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33-676 PDF 2007

FY 2008 BUDGET FOR THE MINERALS 

MANAGEMENT SERVICE, BUREAU 

OF LAND MANAGEMENT, ENERGY 

AND MINERALS PROGRAMS, OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT, 

MINERALS AND GEOLOGY PROGRAM OF THE FOREST SERVICE, 

AND U.S. GEOLOGICAL SURVEY

OVERSIGHT HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

February 27, 2007

Serial No. 110-4

Printed for the use of the Committee on Natural Resources

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

(

or 

Committee address: http://resourcescommittee.house.gov 

(II)

COMMITTEE ON NATURAL RESOURCES 

NICK J. RAHALL II, West Virginia, Chairman 

DON YOUNG, Alaska, Ranking Republican Member

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Neil Abercrombie, Hawaii 

Solomon P. Ortiz, Texas 

Frank Pallone, Jr., New Jersey 

Donna M. Christensen, Virgin Islands 

Grace F. Napolitano, California 

Rush D. Holt, New Jersey 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Jim Costa, California 

Dan Boren, Oklahoma 

John P. Sarbanes, Maryland 

George Miller, California 

Edward J. Markey, Massachusetts 

Peter A. DeFazio, Oregon 

Maurice D. Hinchey, New York 

Patrick J. Kennedy, Rhode Island 

Ron Kind, Wisconsin 

Lois Capps, California 

Jay Inslee, Washington 

Mark Udall, Colorado 

Joe Baca, California 

Hilda L. Solis, California 

Stephanie Herseth, South Dakota 

Heath Shuler, North Carolina 

Jim Saxton, New Jersey 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Wayne T. Gilchrest, Maryland 

Ken Calvert, California 

Chris Cannon, Utah 

Thomas G. Tancredo, Colorado 

Jeff Flake, Arizona 

Rick Renzi, Arizona 

Stevan Pearce, New Mexico 

Henry E. Brown, Jr., South Carolina 

Luis G. Fortun ̃ o, Puerto Rico 

Cathy McMorris Rodgers, Washington 

Bobby Jindal, Louisiana 

Louie Gohmert, Texas 

Tom Cole, Oklahoma 

Rob Bishop, Utah 

Bill Shuster, Pennsylvania 

Dean Heller, Nevada 

Bill Sali, Idaho 

Doug Lamborn, Colorado

James H. Zoia, Chief of Staff 

Jeffrey P. Petrich, Chief Counsel 

Lloyd Jones, Republican Staff Director 

Lisa Pittman, Republican Chief Counsel 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

JIM COSTA, California, Chairman 

STEVAN PEARCE, New Mexico, Ranking Republican Member

Eni F.H. Faleomavaega, American Samoa 

Solomon P. Ortiz, Texas 

Rush D. Holt, New Jersey 

Dan Boren, Oklahoma 

Maurice D. Hinchey, New York 

Patrick J. Kennedy, Rhode Island 

Hilda L. Solis, California 

Nick J. Rahall II, West Virginia, ex officio 

Bobby Jindal, Louisiana 

Louie Gohmert, Texas 

Bill Shuster, Pennsylvania 

Dean Heller, Nevada 

Bill Sali, Idaho 

Don Young, Alaska ex officio 

(III)

CONTENTS 

Page

Hearing held on February 27, 2007 ....................................................................... 1

Statement of Members: 

Costa, Hon. Jim, a Representative in Congress from the State of 

California ....................................................................................................... 1

Prepared statement of ............................................................................... 4 

Pearce, Hon. Stevan, a Representative in Congress from the State of 

New Mexico ................................................................................................... 5

Statement of Witnesses: 

Burton, Johnnie, Director, Minerals Management Service ........................... 7

Prepared statement of ............................................................................... 9

Response to questions submitted for the record ..................................... 65

Hughes, Jim, Acting Director, Bureau of Land Management ...................... 22

Prepared statement of ............................................................................... 24

Myers, Dr. Mark, Director, U.S. Geological Survey ....................................... 16

Prepared statement of ............................................................................... 18

Norbury, Fred, Associate Deputy Chief, National Forest System, U.S. 

Forest Service ................................................................................................ 33

Prepared statement of ............................................................................... 35

Wahlquist, Brent, Acting Director, Office of Surface Mining Reclamation 

and Enforcement ........................................................................................... 28

Prepared statement of ............................................................................... 30

Letter submitted for the record ................................................................ 32

Additional materials supplied: 

Chiang, Hon. John, California State Controller, Letter to The Honorable 

Jim Costa submitted for the record ............................................................. 55 

Chiang, Hon. John, California State Controller, Response to Costa letter 

from the Minerals Management Service submitted for the record ........... 57 

Hinchey, Hon. Maurice D., a Representative in Congress from the State 

of New York, Letter to Secretary of the Interior Dirk Kempthorne 

submitted for the record dated December 21, 2006 .................................. 68

Hinchey, Hon. Maurice D., a Representative in Congress from the State 

of New York, Letter submitted for the record from R.M. ‘‘Johnnie’’ 

Burton, Director, Minerals Management Service, dated February 27, 

2007, in response to Hinchey letter dated December 21, 2006 ................ 71

(1)

OVERSIGHT BUDGET HEARING ON THE 

FISCAL YEAR 2008 BUDGET FOR THE 

MINERALS MANAGEMENT SERVICE (MMS), 

THE BUREAU OF LAND MANAGEMENT 

(BLM), ENERGY AND MINERALS PROGRAMS, 

THE OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT (OSMRE), 

THE MINERALS AND GEOLOGY PROGRAM 

OF THE FOREST SERVICE, AND THE 

UNITED STATES GEOLOGICAL SURVEY 

(USGS), EXCEPT FOR THE ACTIVITIES AND 

PROGRAMS OF THE WATER RESOURCES 

DIVISION. 

February 27, 2007

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Natural Resources 

Washington, D.C. 

The Subcommittee met, pursuant to call, at 2:05 p.m. in Room 

1324, Longworth House Office Building, Hon. Jim Costa [Chairman 

of the Subcommittee] presiding. 

Present: Representatives Costa, Gohmert, Holt, and Pearce. 

STATEMENT OF THE HONORABLE JIM COSTA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. COSTA. The hearing of the Energy and Mineral Resources 

Subcommittee will now come to order. I want to welcome you to the 

first Subcommittee hearing in the 110th Congress. 

Today’s hearing will focus on the Interior’s budget for Fiscal 

Year 2008 in energy and mineral programs. But let me begin by 

saying that we are going to touch the surface today, no pun intended, because obviously in the next two hours in which the hearing will be held, we will only be able to begin to focus on what I 

think is important oversight that Subcommittee members will want 

to pursue over the course of the next year. 

And so, as I told those who are testifying this afternoon, we are 

going to get to know each other better, and this will not be your 

2

first visit before the Subcommittee. But we do hope to do a better 

job in which I think all of us aspire to who serve in government, 

whether it is in the elective level or in the appointed level; and that 

is, to ensure that there is accountability and transparency. Those 

are, I think, the essence of what representative democracy is all 

about. And I will do my best, as the Chairman of this Subcommittee, to ensure that that transparency and that accountability takes place on behalf of all the interests that come under 

the jurisdiction of this Subcommittee. 

I am pleased to acknowledge our panel witnesses this afternoon. 

First, Johnnie Burton, the Director of the Minerals Management 

Service; followed by Brent Wahlquist, the Acting Director of the Office of Mining and Reclamation and Enforcement. Mark Myers, the 

Director of the U.S. Geological Survey. Mr. Jim Hughes, who is the 

Acting Director of the Bureau of Land Management. And Mr. Frederick Norbury, who is Associate Deputy Chief for the United States 

Forest Service, as I understand it. 

Under Rule 4[g], the Chairman and the Ranking Member have 

the opportunity to make opening statements. If other members of 

the Subcommittee have statements, they will be included in the 

record, by unanimous consent. 

Additionally, under Committee Rule 4[g], additional material for 

the record should be submitted by members of this Subcommittee 

or witnesses within 10 days of the hearing. And I would like to ask 

all of those who desire, Subcommittee members or witnesses, we 

would really appreciate your cooperation in responding to any questions submitted to you in writing, because members, as you know, 

come and go; they have multiple committee assignments. Oftentimes they are not able to ask their questions. So it is part of our 

job, as the Subcommittee, to ensure that those questions get forwarded to you, and prompt responses are then provided. I know 

when I am not able to make other committees, I do appreciate getting responses back to my question, even if I don’t like the responses. 

So let me explain to you in general terms what our agenda is 

going to be this year. And let me also caution, for those of you in 

the audience and those listening, that as I have conversed with our 

Ranking Member, Congressman Pearce from New Mexico, this is a 

work-in-progress. So we are in that process. 

Besides with the oversight that will be developed throughout the 

year, it is the Subcommittee’s intent, by the direction of the Chairman, Chairman Rahall, and Speaker Pelosi, to attempt to make 

our recommendations that are under the purview of this Subcommittee by June 1 on what we hope will be a bipartisan energy 

package that will come before the Congress in July. 

Now, there is a lot of overlapping jurisdictions there, and this is 

an effort that is going to take a lot of cooperation. But we intend 

to try to do our part. 

In addition to that, Chairman Rahall, and I suspect this will be 

probably the focus of the Subcommittee in the latter half of this 

year, but don’t hold me to those timelines please, on hard rock mining reform. The hard rock mining law, as I have learned, has not 

changed since it was instituted and signed into law by President 

Ulysses Grant in 1872. That is a few years ago. 

3

And so we will take Chairman Rahall’s recommendations, and 

then do our due diligence to try to produce meaningful changes 

that are in the best interest of all concerned, through the latter 

half of this year. 

This afternoon, though, the Subcommittee will begin the review 

of the proposed Fiscal 2008 budget for energy and minerals programs. The Minerals Management Service, and as well the Bureau 

of Land Management, the Office of Surface Mining and Reclamation and Enforcement, the Forest Service, and the United States 

Geological Survey, except for activities and programs, under the 

Water Resource Division, all of which fall within the jurisdiction 

minus the Water Resource Division in this Subcommittee. Of 

course the Water Resource Division is in another subcommittee 

within the Committee on Natural Resources. 

Let me say that this hearing is critical, I believe, on the national 

level. As many of you already know, next to the Internal Revenue 

Service, the energy and minerals programs that are administered 

by the witnesses who will testify here this afternoon produce the 

second-highest source of revenue for the Federal Government. This 

is why I think we must ensure that oil and natural gas royalty revenues are managed and collected in a fair and honest manner that 

is transparent, as I said at the outset, and accountable. I think this 

is no small matter. 

These are public resources. Royalties from oil and natural gas 

production contribute a significant amount to the Treasury, almost 

$10 billion in the last fiscal year. And some believe, as I do, that 

it would be more if it were not for the problems that have gone on 

within the Department of Interior, including a decrease in the 

number of audits by 22 percent, and the number of auditors by 15 

percent since 2000. 

The Government Accountability Office estimates that the problems or blunders, or whether you care to call it mismanagement, 

that have taken place under the Minerals Management Service, 

that many believe have erroneously allowed lessees off the hook for 

making royalty payments, could cost the Federal Treasury up to 

$10 billion in revenue over the next 25 years. These unpaid royalties negatively affect the ability of the government to operate effectively, and they cost American taxpayers important services. 

