[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
DISCUSSION DRAFT H.R. ____, ``ENHANCING STATE MANAGEMENT OF FEDERAL
LANDS AND WATERS ACT''
=======================================================================
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
__________
Thursday, June 14, 2018
__________
Serial No. 115-49
__________
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
30-431 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 Thursday, June 14, 2018.......................... 1
Statement of Members:
Gosar, Hon. Paul A., a Representative in Congress from the
State of Arizona........................................... 1
Prepared statement of.................................... 3
Lowenthal, Hon. Alan S., a Representative in Congress from
the State of California.................................... 4
Prepared statement of.................................... 6
Statement of Witnesses:
Anderson, Matt, Director, Coalition for Self-Government in
the West, Sutherland Institute, Salt Lake City, Utah....... 17
Prepared statement of.................................... 19
Cahoon, Ben, Mayor, Board of Commissioners, Nags Head, North
Carolina................................................... 21
Prepared statement of.................................... 22
Ebell, Myron, Director, Center for Energy and Environment,
Competitive Enterprise Institute, Washington, DC........... 27
Prepared statement of.................................... 28
Loris, Nick, Herbert and Joyce Morgan Fellow in Energy and
Environmental Policy, Center for Free Markets and
Regulatory Reform, The Heritage Foundation, Washington, DC. 7
Prepared statement of.................................... 9
Additional Materials Submitted for the Record:
List of documents submitted for the record retained in the
Committee's official files................................. 56
LEGISLATIVE HEARING ON DISCUSSION DRAFT H.R. ____, TO AMEND THE MINERAL
LEASING ACT AND THE OUTER CONTINENTAL SHELF LANDS ACT TO ENHANCE STATE
MANAGEMENT OF FEDERAL LANDS AND WATERS, AND FOR OTHER PURPOSES,
``ENHANCING STATE MANAGEMENT OF FEDERAL LANDS AND WATERS ACT''
----------
Thursday, June 14, 2018
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Natural Resources
Washington, DC
----------
The Subcommittee met, pursuant to call, at 10:00 a.m., in
room 1324, Longworth House Office Building, Hon. Paul A. Gosar
[Chairman of the Subcommittee) presiding.
Present: Representatives Gosar, Lamborn, Wittman, Thompson,
Tipton, Graves, Hice, Cheney, Bishop (ex officio), Lowenthal,
Tsongas, Beyer, Soto, Barragan, Velazquez, and Grijalva (ex
officio).
Mr. Gosar. The Subcommittee on Energy and Mineral Resources
will come to order.
The Subcommittee is meeting today to hear testimony on a
discussion draft titled ``Enhancing State Management of Federal
Lands and Waters Act.''
Under Committee Rule 4(f), any oral opening statements at
the hearing are limited to the Chairman, the Ranking Minority
Member, and the Vice Chair. This will allow us to hear from our
witnesses sooner and helps Members keep to their schedules.
Therefore, I ask unanimous consent that all other Members'
opening statements made be part of the hearing record if they
are submitted to the Subcommittee Clerk by 5 p.m. today.
Without objection, so ordered.
I now recognize myself for a 5-minute opening statement.
STATEMENT OF THE HON. PAUL A. GOSAR, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ARIZONA
Mr. Gosar. Today, the Subcommittee will discuss a written
discussion draft that continues a conversation about the
relationship between the Federal Government and the states most
immediately affected by the development of federally-owned
minerals.
This conversation began last fall, after the Department of
the Interior announced a robust draft proposed schedule of
offshore lease sales, which included 47 lease sales in nearly
all regions of the American Outer Continental Shelf.
Many coastal governors, municipalities, and congressional
delegations vocally expressed opposition to the plan, and
attempted to pass certain measures that discourage or prevent
mineral development on the federally-owned Outer Continental
Shelf.
While states are highly involved in the offshore lease
planning process, they do not have a veto power over lease
sales. Congress has seen various bills and amendments
attempting to impose a moratorium on OCS leasing, essentially
imposing the localized will on a nationally-owned, widely
enjoyed benefit. What seems to be lost in these initiatives,
however, is an acknowledgment that such attempts to strand
Federal assets comes at the expense of the American taxpayer.
The ideas presented today increase the state's role in
Federal mineral management, while indemnifying the taxpayer if
the state chooses to leave the Federal mineral undeveloped.
Both the onshore and offshore concepts presented attempt to
increase the role of states in Federal mineral management by
creating additional opportunities for states to facilitate or
inhibit mineral development, while ensuring the American
taxpayer realizes the value of the nationally-owned minerals.
Title I of this bill will allow states to assume exclusive
jurisdiction over oil and gas development on specific parcels
of federally-owned land. With the approval of the Secretary of
the Interior, states may choose to increase or decrease
production, or cease production on these parcels altogether.
Each state with existing onshore energy production has a
robust regulatory framework for managing energy development.
Allowing states to apply their management practices to Federal
lands will eliminate duplicative regulatory requirements,
reduce uncertainty for operators, and make these lands
competitive with state and private lands once again.
If a state increases production on Federal lands, the state
will receive 60 percent of the mineral revenues compared to 50
percent currently provided under the Mineral Leasing Act.
However, if a state reduces production, that state will receive
a reduced share of 20 percent and must pay a lost production
fee to the Federal Treasury. If federally-owned lands within a
state contain economically recoverable oil and gas resources,
they have the potential to generate revenue for the Federal
Government. These lands are owned by the public, meaning that
keeping these resources off the market represents a cost to
taxpayers nationwide. If a state chooses to forego development,
the state will be required to offset the loss in revenue to the
Federal Treasury.
Under Title II, coastal states will be empowered to make
intelligent decisions about allowing or prohibiting development
in Federal waters. The offshore proposal allows states to
consider development on a detailed, block-by-block basis. To
make informed decisions about management, DOI is directed to
consolidate and supplement geologic and geophysical data on the
OCS, and to use this information to plan lease sales and
determine the value of the minerals beneath our oceans.
Coastal states are then offered the right to determine
whether lease blocks are included in a final sale. The more
blocks a state allows to proceed to a final sale, the higher
the revenue sharing percentage that state receives from
revenues generated from the development off its coast. Should a
state choose to withhold the block from a sale, the state must
indemnify the U.S. Treasury for the value lost to the taxpayer.
We recognize that the current draft of the bill contains
several flaws. For instance, it does not yet include the
equitable redrawing of states' administrative boundary lines,
nor are the calculations of reasonable indemnifications to the
Federal Government and revenues to the state finalized. We will
continue to engage all affected stakeholders on this complex,
conceptual proposal, and we invite commentary and suggestions
to ensure the conversation is inclusive and well-informed.
Once again, these concepts seek to start a conversation
about the relationship between states and Federal offshore
development. In the end, these proposals empower states to
allow their decisions to result in financial benefits or costs
to their residents--furthering the notion of federalism.
[The prepared statement of Mr. Gosar follows:]
Prepared Statement of the Hon. Paul A. Gosar, Chairman, Subcommittee on
Energy and Mineral Resources
Today, the Subcommittee will discuss a discussion draft that
continues a conversation about the relationship between the Federal
Government and the states most immediately affected by the development
of federally-owned minerals.
This conversation began last fall, after the Department of the
Interior (DOI) announced a robust draft proposed schedule of offshore
lease sales, which included 47 lease sales in nearly all regions of the
American Outer Continental Shelf. Many coastal governors,
municipalities, and congressional delegations vocally expressed
opposition to the plan, and attempted to pass certain measures that
discourage or prevent mineral development on the federally-owned Outer
Continental Shelf.
While states are highly involved in the offshore lease planning
process, they do not have a ``veto'' power over lease sales. Congress
has seen various bills and amendments attempting to impose a moratorium
on OCS leasing, essentially imposing the localized will on a
nationally-owned, widely enjoyed benefit. What seems to be lost in
these initiatives, however, is an acknowledgement that such attempts to
strand Federal assets come at the expense of the American taxpayer.
The ideas presented today increase the state's role in Federal
mineral management, while indemnifying the taxpayer if the state
chooses to leave the Federal mineral undeveloped.
Both the onshore and offshore concepts presented attempt to
increase the role of states in Federal mineral management by creating
additional opportunities for states to facilitate or inhibit mineral
development, while ensuring the American taxpayer realizes the value of
the nationally-owned minerals.
Title I of this bill would allow states to assume exclusive
jurisdiction over oil and gas development on specific parcels of
federally-owned land. With the approval of the Secretary of the
Interior, states may choose to increase or decrease production--or
cease production on these parcels altogether.
Each state with existing onshore energy production has a robust
regulatory framework for managing energy development. Allowing states
to apply their management practices to Federal lands will eliminate
duplicative regulatory requirements, reduce uncertainty for operators,
and make those lands competitive with state and private lands once
again.
If a state increases production on Federal lands, the state will
receive 60 percent of the mineral revenues, compared to 50 percent
currently provided under the Mineral Leasing Act. However, if a state
reduces production, that state will receive a reduced share of 20
percent and must pay a ``lost production fee'' to the Federal Treasury.
If federally-owned lands within a state contain economically
recoverable oil and gas resources, they have the potential to generate
revenue for the Federal Government. These lands are owned by the
public, meaning that keeping these resources off the market represents
a cost to taxpayers nationwide. If a state chooses to forego
development, the state will be required to offset the loss in revenue
to the Federal Treasury.
Under Title II, coastal states will be empowered to make
intelligent decisions about allowing or prohibiting development in
Federal waters. The offshore proposal allows states to consider
development on a detailed, block-by-block basis. To make informed
decisions about management, DOI is directed to consolidate and
supplement geologic and geophysical data on the OCS, and use this
information to plan lease sales and determine the value of the minerals
beneath our oceans.
Coastal states are then offered the right to determine whether
lease blocks are included in a final sale. The more blocks a state
allows to proceed to a final sale, the higher the revenue sharing
percentage that state receives from revenues generated from development
off its coasts. Should a state choose to withhold the block from a
sale, the state must indemnify the U.S. Treasury for the value lost to
the taxpayer.
We recognize that the current draft of the bill contains several
flaws. For instance, it does not yet include the equitable redrawing of
state administrative boundary lines; nor are the calculations of
reasonable indemnifications to the Federal Government and revenues to
the states finalized. We will continue to engage all affected
stakeholders on this complex, conceptual proposal, and we invite
commentary and suggestions to ensure the conversation is inclusive and
well-informed.
Once again, these concepts seek to start a conversation about the
relationship between states and Federal offshore development. In the
end, these proposals empower states to allow their decisions to result
in financial benefits or costs to the their residents--furthering the
notion of federalism.
______
Mr. Gosar. I now recognize the gentleman from California,
Mr. Lowenthal, the Ranking Member for his 5 minutes.
STATEMENT OF THE HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Lowenthal. Thank you, Mr. Chairman.
And thank you to the witnesses for being here, and I hope
our fourth witness comes soon.
It is Groundhog Day again in the Committee as we consider
yet another bill that prioritizes the oil and gas industry over
everyday Americans.
This discussion draft makes a clear statement: our shared
public lands and waters are only worth the oil and gas that we
can wring out of them. Nothing else is worth anything, not the
ability to hunt, to fish, to bike, to canoe, or simply to enjoy
our treasured natural places. Under this legislation, those are
all worthless.
Our spectacular landscapes, our wild areas, our magnificent
beaches, and our oceans--under this legislation, they are all
worthless. Only oil and gas is worth anything. And the bill
would reward states that get onboard and want to drill more,
while harshly punishing states that prioritize conservation,
protection, wildlife habitat, recreational opportunities, or
their tourism economy, and it also punishes states wanting a
clean environment.
Title I of this bill would hand public land management over
to oil and gas companies in each state. We have seen language
like this before in the Subcommittee, but we have never seen
such a blatant expression of disdain for our existing laws and
the public's right to have a say about what is going on.
The bill entirely waives the National Environmental Policy
Act, the Administrative Procedure Act, the Endangered Species
Act, and the National Historic Preservation Act for oil and gas
activities.
In addition, it says that when our states take over, there
would be no ability to protect other uses of the land or to
limit where oil and gas drilling occurs. And, of course, states
are given incentives to take over and drill more--an additional
11 percent of the oil and gas revenues if they do. In effect,
this title is a bribe for states to take public lands out of
the public's hands.
It might be hard to believe, but Title II of the bill is
arguably even more extreme. Under the guise of local
management, the discussion draft would allow the Federal
Government to extort enormous sums of money from coastal states
that want to protect their oceans and beaches from the threat
of offshore drilling. While the concept is indeed novel, it is
also reprehensible.
If a state wants to prevent a lease sale in its entirety,
they would have to pay potentially billions of dollars, or
more, to the Federal Government.
Due in part to the ambiguous wording of the bill, it is
hard to determine the exact ransom amount, but estimates
underscore the proposal's absurdity. My home state of
California could easily have to pay--and I am going to state
this clearly--over a trillion dollars for a 10-year reprieve.
We know the Administration likes to play favorites. Well,
this bill would give them a chance to bankrupt blue states by
threatening to hold lease sales off their coasts. If a state
pays up, their beaches are safe. But if not--hey, beautiful
coastline you have there, you have a beautiful coastline?
Wouldn't it be a shame if something happened to it?
If Title I is the bribe, Title II is the shakedown. Coastal
tourism and recreation economies generate billions of dollars
and employ millions of people. states recognize both the
financial and social value of coastal resources and know oil
and gas development are not worth the risk.
I hope this discussion draft is more about trying to make a
point than making a serious effort to legislate.
I understand some in the Majority see a double standard,
where coastal states get their way on Federal waters while
other states don't have the ability to manage Federal land on
their own, but that argument is flawed. Coastal states don't
get to unilaterally decide what happens in Federal waters.
We make our case to the Secretary. It is a strong case that
our coastal economies are too valuable to risk them for a few
barrels of oil, and we are backed by a majority of our
constituents, but the Secretary is the one who ultimately
decides what to lease. And states with public land also get to
weigh in on how the land-use plans are developed.
The ideas behind this bill are flawed, and its enactment
would be disastrous for everyone who uses or enjoys our public
lands, our beaches, and our oceans.
I thank the witnesses for being here, and I yield back.
[The prepared statement of Mr. 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.
It's Groundhog Day in the Subcommittee as we consider yet another
bill that prioritizes the oil and gas industry over everyday Americans.
This discussion draft makes a clear statement: our shared public
lands and waters are only worth the oil and gas we can wring out of
them. Nothing else is worth anything. Not the ability to hunt, fish,
bike, canoe, or simply enjoy our treasured natural places. Under this
legislation, those are all worthless.
Our spectacular landscapes, our wild areas, our magnificent
beaches, and our oceans--under this legislation, they are all
worthless. Only oil and gas is worth anything. And the bill would
reward states that get on board and want to drill more, while harshly
punishing states that prioritize conservation, protection, wildlife
habitat, recreation opportunities, or their tourism economy and a clean
environment.
Title I of this bill would hand public land management over to oil
and gas companies in each state. We have seen language like this before
in this Subcommittee, but we have never seen such a blatant expression
of disdain for our existing laws and the public's right to have a say.
The bill entirely waives the National Environmental Policy Act, the
Administrative Procedure Act, the Endangered Species Act, and the
National Historic Preservation Act for oil and gas activities.
In addition, it says that where states take over, there would be no
ability to protect other uses of the land, or to limit where oil and
gas drilling occurs. And, of course, states are given incentives to
take over and drill more: an additional 11 percent of the oil and gas
revenues if they do. In effect, this title is a bribe for states to
take public lands out of the public's hands.
It might be hard to believe, but Title II of the bill is arguably
more extreme. Under the guise of local management, the discussion draft
would allow the Federal Government to extort enormous sums of money
from coastal states that want to protect their oceans and beaches from
the threat of offshore drilling. While the concept is indeed novel,
it's also reprehensible.
If a state wants to prevent a lease sale in its entirety, they
would have to pay potentially billions of dollars, or more, to the
Federal Government.
Due in part to the ambiguous wording of the bill, it's hard to
determine the exact ransom amount, but estimates underscore the
proposal's absurdity. My home state of California could easily have to
pay over a trillion dollars for a 10-year reprieve.
We know this Administration likes to play favorites. Well, this
bill would give them a chance to bankrupt blue states by threatening to
hold lease sales off their coasts. If a state pays up, their beaches
are safe. But if not . . . hey, beautiful coastline you've got there,
would be a shame if something happened to it.
If Title I is the bribe, Title II is the shakedown. Coastal tourism
and recreation economies generate billions of dollars and employ
millions of people. States recognize both the financial and social
value of coastal resources and know oil and gas development are not
worth the risk.
I hope that this discussion draft is more about trying to make a
point than a serious effort at legislating.
I understand some in the Majority see a double standard, where
coastal states get their way on Federal waters while other states don't
have the ability to manage Federal land on their own. But that argument
is flawed. Coastal states don't get to unilaterally decide what happens
in Federal waters.
We make our case to the Secretary. It is a strong case that our
coastal economies are too valuable to risk them for a few barrels of
oil. And we are backed by large majorities of our constituents. But the
Secretary ultimately decides what to lease. And states with public land
also get to weigh in on how land use plans are developed.
The ideas behind this bill are flawed, and its enactment would be
disastrous for everyone who uses or enjoys our public lands, our
beaches, and our oceans.
I thank the witnesses again for being here, and I yield back.
______
Mr. Gosar. I thank the gentleman.
I now will recognize our panel.
We have Nick Loris, Herbert and Joyce Morgan Fellow in
Energy and Environmental Policy, Center for Free Markets and
Regulatory Reform, The Heritage Foundation, right here in
Washington, DC; we have Matt Anderson, Director, Coalition for
Self-Government in the West, Sutherland Institute, Salt Lake
City, Utah; Mayor Ben Cahoon, Board of Commissions, Nags Head,
North Carolina; and then Myron Ebell, Director, Center for
Energy and Environment, Competitive Enterprise Institute, right
here in Washington, DC.
Let me remind our witnesses that under our Committee Rules,
they must limit their oral statements to 5 minutes, but their
entire statement will appear in the record.
The microphones are not automatic. For the first 4 minutes,
you will see a green light. When it turns yellow, you have a
minute to summarize. And then when it hits red, please
summarize so that we can get to questions.
I now recognize Mr. Loris for his 5 minutes.
STATEMENT OF NICK LORIS, HERBERT AND JOYCE MORGAN FELLOW IN
ENERGY AND ENVIRONMENTAL POLICY, CENTER FOR FREE MARKETS AND
REGULATORY REFORM, THE HERITAGE FOUNDATION, WASHINGTON, DC
Mr. Loris. Chairman Bishop, Chairman Gosar, Ranking Member
Lowenthal, and distinguished members of the Subcommittee, thank
you for this opportunity to testify on the Enhancing State
Management of Natural Resources on Federal Lands and Waters
Act.
My name is Nick Loris, and I am the Herbert and Joyce
Morgan Fellow at The Heritage Foundation. The views I express
in this testimony are my own and should not be construed as
representing any official position of The Heritage Foundation.
Both proponents and opponents of energy production on
Federal lands and waters have expressed frustration over the
current leasing and permitting process. Proponents of increased
energy access have long derided decisions by previous
administrations to lock up resources and make it painstakingly
difficult to secure and use a lease.
More recently, opponents of offshore drilling in coastal
states have voiced concerns that offshore oil and gas
production have too much environmental risk and would adversely
affect other sectors of their state's economy. This mutual
dissatisfaction with the status quo presents an opportunity for
change.
A fundamental problem with the current approach is that the
Federal ownership and control of minerals have taken decision
rights away from the states. Federal ownership results in
static management to very dynamic energy markets. In this
regard, I would like to make several observations.
First, the benefits of active state engagement with regard
to energy production.
Offshore--even under the current broken system, Louisiana
is a wonderful success story of a state that has robust oil and
gas production but also strong commercial fishing, seafood, and
tourism industries. With more than 80 percent of water-borne
rigs off the state's coast and representing 30 percent of the
commercial fishing in the continental United States, Louisiana
has long demonstrated these industries work harmoniously.
Onshore--states have had remarkable success overseeing
national resource development, both economically and
environmentally. States process applications for permits to
drill in days or weeks whereas the Federal Government takes
several months. Where states have authority over the regulatory
process, oil and gas production has soared.
This energy revolution has been a tremendous boon for these
states' economies and for the economy at large. Lower energy
bills have reduced costs for businesses across the country and
put money back into the bank accounts of hard-working American
families.
The draft legislation would make important reforms to
transfer responsibilities to the states for energy extraction
on Federal lands. This will result in more accountable and
effective management.
