because
our team has to go through and read every single page. I mean
this is printed double-sided so it could actually fit on the
desk, but there are others that won't take as long. But it
really depends on how many and how many pages we have. There
are some good reports in there. And making sure that our
comments address every issue that is raised in that protest
tends to be one of the most consuming aspects of a protest.
Dr. Gosar. Governor Martinez, when you have such a delay in
the issuance of a lease sale, what does that mean to the state
of New Mexico?
Governor Martinez. It is one of our largest industries. We
rely heavily on the Federal Government, because we have four
military bases and three national labs, so many coming from the
Federal Government. That is one of our largest industries, and
all of these subcontracts to that.
And the second one is our oil and gas industry, which
employs 100,000 people and is a revenue generator of, 35
percent of our general budget comes from the oil and gas
industry.
We also have a $23 billion permanent fund that, should oil
and gas ever be depleted in the state of New Mexico, that
permanent fund then will be the replacing dollars for building
those schools, $1,800 and $19 million every year from the
permanent fund, and the revenue that is received from those
investments goes straight into the budget, as well.
So, when we do not have timely, responsible ways of
requesting permits, those kinds of dollars for a $6 billion
budget is detrimental.
Dr. Gosar. One last question, Ms. MacGregor. In regards to
the methane rule, what is the biggest impediment in regards to
methane from the producers?
Ms. MacGregor. Well, methane is natural gas. It is a
commodity. So, I do believe producers want to take every effort
to capture that commodity and bring it to market to make money
off of it.
In some cases, producers will have to vent or flare for
emergency purposes, or for completion, or there are a multitude
of reasons that are unavailable. But there are other instances,
if they have to do it on an avoidable basis under current
regulations, then we charge them revenue. We charge them a
royalty.
Dr. Gosar. But you get my point. It is a commodity, right?
Ms. MacGregor. Right.
Dr. Gosar. And it is a sellable commodity.
Let me ask you another question. Have leases gone up? Has
more drilling occurred in the United States?
Ms. MacGregor. Yes.
Dr. Gosar. Has methane gone up, the release of methane in
the environment gone up, or run down?
Ms. MacGregor. The last report I read from the EPA had, I
believe, said it has gone down.
Dr. Gosar. Considerably. Considerably, because of industry.
So, why would you want to actually impugn the industry who is
trying to capture it for criminy sakes? I don't get it.
Well, anyway, you satisfied my curiosity, so we will have
to leave it with that.
I want to thank the witnesses for their valuable testimony
and the Members for their questions. The members of the
Committee may have some additional questions for the witnesses,
and we ask that you respond to these in writing.
Under Committee Rule 3(o), members of the Committee may
submit witness questions within 3 business days following the
hearing by 5:00 p.m., and the hearing record will be held open
for 10 business days for their responses.
If there is no further business, without objection, the
Committee is adjourned.
[Whereupon, at 3:45 p.m., the Subcommittee was adjourned.]
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