Further, I think this situation undermines the public trust: that 

their government is receiving what is due from the use of the 

nation’s public resources. And the Minerals Management Service 

must aggressively pursue the augmentation of auditors and auditing that has been reduced in the recent past. The collection of the 

royalty revenues owed the U.S. Treasury I think we all believe, 

while we may have our differences, at the end of the day must be 

paid. 

In addition, I think when we look at the President’s proposal, 

this year’s budget offers $20 million for the Healthy Lands Initiative under the Bureau of Land Management and the United States 

Geological Survey to address the growing conflict between oil and 

gas development on public lands, and also the need for consistency 

in improvement for wildlife and habitat conservation. 

While this is, I think, an important effort by the Bush Administration, I would like to see an additional effort to enforce oil and 

4

gas lease stipulations that assure that proper royalty payments are 

made, and adequately supporting critical and strategical mineral 

surveys, ensuring that prompt implementation of the 2006 amendment to the Surface Mining Control and Reclamation Act is performed. 

I would also like to commend the Bush Administration for including the repeal of certain provisions of the Energy Policy Act of 

2005, within the 2008 budget request. These same provisions have 

already passed in the House of Representatives as a part of our 

first hundred hours agenda on the six for six. Those provisions, 

otherwise known, are contained in Chairman Rahall’s portion of 

H.R. 6, which is referred to as the Clean Energy Act of 2007. It 

would strike an expansion of the Outer Continental Shelf oil and 

gas royalty relief in the Gulf of Mexico, and repeal the provision 

prohibiting the Federal Government from charging companies fees 

when they apply for drilling permits on Federal lands. 

Now, I know that there are those who argue about what aspects 

of that royalty relief can, in fact, be resolved through the enactment of H.R. 6, and certainly the measure is over in the U.S. Senate. And what may come out of a conference committee remains to 

be seen, surely. 

I don’t think any of us want to see a prolonged circumstance in 

which significant litigation takes place if, in fact, we enact this 

very important measure. So I would urge all the parties to work 

together. 

Let me say, in closing, that my efforts in the past, from my previous background in the State Legislature, is to develop bipartisan, 

collaborative, and cooperative efforts to solve problems. Undoubtedly there will be circumstances in which we, as Democrats and 

Republicans, have to agree to disagree, and we understand that. 

But how we do that in a civil fashion, how we do that in a cooperative fashion, and how we do that in a problem-solving way, I think 

is what the citizens of this country expect from us. 

And so I want to do everything on my part, as a Subcommittee 

Chairman, to try to encourage and increase the sort of comity that 

I think is necessary for the legislative process to work. I am a 

strong believer in representative democracy, and I believe representative democracy works best when people of both parties come 

together at the end of the day to solve problems on behalf of our 

constituents. 

I would now like to recognize the Ranking Member of the Subcommittee, the gentleman from New Mexico, Mr. Pearce, for opening remarks that he would like to make. 

[The prepared statement of Mr. Costa follows:]

Statement of The Honorable Jim Costa, Chairman,

Subcommittee on Energy and Mineral Resources 

Welcome to our first subcommittee hearing in the 110th Congress. Today’s hearing will focus on ‘‘The Interior Budget for Fiscal Year 2008 in the Energy and Mineral Programs’’. 

To that end, I am pleased that our panel of witnesses includes: Johnnie Burton, 

director of Minerals Management Service; Brent Wahlquist, acting director, Office 

of Surface Mining; Mark Myers, director, the U.S. Geological Survey; and Jim 

Hughes, acting director of the Bureau of Land Management. 

This afternoon, the Subcommittee will review the proposed Fiscal Year 2008 

budgets for the energy and minerals programs of the Minerals Management Service, 

5

the Bureau of Land Management, the Office of Surface Mining Reclamation and Enforcement, the Forest Service, and the United States Geological Survey, except for 

the activities and programs of the Water Resources Division—all of which fall within the jurisdiction of this subcommittee. 

This hearing is critical on a national level. As many of you may already know, 

next to the Internal Revenue Service, the energy and minerals programs that are 

administered by our witnesses produce the second highest source of revenue for the 

Federal Government. This is why we must ensure that oil and natural gas royalty 

revenues are managed and collected in a fair and honest manner. This is no small 

matter. These are public resources. Royalties from oil and natural gas production 

contribute a significant amount to the Treasury, nearly $10 billion in the last fiscal 

year—and it would be more if it were not for all of the mismanagement that has 

gone on at the Department of Interior——including the decrease in the number of 

audits by 22% and the number of auditors by 15% since 2000. The Government Accountability Office estimates that the blunders that have taken place at the MMS, 

which erroneously allowed lessees off the hook for making royalty payments, could 

cost the Federal Treasury up to $10 billion in revenues over 25 years. These unpaid 

royalties negatively affect the ability of the government to operate effectively and 

cost the American taxpayer important services. 

Further, this situation undermines the public’s trust that their government is receiving what it is due from the use of the Nation’s public resources. MMS must be 

made to aggressively pursue the augmentation of auditors and auditing that it has 

reduced in the recent past. The collection of royalty revenues owed to the U.S. 

Treasury must be paid. 

In addition, the Bush Administration envisions a $20 million Healthy Lands Initiative under the BLM and the USGS to address the growing conflict between oil 

and gas development on public lands with needs for wildlife and habitat conservation. While this appears laudable, we would like to see additional funding for aggressively enforcing oil and gas lease stipulations, assuring that proper royalty payments are made, adequately supporting important critical and strategic mineral surveys, and ensuring prompt implementation of the 2006 amendments to the Surface 

Mining Control and Reclamation Act. 

I would, however, like to applaud the Bush Administration for including the repeal of certain provisions of the Energy Policy Act of 2005 within the 2008 budget 

request. These same provisions have already passed the House of Representatives 

as part of our first 100 hours agenda. 

The provisions, contained in H.R. 6, the Clean Energy Act of 2007, and sponsored 

by Chairman Rahall, would strike the expansion of Outer Continental Shelf oil and 

gas royalty relief in the Gulf of Mexico and repeal the provision prohibiting the federal government from charging companies fees when they apply for drilling permits 

on federal lands. 

STATEMENT OF THE HONORABLE STEVAN PEARCE, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF 

NEW MEXICO 

Mr. PEARCE. Thanks, Mr. Chairman. I appreciate the things you 

said about working for the business of this nation, because that is 

what we are here for. Oversight is a key part of that. And I think 

those people who watched the Parks Subcommittee last year were 

advised that we were going to be working with you on those oversight opportunities. 

As you mentioned, today is our first hearing of the Energy and 

Mineral Resources Subcommittee, and I am honored to serve as 

Ranking Member. Honored to serve falls about 30 percent short of 

satisfied to serve, though. 

Mr. Chairman, I want to congratulate you on your chairmanship, 

and I look forward to working with you in this 110th Congress. I, 

like you, hope that we will be able to work together and help promote American energy and mineral independence. We have a great 

deal of work to do to accomplish this goal, but I think that we can 

see the road that lies ahead of us very clearly. 

6

As you mentioned, this hearing focuses on the Fiscal Year 2008 

budget for several of the different services. These important 

bureaus bring together much of our nation’s resource land management. 

I especially am looking forward to hearing from Mr. Hughes of 

the BLM. The BLM is responsible for nearly one eighth of our 

nation’s land mass. In New Mexico we have almost 30 percent, or 

over 30 percent of our land is in the hands of Federal government 

agencies. 

The BLM has special significance in my home state, as it manages 12.8 million acres of public land in New Mexico. Last year 

New Mexico’s share of mineral revenues from these lands was $574 

million. This revenue helps to make New Mexico a stronger state 

by providing dedicated funds for our education system. 

This mineral development also makes the Nation stronger with 

domestic production of oil, gas, coal, potash, and other minerals. 

New Mexico is proud to be a cornerstone toward America’s energy 

independence. 

I especially look forward to hearing from Ms. Burton of the 

MMS, the bureau which oversees mineral production in the OCS. 

The OCS provides 21 percent of the nation’s natural gas, and 30 

percent of our nation’s oil. Among the many painful lessons that we 

learned from Katrina and Rita was what it would be like if the 

supply were removed from us. We learned that we must cultivate 

even more than our domestic oil and gas resources in the OCS. 

Every day that we do not is a day that we empower leaders in 

the world, like Hugo Chavez, whose arms spending is reported to 

have climbed to more than $4 billion in the past two years, transforming the Nation into Latin America’s largest weapons buyer, 

and placing it ahead of other major purchasers in international 

arms market, like Pakistan and Iran. 

I also look forward to hearing about many of the legislative proposals and programs that accompany the 2008 proposed budget. In 

particular, I am interested in hearing about BOM’s proposal to implement a new model for land management in wildlife energy interface areas, such as the ongoing demonstration in New Mexico. Also, 

the 2008 budget assumes enactment of legislation opening the Section 1002 area of the coastal plain in ANWR. 

In addition to energy issues, I look forward to the further discussion with the Office of Surface Mining and USGS so that we may 

learn more about the direction your bureau proposes taking toward 

mineral production and regulation. 

Welcome to all of you. Thank you again, Mr. Chairman, for holding this hearing. I look forward to it. 

Mr. COSTA. Thank you very much, Congressman Pearce, for your 

opening statement. 

We will now begin with the witnesses’ testimony. We will hear 

from each witness. And following their testimony, when we complete the witness list, we will then move to questions in the normal 

order of House Rules and tradition. 

But let me first say, before I ask the first witness to testify before the Subcommittee, to help us establish the context in which 

you make your opening testimony, as well as the upcoming oversight for this and future legislative hearings. 

7

If you could please provide the panel at the start of your oral testimony a brief summary of the programs that you administer, and 

such activities which fall under your jurisdiction. We have a number of new members to this Subcommittee, and often, too often in 

government, I suspect you, as do I, get a bit frustrated when we 

assume that everyone clearly understands the jurisdiction and the 

focus of your particular bureau, or department, and how that relates to this year’s budget challenges that you see. 

So therefore, if you will do that in your opening statement, I will 

be a little bit lenient as it relates to the five-minute rule as we 

move on here. 

Our first witness today is Ms. Johnnie Burton, who is the 

Director of the Minerals Management Service. Welcome to the Subcommittee. Your prepared statement will be entered into the 

record, and you now may proceed for five minutes. 

STATEMENT OF R. M. ‘‘JOHNNIE’’ BURTON, DIRECTOR, 

MINERALS MANAGEMENT SERVICE, U.S. DEPARTMENT OF 

THE INTERIOR 

Ms. BURTON. Thank you very much, Mr. Chairman and members 

of the Committee. I am delighted to be here, and would like to give 

you a brief overview of MMS. 

The Minerals Management Service is the agency within the Department of the Interior that is charged with managing two essential programs. One is to manage the production of oil, gas, and 

some other minerals from the Outer Continental Shelf; and that 

management goes from leasing the land all the way to supervising 

production of the minerals. 

The other program is to collect royalties due the United States 

from not only the Outer Continental Shelf, but also Federal and 

Indian lands onshore. This, in brief, is our mission. That is what 

we do. And hopefully, that is what we will talk to you about for 

the next few months, and answer your questions the best we can. 