Reducing bureaucratic delay will result in an industry that
is more responsive to price changes, creating more investment
in jobs in the process. The second observation is the benefits
the bill would generate by aligning economic and environmental
incentives. When policies are site-specific, situation-
specific, and employ local knowledge, they encourage better
care of the environment and natural resources by putting them
in the hands of people who have immediate stake in wise
management.
Another significant feature of the draft bill is that it
would properly align financial incentives for the states.
Offering states a greater percentage of the revenue collected
would encourage states to seriously consider the economic
benefits of onshore and offshore energy production.
In fact, as recently as 2013, both Democratic Senators from
Virginia offered legislation to open parts of the Atlantic to
offshore development. A critical component of their legislation
was to ensure that Virginia received royalty revenues similar
to states operating in the Gulf Coast. Under this draft bill,
should states pursue offshore development, they would capture
an even greater share of the revenue.
My third observation is possible congressional action
beyond the scope of this draft. Congress could go even further
by applying the same reforms to all energy investments on
Federal lands and waters.
States should have the same incentives and choices the
draft legislation provides to oil and gas for all other energy
projects, whether it is a solar farm in Nevada or offshore wind
in the Atlantic.
Congress should also consider opening lease options to all
interested parties. Under the current policy, only energy
companies can bid on tracts of land and the Federal Government
requires leaseholders to demonstrate intent to develop these
resources.
Opening up the auction would invite more competition and
help truly assess the value of the land and the resources
beneath it. A more inclusive bidding process could also create
more economic and environmental cooperation. An environmental
organization could pair up with a grazer to bid on a parcel of
land, or an energy company could coordinate with a
conservationist group to use the land in which both parties
benefit.
In conclusion, policy reform should open access to our
abundance of resources, establish the framework for competitive
markets to respond to price signals, empower the states, and
protect the American taxpayers.
I commend the Committee for introducing this draft
legislation that would improve the current process by engaging
the appropriate stakeholders and better aligning incentives for
economic development and environmental protection.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Loris follows:]
Prepared Statement of Nicolas Loris, Herbert & Joyce Morgan Research
Fellow, The Heritage Foundation
My name is Nicolas Loris and I am the Research Manager in Energy
and Environment and Herbert & Joyce Morgan Research Fellow at The
Heritage Foundation. The views I express in this testimony are my own,
and should not be construed as representing any official position of
The Heritage Foundation.
I want to thank the members of the Committee on Natural Resources'
Subcommittee on Energy and Mineral Resources for this opportunity to
discuss enhancing state management of natural resources on Federal
lands and waters.
Both proponents and opponents of increased access to natural
resource extraction on Federal lands and waters have expressed
frustration over the leasing and permitting process. Proponents have
long derided the decisions by previous administrations to lock up
resources or make it painstakingly difficult to secure and use a lease.
More recently, several coastal states responded to the latest
Department of the Interior (DOI) offshore drilling proposal by voicing
concerns that oil and gas production would have possible environmental
risks and negative impacts on other sectors of their respective state's
economy.
Dissatisfaction from both parties presents an opportunity to
improve the current system. Rather than have a system subject to the
whims of whoever is in charge, successful, comprehensive reform should
accomplish four objectives: (1) create a system that enables the energy
industry to respond more quickly to rapidly changing market conditions;
(2) involve states more directly in decision making; (3) protect the
American taxpayer; and (4) align incentives for energy production and
environmental protection.
the enhancing state management of federal lands and waters act
The Enhancing State Management of Federal Lands and Waters Act is a
discussion draft that would amend the Mineral Leasing Act (MLA) and the
Outer Continental Shelf Lands Act (OCSLA) to empower states to have
more control over the leasing, permitting, and regulations of oil and
gas production. Title I addresses onshore oil and gas development. If
enacted, a state would apply to establish enhanced management regions
that would authorize the state to develop energy resources on Federal
land that is not Indian land, part of the National Park System, the
National Wildlife Refuge System, or a congressionally designated area.
The legislation would allow states to develop programs that satisfy
all applicable Federal laws required to produce energy on Federal
lands. Therefore, states would have complete control of their energy
programs. In the event that an enhanced management region generates
more oil and gas production than the average of the previous 5 fiscal
years, states receive a greater percentage of the revenue accrued from
bonus bids, rentals, and royalties. If non-market factors yield less
production in an enhanced management region, the Secretary of Interior
can revoke authority or assess a lost production fee.
Title II of the discussion draft addresses offshore oil and gas
development. The legislation would direct the Interior Secretary to
conduct geological and geophysical mapping of the National Outer
Continental Shelf (OCS) to establish a better estimate of oil and gas
reserves off the U.S. coastline. In addition, the draft would authorize
a state to approve or disapprove of each lease block offered in the
DOI's lease sale if the area is within the state's administrative
boundaries. If a state approves of all of the blocks in a lease sale,
the state would receive 50 percent of the revenues from bonus bids,
rentals, and royalties. If a state disapproves of lease blocks, the
state would pay a fee to the Federal Government to compensate the
taxpayer for lost revenues. The number of lease blocks a state
disapproves of would determine the payment a state would make to the
U.S. Treasury.
the importance of energy production and federalism
The Enhancing State Management of Federal Lands and Waters Act and
the outcome of a January 2018 meeting between Secretary of the Interior
Ryan Zinke and Florida Governor Rick Scott (R) prompts an important
question about federalism and states' rights in the context of energy
production. Florida currently has a legislative ban on oil and gas
production off the Florida coast until 2022.\1\ Shortly after the
Department of the Interior released its Draft Proposed Program (DPP)
for the leasing of Federal lands under the National Outer Continental
Shelf Oil and Gas Leasing Program for 2019-2024, Secretary Zinke met
with Governor Scott.
---------------------------------------------------------------------------
\1\ Laura B. Comay, ``Five-Year Program for Federal Offshore Oil
and Gas Leasing: Status and Issues in Brief,'' Congressional Research
Service Report for Congress, No. 44692, January 8, 2018, http://
plus.cq.com/pdf/crsreports-5247017.pdf?1 (accessed June 11, 2018).
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Afterward Zinke tweeted that Florida would have no new oil and gas
platforms off its coast, citing Governor Scott's position that the
Sunshine State is heavily dependent on tourism for its economy.\2\ The
announcement prompted policy makers in other coastal states to request
their own exemptions.\3\ Secretary Zinke expressed intent to meet with
all the relevant governors and the proposal entered the 60-day public
comment period.\4\ Conversely, lawmakers from Louisiana, which has a
long history in offshore energy production, hailed the proposal as a
boon for the state's economy.\5\
---------------------------------------------------------------------------
\2\ Jennifer A. Dlouhy, ``About-Face Tweet on Florida Drilling May
Backfire on U.S. Agency,'' Bloomberg, January 10, 2018, https://
www.bloomberg.com/news/articles/2018-01-10/about-face-tweet-on-florida-
drilling-may-backfire-on-u-s-agency (accessed June 11, 2018).
\3\ David Weigel, Darryl Fears, and John Wagner, ``Decision to
Exempt Florida from Offshore Drilling Prompts Bipartisan Uproar,'' The
Washington Post, January 10, 2018, https://www.washingtonpost.com/
politics/decision-to-exempt-florida-from-offshore-drilling-prompts-
bipartisan-uproar/2018/01/10/1f5befa4-f625-11e7-beb6-
c8d48830c54d_story.html?utm_term=.810b0cc528fd (accessed June 11,
2018).
\4\ Ibid.
\5\ Matthew Daly, ``Trump Moves to Vastly Expand Offshore Drilling
Off U.S. Coasts; Louisiana Delegation Welcomes Move,'' The Advocate,
January 4, 2018, http://www.theadvocate.com/baton_rouge/news/politics/
article_8ad8a726-f199-11e7-9130-4395863271c7.html (accessed June 11,
2018).
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Although the Secretary's comment was not a formal action, it re-
started a necessary discussion over federalism and the importance of
state input. Pro-energy states, both onshore and offshore, have long
disparaged Federal decisions to prohibit and delay energy development
and job creation in their respective states. Previous Congresses and
administrations have placed outright moratoriums on certain areas off
America's coasts. Furthermore, costly bureaucratic delays on Federal
lands for issuing leases and processing applications for permits to
drill stalls production and economic growth. Without a doubt,
frustration exists on both sides.
The fundamental issue is that Federal ownership and control of
minerals offshore (and onshore) has taken decision rights away from
states. Both economically and environmentally, states have proven to
manage energy development prudently. For example, where states have
authority over applications for permits to drill and conduct
environmental reviews, oil and gas production has soared.\6\ Energy
companies have capitalized on the wealth of resources on private- and
state-owned lands.\7\ The energy industry and consumers alike benefit
from most of the shale oil and shale gas--from which much of the
domestic production is coming--not being under Federal control.\8\
---------------------------------------------------------------------------
\6\ Marc Humphries, ``U.S. Crude Oil and Natural Gas Production in
Federal and Nonfederal Areas,'' Congressional Research Service Report
for Congress, No. 42432, June 22, 2016, https://fas.org/sgp/crs/misc/
R42432.pdf (June 12, 2018).
\7\ Institute for Energy Research, ``Energy Production on Federal
Lands Lags Behind Private and State Lands,'' July 21, 2015, http://
instituteforenergyresearch.org/analysis/energy-production-on-federal-
lands-lags-behind-private-and-state-lands/ (accessed June 12, 2018).
\8\ U.S. Department of Energy, Energy Information Administration,
``Maps: Exploration, Resources, Reserves, and Production,'' https://
www.eia.gov/maps/maps.htm (accessed June 12, 2018).
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However, Federal regulations and Federal land ownership have
rendered vast quantities of recoverable oil and natural gas onshore and
offshore either inaccessible or costlier to extract.\9\ Permitting
energy extraction on federally owned land will result in even more oil
and gas extraction and create jobs in areas that may not otherwise see
such economic growth. On average, the Federal processing of an
application for permit to drill (APD) in the last year of the Obama
administration was 257 days, while state processing is typically 30
days or less.\10\
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\9\ Mark Green, ``Expanding Offshore Access Is Key to U.S. Energy
Security,'' Energy Today, May 1, 2017, http://energytomorrow.org/blog/
2017/05/01/expanding-offshore-access-key-to-us-ener (accessed June 12,
2018).
\10\ News Release, ``Zinke Signs Secretarial Order To Streamline
Process For Federal Onshore Oil And Gas Leasing Permits,'' U.S.
Department of the Interior, July 6, 2017, https://www.doi.gov/
pressreleases/zinke-signs-secretarial-order-streamline-process-federal-
onshore-oil-and-gas-leasing (accessed June 12, 2018).
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State control, local governance, and private-sector participation
would result in more accountable, effective management. While the
Federal Government can simply shift the costs of mismanagement to
Federal taxpayers, states have powerful incentives for better
management of resources on Federal lands. State governments can be more
accountable to the people who will directly benefit from wise
management decisions, especially as it pertains to natural resource
management. According to a 2015 Property and Environment Research
Council report, ``On average, states generate more revenue per dollar
spent than the Federal Government on a variety of land management
activities, including timber, grazing, minerals, and recreation.'' \11\
---------------------------------------------------------------------------
\11\ Holly Fretwell and Shawn Regan, ``Divided Lands: State vs.
Federal Management in the West,'' Property and Environment Research
Center, PERC Public Lands Report, March 2015, Figure 1, http://
www.perc.org/sites/default/files/pdfs/150303_PERC_DividedLands.pdf
(accessed June 12, 2018).
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Moreover, incentives to invest in and steward the environment are
stronger when people have direct ownership and responsibility.\12\ The
Bureau of Land Management (BLM) and Forest Service (FS) lands lost
$4.38 per acre from 2009-2013, while trust lands in four western states
earned $34.60 per acre.\13\ In terms simply of recreation, states again
do a better job of making a return on their investment. Idaho and
Montana averaged $6.86 per dollar spent on recreation on state trust
lands; in contrast, the BLM earned $0.20 and the FS $0.28 per dollar
spent, resulting in a net loss.\14\ While states and local communities
may not always make perfect decisions, the best environmental policies
are site- and situation-specific.
---------------------------------------------------------------------------
\12\ For more information, see Nicolas D. Loris, ``Chapter 5:
Economic Freedom, Energy, and Development,'' 2015 Index of Economic
Freedom (Washington, DC: The Heritage Foundation and Dow Jones &
Company, Inc., 2015), https://www.heritage.org/index/pdf/2015/book/
chapter5.pdf.
\13\ Fretwell and Shawn Regan, ``Divided Lands: State vs. Federal
Management in the West.''
\14\ Ibid.
Moreover, transferring decision rights to states and the private
sector could lead to an industry that is more responsive to price
changes. According to a working paper from Utah State University
---------------------------------------------------------------------------
economist Eric C. Edwards,
Even though 99 percent of Federal drilling permits are
eventually approved, bureaucratic delay imposes costs through
delay and dampening. Drilling response is slower, and thus
wells on Federal lands do not respond to high oil and gas
prices as quickly as private lands. These delays also lead to
lower overall price responses--fewer overall wells drilled in
response to price increases. Our findings indicate that the
potential for improving the responsiveness of Federal lands to
price signals could be achieved through a reduction in delay in
the BLM permitting process.\15\
---------------------------------------------------------------------------
\15\ Eric C. Edwards, Trevor O'Grady, and David Jenkins, ``The
Effect of Land Ownership on Oil and Gas Production: A Natural
Experiment,'' Working Paper, December 2016, https://papers.sioe.org/
paper/2022.html (accessed June 12, 2018).
While the study examines Federal lands, similar logic could apply
to Federal waters. Remedying this situation could compensate states
appropriately through expanded royalty revenue collection. With the
exception of Alaska, states receive 50 percent of the revenues
generated by onshore oil and natural gas production on Federal
lands.\16\ Congress should apply this allocation offshore as well,
including for current operations in the Gulf of Mexico. If Congress
successfully transfers the permitting and environmental review to the
states, the states should receive an even larger share of the royalty
revenue collected.
---------------------------------------------------------------------------
\16\ Elizabeth Malm, ``Federal Mineral Royalty Disbursements to
States and the Effects of Sequestration,'' The Tax Foundation, Fiscal
Fact Sheet No. 371, May 30, 2013, https://files.taxfoundation.org/
legacy/docs/ff371.pdf (accessed June 12, 2018).
---------------------------------------------------------------------------
Drilling off states' coasts and allowing them a larger share of the
royalty revenue would encourage more state involvement in drilling
decisions. Offshore drilling would also promote state and local
government participation in allocating funds, helping to close
deficits, enabling coastal restoration and conservation, and using
funds for schools.
More financial stake and control over the regulatory process would
encourage states to seriously consider the economic benefits and
minimal risk associated with offshore energy production. In fact, as
recently as 2013, both Democratic Senators from Virginia offered
legislation to open parts of the Atlantic to offshore development.\17\
A critical component of their legislation was to ensure Virginia
received royalty revenues similar to states in the Gulf Coast region.
States may choose not to develop offshore oil, gas, wind, or ocean
energy projects, and forego the economic benefits increased energy
production brings.
---------------------------------------------------------------------------
\17\ News Release, ``Sens. Warner and Kaine Submit Legislation to
Expand Offshore Energy Leases,'' Office of Senator Mark R. Warner, May
22, 2013, https://www.warner.senate.gov/public/index.cfm/
pressreleases?ContentRecord_id=3508f696-8280-47d2-97aa-356ec3050f9b
(accessed June 12, 2018).
---------------------------------------------------------------------------
multiple year planning processes ignore market realities
Oil and gas production is a time-consuming and capital-intensive
operation. A company must win the lease sale or acquire the mineral
rights, obtain the permits, conduct seismic surveys, build the
necessary infrastructure, and drill and case the well. The entire
process can take multiple years and the oil and gas industry makes
investments considering multiple time horizons. However, the current 5-
year planning process is not the way commercial energy investments
should be (let alone are, in reality) determined.
By taking a static approach to dynamic energy markets, the Federal
Government's current policy disregards how markets function. Energy
markets are exceedingly complex and prices play a critical role by
efficiently allocating resources to their highest valued use.
Investment decisions change as prices change. Oil prices can fluctuate
significantly from one month to the next, let alone over a 5-year
window. For example (after adjusting for inflation):
From 2007-2008, the price of oil increased from $66 per
barrel to $94 per barrel.
From 2008-2009, the price dropped to $56 dollars per
barrel, before increasing to $74 per barrel in 2009-2010.
From 2011-2013, the price increased to above $94 per
barrel.
From 2014-2015, the price decreased from $87 per barrel to
$44 per barrel.
By 2016, significant increases in supply and less-than-
projected demand pushed the price down to $38 per
barrel.\18\
---------------------------------------------------------------------------
\18\ See U.S. Energy Information Administration, ``U.S. Crude Oil
First Purchase Price,'' January 2, 2018, https://www.eia.gov/dnav/pet/
hist/LeafHandler.ashx?n=PET&s=F000000_3&f=A (accessed June 12, 2018).
Businesses should be able more efficiently respond to such
fluctuations in price rather than waiting on a lengthy planning process
and specific lease-sale schedule. As energy companies plan for the
near- and long-term, the Federal Government should conduct lease sales
if a commercial interest exists and it does not jeopardize national
security. It is incumbent upon the company to develop the resources
safely and responsibly.
Energy policy should not be predicated on what analysts, Members of
Congress or Federal regulators think is going to happen. Instead,
policy should open and establish the framework for competitive markets
and involvement from the relevant states, while ensuring the protection
of property rights and the environment.
the problem of federal ownership and public interest determinations
Oil and gas production is booming in some regions of the United
States, while the rate of production in others has slowed or even
decreased. The divergent trajectories in production primarily boil down
to one word: ownership. Much of the growth is occurring on private and
state-owned lands. Despite the tremendous abundance of oil and gas
beneath Federal lands and off America's coasts, oil and gas output on
federally owned lands has been mostly stagnant or declining. Companies
operating in the United States have been the world's largest producers
of oil and natural gas for 6 years; as a result, the Nation is reaping
the tremendous economic benefits that such large-scale production
generates. This success emerged organically from innovation in the
private marketplace to unlock energy resources formerly thought
inaccessible rather than from any specific government policy to promote
these technologies and processes.
The OCSLA's congressional declaration of policy states that the
Outer Continental Shelf is a ``vital national resource reserve held by
the Federal Government for the public, which should be made available
for expeditious and orderly development, subject to environmental
safeguards, in a manner which is consistent with the maintenance of
competition and other national needs.'' \19\ The phrase ``held by the
Federal Government for the public'' is at the crux of the problem. The
Federal Government should not hold mineral rights for the public.
---------------------------------------------------------------------------
\19\ 43 U.S.C. Sec. 1332.
---------------------------------------------------------------------------
The establishment of national needs, national interest, or public
interest determinations is broadly problematic for energy development
and projects. Decisions that should be left to the private sector and
by price signals are instead left to the Federal Government. For
instance, national and public interest determinations have been
manipulated into pretexts to obstruct energy development and energy
infrastructure.\20\
---------------------------------------------------------------------------
\20\ For more information on this, see Nicolas Loris, ``Removing
Restrictions on Liquid Natural Gas Exports: A Gift to the U.S. and
Global Economies,'' Heritage Foundation Backgrounder No. 3232, July 27,
2017, https://www.heritage.org/sites/default/files/2017-07/BG3232.pdf.
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Unlike air or national security, minerals are not a public good.
Public goods are non-rival and non-excludable. A non-rival good can be
consumed at extremely low rates of marginal cost. Non-excludable goods
are goods that people cannot be easily prevented from consuming. The
energy that people use to light their schools, heat their homes, and
move their vehicles is excludable and rival. For example, Katie cannot
have access to gasoline unless she pays for it. Moreover, when Katie
purchases a gallon of gas, that gallon cannot be simultaneously
consumed by another consumer. Natural resources like oil and natural
gas are privately produced and privately consumed.\21\ Just as the
Federal Government does not make public or national interest
determinations for the clothes its citizens purchase, neither should it
do so for the energy they produce and consume.
---------------------------------------------------------------------------
\21\ Environmental statutes and regulations internalize the
negative externalities associated with the burning of conventional
fuels.