I am here today to testify on the Fiscal Year 2008 budget request of the Minerals Management Service. The Fiscal Year 2008 

request is for $161.5 million in direct appropriation, and $135.7 

million in offsetting receipt, for a total of $297.2 million, which is—

and I am going to compare to two things here—it is $10.2 million 

increase over the 2007 Joint Resolution, and it is $4.9 million over 

the President’s request for 2007. 

With the enactment of the Fiscal Year 2007 Joint Resolution, we 

now have a full year appropriation of $287 million, not including 

additional funds that will be provided for 50 percent of the January 

2007 pay raises. 

Based on direction in the Joint Resolution, we are preparing a 

detailed operating plan for Fiscal Year 2007. We cannot talk about 

the details right now until that plan is put together and has been 

provided to Congress. 

The Federal Outer Continental Shelf is a major supplier of oil 

and natural gas for the domestic market. The approximately 3900 

production platforms on the OCS account for almost 30 percent of 

domestic oil production, and 20 percent of domestic natural gas 

production. 

8

Since 1982, when MMS was created, OCS production has contributed almost 11 billion barrels of oil, and more than 116 trillion 

cubic feet of gas for the nation. Also since 1982, OCS leasing has 

increased by 185 percent; and since 1994, OCS oil production has 

increased by 34 percent. 

Over the next decade we expect an increase in production from 

technologically challenging areas, such as deep water and deeper 

depths within the sea floor. 

The MMS administers also the rental royalty and other financial 

terms for over 28,000 producing leases, and 66,000 non-producing 

leases on Federal onshore, offshore, and Indian lands. 

Over the last 10 years MMS revenue collection has increased 

substantially. In Fiscal Year 2006 MMS collected and accounted 

for more than $12.6 billion in mineral revenues. Since our inception 25 years ago, MMS has disbursed over $165 billion in mineral 

royalty, rents, and bonuses to recipient. 

In a State of the Union Address, President Bush announced 

plans to double the capacity of our nation’s strategic petroleum reserve to 1.5 billion barrels of oil, and to fill existing petroleum reserve facilities to their current capacity of 727 million barrels. 

MMS will provide oil from royalty-in-kind starting July 1, 2007, for 

this order. 

The Administration thinks that additional royalty relief for oil 

and gas development is unwarranted in today’s price environment. 

The Fiscal Year 2008 budget proposes to repeat Section 344 and 

345 of the Energy Policy Act of 2005. Section 344 extended existing 

deep gas incentive, and 345 provides additional mandatory royalty 

relief for certain deep water oil and gas production. 

These two sections are dealt with in your Clean Energy Act of 

2007, otherwise known as H.R. 6, and it would repeal those two 

sections. 

The MMS strives to ensure that our existing fiscal resources are 

distributed in a manner that allows the Agency to maintain current operations, meet future demands, and achieve departmental 

and bureau-level performance goals. Our budget is based upon the 

challenges confronting us during the next fiscal year and beyond. 

The request includes funding to fulfill MMS requirement for environmental and oversight responsibilities that are associated with 

a five-year plan on the OCS; and with the alternative energy offshore, we were given this responsibility in the Energy Policy Act 

of 2005. 

It will also include funding to manage the regulatory and inspection requirement associated with expanding ultra-deep water drilling and production. And that ultra-deep is defined for us between 

5,000 and 10,000 feet of water, which is really a limit and a frontier. These activities require more complicated environmental assessment, new scientific research, and an increasing level of operation complexity. And we would also enhance compliance and enforcement efforts in the management of mineral revenues through 

the MMS support system modification that will help us verify closer and better the amount of money that we do collect from the industry. 

Through all of our programs, MMS works to ensure that the public receives the maximum benefit from America’s OCS resources 

9

1 EIA U.S. Imports by Country of Origin, 12-21-2006. 

and Federal mineral revenue. As MMS moves forward in the new 

century, the importance of facilitating the nation’s management of 

OCS land, and collecting and disbursing mineral revenues, will remain our top priority. 

Mr. Chairman, that concludes my remarks. I thank you for allowing me to present this summary, and I would be happy to answer questions when the time comes. 

[The prepared statement of Ms. Burton follows:]

Statement of R. M. ‘‘Johnnie’’ Burton, Director,

Minerals Management Service, U.S. Department of the Interior 

Mr. Chairman and Members of the Subcommittee, I appreciate the opportunity 

to testify today on the Fiscal Year (FY) 2008 budget request for the Minerals Management Service (MMS). We have looked closely at our ongoing operations and responsibilities and this request reflects our best assessment of the funds needed to 

carry out mission critical MMS activities during FY 2008. 

MMS Background 

The MMS, a federal agency within the Department of the Interior (DOI), is responsible for managing the Nation’s oil, natural gas, and other energy and mineral 

resources on the Federal Outer Continental Shelf and the mineral revenues from 

the OCS and onshore Federal and Indian lands. To carry out this mission, the MMS 

manages two very important programs—the Offshore Minerals Management (OMM) 

Program and the Minerals Revenue Management (MRM) Program. Collectively, 

these programs manage activities that generate 30 percent of America’s domestic oil 

production, 20 percent of domestic natural gas production and an average of over 

$7 billion in annual revenue for the Nation, States, and American Indians. Both of 

these functions are important to the nation’s economic health and are key to meeting the nation’s energy needs. 

The Federal OCS covers 1.76 billion acres and is a major source of crude oil and 

natural gas for the domestic market. In fact, according to the Energy Information 

Administration, if the Federal OCS were treated as a separate country, it would 

rank among the top five nations in the world in terms of the amount of crude oil, 

and second in natural gas it supplies for annual U.S. consumption. 1

Since 1982, MMS has overseen OCS production of 9.6 billion barrels of oil and 

more than 109 trillion cubic feet of natural gas. 

Since 1982, OCS leasing has increased by 200 percent and oil production has increased by 185 percent. According to MMS’s calculations, within the next 5 years, 

offshore production will likely account for more than 40 percent of oil and 20 percent 

of U.S. natural gas production, primarily due to deep water discoveries in the Gulf 

of Mexico. 

Since its inception twenty-five years ago in 1982, the MMS has distributed approximately $164.9 billion to Federal, State, and Indian accounts and special funds, 

including approximately: 

• $101.1 billion deposited to the General Fund of the U.S. Treasury; 

• $20.4 billion disbursed to states; 

• $13.2 billion credited to the Reclamation Fund; 

• $21.7 billion transferred to the Land and Water Conservation Fund; 

• $5.2 billion for American Indian Tribes and Allottees; and 

• $3.3 billion for the Natural Historic Preservation Fund. 

The receipts I have described above are derived from the accomplishment of the 

Bureau’s two program missions. The FY 2008 MMS Request provides the resources 

necessary to meet the increasing demands and expanding responsibilities brought 

on by constantly changing external factors, such as technological and industry innovations on the OCS, litigation, and regulations that affect the collection and distribution of mineral revenues. I would now like to review a few of the MMS’s recent 

achievements and what MMS sees as its challenges for the future. 

FY 2008 President’s Request 

The FY 2008 request is $297.2 million in current appropriations and offsetting 

receipts. 

With the enactment of the FY 2007 Joint Resolution, we now have a full year appropriation of $287.0 million, not including additional funds that will be provided 

10

for 50 percent of the January 2007 pay raise. Based on direction in the Joint Resolution we are preparing a detailed operating plan for FY 2007. We are not at liberty 

to disclose the details of the operating plans until they are approved and submitted 

to Congress on March 17. At that time we will be able to provide comparisons at 

the program level with the 2008 budget request. 

The comparisons in our 2008 budget are with the third continuing resolution, 

which was in effect through February 15. Throughout this testimony the comparisons will be on that basis. 

The 2008 Request for direct appropriations is $161.5 million, $3.2 million above 

the FY 2007 Continuing Resolution level. Offsetting receipts are estimated to be 

$135.7 million, an increase of $7.0 million over the FY 2007 Continuing Resolution. 

Our budget request is based upon our accomplishments in successfully implementing programs that are vitally important and contribute significantly to the 

Nation’s economic well being and energy security. It is also based upon the challenges confronting us during the next fiscal year and beyond, which are the reasons 

for the increases in budgetary requirements. The request includes funding to: 

• Fulfill MMS’s environmental and oversight responsibilities associated with the 

implementation of the Outer Continental Shelf (OCS) 5-Year Oil & Gas Leasing 

Program (covering 2007-2012) which is a critical component of our nation’s overall energy strategy. 

• Manage the regulatory and inspection requirements associated with expanding 

ultra-deepwater oil and gas exploration at depths between 5,000 and 10,000 

feet. These activities require more complicated environmental assessments, new 

scientific research, and an increasing level of operational complexity. 

• Enhance compliance and enforcement efforts in the management of mineral revenues through MRM Support System modifications that will improve the 

MMS’s robust audit and compliance program. 

Strategic Petroleum Reserve 

During the State of the Union Address, President Bush announced plans to double the Nation’s Strategic Petroleum Reserve (SPR) to 1.5 billion barrels of oil. Also 

announced was a directive to fill the SPR to its current capacity of 727 million barrels. The MMS will provide royalty-in-kind oil starting in July 2007 to accomplish 

this mandate. This policy decision will provide an additional layer of protection for 

the Nation’s energy security. 

Deepwater OCS Production Royalty Rates 

Deepwater OCS development has increased significantly in recent years as the 

technologies for accessing oil and gas deposits in deeper and deeper waters have 

progressed and become almost commonplace within the industry. In the meantime, 

oil and gas prices have risen dramatically, making OCS operations increasingly 

profitable. In order to ensure that American taxpayers are fairly compensated for 

the sale of Federal OCS minerals, the MMS recently announced that it will raise 

royalty rates from 12.5 percent to 16.67 percent for all new deepwater Gulf of Mexico (GOM) leases beginning in 2007. The MMS estimates that the increased royalty 

rate of 16.67 percent for new deepwater offshore GOM leases will increase OCS royalty revenues by $4.5 billion over the next twenty years. 

Based on current leasing plans, the next lease sale to which such a rate will apply 

is scheduled for August 2007, and will be announced in the Proposed Notice of Sale 

in April 2007. 

Deep Gas and Deep Water Incentives 

The FY 2008 budget proposes to repeal Section 344 of the Energy Policy Act of 

2005, which extended existing deep gas incentives in two ways. First, it mandated 

an increase in the royalty suspension volumes from 25 to 35 billion cubic feet of natural gas in a third drilling depth category (greater than 20,000 feet subsea). Second, 

it directed that incentives for all three drilling depth categories also be applied to 

leases in 200-400 meters of water. The FY 2008 budget also proposes to repeal Section 345 of the Energy Policy Act, which mandated additional royalty relief for certain deep water oil and gas production. Additional royalty relief for oil and gas exploration is unwarranted in today’s price environment. A legislative proposal will be 

transmitted to the Congress to repeal Sections 344 and 345. 

Net Receipts Sharing 

The 2008 President’s Budget proposes amending section 35 of the Minerals Leasing Act (MLA) to implement a form of ‘‘Net Receipts Sharing’’ (NRS), whereby two 

percent will be deducted from the states’ share of receipts from Federal leasing activities under the MLA. The two percent defrays a portion of the administrative 

11

costs incurred by Federal agencies in the management of onshore leasing activities, 

and would be deposited into miscellaneous receipts (U.S. Treasury). 

Offshore Minerals Management Program Achievements 

Providing Energy for America 

The Federal OCS is a major supplier of oil and natural gas for the domestic market, contributing more oil and natural gas for U.S. consumption than any single 

state or country in the world. The U.S. is now in its twelfth year of sustained expansion of domestic oil and gas development in the deep water area of the GOM. The 

OCS now accounts for almost 30 percent of domestic oil production and about 20 

percent of U.S. natural gas production. According to MMS’s calculations, within the 

next 5 years, OCS production will likely account for more than 40 percent of oil and 

20 percent of U.S. natural gas production, primarily due to deep water discoveries 

in the Gulf of Mexico. 

Lease Sale Implementation 

Interior is continuing OCS oil and gas leasing and approval of exploration and development plans on predictable schedules. In 2005, four successful sales were held, 

three in the Gulf of Mexico and one in Alaska. In 2006, near record oil and gas 

prices led to robust bidding in the March 2006 Central GOM sale, where the MMS 

accepted $581.8 million in high bids on 392 tracts. The August 2006 Western GOM 

sale garnered $340.9 million in high bids from 62 companies. The one remaining 

sale in the current 5-year program is the April 2007 Beaufort Sea sale. 

Two sales from the current 5-year program have been rescheduled. The Central 

Gulf of Mexico (CGOM) Sale 201 was scheduled for March 2007; however, the MMS 

has postponed the sale to August 2007, pursuant to settlement of litigation brought 

by the State of Louisiana. The Chukchi Sale 193 was scheduled for mid-2007 and 

has been rescheduled for early in the next OCS 5-Year Oil and Gas Leasing Program because additional presale environmental analysis is required for the area 

identified of interest. 

Safety and Environmental Protection 

The MMS regards the safety of personnel, the environment, and operations as top 

priorities. Prevention is our most important safety strategy. The continued movement of industry into deeper waters and the overall increased industry activity in 

the GOM have increased both the level and complexity of monitoring and ensuring 

safe OCS operations. 

In addition to the complexities of the operational activities, we must plan and prepare for the severe storms that frequently threaten large areas of the GOM. Consistent with our strategy of prevention, the MMS and the oil and gas industry work 

together to make sure measures are in place to protect workers and minimize the 

possibility of pollution when storms occur. 

The effectiveness of our preparations was demonstrated during the 2005 hurricane season. Hurricanes Katrina and Rita and the impacts they had on the people 

of the Gulf coast and on the oil and gas infrastructure both onshore and offshore 

were the most significant challenges for MMS in 2005. We are still working with 

industry to bring facilities back online. Of the 4,000 Gulf OCS facilities, more than 

3,000 were subjected to hurricane force winds and 115 mostly older facilities were 

destroyed. 

Despite being subjected to these severe conditions, which tested the outside limits 

of facility engineering, there were no casualties or significant environmental incidents associated with offshore oil and gas facilities. All facility shut-in precautions 

and subsurface well shut-off valves worked as designed. Spills from ruptured pipelines and other containers were limited and validated the MMS environmental and 

safety regulatory requirements. 

In the aftermath of Hurricanes Katrina and Rita the MMS took a number of actions to facilitate the process of resuming operations to provide an uninterrupted 

supply of energy resources to America, consistent with the need for safety and environmental protection. These measures included expediting review of requests for 

temporary barging of oil or flaring of small amounts of natural gas and expediting 

the approval process for pipeline repairs. Industry repairs to the Gulf of Mexico’s 

heavily-damaged oil and gas infrastructure began immediately and continue today. 

• Energy production in the Gulf’s Federal waters has steadily increased since the 

2005 hurricane season. Gulf of Mexico oil and natural gas production have 

reached over 90 percent of pre-Katrina levels. 

• 115 platforms were totally destroyed (less than 3 percent of the Gulf’s platforms), 96 were significantly damaged, and 19 rigs were set adrift as a result 

of Hurricanes Katrina and Rita. The MMS has worked and will continue to 

12

work with industry to ensure that all destroyed wells are properly abandoned 

and platforms repaired or properly disposed of in order to protect the environment and ensure safety. This will be a long-term activity. 

Offshore Minerals Management Program Challenges 

Proposed 2007-2012 OCS Oil and Gas Leasing Program 

The Proposed Program for 2007-2012 is under development through an extensive 

consultation process prescribed by the OCS Lands Act (OCSLA). The comment period for the Draft Proposed Program opened on February 10, 2006, and closed on 

April 11, 2006. On August 25, 2006, a second draft, the Proposed Program and the 

associated Draft Environmental Impact Statement (DEIS) were released to the public. The comment period for these two documents closed on November 24th and November 22nd, respectively. The remaining schedule is as follows: 

• April 2007 Proposed Final Program and Final EIS (60 day waiting period) 

• June 2007 Final Program Approval 

• July 1, 2007 Current program ends; New Program begins 

The Proposed Program includes consideration of 21 sales in seven of the 26 OCS 

planning areas—two areas in the Gulf of Mexico, one area in the Mid-Atlantic Planning Area, and four areas off Alaska. The total number of scheduled lease sales will 

be determined when the new OCS program is finalized in the spring of 2007. The 

MMS estimates the total undiscovered technically recoverable resources (UTRR) are 

67.9 billion barrels of oil and 340.4 trillion cubic feet of natural gas from all planning areas where sales are under consideration in the 2007-2012 Proposed Program, 

though only a portion of some of the planning areas are included in the proposal. 

In implementing the mandates of the Gulf of Mexico Energy Security Act, the 

MMS will offer deep-water acreage in the ‘‘181 South’’ area and in a portion of the 

Sale 181 area remaining in the Eastern Gulf of Mexico. We have recently begun the 

process of preparing environmental analyses for those areas. 

The 2008 President’s request includes $4.0 million to fulfill the MMS’s environmental and oversight responsibilities under the 2007-2012 Five-Year Oil & Gas 

Leasing program. Specific components contained within this increase are: $2.5 million for environmental studies and required NEPA analysis in those areas previously included in the Proposed Five-Year Plan, where data either does not exist 

or is extremely outdated (primarily the North Aleutian Basin), and $1.5 million for 

workforce needs associated with the new and expanded leasing areas as well as for 

additional leasing and program support. 

Ultra Deep Water: America’s Expanding Frontier 

The MMS is witnessing a surge in exploration activity and development in the 

ultra-deepwater area of the Gulf of Mexico at water depths between 5,000 feet and 

10,000 feet. At the end of 2004, there were 2,300 active leases in ultra-deepwater, 

and in the five-year period 2001-2005, there were a total of 230 wells drilled in 

these water depths of which 149 were exploratory wells. This activity and the discoveries of oil and gas have now started to translate into development projects. Nine 

development projects began production in the ultra-deepwater area in 2003-2005. 

Several significant new ultra-deepwater discoveries also were announced in the 

GOM in the summer of 2006. The budget includes $1.3 million to acquire the required expertise and resources needed to regulate OCS ultra-deepwater development. 

Ensuring the Safety of an Aging Infrastructure 

The average age of all current OCS platforms is about 20 years. In order to have 

this infrastructure remain in safe and useful condition for years to come, it is important to properly protect and maintain wells, platforms, and pipelines through sound 

engineering standards and rigorous inspection. The MMS is working closely with industry to ensure the continued safety of OCS facilities, protecting workers and the 

environment. 

The FY 2008 President’s budget also requests $820,000 for a GOM hurricane recovery initiative to address well abandonment, pollution prevention, and to keep 

pace with structural modifications and repair permit requests. The MMS seeks the 

capability to address important outstanding issues from the devastation of recent 

hurricanes and future events. 

Energy Policy Act Implementation—Alternative Energy Cost Sharing 

The MMS requested $6.5 million in FY 2007 to fulfill requirements under Section 

388 (Alternative Energy—Related Uses on the OCS) of the Energy Policy Act of 

2005. For the 2008 request, MMS is proposing that parties submitting applications 

for non-competitive renewable energy projects fund the cost of independent 

13

environmental analyses, which would allow for a $3.0 million in savings in appropriated funds for this activity. 

Coastal Impact Assistance Program (CIAP) 

The Energy Policy Act of 2005 authorized disbursement of $250.0 million from 

OCS oil and gas revenues in each of the Fiscal Years 2007 through 2010 to producing States (Alabama, Alaska, California, Louisiana, Mississippi, and Texas) and 

coastal political subdivisions (counties, parishes, or boroughs) for approved coastal 

restoration and conservation purposes. The CIAP Plan guidelines were published in 

the Federal Register on September 29, 2006. Under the statute, States must submit 

plans no later than July 1, 2008. The 2007 President’s budget included appropriations language authorizing the MMS to use a share of the receipts to administer 

the program. Operating under the terms of the three continuing resolutions that 

were in effect through February 15, 2007, MMS did not have authority to use these 

funds to administer the program. The 2007 Joint Resolution, which was enacted on 

February 15, 2007 provides MMS the authority to use CIAP funds for this purpose 

in 2007 and MMS is now proceeding with implementation of the program. The 2008 

President’s budget includes language to continue this authority. 

Minerals Revenue Management Program Achievements 

Financial Management—Clean Audit Opinion 

In November 2005, an independent certified public accounting firm issued a clean 

audit opinion of the MMS’s audit program with no material weaknesses, and no reportable conditions. In its opinion, the accounting firm stated: 

‘‘In our opinion, the system of quality control for the Federal Audit Function of 

the MMS in effect for the 2-year period ending December 31, 2004, has been designed to meet the requirements of the quality control standards established by the 

Comptroller General of the United States for a Federal Government audit organization and was complied with during the 2-year period ending December 31, 2004, to 

provide the MMS with reasonable assurance of conforming with applicable auditing 

standards, policies, and procedures.’’

Business Planning Initiative 

The MRM Strategic Business Planning Initiative was completed in December 

2005. This initiative charts the course and direction of the future MRM business 

through the year 2012. The new initiative focused on identifying and implementing 

best value services with high quality and integrity. This Plan provides a strategic 

approach for continuous program improvement through development and implementation of future operational business plans aligned with five MRM strategic mission 

areas: Compliance, Financial Management, Indian Trust, Resource and Information 

Management, and Asset Management. Importantly, the business planning initiative 

will be supportive of, and fully integrated with, Departmental and the MMS strategic planning guidelines and responsive to the Administration’s management improvement goals and objectives. Key outcomes include an MRM program-wide strategic plan and business plans that emphasize market-based regulatory guidance, 

valuation certainty, and improved business processes and systems with effective 

performance measures and strong internal controls. 

Royalty-in-Kind (RIK) Program 

The RIK program has demonstrated that under certain circumstances, taking royalties in-kind has many advantages over taking royalties in-value (RIV). These advantages include: revenue enhancement, reduced administrative costs for the MMS 

and the industry, reduced incidence of reporting disagreements, and earlier receipt 

of royalty revenues. The Department of the Interior, Environment, and Related 

Agencies Appropriations Act, 2006, and the Energy Policy Act of 2005 granted the 

MMS permanent authority to fund transportation and administrative costs for the 

RIK program through RIK revenue receipts. 