---------------------------------------------------------------------------
Another serious problem with public interest and national interest
determinations is concentrating the decisions in the hands of
government officials and regulators. No concrete definitions exist for
national or public interest determinations, which introduces
subjectivity into the determination. For example, the Natural Gas Act
empowers the Federal Government to reject the import or export of
natural gas to non-free trade agreement countries if that import or
export is not ``consistent with the public interest.'' \22\ However,
the law never specifies what criteria should be considered when
addressing the public interest. The State Department contends with
similar opaqueness for the national interest determination when
deciding on cross-border pipelines. Moreover, the OCSLA gives no
outline or detail for what the DOI should consider as ``national
needs.''
---------------------------------------------------------------------------
\22\ 15 U.S. Code Sec. 717b.
---------------------------------------------------------------------------
The vagueness of these considerations allows government officials
to make decisions that properly belong to companies in the private
sector. Rather than meeting certain criteria, these determinations
empower regulators to arbitrarily make that determination for the rest
of the Nation. Government officials will not always make determinations
on whether to develop resources based on the public interest or even
objective, transparent science; instead, they may base them on their
own subjective values.
The Obama administration's revised 2017-2022 leasing plan is also
evidence of such subjectivity. Private actors incentivized by the
profit motive will know much better than regulators in Washington as to
where, when, and why drilling should take place. That does not preclude
the need for an environmental review and permitting process, or
consideration of national security impacts, but the permitting process
should not be embedded in a 5-year planning process that outlines where
companies may produce energy in accord with a subjective, extremely
vague public interest determination.\23\
---------------------------------------------------------------------------
\23\ Nor does it mean that state regulatory regimes will always
make sound policy decisions. New York's ban on hydraulic fracturing and
Florida's request for an exemption are examples of that.
---------------------------------------------------------------------------
opening auctions to all parties
Two of the objectives of the Enhancing State Management of Federal
Lands and Waters Act are to empower states and provide a fair return
for taxpayers for producing or not producing public resources that, in
their current state, belong to all Americans. As detailed in the
previous section, a number of problems arise from public ownership of
resources, many of which privatization would solve. Another problem is
entrusting government officials to make decisions for the American
people in the name of public interest. As free-market environmentalist
Jane S. Shaw writes in discussing public choice theory, ``although
people acting in the political marketplace have some concern for
others, their main motive, whether they are voters, politicians,
lobbyists, or bureaucrats, is self-interest.'' \24\ In other words,
government officials are people, too.
---------------------------------------------------------------------------
\24\ Jane S. Shaw, ``Public Choice Theory,'' The Concise
Encyclopedia of Economics (Library of Economics and Liberty, 1993),
http://www.econlib.org/library/Enc1/PublicChoiceTheory.html (accessed
June 12, 2018).
---------------------------------------------------------------------------
Absent privatization, one way Congress could more accurately value
the land and resources is to open the lease auctions to all interested
parties. Currently, only energy companies can bid on lease auctions and
the Federal Government requires leaseholders to demonstrate intent to
develop the resources. Restricting who bids and requiring the winner
develop the parcels eliminates competition and fails to assess the
relative value of the land. Conservationists, recreationists,
alternative energy companies, ranchers, or environmentalists may value
the land more for their intended use than for oil and gas development.
As economist Michael Giberson and research fellow Shawn Regan write in
their public comment on Federal oil and gas royalties, ``No method
reliably integrates the variety of diverse, predominantly subjective,
and sometimes conflicting values into a single, uncontroversial auction
reserve price.'' \25\
---------------------------------------------------------------------------
\25\ Michael Giberson and Shawn Regan, ``Public Interest Comment in
Response to U.S. Department of Interior's Advanced Notice of Proposed
Rulemaking,'' comment submitted in response to Federal Register, Vol.
80 (June 5, 2015), p. 22148, June 5, 2015, https://www.regulations.gov/
document?D=BLM-2015-0002-0019 (accessed June 12, 2018).
---------------------------------------------------------------------------
Opening the leasing process to all interested parties would not
only create more competition but also potentially more cooperation. An
environmental organization could pair up with a grazer to bid on a
block of land. An energy company could coordinate conservationist
groups to use the land in which both parties can benefit. Natural
resource extraction would likely still occur, but oil and gas
production will occur because the energy companies value the land and
resources more than other contending interests do. As values change
(for instance, if oil prices rise), buyout programs and lease re-
offerings would ensure that competing interests remain involved in
current and future land-use decisions. One challenge will be to
establish a mechanism to compensate taxpayers for lost royalty
revenues, which the BLM could accomplish by assessing grazing,
recreation, or other land-use fees.
Giberson and Regan write, ``In a number of cases private
conservation groups have negotiated with parties over specific grazing
rights or oil and gas leases on Federal lands in an effort to protect
environmental values. As long ago as 1992 the Conservation Fund
purchased grazing rights in the Glen Canyon National Recreation Area in
southern Utah. By 2003, at least a half-dozen conservation and
sportsmen organizations had grazing permit buyout programs. In 2012 the
Trust for Public Land, a conservation group, worked with a variety of
other groups and donors to purchase and retire oil and gas leases
representing 58,000 acres in Wyoming's Hoback Basin from Plains
Exploration and Production Co.'' \26\
---------------------------------------------------------------------------
\26\ Ibid.
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energy, economic diversity, and environmental safety
For 6 years, the United States has been the world's leading
producer in petroleum and natural gas hydrocarbons, which has produced
astounding economic benefits and put money back into the wallets of
American families. In fact, in November 2017 the U.S. crude oil
supplies surpassed 10 million barrels per day, breaking a record high
from nearly 50 years ago. The extraordinary technological advancements
in resource extraction have the United States in position to overtake
Saudi Arabia and Russia as the world's top oil producer. The latest
projection from the Energy Information Administration estimates that
U.S. production could reach nearly 12 million barrels per day in
2019.\27\
---------------------------------------------------------------------------
\27\ U.S. Energy Information Administration, ``Short-Term Energy
Outlook (STEO),'' May 2018, https://www.eia.gov/outlooks/steo/pdf/
steo_full.pdf (accessed June 12, 2018).
---------------------------------------------------------------------------
The story is made more amazing by the fact that Federal energy
policy actively hindered this energy renaissance as it was taking
place. Centuries' worth of oil, natural gas, and coal resources lie
beneath private property as well as under lands owned by state
governments. While federally owned lands are also full of energy
potential, a bureaucratic regulatory regime has mismanaged land use for
decades. The tremendous economic benefits of open energy markets and
the proven track record of the individual states' regulatory structures
dictate a re-examination of the way the Federal Government manages
resources on Federal lands.
Both onshore and offshore energy production has the potential to
boost and diversify states' economies. Whether it is hunting, fishing,
recreation, or seafood production, energy production and other
industries can work in harmony. Texas, California, North Dakota,
Oklahoma, Pennsylvania, Colorado, Alaska, and others have demonstrated
this for periods spanning more than a century and a half.
When it comes to offshore production, Louisiana is the poster child
for a state that benefits from an abundance of offshore natural
resources but also has strong industries in seafood and tourism. With
more than 80 percent of waterborne U.S. rigs off Louisiana's coast,\28\
and with oil and gas production in the Gulf Coast region accounting for
approximately 18 percent of oil production and 4 percent of natural gas
production in the United States,\29\ the state has generated
significant economic benefits. The energy industry contributes tens of
billions of dollars annually to the economic welfare of the state and
is a critical part of the state's culture and way of life. In 2014, the
industry generated $44 billion for the state economy and another $36
billion when including related infrastructure and refining
activity.\30\
---------------------------------------------------------------------------
\28\ Louisiana Economic Development, ``Louisiana's Energy
Advantages,'' https://www.opportunitylouisiana.com/key-industries/
energy (accessed June 12, 2018).
\29\ News Release, ``Secretary Zinke Announces Plan For Unleashing
America's Offshore Oil and Gas Potential.''
\30\ The Louisiana Mid-Continent Oil and Gas Association and the
Louisiana Association of Business and Industry, ``Request for
Information on 2019-2024 Outer Continental Shelf Oil & Gas Leasing
Program,'' August 17, 2017, http://labi.org/assets/images/media/
LMOGA_LABI_Comments_OCS_Five_Year_Program_Final3589.pdf (accessed June
12, 2018).
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In addition to energy production, seafood and tourism industries
stand out as significant contributors to Louisiana's economy. Louisiana
represents 30 percent of the commercial fishing for the continental
United States and are substantial producers of shrimp, oysters,
crawfish, and crabs.\31\ Many of the seafood businesses are smaller,
family-owned operations that have a long and rich history. Annually,
the industry creates $2.4 billion in economic growth for Louisiana.\32\
In 2016, 46.7 million people visited Louisiana, generating $16.8
billion.\33\
---------------------------------------------------------------------------
\31\ Ibid.
\32\ Louisiana Seafood, ``The Backstory,'' http://
www.louisianaseafood.com/industry (accessed June 12, 2018).
\33\ The Louisiana Mid-Continent Oil and Gas Association and the
Louisiana Association of Business and Industry, ``Request for
Information on 2019-2024 Outer Continental Shelf Oil & Gas Leasing
Program.''
---------------------------------------------------------------------------
These industries work in harmony. Every year, residents of the Gulf
region come to Morgan City, Louisiana, to celebrate the lifeblood of
the region's economy: seafood and oil. The Louisiana Shrimp and
Petroleum Festival's website emphasizes ``the unique way in which these
two seemingly different industries work hand-in-hand culturally and
environmentally in our area.'' \34\ The festival is a tradition that
dates back more than 80 years. Even the adverse effects of the
Deepwater Horizon oil rig accident did not disrupt the harmony of the
state economy. In many respects, the spill strengthened the bond
between the oil and seafood industry, with shrimpers and fishers alike
extremely vocal in support of lifting the offshore drilling ban after
the spill.\35\ At the time, Harlon Pearce, owner of one of the largest
seafood processors in the state and Chair of Louisiana's Seafood
Promotion and Marketing Board, said, ``I am not in favor of the
moratorium. You've got to be down here to see and feel what I'm telling
you. It's our brothers, uncles, and cousins that are working in the oil
industry.'' \36\ Ewell Smith, executive director of the Board, said,
``If you've seen Grand Isle or those [other fishing communities],
you've seen how much oil and gas and seafood co-exist in this state.''
\37\
---------------------------------------------------------------------------
\34\ Louisiana Shrimp and Petroleum Festival, ``History,'' http://
www.shrimpandpetroleum.org/history (accessed January 25, 2018).
\35\ Josh Harkinson, ``Oil Rigs and the Fishermen Who Love Them,''
Mother Jones, June 24, 2010, https://www.motherjones.com/environment/
2010/06/oil-rigs-moratorium-louisiana-fishermen/ (accessed June 12,
2018).
\36\ Ibid.
\37\ Ibid.
---------------------------------------------------------------------------
The Rigs to Reef program is another example of how energy
businesses operating in the Gulf also help the environment. The program
converts old platforms into artificial reefs.\38\ The reefs provide
enormous ecological benefits, as a typical eight-legged structure
provides habitat for 12,000-14,000 fish.\39\ The more than 470
platforms that serve as artificial reefs in the Gulf are inviting for
both anglers and divers.\40\ (California, which has more than two dozen
offshore platforms off its coasts, is considering implementing a
similar program.\41\)
---------------------------------------------------------------------------
\38\ U.S. Department of the Interior, Bureau of Safety and
Environmental Enforcement, ``Rigs to Reefs,'' https://www.bsee.gov/
what-we-do/environmental-focuses/rigs-to-reefs (accessed February 12,
2018).
\39\ Ibid.
\40\ Ibid.
\41\ Nuala Sawyer, ``California's Defunct Oil Rigs May Become
Thriving Ocean Reefs Under New Legislation,'' San Francisco Examiner,
February 17, 2017, http://www.sfexaminer.com/californias-defunct-oil-
rigs-may-become-thriving-ocean-reefs-new-legislation/ (accessed June
12, 2018).
---------------------------------------------------------------------------
Whether it is Federal, state or privately owned land, energy
production underneath America's soil in harmony with other sectors of
the economy. With the abundance of energy off America's coastline,
other states have the opportunity to imitate the symbiotic relationship
between the energy industry and other critical sectors of the economy
in Louisiana.
a better path forward
The statutes guiding oil and gas development on Federal lands and
Federal waters are in need of comprehensive reform. The Enhancing State
Management of Federal Lands and Waters Act would accomplish two
important objectives in delegating more authority to the states and
using financial incentives to inform states' decisions. States share
the cost of the maintenance of Federal lands, whether by the liability
of no management, the lost opportunity of poor management, or the
infrastructure needed to support development of resources. States have
a proven record of managing resources, and already have the regulatory
structures in place to do so on Federal lands within their boundaries
as well. Not only would new management multiply benefits for all
Americans, it would also encourage better care of the environment and
natural resources by putting them in the hands of people who have an
immediate stake in wise management. Washington-centric approach to
management stifles creative, collaborative solutions to competing
interests that could be resolved at local, state, or regional levels
without the added baggage of national political battles and Federal
regulatory processes. While states and local communities may not always
make perfect decisions, the best environmental policies are site-
specific and situation-specific and emanate from liberty.
Several ways in which policy makers could improve the draft
legislation are to:
Specify that if the Secretary of Interior does not make a
decision to approve or disapprove of an application for an
enhanced management region program, that the plan is
approved. Forcing the DOI to issue a decision will prevent
the agency from sitting on the application.
Confirm that the Department of the Interior is the lead
agency for any section of land where management includes
both the Forest Service and Bureau of Land Management.
Problems have arisen with competing land-use plans between
the Forest Service and the Bureau of Land Management in the
past. Designating a lead agency will help avoid any
duplication or confusion.
Apply the same reforms to all energy sources and
technologies. States should have the same incentives and
choices the draft legislation provides to oil and gas
production, whether it is a solar farm in Nevada or an
offshore wind farm in the Atlantic.
Eliminate the 5-year planning process for offshore
leasing. The current 5-year planning process ignores how
businesses operate in the face of rapid market and
technological changes. Through legislation, Congress should
eliminate the 5-year plans and authorize the DOI to conduct
lease sales if interest for development exists while
weighting the consultation with heavily impacted states in
offering those lease sales. Such a reform would allow the
safe development of energy off America's coasts while
empowering state stakeholders. Removing the lengthy and
unnecessary planning process would create a system that is
more responsive both to price changes and to the needs and
interests of states. The permitting would also need to meet
any Department of Defense requirements.
Empower companies, groups, and people that are not energy
companies to bid on lease sales. If a conservationist
organization values non-production or an alternative use of
land or waters, they should be permitted to bid in the
auction. Opening up the bidding process would incentivize
more competition and potentially more cooperation and could
alleviate some of the non-production fees a state would
have to pay for failing to develop oil and gas reserves.
Ensure that states have access to resources within their
boundaries or off their coasts in the event that the
current Administration is hostile to energy production.
States have expressed concern over the Department of the
Interior's aggressive push to open access to the abundance
of resources in the OCS. A number of political and economic
factors could force that to change. Just as the Federal
Government should not force energy production upon the
states, the Department of the Interior (and Department of
Agriculture) should not obstruct a state's desire to
produce energy and create jobs within their borders and
administrative boundaries. Congress and the Federal
Government should, at the very least, ensure access to
provide the choice to the states to develop natural
resources and alternative forms of energy.
Transfer the environmental review and permitting process
for offshore energy development to the states. Similar to
the draft legislation's proposal that would allow states to
assume exclusive jurisdiction over the leasing, permitting,
and development of oil and gas operations for enhanced
management regions, Congress should amend the OCSLA and SLA
to do the same for offshore operations if a state desires
to assume responsibility. The state regulatory program
would be sufficient in lieu of Federal requirements (e.g.,
from the Clean Air Act and the National Environmental
Policy Act). To support their reviews, state regulators can
request technical or safety expertise from the Bureau of
Ocean Energy Management and the Bureau of Safety and
Environmental Enforcement and use previous DOI
environmental assessments. In addition, state regulators
would work in conjunction with the Environmental Protection
Agency and the U.S. Coast Guard to assess environmental
impact and maritime safety and security. States assuming
responsibility would also receive a higher percentage of
the royalties.
conclusion
For decades, excessive regulations and bureaucratic inefficiencies
have stymied oil and gas production and prevented the full effects of
the energy boom. It can take anywhere from 5 to 10 years for a company
to move from approval to production, with no guarantee that the permit
obtained will lead to successful crude oil production.\42\ Much of this
is due to regulatory red tape and Federal control over resource
production. Authorizing states to manage onshore and offshore resource
production for a greater percentage of the revenue will create a system
that permits industry to better respond to changing market conditions.
The Enhancing State Management of Federal Lands and Waters Act would
implement significant reforms that involve states more directly with
the decision-making process, protect the American taxpayers, and align
incentives for energy production and environmental protection.
---------------------------------------------------------------------------
\42\ American Petroleum Institute, ``Offshore Leasing, Exploration,
and Development Process,'' 2013, http://www.api.org/?/media/Files/Oil-
and-Natural-Gas/Exploration/Offshore/Offshore-Process-Feb-2013.pdf
(accessed January 25, 2018).
---------------------------------------------------------------------------
______
Mr. Gosar. Thank you, Mr. Loris.
I now recognize Mr. Anderson for his 5 minutes.
STATEMENT OF MATT ANDERSON, DIRECTOR, COALITION FOR SELF-
GOVERNMENT IN THE WEST, SUTHERLAND INSTITUTE, SALT LAKE CITY,
UTAH
Mr. Anderson. Good morning, Chairman Bishop, Chairman
Gosar, Ranking Member Lowenthal, and members of the
Subcommittee on Energy and Mineral Resources. Thank you for the
invitation to speak this morning.
The West is home to some spectacular landscapes. Towering
red rock mesas, endless seas of sage brush, and majestic
mountains make the West's public lands as diverse as they are
beautiful. This diversity and splendor is not lost on those who
call the West home. In fact, no one knows or loves these public
lands more than locals whose history, culture, and future
depend on the health, accessibility, and the life-sustaining
resources of these lands. Simply put, public lands are our
whole world.
Despite this reality, a narrative persists that state
management of Federal lands will set aside environmental
stewardship and recreational activities in favor of
unrestrained logging, grazing, and extraction practices.
My testimony aims to debunk this by focusing on the
extraordinary efforts being taken by western states to balance
conservation and recreation alongside economic interest.
When it comes to recreation, western states recognize the
increased demand, both in the terms of number of people and
types of recreational activities. Today, there are more hikers,
mountain bikers, snowmobilers, and off-road enthusiasts than
ever before in the West.
We see that western states are stepping up to the plate and
meeting recreational demands through innovative and popular
solutions on state lands.
Despite the perception that state trust lands are managed
solely for resource extraction, western state trust land
agencies are accommodating recreational demands while still
meeting the fiduciary responsibilities. In fact, most western
state trust lands allow recreational use, either free or
through the purchase of moderately priced permits.
Some western states have also elected to lease parcels for
specific recreational opportunities, like mountain biking, to
provide a better recreational experience than can be found on
Federal lands.
Some state trust agencies are even purchasing land to
enhance recreation. For example, Montana's land banking program
allows the sale of state trust lands that have low recreational
value, and the revenues are used to purchase lands with more
recreational opportunities.
The purchased parcels are required to generate more
revenues than those sold so land banking meets financial and
recreational demands. Since 2003, 68,000 acres of Montana trust
lands have been sold, 84 percent of which were surrounded by
private lands and largely inaccessible.
In return, nearly 65,000 acres of legally-accessible land
with recreational opportunities have been purchased.
Western state parks also provide exceptional recreational
opportunities and are incredibly popular. In fact, although the
West state parks make up only one-fifth as much land as
national parks in the West, they bring in nearly 80 percent as
many visitors on a per acre basis. This is largely due to the
types and quality of recreational opportunities they provide
that are enhanced by developed amenities, like lodges, visitor
centers, campgrounds, and other guest services. But these parks
don't solely focus on recreation. They are also known for
wildlife habitat and environmental preservation.
Western states are doing much more than designating and
retaining state parks to preserve the environment, and my home
state of Utah is no exception.
Utah has the largest active watershed and wildlife habitat
restoration program in the United States. The Utah Legislature
has partnered with local hunters and the Federal Government to
invest about $14 million annually for conservation and was
restored almost 1.5 million acres since 2005.
In 2014, the Utah State Legislature passed the Utah
Wilderness Act, recognizing the importance of protecting the
wilderness areas and providing a path for preserving state
lands as state wilderness areas. And most recently, many of
Utah State officials have thrown their support behind House
Bill 4532, which prohibits mineral extraction within 1.35
million acres of the Bears Ears region.
These types of efforts are being led and conducted across
the West. You see, Westerners understand and embrace the
reality that local decision making and sensible land management
are not mutually exclusive and appreciate this recognition by
the Enhancing State Management of Federal Lands and Waters Act.