As MMS has made progress in optimizing RIK volumes and increasing Treasury 

revenues, it has examined its business practices and basic organizational structure. 

Although RIK volumes are expanding, the MMS anticipates that the administrative 

costs will remain relatively flat. The preliminary 2008 estimate for RIK administrative costs is $19.6 million, an increase of only $600,000 for fixed cost adjustments 

over the FY 2007 President’s request. When compared to RIV, MMS estimates that 

RIK resulted in administrative cost avoidance of $3.7 million in 2005, primarily due 

to decreased audit, compliance, and litigation costs. The MMS anticipates similar 

cost avoidance in future years. 

14

Federal and Indian Compliance Assurance 

The MMS compliance assurance activities represent a large and critical part of 

the operational strategy, ensuring that the Government is realizing fair market 

value, and that companies are in compliance with applicable laws, regulations, and 

lease terms. Through the Compliance and Asset Management (CAM) process, the 

MMS ensures that the Nation’s Federal and Indian mineral revenues, whether received through in-kind or in-value royalties, are accurately reported and paid in 

compliance with laws, regulations, and lease terms. This activity plans and conducts 

targeted and random audits and special reviews of mineral lessees and payors to 

detect and collect royalty underpayments. Primary CAM activities include enforcing 

industry compliance with lease terms and regulations, issuing enforcement orders, 

and supporting the mineral revenue litigation and appeals processes. 

In FY 2006 the MMS reviewed and/or audited 72.5 percent of all 2003 Federal 

and Indian royalty revenues within three years from the date of receipt of payment, 

using a system that targets areas of greatest risk—the largest properties and 

payors. 

As part of its compliance assurance activities, the MMS administers delegated 

and cooperative audit agreements with eleven States and seven Indian Tribes. The 

States and Tribes are working partners and an integral aspect of the overall onshore compliance efforts. Tribes are now self-empowered to perform audits on tribal 

mineral royalties within their reservation and the States perform audits on Federal 

leases within their boundaries. The MMS conducts compliance reviews and audits 

to provide compliance coverage over properties not covered by the States and Tribes. 

Funding for States and Tribes in the Section 205 State Delegated Audit Program and Section 202 Tribal Cooperative Audit Program in FY 2006, was around $9.1 

million. For FY 2007 funding for this program remains level. The MMS continues 

to explore how to best allocate available budget resources for the 202/205 Program. 

The MRM has analyzed cost, workload, and risk data to apply ‘‘best business case’’ 

criteria to the funding of this program. The mineral revenues at risk and number 

of producing leases are used to establish funding allocations among States and 

Tribes. Other factors, such as program effectiveness and anticipated increases and 

decreases in revenue activity, are also considered. 

Indian Trust Responsibilities 

The MMS places high emphasis on fulfilling its Indian Trust responsibilities. The 

MMS continues to provide the highest possible Indian trust service in collecting and 

disbursing royalties from Indian lands to 32 Tribes and more than 25,000 individual 

Indian mineral owners (IIMOs). 

The MMS serves as an advocate for the interests of IIMOs. MRM operates in field 

offices that work closely with other Federal agencies to resolve Indian mineral 

issues and respond to the needs of IIMOs. These offices also administer special outreach and cooperative programs to educate and empower Indian mineral owners and 

engage them in the mineral revenue management process. During 2006, MMS held 

74 outreach sessions with American Indian constituents and resolved 4,366 royalty 

related inquiries. The MMS plans to continue these efforts in 2007 and beyond. 

Minerals Revenue Management Program Challenges 

Compliance Strategy—Office of the Inspector General’s (OIG) Report 

The OIG conducted an audit at the request of the U.S. Senate Committee on 

Energy and Natural Resources. The audit, dated December 6, 2006 determined 

whether compliance reviews are an effective part of the CAM program and whether 

the MMS is effectively managing the compliance review process. 

The OIG audit concluded that compliance reviews can be an effective part of the 

MMS CAM program, though the audit ‘‘disclosed some weaknesses that may prevent MMS from maximizing the benefits of the compliance reviews.’’ In addition, the 

OIG audit found that while MMS had audited and or reviewed 72.5 percent of all 

revenues from Federal and Indian leases in FY 2006, this meant that the bureau 

examined only 9 percent of all properties and 20 percent of all companies. The OIG 

recommended that the MMS ‘‘consider modifying its CAM program strategy to ensure appropriate coverage of properties and companies within a reasonable timeframe even if this results in a reduction of the overall percentage of dollars covered.’’

In response, on December 28, 2006, MRM formally submitted an ‘‘Action Plan to 

Strengthen Minerals Management Service Compliance Program Operations.’’ The 

Action Plan documents the improvement actions taken and planned to fully and effectively implement the OIG recommendations: 

• MMS will provide reliable data for managing and reporting on CAM program 

operations; strengthen the compliance review process; and improve performance 

measures to better reflect CAM program operations. 

15

• The Action Plan requires extensive oversight and frequent implementation status reporting by the MMS CAM managers and senior executives. Each improvement action has a target completion date and a designated MMS official with 

implementation responsibility. 

• MMS will pursue a more dynamic, risk-based approach to compliance and is 

presently studying how to accomplish this goal most effectively. The number of 

properties and companies will increase, consistent with OIG recommendations. 

MRM Support System Modifications 

Since the MMS’s formation in 1982, the energy industry has undergone significant 

changes. Over the years, the MMS has successfully adapted to industry changes and 

become more operationally efficient. The MRM’s primary business of collecting, accounting, and assuring compliance for and disbursement of Federal and Indian mineral revenues is highly dependent on its information technology system, the MRM 

Support System (MRMSS). In FY 2008, the MMS is proposing $2.4 million in 

MRMSS system modifications, which will enhance compliance and enforcement efforts. The $940,000 adjustment line monitoring initiative would provide for systems 

improvements and staff support to ensure that required company adjustments are 

made only within allowable time frames. It is anticipated this capacity will provide 

a much larger return to the U.S. Treasury than the initiative will cost. With an increase of $1.5 million for the interactive payment reconciliation and billing initiative, the MMS will automate the interface with its customer base on numerous activities and enhance online reporting and verification capabilities. The funding will 

address an area of concern in the Bureau’s 2006 financial audit, as well as provide 

a strong return on investment.

The MMS receives funding for operations from three sources: the Royalty and Offshore Minerals Management (ROMM) appropriation, Oil Spill Research (OSR) appropriation and Offsetting Collections (primarily from rental rate receipts from offshore leases). In addition to appropriations for operations, MMS receives appropriations for distribution of the States’ share of onshore mineral receipts. In FY 2008, 

the MMS estimates that the States’ share of these onshore mineral receipts will be 

approximately $2.0 billion. This amount is slightly above our FY 2007 estimate of 

$1.9 billion.


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Conclusion 

As we move forward in the new century, efficient, safe, and productive management of the Nation’s OCS lands and mineral revenue collection efforts will remain 

the MMS’s top priority. The MMS will continue to strive for excellence and work 

for the responsible development of America’s energy supplies. 

Mr. Chairman that concludes my statement. Please allow me to express my sincere appreciation for the continued support that this committee has provided the 

MMS. It would be my pleasure to answer any questions you or other Members of 

the Subcommittee may have at this time. 

Mr. COSTA. Thank you very much, Ms. Burton, and we will have 

questions for you when the time comes. And I was quite generous 

with your time. We did go a little long, but I wanted to make sure 

you completed your statement. 

As to the other witnesses, we want to be mindful of the Members’ 

time here and give them an opportunity to ask questions following 

your statements. 

I would now like to recognize Dr. Myers, who is the Director of 

the United States Geological Survey, for his testimony. 

STATEMENT OF MARK D. MYERS, DIRECTOR, U.S. GEOLOGICAL 

SURVEY, U.S. DEPARTMENT OF THE INTERIOR 

Mr. MYERS. Good afternoon, Mr. Chairman, and thank you for 

this opportunity to testify. 

The USGS was created by an Act of Congress in 1879, and has 

evolved into a premier scientific agency which employs some of the 

world’s finest scientists in biology, geology, hydrology, and geography. Unique is the USGS’s ability to integrate and fuse these 

sciences together to deal with today’s pressing, complex challenges. 

The USGS serves the Nation by collecting and monitoring, analyzing and providing scientific information, understanding about 

natural resource conditions, issues, and problems. We provide the 

Nation with relevant, impartial scientific information to describe 

and understand the earth, minimize loss of life and property from 

natural disasters, manage water, biological energy and mineral resources, and enhance and protect the quality of life. 

Some key national systems the USGS manages is the Advanced 

National Seismic System, used for earthquake monitoring and prediction; the Landsat 5 and 7 satellites; and a network of over 7,000 

stream gauges. 


33676.002
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The value of the USGS to the Nation rests on its ability to carry 

out studies on the national scale, and sustain long-term monitoring 

assessment of natural resources. Because it has no regulatory or 

management mandate, the USGS provides impartial science that 

directly impacts and positively benefits society. 

The 9,000 scientists, technicians, and support staff of the USGS 

are located in nearly 400 offices in every state and several foreign 

countries. With a budget of approximately $1 billion a year, the 

USGS leverages its resources and expertise in partnerships, with 

more than 2,000 agencies of state, local, and tribal government, the 

academic community and Federal allies, and non-government organizations, and the private sector. 

The Fiscal Year 2008 budget proposal focuses on the USGS research on issues of societal relevance by reflecting the President’s 

commitment to reduce the deficit and balance the Federal budget 

by 2012. It ensures the USGS maintains its expertise to help address societal and scientific challenges that will arise in the months 

and years ahead. 

The budget proposes a moderate increase to fund an expanded 

role for the USGS in the Green River Basin of Wyoming, a priority 

for the Department of Interior’s Healthy Lands Initiative. Through 

the initiative and partnership with the Bureau of Land Management and Fish and Wildlife Service, the USGS will provide essential long-term science to protect and restore the living resources of 

the Basin, while facilitating necessary and responsible development 

of energy resources. It includes increases to priorities in the Ocean 

Actions Plan. 

The Coastal and Marine Geology Program will receive additional 

funds for collaborative efforts with the Federal, regional, state, and 

local partners to provide coastal resource managers, coastal zone 

planners, and emergency and public health officials with data and 

forecasting of changing coastal conditions. 

Natural hazards continue to threaten life and property across the 

U.S. Each year natural disasters in the United States result in 

hundreds of lives lost, and costs billions of dollars in disaster aid, 

disrupted commerce, destruction of public and private property. 

The 2008 budget request builds on previous investments, and 

will seek to fill critical gaps of coverage in Southern California, 

which has one of the nation’s highest potential for extreme catastrophic losses due to natural hazards. 

Monitoring, responding to, and mitigating these impacts of natural hazards remain a core focus of the USGS scientific research. 

A great concern to the Department, the Congress, the Nation are 

the potential impacts of climate change. USGS conducts national, 

regional, and local research across the nation, and provides necessary scientific information across multiple scientific disciplines, 

times, and scales. Because of this, the USGS has an important role 

in the climate science community that no other public or private 

science agency can fill. 

The 2008 budget continues the base-level funding for research 

and monitoring related to climate change. USGS will use this funding to monitor, model, and understand ecological and physical 

responses to our changing climate. 

18

The USGS Energy Resources Program also maintains its base 

funding, and will continue to provide impartial scientific robust information to advance the understanding of geologically based 

energy resources to contribute to plans for a secure energy future, 

and to facilitate evaluation and responsible use of resources. 

The Fiscal Year 2008 budget request for the program continues 

the work called for in the Energy Policy Act of 2005, including the 

national assessment of geothermal resources, oil and gas resource 

assessments, to be joined with BLM in the U.S. Forest Service 

data, with the oil and gas inventory on Federal lands, and unconventional gas research, such as gas hydrates. 

Additionally, USGS is a recognized scientific leader, as I said, in 

gas hydrate research, and will continue its collaborative work as 

part of major gas hydrate research projects around the world. 

I am sure the Committee is aware the 2008 budget proposes a 

decrease to the minerals resource program. This program conducts 

basic research in ore deposits, geochemistry, and geophysics and 

applied research in national and international mineral assessments. The Administration is focusing its efforts in mineral research assessments and research projects that support the needs of 

the Federal Land Management programs. 

The Fiscal Year 2008 budget includes funds to ensure continued 

availability of earth observation data to government, academic, 

commercial, and international users. It provides for operations and 

maintenance of Landsat 5 and 7, as well as a Landsat data continuity mission, to develop a ground data processing and flood operations system in preparation for the next Landsat satellite, scheduled to be launched in 2011. I will note that the funding to begin 

preparation for LDCM was contained in the continuing resolution. 

In the years ahead, our nation must deal with national and global trends that have major natural science implications. The USGS 

is uniquely suited to address the broad scope of these natural resource, natural science issues facing the nation. 

The 2008 budget request will enable the USGS to build on the 

breadth of expertise and its long tradition of service to provide data 

and long-term scientific understanding and scientific tools necessary to help the economy remain strong, the environment remain 

healthy, and the quality of life in the United States remain high 

now and into the future. 

This concludes my statement, Mr. Chairman. I would be pleased 

to answer any questions you might have, or the questions of other 

Members. 

[The prepared statement of Mr. Myers follows:]

Statement of Mark D. Myers, Director, U.S. Geological Survey,

U.S. Department of the Interior 

Good morning, Mr. Chairman and Members of the Subcommittee. Thank you for 

the opportunity to present the Administration’s proposal for the budget of the U.S. 

Geological Survey (USGS) for Fiscal Year (FY) 2008. This budget preserves the Survey’s scientific excellence in our core areas of biologic, geographic, geologic, and 

water resources research. The FY 2008 budget request for USGS is $975 million in 

current appropriations. 

With enactment of the FY 2007 Joint Resolution, we now have a full year appropriation of $977.7 million, not including additional funds that will be provided for 

50 percent of the January 2007 pay raise. Based on direction in the Joint Resolution 

we are preparing a detailed operating plan for FY 2007. We are not at liberty to 

19

disclose the details of the operating plans until they are approved and submitted 

to Congress on March 17. At that time we will be able to provide comparisons at 

the program level with the 2008 budget request. 

The comparisons in our 2008 budget are with the third 2007 continuing resolution, which was in effect through February 15. Throughout this testimony the comparisons will be on that basis. 

The FY 2008 Administration’s budget proposal continues to focus USGS research 

on issues of societal relevance, while reflecting the President’s commitment to reduce the deficit and balance the Federal budget by 2012. It ensures that USGS 

maintains the expertise to help address the scientific and societal challenges that 

will arise in the months and years ahead. The budget strengthens USGS efforts in 

support of key Administration priorities, such as the Healthy Lands Initiative and 

the Ocean Action Plan, and it maintains strong efforts to ensure continued availability of Earth observation data to government, academic, commercial, and international users, to reduce the human and environmental costs of natural disasters, 

and to provide the fundamental research and monitoring needed to address increasing concerns about climate change. The budget reflects $16.3 million in program increases and $24.0 million in increases for fixed costs, which are offset by $10.1 million in reductions to lower priority programs. The budget proposes an increase of $5.0 million to fund an expanded role for 

USGS in the Green River Basin of Wyoming, a priority site for the Department’s 

Healthy Lands Initiative. Through this Initiative, in partnership with the Bureau 

of Land Management and the Fish and Wildlife Service, USGS will provide the essential long-term science to help protect and restore the living resources of the basin 

while facilitating responsible development of the energy resources. The landscape 

and ecosystems of the Green River Basin include some of the highest quality wildlife 

habitat in the Intermountain West—but these landscapes are changing rapidly in 

response to recent energy resource development and increasing population pressures. The sagebrush, mountain shrub, aspen, and riparian habitats of the basin 

support significant numbers of plants and animals, including species that are candidates for Federal listing under the Endangered Species Act or species that are already listed as threatened or endangered. 

The budget increase for the Healthy Lands Initiative builds on past and present 

scientific studies and assessments, including the recently completed energy assessment of the basin, land use and land cover studies, vegetation mapping, and longterm baseline water monitoring, and will enable USGS to investigate the environmental impacts of natural events and land-use change in the basin. Working with 

partners, USGS will assess the health of habitats and resources; build the 

geospatial framework for sharing information; and monitor changes in landscapes 

to ensure the long-term health and sustainability of the living resources. Our research and monitoring will inform our partners as they develop habitat restoration 

strategies that benefit species of concern. For example, USGS will integrate landscape-scale species and habitat science with energy assessments for the ecoregional 

analysis of terrestrial and aquatic ecosystems within the basin, determine the distribution of key species such as sage grouse, assess landscape and habitat conditions, identify unique ecological and critical habitats in relation to energy resources, 

assess priority conservation targets, and test the response of species to human disturbance. USGS inventories and monitoring of species and habitats, water-resource 

monitoring, and syntheses of habitat and energy information are critical to inform 

land- and resource-management decisions and restoration plans that ensure the 

year-round vitality of the diversity of habitats on which wildlife depends. 

The proposed budget includes increases in both geology and water to address priorities in the U.S. Ocean Action Plan. The Coastal and Marine Geology program will 

receive $1.5 million for collaborative efforts with Federal, regional, State, and local 

partners to provide coastal resource managers, coastal zone planners, and emergency and public health officials with data and forecasts of changing coastal conditions, enabling them to anticipate and prepare for extreme weather events, natural 

disasters, and human influences on coastal environments and communities. The 

work will begin in pilot regions chosen to reflect a range of natural settings and 

human needs; candidate regions include the northern Gulf of Mexico, Southern California, and the Southeast/Mid-Atlantic. USGS will begin initial efforts in at least 

three pilot regions in FY 2008. 

The budget also includes an increase of $1.5 million in the Hydrologic Networks 

and Analysis program to implement one of the chief recommendations of the U.S. 

Commission on Ocean Policy and the President’s Ocean Action Plan: the creation 

of an interagency National Water Quality Monitoring Network. The network will integrate monitoring of watersheds, coastal waters, and oceans to provide regional and 

national data on the quality of surface and ground water in tributaries, wetlands, 

20

coastal waters, the Great Lakes, and coastal beach areas. Although many monitoring networks already exist and will continue, data from different networks may 

not be comparable. The new network will be unique in its ability to combine multidisciplinary data on water quality from many sources, ranging from upland tributaries to estuarine and offshore waters, and the data will be accessible through a 

single Web-based portal. The plan for the network was developed cooperatively with 

40 different organizations at the Federal, regional, State, and local levels to ensure 

that it meets the needs of a wide range of users, and it has been approved by members of the Advisory Committee on Water Information and by the Council on Environmental Quality, National Science and Technology Council. In FY 2007, USGS is 

working with other agencies on pilot studies to inventory existing monitoring assets, 

identify gaps in data collection, refine the network’s observational and data sharing 

requirements, and identify next steps for network implementation. FY 2008 activities supported by the proposed increase will build on pilot study results to establish 

demonstration projects that will show the feasibility of the network, refine observational parameters and temporal and geographic sampling frequencies and scales, 

and develop methods for sharing, summarizing, and reporting the data. 

These linked activities will further the broad objectives of the Ocean Action Plan, 

supporting the development of integrated mapping, observations, visualization techniques, forecast models, and decision-support tools. Within 5 years, USGS and its 

partners will provide managers and officials in the pilot study areas with decisionsupport tools to help policy makers anticipate and prepare for coastal ecosystem and 

community responses to extreme weather events, natural disasters, and human influences. 

Natural hazards continue to threaten lives and property across the United States. 

Each year, natural disasters in the United States result in hundreds of lives lost 

and cost billions of dollars in disaster aid, disrupted commerce, and the destruction 

of public and private property. It is the mission of USGS to provide scientific research and analysis to help citizens, emergency managers, and policy makers decide 

how to prepare for and react to the natural hazards we face. By collecting long-term 

data and information on past and present hazard events, by providing continuous 

monitoring and data collection, and by developing tools and products to aid communities in creating emergency preparedness and recovery plans, USGS can mitigate 

the potential impacts, saving lives and property. The FY 2007 budget request reflected an increase of $2.2 million to support USGS hazards research and monitoring, supported by an additional $3.5 million from redirection of priorities within hazards-related programs. The FY 2008 budget request 

builds on last year’s request and seeks an additional $1.3 million for the Natural 

Hazards Initiative. Within the $1.5 million increase for the Ocean Action Plan in 

the Coastal and Marine Geology program, $1.0 million will address hazard related 

programs, as discussed above. In addition, the budget seeks an additional $250,000 

for two major activities as part of the Natural Hazards Initiative. An increase of 

$100,000 will be used to fill critical gaps in coverage in Southern California, which 

has one of the Nation’s highest potentials for extreme catastrophic losses due to natural hazards, by installing new streamgages with the ability to transmit data in real 

time via satellite telemetry. These data are used in flood, landslide, and debris-flow 

forecasting and warning. An increase of $150,000 will enhance storm-surge monitoring in hurricane-prone areas to provide the National Weather Service and emergency managers with visualization of storm surge for use in conducting emergency 

response activities during a hurricane. The region bordering the Gulf of Mexico is 

particularly vulnerable to the impacts of hurricanes, and the Natural Hazards Initiative builds on current USGS activities to improve the ability to forecast and respond to hurricane impacts to this most vulnerable of coastal settings. These impacts include flooding from coastal storm surge and inland rivers; damage to physical features such as barrier islands, mainland beaches, wetlands and estuaries that 

provide the first line of defense when a hurricane strikes; and, as the hurricane 

moves inland, catastrophic landslides in mountainous areas. Scientific information 

and understanding are required to assess the physical, ecological, and socioeconomic 

vulnerability of these coastal settings; predict the potential impacts of storm events; 

provide emergency responders with timely and accurate information needed to direct critical resources for activities such as evacuations, search and rescue missions, 

and damage assessments; assess the effectiveness of post-storm restoration and enhancement activities (including those in response to Hurricanes Katrina and Rita) 

in reducing future vulnerability; and provide coastal zone managers with rapid and 

reliable assessments of the impacts of future storms and the resulting changes in 

coastal vulnerability to future hurricanes. 