However, we at Sutherland maintain that more can and should
be done if this legislation's intent is to make localism the
guiding principle of Federal land management. If states are
wise and experienced enough to make decisions regarding oil and
gas drilling on public lands, then don't they have the capacity
to manage recreational opportunities, logging, grazing,
wildlife, and environmental protection as well?
As is evidenced by the cited example, there is no hard and
fast rule as to what gets priority on public lands under state
management. Instead, local voices, expertise, values, and
circumstances guide the sustainable uses over state land
management and should do the same for Federal multiple-use
public lands. Under this approach, states become the agent of
the Federal Government in setting multiple-use priorities on
publicly-controlled Federal lands to the benefit of the public,
state and Federal budgets, and the lands themselves.
Localism would drive better public land management by
leveraging local knowledge and manpower while maintaining the
opportunity for Federal guideposts to protect against bad
actors. In short, if localism is a good approach for oil and
gas drilling, then why not further uses on our public lands.
Thank you.
[The prepared statement of Mr. Anderson follows:]
Prepared Statement of Matthew Anderson, Director of the Coalition for
Self-Government in the West, a project of Sutherland Institute
Good morning, Chairman Bishop, Chairman Gosar, Ranking Member
Lowenthal, and members of the Subcommittee on Energy and Mineral
Resources. Thank you for the invitation to speak.
The West is home to some spectacular landscapes. Towering red rock
mesas, endless seas of sagebrush and majestic mountains make the West's
public lands as diverse as they are beautiful. This diversity and
splendor is not lost on those who call the West home. In fact, no one
knows or loves these public lands more than locals whose history,
culture and future depend on the health, accessibility and the life-
sustaining resources of these lands. Simply put, public lands are our
whole world.
Despite this reality, a narrative persists that state management of
Federal lands will set aside environmental stewardship and recreational
activities in favor of unrestrained logging, grazing and extraction
practices. My testimony aims to debunk this by focusing on the
extraordinary efforts being taken by western states to balance
conservation and recreation alongside economic interests.
When it comes to recreation, western states recognize the increased
demand, both in terms of the number of people and the types of
recreational activities. Today, there are more hikers, mountain bikers,
snowmobilers, and off-road enthusiasts than ever before in the West. We
see that western states are stepping up to the plate and meeting
recreational demand through innovative and popular solutions on state
lands.
Despite the perception that state trust lands are managed solely
for resource extraction, western state trust land agencies are
accommodating recreational demands while still meeting their fiduciary
responsibilities. In fact, most western state trust lands allow
recreational use--either free or through the purchase of a moderately
priced permit. Some western states have also elected to lease parcels
for specific recreational opportunities, like mountain biking, to
provide a better recreational experience than can be found on Federal
lands. Some state trust agencies are even purchasing land to enhance
recreation. For example, Montana's Land Banking Program allows the sale
of trust lands that have low recreational value, and the revenues are
used to purchase lands with more recreational opportunities. The
purchased parcels are required to generate more revenues than those
sold, so land banking meets financial and recreational demands. Since
2003, 68,000 acres of Montana trust lands have been sold, 84 percent of
which were surrounded by private lands. In return, nearly 65,000 acres
of legally accessible land with recreational opportunities have been
purchased.
Western state parks also provide exceptional recreational
opportunities and are incredibly popular. In fact, although the West's
state parks make up only one-fifth as much land as national parks in
the West, they bring in nearly 80 percent as many visitors on a per-
acre basis. This is largely due to the types and quality of
recreational opportunities they provide that are enhanced by developed
amenities like lodges, visitor centers, campgrounds and other guest
services. But these parks don't solely focus on recreation; they also
manage for wildlife habitat and environmental preservation.
Western states are doing much more than designating and maintaining
state parks to preserve the environment, and my home state of Utah is
no exception. Utah has the largest active watershed and wildlife
habitat restoration program in the United States. The Utah Legislature
has partnered with local hunters and the Federal Government to invest
approximately $14 million annually for conservation and has restored
almost 1.5 million acres since 2005. In 2014, the Utah State
Legislature passed the Utah Wilderness Act--recognizing the importance
of protected wilderness areas and providing a path for preserving state
lands as state wilderness areas. And most recently, many of Utah's
state officials have thrown their support behind HB 4532, which
prohibits mineral extraction within 1.35 million acres of the Bears
Ears region. These types of efforts are being led and conducted across
the West.
You see, Westerners understand and embrace the reality that local
decision making and sensible land management are not mutually exclusive
and appreciate this recognition by the Enhancing State Management of
Federal Lands and Waters Act.
However, we at Sutherland Institute maintain that more can and
should be done, if the legislation's intent is to make localism the
guiding principle of Federal land management. If states are wise and
experienced enough to make decisions regarding oil and gas drilling on
public lands, then don't they have the capacity to manage recreational
opportunities, logging, grazing, wildlife and environmental protection
as well?
As is evidenced by the cited examples, there is no hard and fast
rule as to what uses get priority on public lands under state
management. Instead, local voices, expertise, values and circumstance
guide the sustainable uses of our state land management and should do
the same for our Federal multiple-use public lands. Under this
approach, states become the agent of the Federal Government in setting
multiple-use priorities on federally controlled public lands, to the
benefit of the public, state and Federal budgets, and the lands
themselves. Localism would drive better public land management by
leveraging local knowledge and manpower, while maintaining the
opportunity for Federal guideposts to protect against bad actors. In
short, if localism is a good approach for oil and gas drilling, then
why not for other uses?
______
Mr. Gosar. Thank you, Mr. Anderson.
I now recognize Mr. Cahoon for his 5-minute testimony.
STATEMENT OF MAYOR BEN CAHOON, BOARD OF COMMISSIONERS, NAGS
HEAD, NORTH CAROLINA
Mr. Cahoon. Good morning, Chairman Gosar, Ranking Member
Lowenthal, and honorable Committee members. My name is Ben
Cahoon, and I am the mayor of Nags Head, North Carolina, and I
am a Republican.
I greatly appreciate the opportunity to testify before you
today. My testimony will cover the impacts of seismic air gun
blasting and offshore drilling, the legal and transparency
problems associated with seismic air gun blasting, the
absurdity of creating new financial penalties for coastal
states that oppose drilling, the devastating economic
consequences that offshore drilling and seismic testing could
bring to our coast, the threat to existing national security
operations, and the large and widespread bipartisan opposition
to offshore drilling and seismic air gun blasting.
Proponents of seismic air gun blasting often
mischaracterize an old quote from Dr. Bill Brown of BOEM,
claiming that seismic air gun blasting has no impact on marine
mammal populations. However, there is a substantial body of
peer-reviewed science showing that seismic air gun blasting
negatively affects marine mammals, potentially even at the
population level. For example, whales exposed to seismic air
gun noise stop producing vocalizations that are essential to
their feeding, avoiding predators, breeding, and raising their
young.
Scientific studies show behavioral and physiological
impacts to marine life. These include killing zooplankton
causing mass mortality and immune system damage to scallops,
causing oysters to stop feeding and breeding, depressing long-
line cod and haddock catch by 70 to 80 percent, and a 78
percent decline in reef fish abundance after seismic air gun
blasting was conducted in the area.
Proponents for testing and drilling often argue that
seismic tests are necessary to provide coastal communities with
data about oil and gas deposits off their shores to assess
whether it makes economic sense to move forward with drilling
for those resources. But that information is considered
propriety by the private companies conducting them. Local
decision makers won't have access to it nor will the public.
Not even Members of Congress can get their hands on it.
Currently, there are at least five companies awaiting final
permits from BOEM to conduct seismic testing along the Atlantic
Coast. Most of these companies are foreign and will not be
investing in our communities. Therefore, BOEM is literally
putting foreign business interests ahead of our hard-working
American workers who are dependent on healthy ocean ecosystems
for survival.
This bill would create financial penalties for coastal
states where there has been no offshore drilling in decades. I
will cover the overwhelming opposition in more detail later,
but nearly every East and West Coast governor has spoken out
against this Administration's proposal to open nearly all
waters to new offshore drilling for the first time in over 30
years. Creating financial penalties for these states, where
coastal businesses depend on clean and healthy oceans, would
just establish a revenue scheme to transfer money from the
states to the Federal Government. Coastal states should not be
penalized for protecting their existing economic interests.
Based on a rough estimate, using the methodology outlined
in the draft legislation, states could be forced to pay
hundreds of millions of dollars just to protect their thriving
coastal economies. It is inappropriate, and once again,
Washington is pushing its beliefs onto local citizens instead
of listening to their vehement opposition.
Oil and gas development poses a real threat to the fishing,
tourism, and recreation-based businesses along the East and
West Coasts that each year generate around $180 billion in
gross domestic product and support nearly 2.6 million jobs.
The President's newly proposed national OCS program also
proposes to offer leases in areas that have extensive military
operations, thus risking our national security training and
readiness.
The draft plan deviates from the long-standing tradition of
deference to the Department of Defense when offering leases in
Federal waters. Secretary Zinke famously met with Florida
Governor Rick Scott on the tarmac of the Tallahassee airport,
where the Secretary announced that, due to the Governor's
opposition to Florida being included in the 5-year plan and
Florida's unique coastal environment and tourism, the state
would be removed from the 5-year plan. That is great that the
Governor and Secretary are listening to state and local
leaders, but nearly every other state along the Atlantic Coast
has requested the same meeting and treatment Governor Scott
received.
Offshore drilling in any new areas is not the answer.
Unfortunately, this legislation would place an absurd penalty
on coastal states requiring states to pay the Federal
Government to protect their coast, potentially costing
taxpayers millions of dollars. Creating a ransom for coastal
states to protect their coastal economy's way of life and
military readiness violates core conservative principles.
I urge this Committee to reject this draft and any calls to
penalize coastal states for protecting their coastal economies.
I thank you for the opportunity to testify here today, and
I look forward to answering your questions.
[The prepared statement of Mr. Cahoon follows:]
Prepared Statement of the Honorable Benjamin Cahoon, Mayor of Nags
Head, North Carolina
Good morning, Chairman Gosar, Ranking Member Lowenthal, and
honorable Committee members. My name is Ben Cahoon, and I am the Mayor
of Nags Head, North Carolina, and I am a Republican. I greatly
appreciate the opportunity to testify before you today about the
importance of protecting our coasts from expanded offshore drilling and
seismic airgun blasting. My testimony today will cover: (1) the impacts
of seismic airgun blasting and offshore drilling; (2) the legal and
transparency problems associated with seismic airgun blasting; (3) the
absurdity of creating new financial penalties for coastal states that
oppose drilling; (4) the devastating economic consequences that
offshore drilling and seismic testing could bring to our coast; (5) the
threat to existing national security operations; and (6) the large/
widespread, bipartisan opposition to offshore drilling and seismic
airgun blasting.
impacts of seismic airgun blasting and offshore drilling
Dangerous exploration for offshore oil involves seismic airguns
shooting loud blasts of compressed air through the ocean and into the
seafloor.\1\ These loud blasts are repeated every 10-12 seconds \2\ for
days, weeks or months at a time.\3\ These seismic airguns are one of
the loudest sources of noise in the oceans.\4\ According to the
National Oceanic and Atmospheric Administration (NOAA), the sound from
seismic airguns can be recorded from sites more than 1,860 miles away,
equivalent to the distance from Washington, DC all the way to Las
Vegas.
---------------------------------------------------------------------------
\1\ Goold C, Fish P (1998) Broadband spectra of seismic survey air-
gun emissions with reference to dolphin auditory thresholds. Acoustical
Society of America. 103(4), 2177-2184.
\2\ National Research Council (2003) Ocean Noise and Marine
Mammals. Washington, DC: The National Academies Press.
\3\ Blackwell S, et al. (2015) Effects of Airgun Sounds on Bowhead
Whale Calling Rates: Evidence for Two Behavioral Thresholds. PLoS ONE
10.6.
\4\ Badelt B (2015). The Inventor of the Seismic Air Gun Is Trying
to Supplant His Controversial Creation. Hakai Magazine. Available:
https://www.hakaimagazine.com/article-short/inventor-seismic-air-gun-
trying-supplant-his-controversial-creation.
---------------------------------------------------------------------------
Scientists agree that seismic airgun blasts could alter marine
mammals' behavior, affecting their migration patterns, mating habits
and how they communicate with each other. Most animals in the ocean use
sound the way animals on land use eyesight; saturating their
environment with noise will have an impact. NOAA estimates that marine
animals like dolphins and whales could be harmed hundreds of thousands
of times.
Proponents of seismic airgun blasting often mischaracterize an old
quote from Dr. Bill Brown of BOEM, claiming that seismic airgun
blasting has no impact on marine mammal populations--``populations''
being the key qualifier. However, there is a substantial body of peer-
reviewed science showing that seismic airgun blasting negatively
affects marine mammals, potentially even at the population level. For
example, whales exposed to seismic airgun noise stop producing
vocalizations that are essential to feeding, avoiding predators,
breeding, and raising their young. In the baleen whales, these impacts
can occur across vast distances, as much as 100,000 square kilometers
or more around a single seismic array. Recent science shows that there
are population level impacts.\5\
---------------------------------------------------------------------------
\5\ E.g., Castellote, M., Clark, C.W., and Lammers, M.O., Acoustic
and behavioural changes by fin whales (Balaenoptera physalus) in
response to shipping and airgun noise. Biological Conservation 147:
115-122 (2012); Cerchio, S., Strindberg, S., Collins, T., Bennett, C.,
and Rosenbaum, H., Seismic surveys negatively affect humpback whale
singing activity off Northern Angola. PLoS ONE 9(3): e86464 (2014);
Blackwell, S.B., Nations, C.S., McDonald, T.L., Thode, A.M., Mathias,
D., Kim, K.H., Greene, C.R., Jr., and Macrander, M., Effects of airgun
sounds on bowhead whale calling rates: Evidence for two behavioral
thresholds. PLoS ONE 10(6): e0125720 (2015).
---------------------------------------------------------------------------
Furthermore, scientific studies show behavioral and physiological
impacts to marine life. These include a 2017 study documenting seismic
airgun blasting killing zooplankton up to three-quarters of a mile
away; \6\ a 2017 study documenting seismic airgun blasting causing mass
mortality in scallops and severely impacting the remaining scallops'
immune systems; \7\ a 2017 study documenting that seismic airgun
blasting increases stress levels, which according to the study, causes
the oysters to stop feeding and breathing; \8\ a 2017 study documenting
seismic airgun blasting decreasing the white blood cell counts in spiny
lobsters, leading to higher rates of immune infections; \9\ a study
documenting seismic airgun blasting depressing longline cod and haddock
catch by 70-80 percent; \10\ and a 2017 study documenting a 78 percent
decline in reef-fish abundance after seismic airgun blasting was
conducted in the area.\11\
---------------------------------------------------------------------------
\6\ McCauley R, et al. (2017) Widely used marine seismic survey air
gun operations negatively impact zooplankton. Nature Ecology &
Evolution. Article number: 0195. doi:10.1038/s41559-017-0195.
\7\ Day R, et al. (2017) Exposure to seismic air gun signals causes
physiological harm and alters behavior in the scallop Pecten fumatus.
Proceedings of the National Academy of Sciences of the United States
114(40): E8537-E8546, doi: 10.1073/pnas.1700564114.
\8\ Charifi M, et al. (2017) The sense of hearing in the Pacific
oyster, Magallana gigas. PLoS ONE 12(10): e0185353. https://doi.org/
10.1371/journal.pone.0185353.
\9\ Fitzgibbon Q, et al. (2017) The impact of seismic air gun
exposure on the haemolymph physiology and nutritional condition of
spiny lobster, Jacus edwardsii. Marine Pollution Bulletin. 125: 146-
156.
\10\ Engas A, et al. (1996) Effects of seismic shooting on local
abundance and catch rates of cod (Gadus morhua) and haddock
(Melanogrammus aeglefinus). Canadian Journal of Fisheries and Aquatic
Sciences, 53:2238-2249. doi: 10.1139/cjfas-53-10-2238.
\11\ Paxton A, et al. (2017) Seismic survey noise disrupted fish
use of a temperate reef. Marine Policy. 78:68-73. doi: 10.1016/
j.marpol.2016.12.017.
---------------------------------------------------------------------------
When the industry proceeds from seismic surveys to exploratory
drilling or production, the risks of harm become even greater for
coastal communities that rely upon a clean coast. Once drilling begins,
we know that accidents happen in a world where human error, mechanical
imperfections and coastal hurricanes all play unexpected roles. When
you drill, you spill. It is inevitable.
We saw what happened in the Gulf of Mexico in 2010 when the
exploratory BP Deepwater Horizon rig spilled millions of barrels of oil
into the Gulf. It was a disaster, but at least the Gulf's bowl-like
shape contained the spill in that region. A similar spill off the
Atlantic Coast would be a disaster of epic proportions. If oil entered
the Gulf Stream, it could be carried into the Chesapeake Bay, the
Hudson River Valley, the Gulf of Maine, and the Grand Banks, which are
some of the richest fishing grounds in the world.
The Gulf of Mexico BP Deepwater Horizon blowout showed that oil
cannot be removed from salt marshes and other wetland systems. It can
remain in the sediments for decades. Coastal salt marshes in North
Carolina are among the most productive ecosystems in the world and are
nursery grounds for many estuarine and marine species. Toxic substances
from oil spills, both chronic and acute, will put all of these
organisms at risk.
Even if a major spill never occurs--and both the oil industry and
the Federal Government admit that spills are inevitable--there's still
an adverse impact to North Carolina's coast in that the land-based
infrastructure necessary to support offshore drilling is dirty and
highly industrial. Also, the infrastructure required to transport
offshore oil is devastating. For example, a series of canals built
across Louisiana wetlands to transport oil has led to vast destruction
of marshlands. Healthy marshlands are a critical component of our
ecosystem.
Sometimes we hear elected officials claim that they want to explore
and drill for natural gas only, while leaving the oil in the ground.
One doesn't explore for just gas. According to current law, oil and gas
companies are required to operate their wells to ``maximize ultimate
recovery.'' \12\ When oil and gas occur together in a reservoir, as the
oil is produced, the gas cap expands helping to remove the oil,
essentially pushing it out of the pore spaces in the rocks. When
exploration wells are drilled, one finds oil and/or gas and/or water
and/or nothing. Then the oil company determines if it's economical to
produce the reserves they found, and if so, submits a plan to BOEM
about how they will produce the well.
---------------------------------------------------------------------------
\12\ 30 CFR Sec. 250.1150. Available: https://www.gpo.gov/fdsys/
pkg/CFR-2013-title30-vol2/pdf/CFR-2013-title30-vol2-sec250-1150.pdf.
---------------------------------------------------------------------------
legal and transparency issues with seismic airgun blasting
Proponents for testing and drilling often argue that seismic tests
are necessary to provide coastal communities with data about oil and
gas deposits off their shores to assess whether it makes economic sense
to move forward with drilling for those resources. But that information
is considered proprietary by the private companies conducting them.
Local decision makers won't have access to it, nor will the public. Not
even Members of Congress can get their hands on it.
Currently, there are at least five companies awaiting final permits
from the Bureau of Ocean Energy Management (BOEM) to conduct seismic
testing along the Atlantic Coast. Most of these companies are foreign
and will not be investing in our communities. In fact, Reuters reported
that a French-based company, CGG, is dependent on the Atlantic contract
to avoid bankruptcy.\13\ Therefore, BOEM is literally putting foreign
business interests ahead of hard-working American workers who are
dependent on healthy ocean ecosystems for survival.
---------------------------------------------------------------------------
\13\ French oil services firm CGI files for bankruptcy. Reuters
(2017). Available: https://www.reuters.com/article/france-cgg/french-
oil-services-firm-cgg-files-for-bankruptcy-idUSL8N1JB6H8. Accessed
January 17, 2018.
---------------------------------------------------------------------------
absurdity of financial penalties for coastal states
This bill would create financial penalties for coastal states where
there has been no offshore drilling in decades. I'll cover the
overwhelming opposition in more detail later, but nearly every East and
West Coast governor has spoken out against the Trump administration's
proposal to open nearly all waters to new offshore drilling for the
first time in over 30 years. Creating financial penalties for these
states, where coastal businesses depend on clean and healthy oceans,
would just establish a revenue scheme to transfer money from states to
the Federal Government. This approach is outrageous, and I urge this
Committee to reject this attempt to hold states like mine hostage.
Coastal states should not be penalized for protecting their existing
economic interests.