The potential impacts of climate change are of great concern to the Department, 

the Congress, and the Nation. With our ability to conduct national, regional and 

21

local research across the Nation and our ability to provide necessary science information across multiple scientific disciplines, times, and scales, USGS has an important niche in the climate science community that no other public or private science 

agency can fill. The FY 2008 budget continues the FY 2007 base funding level of 

$26 million for research and monitoring related to climate change. USGS will use 

this funding to monitor, model and understand ecological and physical responses to 

changing climate, such as— • Permafrost thawing in the sub-Arctic Yukon Basin and the Arctic regions of 

Alaska, • Drought monitoring in arid parts of the western United States; • Migration of plant communities and proliferation of invasive species in response 

to climate change; • Changes in snowpack and stream runoff in mountainous areas; • Retreat of alpine glaciers; • Coastal wetlands loss related to subsidence and sea-level rise; • The interplay between climate and changes in land use and land cover; and • Wildland fire across landscapes. 

These observations and related USGS research are essential components for climate models, especially those that deal with the physical causes of climate change 

and impacts to the terrestrial, freshwater, and marine ecosystems from changing climate. 

The FY 2008 budget proposes $222.1 million for USGS geology activities, which is $4.7 million above the FY 2007 CR level. The proposal includes $1.5 million of 

the requested $3 million for the Ocean Action Plan initiative, described earlier. It 

also includes $5.8 million in increases for fixed costs and continues funding for most 

assessments of geologic hazards, landscapes, and resources as proposed in FY 2007. The FY 2008 budget proposes a decrease of $2.6 million for the Mineral Resources 

Program. This program conducts basic research in ore deposits, geochemistry, and 

geophysics and applied research in national and international mineral assessments 

that are used by States, local governments, industry, and academia, in addition to 

many Federal agencies. The Administration is focusing its efforts in mineral resource assessments and research on projects that support the needs of Federal land 

management programs. The proposed budget will permit the program to conduct 

one site-specific mineral resource project for Federal land management agencies in 

the lower 48 States, provide regional-scale geologic data and mineral resource assessments in Alaska, complete collection of national-scale data characterizing earth 

materials, collect data on production and utilization of 70 to 80 mineral commodities, and manage four national-scale long-term databases. The FY 2008 budget requests $181.1 million for biological research, which is $8.5 million above the FY 2007 CR level. The proposal reflects $4.5 million in increases 

for fixed costs and $5 million for increases for the Healthy Lands Initiative in the 

Green River Basin of Wyoming, as described earlier. Also included in this funding 

level are decreases of $950,000 for lower priority studies in two programs: the wildlife program ($300,000) and contaminants program ($650,000). 

The FY 2008 budget includes $75 million for Geography, demonstrating continued 

support for the USGS role in land remote sensing and geographic research. The request reflects a net decrease of $1.7 million below the FY 2007 CR level but an increase of roughly $15 million compared to FY 2006 enacted funding. The FY 2008 

budget includes funds to ensure continued availability of Earth observation data to 

government, academic, commercial, and international users. The budget continues 

to provide for the operations and maintenance of Landsats 5 and 7. In addition, the 

FY 2008 budget provides $24 million for the Landsat Data Continuity Mission 

(LDCM) to develop the ground data processing and flight operations systems in 

preparation for the next Landsat satellite, scheduled for launch in 2011. USGS and 

NASA are working in partnership to produce an integrated Landsat ground and 

space system. LDCM will ensure that the United States maintains its global technological and scientific leadership in land imaging operations and preserves the 

Nation’s commitment to continuous observation and analysis of our dynamic planet. 

Decreases to the Geography budget include $2.0 million in the Priority Ecosystem 

Science program and $850,000 for further development of the Commercial Remote 

Sensing Space Policy Imagery-Derived Requirements. 

The FY 2008 budget for the USGS water resources discipline proposes $212.5 million to continue work on issues related to water availability, water quality, and flood 

and drought hazards. This budget proposal includes an increase of $1.4 million for 

streamgaging activities through the National Streamflow Information Program 

(NSIP), allowing USGS to reactivate real-time streamgages and continue operating 

streamgages at high-priority sites that might otherwise be lost through lack of 

partner funding. The increase will also enable USGS to invest in technological 

22

improvements that will make the entire network more cost-efficient in the long 

term. USGS currently operates a network of about 7,400 streamgages nationwide. 

The network provides near-real-time data to other Federal agencies, States, and 

local communities for activities such as protecting life and property from floods; 

water resources assessment, planning, and management; habitat protection; recreation safety and enjoyment; and engineering design for planning our Nation’s infrastructure. The FY 2008 budget also includes increases of $1.5 million for the Ocean 

Action Plan and $250,000 for the hazards initiative, as described earlier. 

The FY 2008 budget proposes a decrease of $2.2 million in cooperative water studies that will result in 13 fewer interpretive studies to be conducted in FY 2008 than 

in FY 2006. Like the FY 2007 CR level and FY 2007 budget request, the FY 2008 

budget does not include $6.4 million for the 54 State Water Resources Research Institutes. 

The FY 2008 budget requests $284.3 million for science support, enterprise information, and facilities, which is $10.3 million above the FY 2007 request. This funding level includes an increase of $4.7 million for critical health and safety repairs 

and rehabilitation of facilities at the Patuxent Wildlife Research Center, a facility 

that is shared with the Fish and Wildlife Service (FWS) at the Patuxent Research 

Refuge. The USGS and FWS funds will, in combination, be used to replace and repair the water, sewer, and electrical utility infrastructure and associate sub-systems 

at Patuxent. The facility is a nationally recognized center for research on endangered whooping cranes and other biological issues. The increase will enable USGS, 

working in cooperation with the Fish and Wildlife Service, to replace outdated utility systems. The budget request also reflects a decrease for enterprise information 

of $1.5 million achieved through economies of IT centralization, consolidation of software and hardware purchases, and workforce planning. 

In the years ahead, our Nation must deal with national and global trends that 

have major natural-science implications. USGS, with its worldwide reputation for 

excellent, objective, unbiased science, is uniquely suited to address the broad scope 

of natural-resource and natural-science issues facing the Nation, employing scientific tools at scales ranging from microscopic to global. The FY 2008 budget request will enable USGS to build on its breadth of expertise and its long tradition 

of service to provide the data, long-term scientific understanding, and scientific tools 

needed to help the economy remain strong, the environment remain healthy, and 

the quality of life in the United States remain high now and into the future. 

This concludes my statement, Mr. Chairman. Thank you for the opportunity to 

testify. 

Mr. COSTA. Thank you very much, Dr. Myers. I would now like 

to recognize Mr. Hughes, who is the Acting Director of the Bureau 

of Land Management. 

Mr. Hughes. 

STATEMENT OF JIM HUGHES, ACTING DIRECTOR, BUREAU OF 

LAND MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR 

Mr. HUGHES. Mr. Chairman, Members of the Subcommittee, 

thank you for the opportunity to appear before you today to discuss 

the Bureau of Land Management’s Fiscal Year 2008 budget request. 

The Bureau of Land Management manages more land, 258 million surface acres, than any other Federal agency. Most of this public land is located in 12 western states, including Alaska. The 

Bureau also administers 700 million acres of subsurface mineral 

estate throughout the nation. 

The BLM’s multiple-use mission is to sustain the health and productivity of the public lands for the use and enjoyment of present 

and future generations. The Bureau accomplishes this by managing 

such activities as outdoor recreation, including hunting and fishing; 

livestock grazing; mineral development; and energy production; and 

by preserving natural, historical, and cultural resources on public 

lands. 

23

The BLM is dedicated to ensuring the American people, regardless of where they live, benefit from the Agency’s multiple-use mission. Rapid population growth in the West has led to an increasing 

pressure to meet complex and sometimes competing demands for 

public land resources. 

These challenges in the BLM’s larger role as steward of 258 million-plus acres of public lands are reflected in our Fiscal Year 2008 

budget request, which serves to advance the Agency’s top priorities. 

These include restoring the health of the land and enhancing important fish and wildlife habitat; providing the Nation with dependable and affordable energy that is developed in an environmentally sound manner; and capturing efficiencies by improving 

the Agency’s operational and administrative functions. 

The BLM continues to do its part to contribute to domestic 

energy production through implementation of the President’s 

National Energy Policy, and the Energy Policy Act of 2005, which 

the Congress passed. 

Among our actions to date, we have made oil and gas permitting 

more efficient by streamlining the process of applications for permits to drill in the seven pilot offices that were identified in the 

Energy Policy Act. We are also in the process of preparing a programmatic environmental impact statement for oil shale and tar 

sands, and to date have issued five research development and demonstration oil shale leases in Colorado. 

The BLM’s land use planning process seeks to ensure that domestic oil and gas production on public lands is done in a way that 

protects the environment, and involves locals in land use planning. 

For example, our recently completed resource management plan 

for Otero and Sierra Counties in New Mexico is one of the most restrictive plans ever developed for oil and gas leasing on Federal 

lands. It strictly limits, regulates, and monitors all surface disturbance activities, and ensures that important habitat for endangered 

species and other special areas are preserved. The BLM is proposing an increase of $3.1 million in its 2008 

budget request, to better ensure that oil and gas operations are 

conducted in an environmentally sound manner, and that the 

terms of leasing permits are enforced. This funding increase is necessary so that the BLM’s oversight capabilities can match the pace 

of industry’s on-the-ground operations. 

While we have made progress in support of traditional forms of 

energy, we are also focusing our attention on the development of 

renewable energy sources. Renewable forms of energy have the potential to diversify our energy supply and increase our energy security. The Energy Policy Act of 2005 requires development of renewable energy sources. The BLM is making progress in advancing the 

development of geothermal, solar, and wind energy on public lands. 

The annual electrical needs of 1.2 million homes in the U.S. are 

generated by 58 geothermal leases on BLM-managed lands. Another one million homes could be powered in coming years by wind 

energy produced on public lands. When it comes to our own energy 

consumption, the BLM has installed about 600 photovoltaic solar 

equipment systems in our facilities to self-generate electricity, and 

we expect to install more systems this spring. All of these efforts 

are undertaken in conformance with strict mitigation measures to 

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minimize any impacts on wildlife from habitat fragmentation, 

ground disturbances, or noise. 

The BLM’s Fiscal Year 2008 budget request includes a proposed 

increase of $15 million in support of the Department’s Interior 

Healthy Lands Initiative. Multiple pressures on public land uses 

affect large landscapes, particularly those in the growing wildlife 

energy interface. The Healthy Lands Initiative is a new strategy 

for aggressively meeting these challenges, and focuses on cooperative watershed restoration and ecosystem enhancement at the landscape level. The goals of this initiative are to sustain public lands 

and wildlife habitat to maintain recreational opportunities, manage 

landscapes to prevent the listing of species, and stabilize energy 

production and enhance energy security. 

The BLM plans to use the requested increase in funds to begin 

habitat restoration enhancement projects in six geographic areas 

that face the greatest challenge in maintaining multiple use. The 

funds will be used to leverage resources with other Federal agencies and our partners in the state and local levels. 

The BLM’s Fiscal Year 2008 budget request also proposes a 

number of reductions, resulting from improving some of the Agency’s operational and administrative functions. We are in the process of consolidating and streamlining our information technology 

functions, implementing changes to our management structure, reducing travel costs. We plan to continue with these cost-saving efforts in 2007. 