Based on a rough estimate, using the methodology outlined in the
draft legislation, states could be forced to pay hundreds of millions
of dollars just to protect their thriving coastal economies, including
massive penalties to the Federal Government for not opening their
coastline to dirty and dangerous offshore drilling.
It's inappropriate, and once again, Washington is pushing its
beliefs onto local citizens, instead of listening to their vehement
opposition.
economic impact and risks of expanded offshore drilling and seismic
airgun blasting
Oil and gas development poses a real threat to the fishing,
tourism, and recreation-based businesses along the East and West Coasts
that each year generate around $180 billion in gross domestic product
and support nearly 2.6 million jobs. The BP Deepwater Horizon oil spill
caused 10 million lost days of beach, fishing, and boating activity.
Many leisure travelers stayed away from Florida's Gulf Coast in the
months following the spill, even in areas that did not have oil on
their beaches.
The Federal Energy Information Administration now predicts the
Nation will be a net energy exporter within a decade--for the first
time since the 1970s. There's no need for offshore oil production off
North Carolina's coast, especially in light of the costs noted above.
The American Petroleum Institute says oil and gas drilling could
result in $3.3 billion to North Carolina over a two-decade period. That
sounds like a fairly big number, but according to ``Visit North
Carolina,'' which is a part of the Economic Development Partnership of
North Carolina, tourists in North Carolina spent nearly 10 times that
amount--more than $20 billion--in 2016 alone.\14\ Even the most
lucrative oil and gas scenario would generate roughly 1 percent of the
economic impact tourism has on the state. Further, these industries do
not live harmoniously. Along the Gulf Coast, beach goers are provided
with wipes to clean the oil and tar balls from their feet after walking
on the beach. To the residents of North Carolina, that scenario is
unacceptable, as our beaches are major revenue generators and part of
our way of life. Moreover, tourism revenue increases every year with no
signs of that trend slowing; the same cannot be said of the demand for
oil.
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\14\ https://partners.visitnc.com/contents/sdownload/67490/file/
2016-Economic-Impact-of-Travel-on-North-Carolina-Counties-revised.pdf.
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The economically recoverable amount of oil and gas that could be
produced off North Carolina's coast, according to Department of the
Interior estimates, would meet U.S. demand for roughly 65 of oil and 57
days of gas, and there's no guarantee that the drilling will pan out at
all. There's so little oil, and the risk is far too great. It's not
worth the risk for North Carolina when we look at how much GDP and how
many jobs are generated by healthy ocean ecosystems including fishing,
recreation and tourism. In 2016 alone, these industries generated over
$2.5 billion in GDP and nearly 57,000 jobs.\15\ Risking our ocean and
way of life is not worth the economic trade-off.
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\15\ Clean Coast Economy, by Oona Watkins and Kevin He, Oceana,
March 2018.
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threat to existing national security operations
The President's newly proposed National OCS Program also proposes
to offer leases in areas that have extensive military operations, thus
risking our national security training and readiness. The draft plan
deviates from the long-standing tradition of deference to the
Department of Defense (DoD) when offering offshore drilling leases in
Federal waters. The Atlantic and Eastern Gulf of Mexico are home to
critical coastal military facilities, including Norfolk Naval Station--
the largest naval station in the world. In the Atlantic Ocean, DoD
conducts extensive readiness operations including live fire tests, air-
to-surface bombing exercises, homing torpedo testing, supersonic test
flights, laser targeting operations, and both Naval Air and Sea Systems
Command. DoD's 2015 report on mission compatibility with offshore
leasing indicated that significant restrictions on oil and gas activity
in the Mid-Atlantic and South Atlantic planning regions would be
necessary to ensure that DoD activities would not be impaired.
Furthermore, DoD has made it clear that the continuation of the
moratorium on oil and gas leasing in the Eastern Gulf of Mexico is
essential to vital military readiness activities. An April 2017 letter
from the Office of the Under Secretary of Defense states, ``The
Department of Defense (DoD) cannot overstate the vital importance of
maintaining this moratorium.'' The letter continues, ``The moratorium
on oil and gas `leasing, pre-leasing, and other related activities'
ensures that these vital military readiness activities may be conducted
without interference and is critical to their continuation. Emerging
technologies . . . will require enlarged testing and training
footprints, and increased DoD reliance of the Gulf of Mexico Energy
Security Act's moratorium beyond 2022.'' A separate June 2017 letter
from the Air Force states, ``The moratorium is essential for developing
and sustaining the Air Force's future combat capabilities.''
The Department of Defense hosts a wide variety of training and
testing activities critical to military readiness and our national
security. The Department's own public statements make it clear that new
leasing could create conflict with long-standing operations throughout
the Atlantic. It makes no sense to put my home state of North Carolina
or any new areas at risk when the proposal presents a direct threat to
our national security.
bipartisan opposition to offshore drilling and seismic airgun blasting
By bringing offshore drilling to shores where Americans have
already spoken vehemently against it, this proposed legislation
undermines Congress' commitment to local and state decision making.
Recently, Secretary Zinke met with Florida Governor Rick Scott on
the tarmac of the Tallahassee Airport, where in front of several TV
cameras, the Secretary announced that due to the Governor's opposition
to Florida being included in the 5-year plan, and Florida's unique
coastal environment and tourism, the state would be removed from the 5-
year plan. While that is great that the Governor and Secretary are
listening to state and local leaders, nearly every other state along
the Atlantic Coast has requested the same meeting and treatment Gov.
Scott received. In fact, on the East Coast, governors from Florida,
South Carolina, North Carolina, Virginia, Maryland, Delaware, New
Jersey, New York, Rhode Island, New Hampshire, Connecticut, and
Massachusetts all oppose the draft 5-year plan for 2019-2024. It should
be noted that the governor of Georgia has recently shifted his position
from supporting more offshore drilling off their coast to expressing
concerns with this new national OCS program. Additionally, it will not
be clear whether Florida is removed, formally, until the Proposed
Program is released.
As of today, opposition and concern over offshore drilling
activities includes:
Bipartisan opposition and concern from governors of
Florida, Georgia, South Carolina, North Carolina, Virginia,
Maryland, Delaware, New Jersey, New York, Connecticut,
Rhode Island, Massachusetts, New Hampshire, Washington,
Oregon and California
More than 275 East Coast and Pacific Coast municipalities
Bipartisan opposition from more than 1,700 local, state
and Federal elected officials
An alliance representing over 43,000 East Coast businesses
and 500,000 fishing families
An alliance representing over 1,000 West Coast businesses
The New England, Mid-Atlantic, South Atlantic and Pacific
fishery management councils
Commercial and recreational fishing interests such as the
Southeastern Fisheries Association, Fisheries Survival
Fund, Southern Shrimp Alliance, The Billfish Foundation and
the International Game Fish Association
NASA, the Department of Defense, U.S. Air Force and the
Florida Defense Support Task Force
Offshore drilling in any new areas is not the answer.
Unfortunately, this legislation would place an absurd penalty on
coastal states, requiring states to pay the Federal Government to
protect their coast, potentially costing taxpayers millions of dollars.
Creating a ransom for coastal states to protect their coastal
economies, way of life, and military readiness violates core
conservative principles. I urge this Committee to reject this draft and
any calls to penalize coastal states for protecting their coastal
economies.
I thank you for the opportunity to testify here today, and I look
forward to answering your questions.
______
Mr. Gosar. Thank you, Mr. Cahoon.
I now recognize Mr. Ebell for his 5 minutes.
Welcome.
STATEMENT OF MYRON EBELL, DIRECTOR, CENTER FOR ENERGY AND
ENVIRONMENT, COMPETITIVE ENTERPRISE INSTITUTE, WASHINGTON, DC
Mr. Ebell. Thank you, Chairman Gosar, and thank you for
inviting me to testify today.
I apologize for being late. I am very interested by your
draft discussion bill. I think a lot of thought has gone into
it, and a lot of thought is going to go into it in the future
as you work out the details.
I would like to say that as part of the President's agenda
to get the economy moving again, this is a very important part.
The energy renaissance in the United States, because of the
shale oil and gas revolution, is going to go forward whether
this bill happens or not. America is going to become, and I
think already is today, the world's leading energy producer.
Over 80 percent of the world's energy comes from coal, oil, and
natural gas. That was true 30 years ago. It was true 20 years
ago. It is true today.
It is projected to be true 10, 20 and 30 years from now.
But the pie keeps getting bigger; that is, the world's energy
demands keep growing. Most of that energy is going to come from
coal, oil, and natural gas.
So, whether or not the Federal lands and offshore areas
take their place as major energy producers, the United States
is going to be leading the way. But as someone who comes from a
Federal lands state and has watched the mismanagement of our
Federal lands lead to economic decline for decades, our mineral
resources in some parts of the West are a very important part
of getting rural economies going again.
Not only does energy production on Federal land create
wealth for the whole economy, it creates wealth for local
people. Having seen the stagnation of oil and gas production on
Federal land is very worrying, and I think your proposal to
turn it over to the states, the management of oil and gas
leasing, is a very good way to get around the mismanagement
that the BLM doesn't seem to be able to fix.
As far as the coastal provisions, in my testimony, I have
emphasized the need for the first section, which is to do a
comprehensive geologic survey, the mapping section of your
bill. It is very important in making public policy to base it
on information and not on the lack of information. And as you
know, on all of the Federal lands issues, there is a lack of
systematic information. In fact, the BLM land annual that shows
land ownership is highly defective. We need a survey of all the
Federal lands and what lands have been withdrawn in various
categories, including mineral withdrawals.
I would like to conclude by going to the second section of
the offshore proposal, the idea that if a state wants a
moratorium on offshore development, they can actually get it;
they don't have to try to apply political pressure so that one
state gets a special deal and another state does not. They can
actually say: we want a moratorium, and here is what we are
willing to pay for it.
So, I think this is a real solution to a very thorny issue
of federalism. And I applaud the Committee's creative thinking
on this. I wish I had thought of it. I am glad you did. And I
think, in addition to revenue sharing, adding royalty sharing
to the offshore states, which provides a powerful incentive to
want to have offshore oil production, that, in addition to that
incentive, having the ability of the state to actually say,
``No, we don't want it,'' really balances the incentive very
well.
I think you have done a really good job putting those two
things together. The offshore states do deserve royalty sharing
just as the Federal land states, like New Mexico and Wyoming,
who, as you know, a huge part of their budget is dependent upon
Federal royalty sharing.
So, thank you.
[The prepared statement of Mr. Ebell follows:]
Prepared Statement of Myron Ebell, Director, Center for Energy and
Environment, Competitive Enterprise Institute, Washington, DC
Chairman Gosar, Ranking Member Lowenthal, and members of the
Committee, thank you for inviting me to testify today on the draft
discussion bill, ``Enhancing State Management of Federal Lands and
Waters Act.'' My name is Myron Ebell, and I am director of the Center
for Energy and Environment at the Competitive Enterprise Institute
(CEI), a non-profit, non-partisan public policy institute that focuses
on regulatory issues from a free-market and limited-government
perspective. CEI accepts no government funding. CEI and I have been
involved in a wide range of Federal lands and energy policy issues
since the late 1980s.
I especially appreciate the opportunity to comment on this bill
while it is still in the drafting process. Let me begin with the
offshore energy title. The first section of the offshore title amends
the Outer Continental Shelf Lands Act of 1953 to require the
establishment within 1 year of a program ``to conduct geological and
geophysical mapping of the outer continental shelf, including mapping
of reserves of oil and gas.'' In my view, this is a critical provision.
The most recent National Assessment published in August 2017 of
technically recoverable undiscovered resources made by the Bureau of
Ocean Energy Management of 90 billion barrels of oil and 327 trillion
cubic feet of natural gas in the 1.7 billion acre Federal offshore
estate is no doubt a well-informed guess, but it is really only a
guess. Much of the data comes from geologic studies that are one, two,
or even three decades old, and the assessment is thus based on outdated
technology and scientific understanding that has been superseded by
subsequent research. A comprehensive survey based on current geological
knowledge and using up-to-date techniques, including seismic testing,
is long overdue.
When similar geological surveys have been proposed in the past,
they have never gotten started in the face of objections that they will
cost too much and take too long. Undoubtedly, the same objections will
be raised again in an effort to remove this provision from the bill. In
my view, the objections of time and money are real, but are far
outweighed by the value of having much better information about the
extent and location of America's offshore energy resources. Incomplete
and inadequate knowledge of federally-controlled resources is not of
course restricted to offshore resource and regularly contributes to
poor management decisions by the Federal land agencies on a wide
variety of issues.
As for the time it will take to map OCS potential oil and gas
reserves, I suggest that now is a good time to begin. The Department of
the Interior under Secretary Zinke's leadership should be enthusiastic
about it and eager to get started. A complete map may take several
years, but the most promising areas for major oil and gas reserves can
be mapped first. As for the cost, I suggest that the Congress could
stop appropriating funds for land acquisition under the Land and Water
Conservation Fund and use the money for this and other projects that
contribute to improving management of the land and subsurface resources
that the Federal Government already owns. I hope that an amendment to
the Interior-EPA appropriations bill to provide initial funding for the
mapping program will be offered when the bill comes to the Floor.
The second section of the offshore title contains one provision
that CEI has supported for a long time--sharing Federal revenues from
offshore oil and gas production with the coastal states. This issue was
last debated in Congress in 2006 when then-Natural Resources Committee
Chairman Richard Pombo failed to enact general offshore royalty-sharing
legislation and had to settle for enacting a provision that shares 37.5
percent of Federal royalties on new production with Louisiana, Texas,
Mississippi, and Alabama--the four Gulf states off whose coasts oil and
gas was being produced in the Federal OCS at the time.
CEI strongly supports sharing Federal offshore royalties with the
coastal states where production occurs. Sharing royalties with coastal
states means that they will be treated in much the same way as states
with oil and gas production on Federal lands within the state. This
seems only fair. Federal lands states receive a share of Federal
royalties under the Mineral Leasing Act of 1920 as amended. For most
states, the amount is half of gross revenues from oil and gas leasing.
Gross revenues come from the auction price of the lease (the bonus
bid), a nominal annual rental fee, and the Federal production royalty,
which is 12.5 percent.
Sharing Federal royalties provides a powerful incentive over the
long term for states to support offshore oil and gas production off
their coasts. It turns out that most states are as profligate in their
spending as the Federal Government, but unlike the Federal Government
most states must balance their budgets. This means that they are
constantly seeking new sources of revenue. Receiving a share of Federal
royalties looks very attractive compared to raising taxes. Raising
taxes depresses economic activity, whereas offshore oil and gas
production increases economic activity (and thereby also increases
indirect tax revenues) and at the same time would provide direct
royalty payments to the state.
As well as providing a powerful incentive to the states, the
discussion draft also includes provisions designed to give coastal
states veto authority over offshore oil and gas production off their
coasts. Under current law, coastal states cannot stop offshore
drilling. At the same time, most coastal state governments currently
oppose offshore drilling. These states are left with trying to exert
political pressure, as in the case of Florida Governor Rick Scott, or
making empty threats, as in the case of California Governor Jerry
Brown. The discussion draft would give these states the legal right to
prevent drilling off their coasts for a period of their choosing by
paying a lost production fee to the Federal Treasury. The size of the
payment would be calculated according to several factors.
I don't want to comment on the details of this section, which is
lucky because the details are messy and most of them appear still to be
in the process of being worked out. However, in concept, I think these
provisions address in a highly creative way a real conflict in our
federalist system by balancing Federal rights and state interests. On
the one hand, it is not right for any state to be able to stop resource
production in the Federal OCS. These resources are after all owned by
all Americans, and therefore all Americans should be able to benefit
from their use through increased economic activity and additional tax
revenues. On the other hand, some states have strong reasons to oppose
drilling off their own coasts. These provisions respect these states by
granting them the privilege of prohibiting production by paying for it.
Now, I would like to comment on the onshore title in the discussion
draft. The onshore title proposes to work around Federal mismanagement
of the oil and gas leasing program on Federal lands by allowing states
to take over management in areas of their choice, which the bill calls
``enhanced management regions.'' My general view is that almost any
aspect of Federal land management would be done better by any of the
Federal lands states; and therefore I am in full support of this
particular delegation of management. Oil and gas production on Federal
lands stagnated during the previous administration, largely as a result
of deliberate administration policies. Despite dramatically different
policies from the Trump administration, obstacles to increasing Federal
oil and gas production remain. As far as I am aware, the single biggest
obstacle is processing and approving Applications for Permit to Drill
(APDs) by local Bureau of Land Management offices. APDs must be
approved before exploration wells can be drilled on lease tracts that
have been acquired through BLM's competitive bidding process.
All the evidence points to the fact that states process drilling
permits on private and state lands much more quickly and efficiently
than the BLM processes drilling permits on Federal lands. Thus I feel
confident that states that want to administer tracts of Federal land
that they choose for leasing, permitting, and production of oil and gas
will do a better job than the BLM. The incentive and penalty structure
in the bill will help ensure that production will increase under state
management.
During the Obama years, the shale oil and gas revolution boosted
U.S. production dramatically from a low of 4 million barrels of oil a
day in 2008 (after peaking at 10 million barrels in 1970) to over 10
million barrels a day in 2017 today. This increase resulted from
technological innovations made by creative people working in a free
market. It occurred independently of government policies and to a large
extent despite government policies. Together with vast coal reserves,
the United States is well on the way to becoming the world's energy
superpower. The economic benefits to the American people have been
immense and look set to continue for decades to come. However, as a
result of the previous administration's policies, oil and gas
production on Federal lands and the OCS has lagged. It's time to catch
up.
Increasing Federal energy production is an important part of
President Trump's energy agenda, which is in turn a key part of his
agenda to get the economy moving again. Much has already been done by
the Department of the Interior to get Federal production back on an
upward track. This Committee has already done good work that if enacted
into law would make significant contributions to that effort. The
Enhancing State Management of Federal Lands and Waters Act promises to
make another major contribution to removing obstacles to vastly
increasing oil and gas production on the Federal estate. I look forward
to working with the Committee to advance this important legislation.
______
Mr. Gosar. Thank you, Mr. Ebell.
I thank the panel for their testimony, reminding the
members of the Committee that Committee Rule 3(d) imposes a 5-
minute limit on the questions. I will now recognize myself.
Mr. Loris, in your testimony, you mentioned, ``that oil and
gas production is booming in some regions of the United States
while the rate of production in others has slowed or even
decreased,'' and that this is often a result of one thing,
``ownership.''
Can you tell us some of the factors a company might
consider when deciding whether to produce on Federal, state, or
private lands?
Mr. Loris. Yes, sure. There are a whole number of factors,
honestly. You have the price of oil, the geographic region, but
a big part of it boils down to who owns the mineral rights, and
therefore, if you look at the trajectory on the timeline for
applications for permits to drill on Federal lands, it has only
increased. It is above 220 days on average now. Where, again,
as I mentioned in my written and oral testimony, it is days or
weeks for state and privately-owned lands.
That is a huge incentive to go toward those lands and away
from Federal lands. There have even been cases where energy
companies have told me they have gone away from private- and
state-owned lands that are adjacent or interspersed with
Federal lands because they don't want to deal with the Federal
Government's cumbersome process.
Mr. Gosar. Mr. Anderson, it seems the Federal Government
has imposed a one-size-fits-all approach to regulating oil and
gas industry and other land-use practices as well.
Can you explain how such an approach ignores the unique
characteristics of each state and impedes the state's ability
to accommodate localized conditions?
Mr. Anderson. Absolutely. You know no state is like one
another. Culturally, I think the state of Massachusetts is very
different from my state of Utah.
Furthermore, the geography in each state is very unique.
And even within a state like mine in Utah, our geography is
very diverse. We have grasslands, red rock and deserts, and
mountains. So, there is this huge geographic diversity that is
there and is difficult to manage if you have one-size-fits-all.
A great example of this one-size-fits-all approach for
Federal management is recreation. Federal land managers,
because they are so rigid, often have a hard time being able to
prioritize one use over another. Not all recreation activities
are conducive to one another. For example, horses are spooked
by dirt bikes on trails, and they are unable to prioritize for
us. That is just one example of many of how Federal rigid land
management just isn't allowing locals to really meet their
needs.
Mr. Gosar. Mr. Anderson, you bring up a good point.
Would you consider that the state jurisdiction and
oversight is inferior to the Federal Government's?
Mr. Anderson. Absolutely. When you are able to bring in
local history, culture, and a variety of other factors and
circumstances, you are able to meet the needs of the people who
live there. And that does not mean that we have to have
environmental or recreational degradation as a result.
Mr. Gosar. Mr. Loris and Mr. Ebell, coastal states cite
localized industry such as tourism as one of the main reasons
for opposing mineral development on the OCS.
How could we balance these concerns while ensuring fair
value to the return of the U.S. taxpayers? Let's go with Mr.
Ebell first.
Mr. Ebell. Thank you, Chairman Gosar.
I think one of the reasons why royalty sharing is a good
idea is because it is recognized that offshore oil and gas
presents costs. And I think the environmental permitting
process for all kinds of resource projects tries to take that
into account.
The regulatory regime for offshore oil and gas production
tries to minimize risks, but they do occur. I think Louisiana
is a good example of the fishing industry working and
succeeding at the same time with a much larger, economically
speaking, in terms of the value created.
The offshore oil and gas industry for many, many decades,
going back to the 1950s, has produced tens of billions of
dollars of oil, and the fishing industry has still flourished.
I think you can see that the two can co-exist but that
there is a balancing there, and you have to take both into
account. I think your provision to allow states that are really
convinced that there is no way to have both, that there is no
way to have other amenities or tourism or fishing and have oil
production, that they can actually stop it.
Currently, they can't, right? They can complain. They can
jump up and down, hold their breath, try to exert political
pressure, but they can't stop it.
Your bill would allow states that really think that there
is no way to balance the two and to have both at the same time
could buy their way out. I think that is a very important
provision.
Mr. Gosar. My time is expired.
The gentleman from California is recognized for his 5
minutes.
Mr. Lowenthal. Thank you, Mr. Chairman.
Mr. Loris, on page 7 of your written testimony, and you
have also mentioned it in your oral testimony, you say that
``oil and gas output on federally owned lands has been mostly
stagnant or declining.''
In fact, production from onshore Federal lands went up 78
percent under President Obama, and offshore oil hit an all-time
high in January of 2017 and continues to climb. In New Mexico,
production went up faster on Federal lands than on private
lands. Are you not aware of this data? Did you not check this
data before making that statement?
Mr. Loris. I would like to see that data, but if you look
at where the shale revolution is on state and privately-owned
lands----
Mr. Lowenthal. Federal production went up 78 percent under
the Obama administration on Federal lands. Are you not aware of
that, is what I am asking?
Mr. Loris. I know that energy production on Federal lands
has increased, but it is still is dwarfed by the amount of
production that is happening on state and privately-owned
lands.
Mr. Lowenthal. So, you consider that stagnant?
Mr. Loris. I would need to see the relative numbers
compared to what they were in the past, but given the decisions
by the Administration to impose a moratorium and de facto
moratorium, I do think there are opportunities where----
Mr. Lowenthal. You are talking about previous
administrations, all the way back through the Bush
administration.
Mr. Loris. Sure, yes, absolutely.
Mr. Lowenthal. Thank you.
Mayor Cahoon, as you mentioned, in your town of Nags Head,
they oppose the inclusion of North Carolina in BOEM's draft
proposed program and, in February, adopted a resolution
opposing seismic testing and offshore drilling.
You mentioned this in your testimony, but I would like you
to tell us some more--in your estimation, does the value of
tourism, recreation, and fishing industries along North
Carolina's coast outweigh any of the potential economic
benefits from offshore drilling? And how do you feel about the
part of the bill where your state would be extorted if you had
to not comply or you chose not to?
Mr. Cahoon. Thank you very much for your question.
In our county, which is a relatively small county in North
Carolina, our population is a little less than 40,000 people.
Almost a third of those people are employed in the tourism
industry, and that small population generates $1.1 billion in
domestic tourism spending, which is Number four in North
Carolina.
In our community, you are either engaged in the tourism
industry, the fishing industry, or people like me, architects,
doctors, lawyers, everybody who lives there lives there as a
by-product of the tourism industry.
For us, offshore drilling is a bit of a sword of Damocles.
The risk of damage may be small, but when there is a spill, we
have no fallback. We are a little different on the coast of
North Carolina from many other areas of the United States. If
you look at a map, we are a thin strip of barrier islands.
Behind us are the sounds and then behind that, are rural
sparsely populated counties with no other industries to fall
back on.
If there is a spill, we are dead. We have no livelihood,
and we basically lose everything that we have. We have opposed
testing and oil drilling going all the way back to the 1980s,
the town of Nags Head has actually passed eight resolutions in
opposition to offshore testing and drilling.
Mr. Lowenthal. What about the part of the bill that says if
North Carolina chooses not to go along with drilling, that you
have to pay a great sum of money back to the Federal
Government?
Mr. Cahoon. Yes, sir. Well, that certainly seems like an
inappropriate mechanism to me. And it fundamentally avoids the
question of just making the decision about whether offshore
drilling is the right thing to do or not. If we are going to
have an energy policy and we are going to decide that we need
the oil, why are we letting states then take some of that oil
back off the table in exchange for a payment. But more
fundamentally as a mayor, I worry about what our state would do
to find those resources.
We would certainly have a charged political discussion in
the state of North Carolina to find those funds. Those funds
are going to come from somewhere. They may be taken from towns
or additional taxes imposed.
Mr. Lowenthal. Thank you. I have run out of time, and I
yield back, but thank you for your testimony.
Mr. Gosar. I thank the gentleman from California.
The gentleman from Colorado is recognized, Mr. Lamborn.
Mr. Lamborn. Thank you, Mr. Chairman. Thank you for having
this hearing.
I would like to make a general comment and then ask Mr.
Anderson a question or two.
While oil and gas production has increased in recent years
overall, as Mr. Lowenthal mentioned, this growth has occurred
largely on state and private lands. So, uncertainty associated
with the issuance of required permits presents additional
challenges to producers seeking to develop on Federal land. And
we know that mineral revenues are a crucial source of income
for the states, so when we have permitting backlogs and delayed
leasing decisions, these are lost opportunities for economic
development and job creation. And we know that 50 percent of
mineral revenues are returned by the Federal Government to the
states.
So, Mr. Anderson, when the Federal Government fails to
effectively manage oil and gas permitting on Federal lands in
the state of Utah, where you are familiar, resulting in
backlogs and unpredictable leasing timelines, how does that
impact state and local budgets?
Mr. Anderson. Our public lands are a puzzle. There are a
lot of working pieces, and you have to have all these pieces
together to paint the whole picture.
When we are unable to extract resources from our public
lands, it has both a short-term and a long-term impact.
I want to give you a fantastic example of eastern Utah in
the Uintah Basin. I go out there and visit it quite frequently.
Uintah Basin is far removed from airports and major highways,
and it is quite isolated. And the recreational opportunities
just aren't there like they are in Zion National Park or
Canyonlands or other places in our state. So, the area is very
reliant on resource extraction. A lot of the money, when there
is a boon that comes to those from these mineral royalties,
helps sustain them when we see the roller coaster that
inevitably happens with this form of extraction.
Now, am I suggesting that oil and gas extraction should be
the only economic use of our public lands? No, and quite
frankly, it is not ideal for the Uintah Basin. That said, that
is the hand that they have been dealt. They don't have the
opportunity to promote recreation to make money, so they need
those royalties. And they need it to fund their schools and
their infrastructure and many other things that come back to
them.
Mr. Lamborn. Let's talk about state management of lands.
Should we be able to pass this bill and give the states more of
a say in their destiny, what is the record of Utah in allowing
for public access to lands? Is it strictly for energy
development, or is every other kind of use allowed as well?
Mr. Anderson. Absolutely not. The state of Utah engages in
a host of land management practices.
A great example is, in 2015, the state of Utah passed a
piece of legislation asking every county to come up with a
resource management plan for both the county, state, and
Federal lands within their borders. It gave the opportunity for
locals to come in and give their opinions. These were passed by
the counties and the county commissioners. Then it was passed
along to the state level. Locals were, again, given the
opportunity to comment, and now we have our Utah State Resource
Management Plan for the entire state.
And it has a host of different things in there. Recreation,
wilderness areas, water, air, you name it. So, absolutely.
Mr. Lamborn. So, is it reasonable to assume that, given the
fact that states managed their state lands according to the
principles of multiple use, that the states would do the same
on Federal lands, not just Utah but other states, should we be
able to pass this legislation, while giving more certainty to
energy producers?
Mr. Anderson. Yes. As I mentioned in my testimony, nobody
loves these lands more than the people who call them home, and
I believe they will protect them. They have to live with the
consequences that are made on them. Multiple-use management is
an integral part of who we are as Westerners, and I believe
that it would continue to be if the states were able to manage
these places.
Mr. Lamborn. I thank you for your great responses.
Mr. Chairman, I yield back the balance of my time.
Mr. Gosar. The gentlewoman from Massachusetts, Ms. Tsongas,
is recognized for 5 minutes.
Ms. Tsongas. Thank you, Mr. Chairman.
Welcome to our witnesses. Generation after generation of
Americans have endorsed the idea that our public lands and
waters should be managed for the benefit of all Americans,
despite the fact that many of those public lands are
necessarily resident in particular states so managed for all
Americans to support a wide range of activities.
These multiple uses include recreation activities, such as
hunting, hiking, and camping, along with responsible resource
extraction and economic development, fishing, grazing, timber
harvesting, and mining.
Unlike state lands, which are often managed to maximize
profits, public lands, the lands that belong to all Americans,
do not exist for the sole purpose of generating revenue.
I want to highlight the words of Pope Francis who recently
met with oil industry executives at the Vatican. He said, ``The
need for greater and more readily available supplies of energy
to operate machinery cannot be met at the cost of polluting the
air we breathe. The need to expand spaces for human activities
cannot be met in ways that would seriously endanger our own
existence or that of other living species on Earth.''
He is also speaking to the environmental values of how we
protect our public lands. We must work--and these are not his
words--we must work to find a balance between competing
interests on our Federal lands and waters, which this
legislation clearly fails to do by creating a presumption in
favor of oil and gas development over all other economic
interests and national values.
Mayor Cahoon, my questions are for you.
The economics of your community are clearly dependent upon
tourism and fishing and are put at risk by the potential risks
of offshore drilling. Should there be a spill, which one of our
witnesses has today referenced that there are risks associated
with offshore drilling. So, I am just curious, from your point
of view--and it is in part reiterating what you have already
said--what are the risks that offshore drilling would pose to
your economy that is so dependent on tourism and fishing?
Mr. Cahoon. There are really two risks for our community.
The first arises with testing. We have a very significant
commercial and recreational fishing industry in our area. Many
of our tourists come for recreational fishing to go offshore to
the Gulf Stream. Any activity that changes the behavior of the
commercial fish or of the sport fish would put those industries
at some risk and especially our neighboring communities. The
Wanchese area that is a historic fishing community would suffer
significantly.
The second risk is from a spill. The damage that that would
do to the fishing areas, the shell fishing areas, would be very
significant.
For us, though, we think of a spill on the beach and what
that would mean. I have always said that if you can run a
business on the Outer Banks, you are one of the best business
people in the world, because we have tourists for about 4 or 5
months out of the year, and our businesses make enough to get
by. We make a living that way. If there is a spill and we shut
down in one of those summers, people really will lose
everything. And that is really why this cuts across all the
lines for us and is a very simple decision that we just cannot
withstand that risk.
Ms. Tsongas. So, you clearly don't need offshore drilling
to protect the long-term economic stability of your community.
Yours is rooted in very different industries that are dependent
on a very different scenario?
Mr. Cahoon. We do not. Our county is a $1.1 billion tourist
industry right now today. And we don't need the oil, and we
would put that substantial business at risk.
Ms. Tsongas. I thank you for your testimony.
The challenge we have here is to face, to balance competing
interests, serious economic interests that benefit different
communities in different ways, and this legislation clearly
creates a presumption in favor of oil and gas drilling at the
expense of other economic interests.
I yield back.
Mr. Gosar. I thank the gentlewoman.
The Chairman of the Full Committee, Mr. Bishop from Utah,
is recognized for 5 minutes.
Mr. Bishop. Thank you.
I appreciate the witnesses for being here.
Mr. Graves, I apologize. I feel sorry for you. You come
from a state that does offshore drilling, I suppose, so I am
sorry that the tourism trade in Louisiana has dried up and no
one wants to go down there because of that.
Mr. Graves. Sir, tourism is smoking in New Orleans. It is
amazing.
Mr. Bishop. For the first witness, you said that if you
look at Louisiana, Texas, Mississippi, Alabama, they have been
able to have economic activities in oil and gas production as
well as tourism, as well as recreation, and they seem to be
functioning very well at that, right?
Mr. Loris. Yes, that is the right. It is not a zero-sum
game.
Mr. Bishop. So, the idea that this is the only thing we are
talking about when we do offshore production and it will drive
out everything else is one of those false narratives and false
assumptions?
Mr. Loris. Correct.
Mr. Bishop. However, I want to thank you for having this
hearing, especially because of some of the letters I have
received. This is wonderful.
There were five Atlantic Coast governors that sent me a
letter that said: We reject this legislation that disregards
the wishes of the citizens of our state. It could not be more
clear that the citizens of our state oppose the U.S. Department
of the Interior's proposed plan--even though I would notice
that legally he has to come up with a 5-year plan, that is one
of his responsibilities, regardless of whether you do it or
not--in addition, finally, many of our state legislatures and
local governments have enacted statutes and ordinances
respectively to prevent or oppose offshore drilling.
I am thankful for these letters. This is a wonderful
letter. It is a great letter. I appreciate receiving it.
This is a letter that came from the governor of my state
that said: ``As evidenced by the opposition from virtually
every elected county, state, and Federal official, the state of
Utah strongly opposes any unilateral monument designation
within our state.''
So, Ms. Tsongas, Mr. Lowenthal, you have spoken so far. Why
are these letters good and you are supportive of them? And why
is this letter rejected? Why is this letter something you
oppose? What is the difference between these two letters? Why
should the wishes of the citizens of these states on public
waters be respected and the wishes of this state on public
lands not be respected?
I yield to either one of you that want to do that. I have
five people over there. Any of you want to respond on why these
letters are good and this letter is not?
OK. Mr. Ebell, let me go to you, if I could, for just a
second.
You talked about seismic testing. Restate what you said.
But why is it important that we make these decisions with some
knowledge instead of in a simple vacuum?
Mr. Ebell. Mr. Chairman, for a long time, I have supported
multiple surveys of the federalist state, both offshore and
onshore. Our Federal land managers, bless their hearts, they do
lots of good work and, in my view, lots of bad work, but one of
the things that hampers them is a lack of information.
How can the United States develop a strategy for its future
energy production if it doesn't know how much energy it has?
Mr. Bishop. Let me shut you off here for just 1 second. I
am sorry. There are a couple other things I need to say quickly
before my time goes away.
Mr. Ebell. Yes, certainly.
Mr. Bishop. And you are spot on. One of the things this
bill does do is try to make sure that information goes out
there so states can make a wise decision.
Mr. Ebell. Yes.
Mr. Bishop. The other thing it tries to do is treat onshore
and offshore states the same way on their public lands and
public waters and tries to put everything on an even basis that
is not talked about here.
I do need to say one thing about Mr. Lowenthal's question
to you originally. Between 2010 and 2015, the percentage of the
Nation's crude oil produced on Federal lands decreased from 35
to 21 percent, according to BLM. The number of drilling permits
issued on controlled onshore land dropped 47 percent during the
last administration. Further, Federal data shows crude oil
production remained flat between 2010 and 2015 on federally-
controlled land while natural gas production actually declined
by 27 percent.
However, on lands that were controlled by states and
private individuals, it increased 115 percent for crude, 66
percent for natural gas. I would like to see your data. And I
want to see where those numbers come from because it does not
equate to anything BLM has produced or anything the Department
of the Interior has produced.
Mr. Lowenthal. I have the data right here.
Mr. Bishop. Good.
Mr. Lowenthal. I can put it into the record.
Mr. Bishop. No, let me just see it, so we can see where you
are skewing the approach to it. That is important because there
has been a decline, and we have been missing out, which means--
I am 5 seconds over. So, in the second round I may say what it
means. The rest of you will have to spend your time in bated
anticipation for what it means.
I just want to treat all states equally and fairly,
including Louisiana. And that is not happening right now.
I have not yielded back. You took it away.
Mr. Gosar. I thank the gentleman.
The gentlewoman from New York, Ms. Nydia Velazquez, is
recognized for 5 minutes.
Ms. Velazquez. Thank you, Mr. Chairman.
I would like to request unanimous consent to submit a
letter for the record written by my governor of New York in
strong opposition of the bill we are deliberating here today. I
am not sure if the Chairman already got that letter, but I just
want to make sure that the record has the letter from the
governor of New York.
Mr. Gosar. Without objection, so ordered.
Ms. Velazquez. Thank you.
This bill essentially incentivizes offshore drilling and
imposes fees on states that are working to employ more
sustainable energy resources.
For those of us in New York, this bill threatens to
jeopardize long-term investments in clean energy for our
children and families. And it puts at risk entire industries
that rely on our coast from tourism to fishing.
This is irresponsible in the short term, putting our
healthy coastline at risk. But this fossil fuel addiction is
also reckless for the long term, contributing to climate change
and placing our communities at risk of powerful extreme weather
events, while threatening the planet for our children.
We have seen that energy exploration like this carries
inherent risks. Have my colleagues already forgotten the BP oil
spill in the Gulf 8 years ago?
As the Ranking Member of the Small Business Committee, I
remember hearing vividly how entire fishing and tourism
industries suffered because of one company's mistakes on a
single oil platform. Some estimates suggest the Gulf economy
lost $22 billion in the following 5 years.
We do not want to let that happen in New York. For those of
us from New York City, we sometimes say that water is our sixth
borough. It surrounds our cities, and it defines the character
of our city.
In other parts of the state, the ocean is the anchor of
tourism and fishing industries.
New York's ocean economy generates an estimated $11 billion
in wages, contributes $23 billion in gross domestic product,
and supports 320,000 jobs.
All of this could end or be massively undercut if there
were a major oil spill.
So, as a state and a city, we have chosen a different path.
As New Yorkers, we have worked hard to find other energy
sources. Our state is leading a $1.4 billion investment
dedicated to onshore renewable energy projects.
New York released a plan to develop 2,400 megawatts of
offshore wind generation by 2030. We ought to be able to make
that choice, and I believe that this is at the center of the
debate of this legislation.
We, every state, should be able to make that choice. That
should be our option. We should be able to say we want a
sustainable energy path in our state and in our city that does
not risk damaging our wonderful coast and ocean.
But this bill takes that option away from us. The message
is either start down the road of opening your coastlines to
drilling or start paying fines.
Mr. Loris, you mention that this legislation empowers
states. What a wonderful way to empower a state, by telling
them: if you choose this path, then you will have to pay fines
or fees.
The irony, of course, is that in every other area,
Republicans love to extol states' rights and how the Federal
Government should not impose its will or overstep.
Apparently, that principle does not extend to protecting
Big Oil.
My question for the panel is this, quite simply--shouldn't
New Yorkers be allowed to decide whether they want to imperil
their coastline with oil exploration or if they want to develop
sustainable renewable energy resources? Should Washington force
these decisions on them from afar? And if states like New York
do elect a more sustainable future, why should they have to pay
penalties for doing so? Isn't that a fair question?
I yield back, Mr. Chairman.
Mr. Gosar. I thank the gentlewoman.
The gentleman from Virginia, Mr. Wittman, is recognized for
his 5 minutes.
Mr. Wittman. Thank you, Mr. Chairman.
I go to Mr. Ebell.
You spoke in your testimony about the importance of data
concerning offshore resources, specifically the geology of
offshore having a comprehensive database to understand both the
geological and geophysical conditions there. There hasn't been
a study done in, I know, well over 30 years.
Let me ask this, is it important, first of all, for us to
do a study, a current study? Is there a reason why we shouldn't
do a study? Is that data important for decision making?
Mr. Ebell. Thank you, Representative Wittman.
I am not an expert on this, but I think that the insistence
of environmental pressure groups over many decades to keep
information from informing public debate really needs to be
recognized here, and this bill says, finally, we are going to
spend the money and take the years that it takes to do an
adequate geological mapping of our offshore resources.
I was involved for several decades in the ANWR debate,
which was resolved successfully without anybody really doing
anything last year. It just sort of happened. But one of the
things that the environmental groups insisted upon for years is
that we couldn't know how much oil might be contained in the
coastal plain of ANWR. They would not allow exploration
drilling so that public policy decisions could be based upon
information. It could instead be based on wild emotional claims
about unique resources that nobody had ever visited, so they
could make up falsehoods.
The point about not allowing information to inform public
policy decisions is because, of course, if the American public
knew how much oil there might be under the coastal plain, they
would be able to decide whether they wanted to drill there or
not.
The same is true of the offshore resources. We may find
out, for example, that there isn't very much oil in ANWR. We
may find out that there is a huge amount of oil in Virginia, or
there isn't much at all.
Once we know, that will inform people in making the debate.
If there is going to be $5 billion of activity or $50 billion
of activity, that makes a big difference in the decision that
the people of Virginia make when they are calculating how much
their royalty might be, their share of the royalty.
So, I think it is absolutely critical that this Committee
insist that the money be spent to do an adequate mapping of our
offshore resources, and then I would say, as a rural Westerner,
we need an adequate mapping of what the Federal lands are and
what the withdrawals have been.
Mr. Wittman. Mr. Ebell, when it comes to doing that
mapping, gathering that data, I know the Bureau of Ocean Energy
Management has looked at what the impacts would be of seismic
studies, using sound to penetrate the sediments below to see
what is there.
I know you have done an assessment to see what is the
impact on marine mammals, what is the impact on fisheries.
Can you give us the results of that study? Because I know
there has been a lot of discussion too about there being
impacts on those marine mammals and those fishery resources.
Mr. Ebell. Yes, again, I am not an expert on this. Nick
Loris may have looked into this much more deeply than I have.
I would just say I think a lot of wild claims have been
made about seismic testing, and the scientific research I am
familiar with does not sustain those claims. But I haven't
looked at the entire scientific literature, and I don't have
the scientific credentials to weigh it adequately, so I will
try to put off that question.
Mr. Wittman. Mr. Loris, do you have a comment on that?
Mr. Loris. I haven't seen that specific report or the work
from BOEM, so I will take a look and offer comments for the
record.
Mr. Wittman. OK. Very good.
Mr. Chairman, I would like to offer the Committee that the
results from the BOEM study ought to be part of the information
offered by this Committee.
Again, I want to make sure that we are making decisions
based on all the information across the board. I understand
different groups advocating in different ways, but I think it
is critical, as you point out, Mr. Ebell, that we have the full
scope of information. We do want to make informed decisions,
and I think having that information is key for that.
So, with that, Mr. Chairman, I yield back.
Mr. Gosar. I thank the gentleman.
The gentleman from Florida, Mr. Soto, is recognized for his
5 minutes.
Mr. Soto. Thank you, Mr. Chairman.
This bill seems to be a paradox of federalism, stacking the
deck in favor of oil drillers because states that want to drill
can take over and drill, but states that want to protect their
coasts and Federal lands face a hefty ransom.
Just as an aside, no one is going to mistake a Florida
beach coast or intercoastal region for any other state, other
than perhaps Hawaii. That is why every member of the Florida
delegation opposes offshore oil drilling because we understand
that it comes at a price, and most Americans understand it
comes at a price.
Mayor Cahoon, how would you all feel in Nags Head if the
Federal Government told you, ``We are going to throw up a full
oil derricks, or you have to pay the price''? How would your
constituents feel about that?
Mr. Cahoon. I think my constituents would probably scream
bloody murder. We face, as a local government, issues of
resources, and it is a constant struggle, I realize, in what
the state is able to give us and take away, and I understand
that to some degree, but this is a massive extraction from our
state of resources; by one estimate, I believe, about $560
million from North Carolina. That would take resources away
from our towns and schools and other things that have needs.
Mr. Soto. Thank you, Mayor.
Mr. Loris, why should we have this double standard?
Mr. Loris. I think the alternative is the Department of the
Interior forces those decisions on you without the choice. I
don't see it necessarily as a double standard but actively
engaging states to make choices, hopefully with better informed
data about the resources that lie off the coasts and in the
Federal lands.
Mr. Soto. Thank you, Mr. Loris.
Mr. Anderson, why the double standard? Why can states
demand to drill and other states have to pay ransom in order to
protect their lands? Why would we want that inconsistency?
Mr. Anderson. Well, these are America's public lands, and
as Americans, we all benefit from the extraction of these
mineral resources. If those go unused in the coffers, if we
don't have that money going into our Federal coffers, all
Americans are going to struggle as a result.
Mr. Soto. So, you are comfortable with the inconsistency in
sovereignty?
Mr. Anderson. I think there is another side to the coin
too. When we choose not to extract, like in the state of Utah
that we have seen, locals are struggling significantly, so
there are consequences on both sides.
Mr. Soto. I appreciate you mentioned that because Utah has
traditionally been an energy state that has decided to do that,
and that is something that we should all support.
But my state doesn't want any of this.
Mr. Ebell, how do we justify requiring states to pay if we
don't want to drill yet giving states the overwhelming power to
drill? How do you reconcile that inconsistency in sovereignty?
Mr. Ebell. I think there is an asymmetry between Federal
land states and offshore Federal waters.
The state of Utah, for example, or Wyoming or New Mexico,
has a lot of Federal land against its will. That is, it was
never transferred at the time of statehood as it should have
been under the Constitution and the statehood acts. Those
states are stuck with the Federal lands.
The Federal offshore waters are not in your state. They are
owned by all Americans.
Mr. Soto. So, you would be OK with the one part, but----
Mr. Ebell. Florida does not have jurisdiction over Federal
waters. You have jurisdiction over state waters. You can drill
or not drill----
Mr. Soto. Mr. Ebell, thank you so much. We are here in the
Federal Government today talking about that, and we have
authority over that. That is why we are here, not in State
Legislature.
So, you are OK with the first part, but you haven't
justified the second part of requiring states to be able to
have power over the Federal lands for oil drilling, but if they
want to preserve them, they are left helpless.
The last thing I wanted to talk about--today, they just
came out with a study that Antarctica is melting at three times
the amount we thought it would be because of global warming.
Is it inevitable that we are going to face oil drilling for
the next couple decades?
Mr. Ebell, you can answer that one.
Mr. Ebell. The world's energy demands are enormous, and
they are growing. Over 80 percent of the world's energy and
over 80 percent of the United States' energy comes from coal,
oil, and natural gas----
Mr. Soto. So, is it inevitable?
Mr. Ebell. Yes.
Mr. Soto. OK. Thank you. I hope we are not telling our
children and grandchildren that.
I yield back.
Mr. Gosar. I thank the gentleman.
The gentleman from Pennsylvania, Mr. Thompson, is
recognized for his 5 minutes.
Mr. Thompson. Mr. Chairman, thank you for hosting this
hearing. This is one that is near and dear to my heart, having
Federal lands within my congressional district, a national
forest that, quite frankly, was oil and gas filled long before
it was a national forest known for providing resources.
Part of this hearing has been sort of portrayed in
different ways, with the whole climate scare thing and other
different ways, but I look at this as leveling the playing
field for rural America and urban America.
Urban policy makers have been discriminating in a purely
selfish manner, limiting the opportunity in rural America,
limiting access to resources we have been blessed with,
especially at a time like we are experiencing today, but we
also have the technology to be great stewards of the land as we
use what God has given us.
I border New York. I feel sorry for the folks in upstate
New York, quite frankly, where we have benefited because the
state and the Federal Government have tried to work together to
provide an economic base and to do the right thing morally so
that American families can find that they have affordable
electricity, affordable energy, especially the people that are
struggling living paycheck to paycheck. They cannot afford
escalating energy bills, especially when we are blessed with
the energy resources that we have today and the technology to
be able to produce and use in that way.
In New York, despite the governor of New York having put
billions of dollars into the Upstate Revitalization Initiative
that was mentioned into economic development, but it ignores
the vast amount of energy resources that we have in New York.
Again, that is not my state, but I have kind of a picture
window of it when I am up in the northern tier of my district.
New York added 97,000 jobs over the past 12 years. All but
9,100 of those were on Long Island and New York City. God bless
Nags Head and New York City and places that do have tourist
destinations that people from my district and Mr. Bishop's
district and all around the country want to come and spend
money. That is great economically for them, but what about the
rest of America? What about America that has been left behind
that, quite frankly, has the energy resources to have a robust
economy?
I probably used way too much time on that, but now for my
questions.
Mr. Ebell, thank you for providing your thoughts on the
draft bill that we are discussing today.
A large portion of my congressional district has the
Allegheny National Forest. Timber receipts from this national
forest provide more and more counties in my district with
crucial funds needed to carry out day-to-day operations.
Now, as we consider giving states more influence in the
subsurface development of their Federal lands, I am talking the
onshore thing at this portion of this bill, might counties
benefit revenue-wise?
Mr. Ebell. They will certainly benefit from energy
production in terms of local economic activity and high-paying
jobs, and you have seen that in your district with the shale
oil and gas revolution.
I would like to see the other Subcommittee work on getting
back to timber harvesting instead of managing our huge reserves
of timber through insect infestation, disease, and catastrophic
fire.
In my part of the world, there are no timber mills left. We
now just burn it down. In fact, all the towns in Oregon, all
those little rural towns, you say getting rural America going
again, a lot of them have just dried up and blown away because
the mill closed and that was all there was.
So, I think that the revenue sharing of oil and gas goes to
the state, but obviously, it will help the counties finance
this as well.
Mr. Thompson. I find in terms of energy, minerals, and
resource production, timbering is an important part, and
unfortunately, because of lawsuits, we have really lost that.
And I am proud to say that the farm bill, which I hope we
will be bringing up, I would love to have my friends across the
aisle support us on that when it comes back to the Floor,
because it has great provisions in there for forestry. And if
you are concerned about climate change, then you ought to be
supporting the largest carbon sinks in the world, and those are
good, healthy forests. It is the natural way of taking carbon
out of the air and manufacturing top soil, which we all know
also has great benefits in terms of growing our food supply.
Thank you, Chairman, and I yield back.
Mr. Gosar. I thank the gentleman from Pennsylvania.
The gentleman from Arizona, Mr. Grijalva, is recognized for
his 5 minutes.
Mr. Grijalva. Thank you very much, Mr. Chairman.
Mayor, North Carolina's coast is particularly vulnerable to
sea level rise, coastal impacts of climate change, including
increased intensity and frequency of hurricanes. These impacts
threaten beach front real estate and private property, also the
tourism and recreation industry, and North Carolina's
agricultural sector as well.
As a local coastal official, what about climate change
concerns you most? And how is your community preparing for
impacts?
Mr. Cahoon. Thank you, sir.
Climate change, or sea level rise specifically, does
concern us very greatly. We are already seeing the impacts in
our community of a rising water table and increased beach
erosion. We, in fact, just in this budget in our town are
dealing with the storm water issues that are being caused by an
elevated water table that is part of the sea level rise
equation. We operate on site-by-site septic systems, and those
systems, as the water table rises, are polluting the
groundwater, so we are having to deal with that issue.
Several years ago, we spent over $30 million on a beach
nourishment project, which was paid for locally. There is no
Federal or state money in our beach nourishment projects. We
are getting ready to spend over $30 million again to rebuild
our beach, because when we lose the beach, we suffer the
erosion and damage to our real estate, our infrastructure, our
streets, power lines, and that kind of thing. It is a very
significant issue for us.
Mr. Grijalva. Thank you. I appreciate that.
Mr. Ebell, according to a news report, the Trump
administration is pursuing or discussing to pursue a plan to
make electric grid operators and certain utilities purchase
uneconomic power from struggling coal and nuclear plants to
prevent them from retiring.
The proposal, I think, goes against the free enterprise and
limited government concept and would surely raise electricity
rates and energy rates for consumers.
Discussing the plans 2 days ago, FERC commissioners
expressed extreme skepticism about a coal bailout, and
according to their chairman, who said, ``There is no immediate
calamity or threat to our ongoing ability to have our bulk
power system operate and satisfy our energy needs.''
Mr. Ebell, do you support propping up uneconomic coal and
nuclear plants?
Mr. Ebell. Representative Grijalva, I believe this question
goes beyond the subject of the hearing. If the Chairman will
indulge me, I will try to answer your question.
Mr. Grijalva. I will indulge you for a little while. I have
other questions as well.
Mr. Ebell. Yes. The CEI hasn't taken a position on any
proposals because we haven't seen them yet. In general, we
oppose energy mandates and subsidies.
The problem here is that the Federal Government props up
uneconomic forms of energy through the wind production tax
credit and the solar investment tax credit, and many states
have mandated the use of uneconomic forms of solar and wind
energy, so what we see in terms of the security of the grid and
the reliability of the grid is now a question for debate.
And I am not an expert in reliability, so I can't really
judge whether these countervailing subsidies are a good idea or
not.
Mr. Grijalva. Mr. Loris, same question. Do you support the
President's proposed plan to prop up uneconomic coal and
nuclear plants?
Mr. Loris. We do not. In fact, we have written about it in
both Heritage papers and op-eds that we do not support these
bailouts. I think it is one thing that can stifle innovation in
the energy sector broadly if you allow uncompetitive sources to
be propped up.
That said, we support getting rid of all energy subsidies,
the wind production tax credits, reducing regulations that can
make new power plants and existing power plants more
competitive, but we do not support the bailouts.
Mr. Grijalva. Mr. Chairman, I yield back.
Mr. Gosar. I thank the gentleman.
I guess the point to this whole aspect is that you can't
treat energy equally. We are talking about base load versus
intermittent, and so that is a big denomination that has to
have a decipher.
For the record, the gentleman from Louisiana, Mr. Graves,
is recognized.
Mr. Graves. Thank you.
I want to thank you all for being here today and for your
testimony.
Mayor, I have a question. I have had the opportunity to do
a lot of jobs in my life, and one of them is I got to be a
garbageman for a while, and it was lot of fun.
Let me ask you, if you had 10 garbagemen that all worked
for your city, and you brought the new trucks on that have the
automation that lift the cans and everything, and as a result
of that automation, let's say that 9 of your garbagemen were
able to have a 70-percent increase in production and
efficiency, but one wasn't able to do that, and you tried to
work with that person and tried to make them do a better job
and increase their efficiency, would you keep them on, do you
think? Or do you think you might get rid of them at some point?
Mr. Cahoon. Well, as mayor, I defer to my town manager to
make those kinds of decisions, and I generally stay out of the
detail.
We would appreciate that increased efficiency. We would,
within human resources, we would do everything we could to find
another job for that person so that they could still be----
Mr. Graves. But you would recognize that there was
disparity there and perhaps it needs to be fixed. There is
something out of whack. Right?
Mr. Cahoon. Certainly. Yes.
Mr. Graves. So, my good friend, Mr. Lowenthal, we have had
this discussion before in this very Committee with your same
factoids.
When you look at energy production on Federal lands and you
look at energy production on private lands and Indian lands,
you have disparity. You set a curve, you set a baseline, based
upon what is happening.
The energy production on Federal lands and Indian lands
have completely smoked those on Federal lands during the Obama
administration.
Mr. Lowenthal. It has gone up by 78 percent----
Mr. Graves. No.
Mr. Lowenthal. Let's talk about it. Let's admit that it has
gone up.
Mr. Graves. It is my time.
Mr. Lowenthal. You asked me.
Mr. Graves. So, you have a baseline of energy production,
of what is happening on Federal lands versus what is happening
on comparable lands run by the private government or run by
Native American tribes, and that is where you see a complete
difference in energy production on the private lands and on--
and I don't need to pull up any facts, I understand that.
Mr. Lowenthal. On Federal lands----
Mr. Graves. The energy production on private lands has
completely smoked that on Federal lands. The Federal Government
under the Obama administration did not do a good job using
those resources. They did not.
So, going back to other fun questions and comments, the
state of Louisiana, we have a fishing industry, Mr. Mayor. As a
matter of fact, we have the top commercial fishing industry in
the continental United States.
We also produce more offshore energy than anywhere else in
the United States.
In fact, let me do the math for you. You have six states
that produce offshore energy. You have Alabama, Mississippi,
Louisiana, Texas, California, and Alaska, right? When you take
the Federal production of those six states--in fact, of
Alabama, Mississippi, Texas, California, and Alaska, and you
add it up, you multiply it times about four, and that is what
we do in just Louisiana. Yet, we have the top commercial
seafood production in the continental United States.
And just to give you a comparison, in North Carolina, in
the 5 years, the most recent years of data, you all produced
295 million pounds valued at $435 million. We produced 5.2
million pounds valued at $2 billion.
The point is, things can co-exist. They can. You can have
both energy production and you can have a very productive
ecosystem, and we have been able to find that balance.
And I think where the concern is, is that if we are in a
situation where perhaps Virginia Beach came into Nags Head and
said, ``You know what? We are not going to let you renourish
your beach. We are not going to let you rebuild roads. We are
not going to let you build a hotel,'' you would probably be
pretty frustrated and say, ``You know what, Virginia Beach? Get
back over to your town, to your state, to your territory, and
don't tell me what to do.''
So, I think that we do need to keep in mind that these are
Federal resources. These are Federal resources, and this is the
Federal Government, and I am not at all saying that there are
not implications to states, that we need to ignore the states'
thoughts and comments, but I am saying that these are Federal
resources, and this is an opportunity to drive Federal revenue
for Federal investments for the Federal Government.
And to have a local government, to have a state come in,
and to unilaterally determine--I think their comments need to
be considered--but to unilaterally determine what happens with
those resources is inappropriate.
I yield back.
Mr. Gosar. I thank the gentleman.
The gentlewoman from California, Ms. Barragan, is
recognized for 5 minutes.
Ms. Barragan. Thank you, Mr. Chairman.
Mr. Mayor, I want to first thank you for the comments that
you made about what you are doing in your town on sea level
rise and the cost that it has to local government.
I, myself, was a mayor of a city along the California
coastline and saw it firsthand happening and saw that we had to
take action on it. And you are right: sometimes you get no
assistance financially.
And it leads me to the question. We don't talk about
climate change in this Committee. We have never had a hearing
about climate change and its impacts. It feels like we continue
to have hearings in this Committee on opening up more lands to
oil drilling and more money that can be gained from that
instead of, what would be the impact to climate change? What
would be the impact to health in the world?
And one of my colleagues mentioned that we should be doing
the moral thing, and I happen to believe that doing the moral
thing is taking care of our planet and taking care of our lands
and the health and the environment.
And I just want to ask you, is climate change something
that you talk about in your city? Is it something that, when
you guys talk about civil rights, you make that connection?
Mr. Cahoon. We do. In fact, the town of Nags Head is
recognized as taking the lead in North Carolina on sustainable
development and addressing the sea level rise issue.
We have had a number of community forums and we have had
community discussion about the issue, what the potential
impacts will be. And we are currently redeveloping our unified
development ordinance, and dealing with the issues of sea level
rise and the rising water table are going to be part of the new
policy that we implement.
Ms. Barragan. And do you think if we start opening up our
Federal lands to oil drilling across this country, that climate
change is going to get worse or better?
Mr. Cahoon. I can only imagine that if we continue to burn
fossil fuels at the current or a greater rate, then, yes, that
climate change and those consequences will increase.
Ms. Barragan. Thank you.
I think this bill is going to only further enable the
Administration's desire to surrender our oceans and our
coastlines and our public lands to the oil and gas industry,
allowing for drilling no matter the environmental or economic
cost.
And not only has this Administration and the Republican
Majority in Congress attempted to do this while simultaneously
seeking to weaken safety regulations that govern offshore oil
and gas drilling--this is especially troubling from where I
represent. I am in Southern California. People in my state,
certainly in my area, do not want to see any offshore oil
drilling. We already feel the impacts of oil drilling and the
health impacts in my community.
As a matter of fact, in California, the coastal tourism is
unparalleled. It is contributing about $17.6 billion to our
economy annually. And the vast majority, about 69 percent of
Californians, strongly oppose new oil and gas drilling off of
the coast.
It is something I did when I was on the local city council.
I have introduced the Safe Coast Act, which codifies two of the
common-sense safety regulations put in place after the 2010
Deepwater Horizon disaster that happened.
Mayor, even if North Carolina were to pay countless
billions of dollars under this bill to take the area of its own
coast out of a lease sale, would that eliminate the threat to
North Carolina's beaches of offshore oil and gas leasing in the
Atlantic?
Mr. Cahoon. Absolutely not. I mean, North Carolina could be
in the situation where it had chosen to pay to not have oil
rigs off of its coast, but Virginia and South Carolina could,
and a spill off either of those coasts, given their currents
and the various conditions offshore, could easily bring the oil
to our coast, and we would be in the situation where, hey, we
have paid, and now we have a mess. And it would be outside of
our control, and we would then suffer those economic
consequences.
Ms. Barragan. There is no doubt, there is certainly not a
line that stops oil from seeping into different parts of the
ocean, and we have seen what happens to tourism and industries
when that occurs.
We recently read about Secretary Zinke taking Florida off
of this draft proposed plan.
Do you think that North Carolina's coastline is equally as
unique and as reliant on tourism as Florida's?
Mr. Cahoon. I do. I think much of our coast is even more
reliant on tourism. If you look at our coast, we have no
fallback. We have no major cities, no large ports, no large-
scale development behind our beaches. If there is oil on the
beach, we have no place to go. We give our houses to the banks
and we leave.
Ms. Barragan. Great. Thank you.
I yield back.
Mr. Gosar. I thank the gentlewoman.
The gentleman from Georgia, Mr. Hice, is recognized for 5
minutes.
Dr. Hice. Thank you, Mr. Chairman.
Mr. Ebell and Mr. Loris, let me address my questions to
both of you.
As this bill, the offshore title, currently is drafted,
states that participate would receive 50 percent of the
offshore development.
Currently, just by comparison, the revenue from the Gulf
states is shared at 37.5 percent. The rest of it goes to the
Land and Water Conservation Fund.
So, my question, to begin with, this 50 percent to the
states, is that fair? Is that equitable? Is that a good thing
in your estimation?
Mr. Loris, I will begin with you.
Mr. Loris. I do think so, and I think if they assume even
more responsibility, then they should get an even greater share
of the revenue.
Mr. Ebell. Thank you, Representative Hice.
I think it is a question for debate by the Committee. As I
said, the Federal royalties for the Federal land states, those
lands are in the state as an imposition. The Federal waters are
federally-owned, they are not state-owned.
So, I think the argument could be made that the royalties
should be less, maybe 37.5 percent.
On the other hand, the environmental risks and the
balancing between different values might mean that the
royalties should be higher than 50 percent.
I think I would defer to the prudential judgments of the
members of the Subcommittee on this and let you guys work it
out.
I think also the fees to be paid if you want a moratorium
need to be worked out, and it is not clear to me where they
should be set either, and I think you probably have a lot more
interest in getting that right, and I will defer to you on that
as well.
Dr. Hice. OK. But overall, it may need to be tweaked one
way or the other, but it doesn't appear to be unreasonable.
Mr. Ebell. No. Not at all.
Dr. Hice. Mr. Anderson, let me ask you this, it came up a
while ago with the state of Utah. We have the Federal
Government failing, frankly, to effectively manage the oil and
gas permitting process. What kind of impact does that have on
local communities and states?
Mr. Anderson. It is huge. Like I said, there are some areas
in our state that just cannot provide the recreational
opportunities that other parts in our state can, like with Zion
National Park. Not all public lands are the same, and as such,
we have some areas that need oil and gas development (1) for
the royalties that our state receives, and (2) almost more
importantly, for the economic boon that it provides these
communities. It is really the lifeblood of them, and they have
to have it, and without it, we are leaving rural America
behind. These communities don't have the opportunities that
many other parts of our state do.
Dr. Hice. And at best, that economic boon is delayed years
and years and years, as we have backlogs in the permitting
process that seem to never get resolved.
Mr. Anderson. Absolutely. Yes, exactly.
A great example of that, I was reading an article a few
days ago that down in New Mexico, in the San Juan Basin, it was
taking over 120 days to approve an oil permit, and that is a
problem. When there is an oil boom, you need to make it happen
quickly. You need to make sure it gets out there so these
states and communities can get on it as soon as possible.
Dr. Hice. OK. I want to come back, Mr. Loris and Mr. Ebell,
to you as I wrap up here.
I really like this idea. I like the direction this is
moving here, but I do have a question regarding certain states
that have a particular issue that may be involved.
For example, offshore in Georgia, we have the breeding
ground for the right whale. So, what happens in a case like
that? Suppose there are resources that are discovered, this,
that, and the other, what happens when there is a legitimate
issue involved here? Would Georgia, in that case, for example,
be responsible for the lost production fee?
Mr. Ebell. Representative, I am not an expert in the
permitting of offshore oil, but I do know that the
environmental permitting process is very rigorous, and it is
the decision of the land managers that we are not going to go
ahead because the environmental permitting is----
Dr. Hice. So, there would be a waiver?
Mr. Ebell. We withdraw this track because we don't think we
can satisfy the environmental----
Dr. Hice. My time is running out.
Mr. Loris.
Mr. Loris. Yes, I would echo those concerns. If there is a
waiver for something that is of a legitimate concern that is
echoed by both the state environmental resources department and
also by the Department of the Interior, you could have a
process where those concerns have some sort of footing where
the state isn't paying for a lost production fee.
Dr. Hice. I think that would be important when there are
legitimate issues, not to be penalized if you are not able to
do the development.
Thank you to each of you for being here.
I yield back.
Mr. Gosar. I thank the gentleman.
The gentleman from Virginia, Mr. Beyer, is recognized for 5
minutes.
Mr. Beyer. Thank you, Mr. Chairman, very much.
Mayor Cahoon, supporters of offshore oil drilling and
exploration routinely use an old mischaracterized quote from
Dr. Bill Brown of BOEM, in which he claims that seismic air gun
blasting doesn't cause harm to populations of marine life, even
sometimes leaving out the word ``populations'' to intentionally
misrepresent the science. But it is clearly not true.
Can you talk about some of the impacts that seismic air gun
blasting would have on the marine life that North Carolina
fishers are dependent on?
Mr. Cahoon. Yes, sir. One of the issues that is of concern
is our legislature is talking now about large-scale oyster
production in the sounds of North Carolina, and we know that
there are issues with air gun testing that affect even
shellfish.
But most specifically, I would refer to the offshore
fishing, both commercial and sportfishing. Just as an example,
we have a very significant industry of tourists who come, and
one member of the group goes offshore fishing, they might go
out to the Gulf Stream. The rest of the family goes shopping,
and they spend money in our community, and they go out on boats
that are built in our county, which our boat building is also a
very large significant industry that generates a lot of
economic activity.
And a change that would move those tuna, bill fish, that
would have any kind of impact on our captains' ability to go
find those for those recreational fishermen, that is a
significant negative impact.
Mr. Beyer. Thank you very much.
Mr., is it Ebell?
Mr. Ebell. Yes. That is fine.
Mr. Beyer. Just this week, the National Oceanic and
Atmospheric Administration reported that May was the warmest
May recorded in the continental United States ever, that it was
the warmest 3-year period in recorded history, the warmest 4-
year period in recorded history, the warmest 5-year period in
recorded history. There was an article in The New York Times
yesterday that Antarctica is melting at three times the rate it
was just 6 years ago in 2012.
I know you have been a climate change denier/skeptic, et
cetera, over the years. Has the abundant science changed your
mind at all?
Mr. Ebell. Representative Beyer, this is a very large
issue. I think that the debate in climate is now between the
modelers and the data. And if you look, the only reliable
global temperature data is the satellite data and the weather
balloon data. They do not show what you are saying that the
surface temperature weather stations are showing.
So, I think the modelers show a lot of warming. The
historic data since the satellites went up in 1979 shows a rate
of about 0.12 degrees per decade or 1.2 degrees per century.
That means that the 2 to 3 goal has already been achieved, and
you all can declare victory and say that catastrophe has been
averted.
Mr. Beyer. I don't want to debate the science with you, but
it would be easy to get a number of climate scientists up here
who would contradict almost everything that you just said,
including that the only reliable data was from satellites.
Let me ask you one other question. I know you have been on
record for wanting to abolish the EPA. Do you still feel that
way?
Mr. Ebell. I think that, as I have said, very large parts
of the EPA have already been transferred to the states for
monitoring, compliance, enforcement, all these things. I think
more can be done, and I think large parts of the EPA can be
abolished, yes.
Mr. Beyer. Thank you.
Mayor Cahoon, the Eastern Shore of Virginia Chamber of
Commerce sent a letter to Secretary Zinke opposing the 5-year
plan, mostly because they heard from all of the restaurants,
hotels, and all the tourist things.
How would offshore drilling affect the tourism, hotel/
motel, or restaurant industry on the coast of North Carolina?
Mr. Cahoon. To answer how that would affect, there would be
some effect of oil rigs and that kind of activity offshore in
terms of the fishing activity and, again, the tourism
recreational fishing activity. But what we really worry about
is the spill and what happens when there is a spill. If the
rigs are offshore and the water is clean and the fishermen can
fish, then yes, those industries can co-exist.
But I go back to the sword of Damocles analogy, the
likelihood of that string breaking may be very small, but when
it does, Damocles is dead.
And for us, that one spill could be enough to totally wipe
out a season for us, and with the thin margins for us, for our
hoteliers, our restaurant people, and all those in the tourism
industry, that could wipe us out, and that is all it would
take.
Mr. Beyer. Thank you very much.
Mr. Gosar. I thank the gentleman.
We are going to do a quick 5 minutes on both sides for a
second round. I am going to start with Mr. Lowenthal for his 5
minutes.
Mr. Lowenthal. Mr. Ebell, I want to ask you a few questions
first, yes or no.
You have a long and well-documented history of opposing
renewable energy development in the United States.
Is that true or not? And if not, explain.
Mr. Ebell. No. I oppose mandates and subsidies.
Mr. Lowenthal. So, then you support--because if I follow
that statement, last year, you said, ``This large-scale effort
to move the grid to solar and wind is a dead end. The wind and
solar industries have peaked.'' Is that accurate?
Mr. Ebell. Yes. It is certainly true.
Mr. Lowenthal. You think they have peaked?
Mr. Ebell. Yes.
Mr. Lowenthal. Earlier this year, a study was published by
the Environmental Defense Fund that found that wind and solar
industries are creating jobs 12 times faster than the rest of
the economy, and there are nearly 5 times more jobs in wind and
solar than in coal.
Offshore wind is a technology that is just beginning to get
off the ground in this country as well.
Given the continued job growth in renewable energy we have
seen year after year, can you please explain what you mean that
solar and wind industries have peaked?
Mr. Ebell. Yes. These are very low-value jobs. Coal still
provides more than 10 times as much electricity with many fewer
people in the industry.
You have to look at what is the value produced. Wind and
solar still produce less than 3 percent of the electricity in
this country, and it is not very valuable electricity because,
as the Chairman has pointed out, it is intermittent and
unreliable.
Mr. Lowenthal. But the question is, has it peaked? And we
are seeing now that they are producing jobs at a faster rate
and that the amount of investment has gone up.
Why do you say it has peaked?
Mr. Ebell. Well, maybe I spoke a little too soon. The
Federal subsidies for wind and solar have started to go down,
so there is a rush to get projects ground broken so that
project can qualify for the full subsidy.
Mr. Lowenthal. So, you agree that there are more projects
and that----
Mr. Ebell. For the next couple of years, but we are going
to see a very sharp decline as soon as the subsidies go down.
Mr. Lowenthal. That is your speculation, that there is
going to be a sharp decline.
As far as the data is concerned, it has not peaked. Is that
true?
Mr. Ebell. Yes.
Mr. Lowenthal. Thank you.
I wonder if we could put something on the screen? Are we
able to do that?
OK, then before I yield back, I will just enter into the
record the data that indicates from the Department of the
Interior that Federal onshore oil production has gone from 99
million barrels of oil in onshore in 2008 to 175 million
barrels in 2015, which is a 77 percent increase.
And also the slide that is from the Department of Energy,
as reported by Bloomberg, maybe this is also Department of the
Interior, that New Mexico's oil on Federal lands, which started
as equal in 2006, was slightly above in 2007, and by the time
we got to 2015, the percentage change on Federal land was
almost 250 percent and state land was statewide, private and
state, 150 percent, to indicate that oil production had
increased that much on Federal versus state, and I enter this
into the record.
Mr. Gosar. Without objection.
Mr. Lowenthal. I yield back.
The Chairman. The gentleman yields.
The gentleman from Utah is recognized.
Mr. Bishop. Let me share my time with Mr. Graves. Just 5
minutes between us? Let's start with Mr. Graves.
Mr. Graves. I am going to be very quick.
Do you mind putting my graphic up?
I hate to say I told you so. OK. I don't, but if you look
at this, this shows very clearly what we have all been talking
about. You can see the yellow and orange lines on the bottom
are relatively stagnant, I believe, Mr. Loris, was the term,
whereas you see the non-Federal production, which means on
private lands, has spiked. This is Congressional Research
Service data. I think everybody agrees it is used from the
Department of Energy as well. It just makes the point that the
production in private lands has gone up significantly compared
to those on public lands and managed under the Obama
administration.
Very quickly, Mr. Mayor, there were at least six sites that
provided ocean access, beach access, from Land and Water
Conservation Fund funds on Nags Head, and there were at least
two improvement projects. In fact, the state of North Carolina
has received millions and millions of dollars from offshore
energy revenues produced off the coast of Louisiana that have
been invested in Nags Head specifically and other sites in
North Carolina.
In your testimony, you make some mention to a scheme to
divert money from states to the Federal Government. I am just
wondering if we could have our money back in Louisiana.
I yield back.
Mr. Bishop. Let me ask Mr. Anderson just a couple
questions.
Let's play the federalism game here because that has been
brought up several times.
Does federalism, as we understand it, allow a state to
dictate what will happen on Federal waters off their coast?
Mr. Anderson. No.
Mr. Bishop. Does it allow states that are onshore to
dictate what happens on Federal land within our states?
Mr. Anderson. No.
Mr. Bishop. If we were to open up this process so that
those who have offshore would have greater say in how those
offshore waters are developed at the same time you allow states
that are onshore to have greater say on how public lands,
Federal lands, are managed within our state, would that
increase or decrease the concept of federalism and the ability
of people to control their lives?
Mr. Anderson. It would increase if we had it on our land,
but, yes, absolutely, it would increase it.
Mr. Bishop. So, that is what this bill is actually trying
to do.
Mr. Anderson. Absolutely.
Mr. Bishop. Allow states to have a say in an area right now
where they do not have a say.
Mr. Anderson. Yes.
Mr. Bishop. Now, since my friends have left us already,
which of these two letters fits? This is the one that says the
states want to have a say on offshore water that is Federal,
and this is the one from Utah that says we want to have a say
on Federal lands within our state. Which of the two is the
better letter? Or are they equal?
Mr. Anderson. Equal.
Mr. Bishop. Then give us a break. In this bill, it is one
of the things they want to do.
Isn't it somewhat frustrating to think that people who want
to drive their cars to work, want to air condition their homes,
want to air condition the tourist hotels that are attracting
people don't really care about where that energy to air
condition and drive their cars comes from?
Mr. Anderson. Yes. They don't think about it very often.
Mr. Bishop. Let's try another one. Mayor Cahoon wants the
ability of controlling and negating development on Federal
lands off the coast of North Carolina in his area.
Did the mayors of Blanding and Monticello have a concern
about the designation of Bears Ears National Monument in Utah?
Mr. Anderson. Incredibly concerned about it.
Mr. Bishop. Did they have a say in anything?
Mr. Anderson. No.
Mr. Bishop. If this bill was passed, would each of those
have a better say in those types of situations?
Mr. Anderson. Without a doubt.
Mr. Bishop. And this is a plus forward going in some kind
of direction.
This is what we are talking about. There is a great deal of
hypocrisy going on here. People want to have a say in their
area but will not allow somebody else to have that say, and
that has to change. And that is what this bill is talking
about, giving greater ability of people to having some kind of
input, which does not happen under the status quo right now.
Plus, there is an idea that, at some point, you have to provide
the energy that is necessary to drive tourism and everything
else. And you can't have it both ways. You have to work
together in some particular way.
I think Louisiana has shown, and Texas, Alabama, and
Mississippi have shown how they are dedicated to making that
work. And it can work.
Some of the other states that are drawing lines in the
proverbial sand are just doing that: drawing lines in the
proverbial sand.
I appreciate the witnesses for being here. I would like to
tell Mr. Hice I think he should get 50 percent. I don't care
about the rest of you. And I am glad you brought up LWCF
because that is stuff that people talk about that is good
offshore development. There has to be some kind of level
playing field so that we are talking about the same thing all
over the place.
Mr. Gosar. The gentleman from California is recognized.
Mr. Lowenthal. Mr. Chairman, I would like to submit for the
record letters in opposition to this discussion draft from six
governors of coastal states and multiple environmental
organizations.
Mr. Gosar. Without objection, so ordered.
The one comment that I am going to make, and I will keep it
very brief--Mayor, in regards to your teachers, how do you pay
your teachers, in what quartile do you pay your teachers,
public schools?
Seems like an odd question. And the reason being is because
a lot of these revenues go to paying our teachers back home,
and so this is one of those revenue sources where a vested,
multi-discipline, multi-factorial type process actually
benefits that, but can you tell me what quartile you--or can
you get back to me in regards to the quartile of which you pay
your teachers?
Mr. Cahoon. I can certainly get back to you on what we pay
teachers and where we rank among the states. Of course, the
vast majority of that money that goes to teachers is at state
level, and they struggle to balance that.
Mr. Gosar. That is why I brought it up, because the next
person I want to talk to is Mr. Anderson.
Can you quickly give me a 1-minute synopsis of SITLA?
Mr. Anderson. Yes. State trust lands are entirely to make
money for our education system, as well as a few other public
institutions like hospitals, but the bulk of that goes--but I
think it is so fascinating that, even though they are there to
make money, they are not just drilling and logging.
Like I mentioned in my presentation, they found innovative
ways to promote recreational opportunities. In fact, it is
becoming so popular that Idaho, because of the money that they
are receiving from recreation, more than 70 percent of the
state trust lands in Idaho are open to recreation. The other 30
percent aren't largely open because they are isolated. They are
landlocked by private land.
So, we are seeing that, in fact, recreation is a great
driver in making a lot of money for schools on those state
trust lands.
Mr. Gosar. Where I am getting to is diversified portfolios.
They all perform very, very well.
I want to thank the witnesses for their valuable testimony
and the Members for their questions.
Members of the Committee may have additional questions for
the witnesses, and we ask you to respond to those in writing.
Under Committee Rule 3(o), members of the Committee must
submit witness questions within 3 business days following the
hearing by 5 p.m., and the hearing record will be held open for
10 business days for those responses.
If there is no further business, without objection, the
Subcommittee stands adjourned.
[Whereupon, at 12:00 p.m., the Subcommittee was adjourned.]
[LIST OF DOCUMENTS SUBMITTED FOR THE RECORD RETAINED IN THE COMMITTEE'S
OFFICIAL FILES]
Rep. Lowenthal Submissions
-- Letter addressed to Chairman Gosar and Ranking Member
Lowenthal from the Outdoor Alliance Association
dated June 14, 2018, to express opposition to the
``State Management of Federal Lands and Waters
Act.''
-- Letter addressed to Chairman Bishop, Ranking Member
Grijalva, Speaker Ryan, and Democratic Leader
Pelosi from Governor Murphy of New Jersey, Governor
Malloy of Connecticut, Governor Northam of
Virginia, Governor Cooper of North Carolina, and
Governor Raimondo of Rhode Island dated June 13,
2018, regarding opposition on the Enhancing State
Management of Federal Lands and Waters Act.
-- Article dated June 19, 2018, ``Applied conservation
science,'' on New Zealand blue whales, Geospatial
Ecology of Marine Megafauna Laboratory, by Dawn
Barlow, student at Oregon State University.
-- Article dated August 1, 2017, ``The impact of seismic
air gun exposure on the haemolymph physiology and
nutritional condition of spiny lobster, Jasus
edwardsii.'' Marine Pollution Bulletin (2017),
Fitzgibbon, Q.P. et al.
-- Article dated October 25, 2017, ``The sense of hearing
in the Pacific oyster, Magallana gigas.'' PLoS ONE,
Charifi, M., et al.
-- Article dated August 3, 2017, ``Exposure to seismic air
gun signals causes physiological harm and alters
behavior in the scallop Pecten fumatus.'' PNAS,
Day, R.D., et al.
-- Article dated June 22, 2017, ``Widely used marine
seismic survey air gun operations negatively impact
zooplankton.'' Nature Ecology & Evolution,
McCauley, R.D., et al.
-- Article dated December 22, 2016, ``Seismic survey noise
disrupted fish use of a temperate reef.'' Marine
Policy, Paxton, A.B., et al.
-- Department of the Interior, Chart on Federal Onshore
Oil Production from 2008-2016.
Rep. Velazquez Submission
-- Letter addressed to Chairman Gosar from the State of
New York Executive Chamber, Andrew M. Cuomo,
Governor, dated June 13, 2018, regarding opposition
on the Enhancing State Management of Federal Lands
and Waters Act.