Mr. Chairman, this concludes my opening remarks. I will be 

happy to answer questions. Thank you, sir. 

[The prepared statement of Mr. Hughes follows:]

Statement of Jim Hughes, Acting Director,

Bureau of Land Management, U.S. Department of the Interior 

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity 

to appear here today to discuss the Fiscal Year (FY) 2008 President’s Budget Request for the Bureau of Land Management (BLM). 

Budget Overview 

With enactment of the FY 2007 Joint Resolution, the BLM now has a full year 

appropriation of $1.76 billion, not including additional funds that will be provided 

for 50 percent of the January 2007 pay raise. Based on direction in the Joint Resolution we are preparing a detailed operating plan for FY 2007. We are not at liberty 

to disclose the details of the operating plans until they are approved and submitted 

to Congress on March 17. At that time we will be able to provide comparisons at 

the program level with the 2008 budget request. 

The comparisons in our FY 2008 budget are with the third 2007 continuing resolution, which was in effect through February 15 of this year. Throughout this testimony the comparisons will be on that basis. 

The BLM’s FY 2008 Budget request is $1.812 billion for the BLM’s major appropriations, including the Management of Lands and Resources, Oregon and California Grant Lands (O&C), Construction, Land Acquisition, Miscellaneous Trust 

Funds, and the Department of the Interior’s Wildland Fire Management Appropriation. This represents an increase of $57.8 million above the 2007 continuing resolution level. When permanent accounts are included, the BLM’s total budget request 

is about $2.012 billion. 

The budget proposes several programmatic decreases totaling $36.6 million, which 

include $3 million for the Cultural Resources Management program; $4.7 million in 

the Wild Horse and Burro Management program; $3 million for Resource Management Planning program; $4.3 million for Deferred Maintenance program; and, $5 

million in the O&C Grant Lands Appropriation. Cost savings totaling nearly $10 

million are achieved by consolidating and streamlining BLM’s information technology functions, implementing changes in BLM’s management structure to improve 

25

efficiency, and reducing travel costs. In part, these reductions take into account savings that can be achieved due to past programmatic accomplishments; however, they 

also reflect the need to shift funding from lower priority activities to higher priorities such as the Healthy Lands Initiative. 

Background 

The Bureau of Land Management is dedicated to ensuring that the American people—regardless of where they live—benefit from the agency’s multiple-use mandate. 

As stewards of 258 million acres, the BLM manages these public lands in accordance with the 1976 Federal Land Policy and Management Act. These public lands 

contain myriad resources and provide for a variety of our Nation’s needs, including 

outdoor recreation, domestic energy, wildlife habitat, livestock grazing, timber, and 

other natural, cultural, and historical resources. With the rapid population growth 

in the west—from nearly 20 million people in 1950 to more than 60 million today—

the pressures to meet complex, and sometimes competing, demands for public land 

resources also has grown exponentially. 

In ever increasing numbers, the American public has turned to BLM-managed 

public lands for recreation. We also have important responsibilities in managing for 

critical wildlife habitat, cultural resources, our National Monuments, and wilderness 

values, to name a few. In providing an appropriate mix of both renewable and conventional energy supplies from the public lands, the BLM contributes to a more secure and reliable energy future for our country. 

As one of the Nation’s oldest land management agencies, the BLM also delivers 

value on a daily basis to the American public. Each dollar spent by the taxpayer 

on BLM activities is an investment, not only in the land, but also in an ongoing 

revenue stream. The BLM is an important source of revenue to the Treasury. Royalties collected from energy leasing, and fees collected from grazing permits and timber sales, among others, all serve to benefit the taxpayer. In 2008, public lands will 

generate an estimated $4.5 billion in revenues, mostly from energy development. 

Approximately 44 percent of these receipts are provided directly to States and counties to support roads, schools, and other community needs. 

The President’s FY 2008 budget proposal will enable the BLM to fulfill its multiple-use mission in the most effective and efficient way possible. In particular, the 

President’s budget advances the Agency’s top priorities in the upcoming fiscal year, 

which are to: 

• Maintain or restore the health of the land and enhance vital habitat; 

• Provide the Nation with dependable, affordable energy developed in an environmentally-sound manner; and 

• Improve the efficiency of the BLM’s operational and administrative functions. 

Healthy Lands Initiative 

The President’s FY 2008 budget proposal includes an increase of $15 million over 

the FY 2007 Continuing Resolution in support of the Department of the Interior’s 

Healthy Lands Initiative (Initiative). The Initiative represents a new concept for 

meeting emerging challenges in managing natural resources with flexible, landscape-level approaches for continued multiple-use. Landscapes are land areas composed of diverse habitat types that include winter range and migration corridors. 

Land health is being affected by pressures such as community expansion, 

wildfires, unprecedented demands for energy resources, ever-expanding recreation 

uses, and weed invasion. These pressures often interact among themselves to affect 

large landscapes and ecosystems, particularly those in the growing wildlife-energy 

interface. 

A different management approach is urgently needed to meet these challenges. 

Taking aggressive steps now will help avoid the need for future restrictions on uses 

of public land that would directly affect the Nation’s economy and quality of life. 

The goals of the Initiative are to: 

• Continue to provide access to energy resources, thereby enhancing energy 

security; 

• Manage landscapes to ensure sustainable habitat for wide-ranging species, such 

as the sage grouse, and prevent future ESA listings; and 

• Sustain public lands and wildlife habitat, and traditional activities on public 

lands. 

The BLM will begin aggressive, landscape-scale habitat enhancement projects in 

six geographic areas: southwest Wyoming; northwest and southeast New Mexico; 

south-central Idaho; southwestern Colorado; Utah; and the three-corner area of 

Idaho, Oregon, and Nevada. 

The Bureau will concentrate a large number of treatments in each emphasis area, 

resulting in significant improvements to habitat in an entire watershed or 

26

landscape-wide area within one to three years. The BLM will also utilize $8 million 

in other BLM funds, as well as leverage funding with other Federal agencies and 

our partners at the state and local levels. 

The Green River Basin in Wyoming 

One of the six priority areas of the Healthy Lands Initiative is the Green River 

Basin in Wyoming. It is representative of areas in the West where landscapes and 

habitats are undergoing changes in response to pressure from multiple-use. Southwest Wyoming possesses some of the most diverse wildlife habitats in the Intermountain West, which attracts hunters, fishermen, and other outdoor enthusiasts 

each year. While these interests represent important sources of income for surrounding rural communities, this region, principally the Green River Basin (Basin), 

is also under pressure from natural gas development. The 15 million-acre Basin, 

characterized by sagebrush (sage grouse habitat), mountain shrub, aspen, and riparian communities, also has an estimated 83 trillion cubic feet of recoverable natural 

gas. 

The BLM together with the Fish and Wildlife Service and U.S. Geological Survey, 

are teaming up to protect these important habitats while natural gas production 

takes place in the Basin through the Wyoming Landscape Conservation Initiative 

(WLCI). Rather than conducting separate and uncoordinated impact studies and 

mitigation efforts, these partners will: 

• Conduct efficient, science-based species monitoring and habitat enhancement; 

• Facilitate best reclamation and mitigation practices for areas affected by 

current natural gas development; 

• Integrate existing data with new knowledge and technologies to forecast future 

development of energy resources and assist in habitat conservation planning; 

and 

• Conduct habitat enhancement in all habitat types with a special focus on sagebrush, mountain shrub, aspen, and riparian communities. 

The partnership, which also includes efforts underway by the National Park Service, Bureau of Reclamation, Forest Service, and Wyoming Game and Fish, will also 

provide a broader understanding of the valuable Green River Basin ecosystem. 

By using this landscape-level approach and using the WLCI partnership, the 

Bureau expects to be able to leverage funding for key projects that will mitigate the 

pressures these habitats face from a combination of energy, industrial, and residential development in both the short- and long-terms. In Wyoming, partners have already identified funding priorities including vegetation treatments (sagebrush, 

aspen trees), water projects such as building or restoring water sources for wildlife, 

and improving riparian areas. Funding for the WLCI will be long-term and include 

leveraging funding with other Federal agencies and our partners at the state and 

local levels. 

Energy Initiatives 

BLM’s FY 2008 Budget will continue to address America’s energy needs by facilitating environmentally-sound energy development on public lands. The budget 

builds upon the significant prior year funding increases to the Energy and Minerals 

program budget, including those proposed in the FY 2007 President’s Budget. These 

increases will enable the BLM to continue to support implementation of the Energy 

Policy Act of 2005 and to support the goals of the National Energy Policy for increasing domestic energy supplies. 

The FY 2008 President’s Budget request includes an increase of $3.1 million to 

support increased oil and gas inspections and monitoring to better ensure that oil 

and gas operations are conducted in an environmentally-sensitive manner and that 

leasing permit terms are enforced. This increase is necessary so that the BLM’s 

oversight capabilities can match the pace of industry’s on-the-ground operations. Additionally, the BLM is implementing two innovations that will both increase the efficiency of Inspection and Enforcement (I&E) functions and result in cost savings. 

The Remote Data Acquisition for Well Production (RDAWP) Project will provide 

the BLM up-to-date wellhead production data by way of direct downloads from wellhead flow meters to a secure web-based server. The objective of this project is to 

provide the BLM with the ability to perform production verification accounting tasks 

more efficiently, and to reduce the production verification workload. Currently, production verification is time consuming because it is performed using hard copies of 

production reports. RDAWP will allow ‘‘real-time’’ access to production data collected 

at specific points within a producing oil and gas lease. In addition, the BLM will 

have a rapid means of cross-checking production data that has been rectified and 

provided by the Minerals Management Service (MMS) with the known equipment 

located at the lease. The initial benefits of RDAWP should be an incremental 

27

increase in processed production verification capabilities, and increased accuracy of 

royalties recovered. 

Another innovative inspection tool the BLM is adding to its I&E capabilities is 

the Automated Fluid Minerals Support System (AFMSS) Handheld Inspection Capability. These handheld data capture units will provide field inspectors access to inspection information and associated agency computing capabilities while in the field, 

improving inspection efficiency, and productivity. 

The BLM’s land use planning process seeks to ensure that domestic oil and gas 

development on public lands is done in a way that protects the environment. For 

example, the BLM recently issued an innovative Resource Management Plan (RMP) 

for limited, environmentally-sensitive oil and gas development on public lands in 

Otero and Sierra Counties in New Mexico. It is one of the most restrictive plans 

ever developed for oil and gas leasing on Federal lands. 

The plan will allow strictly regulated and carefully monitored activity, leading to 

a maximum surface disturbance of only 1,589 acres from well pads, roads and pipelines—less than one-tenth of one percent of the total surface area of 2 million acres. 

At most, there will be 141 exploratory wells drilled, resulting in up to 84 producing 

wells. Almost 36,000 acres of grasslands with the highest potential as habitat for 

the endangered Aplomado falcon will be closed to leasing and permanently protected. In addition to these measures and overall limits on development, leasing will 

not be allowed in six existing and eight proposed Areas of Critical Environmental 

Concern and four Wilderness Study Areas—bringing the total number of protected 

acres to 124,000. This new plan amends a 1986 RMP that would have allowed leasing with few restrictions on oil and gas activities, would have used standard lease 

terms and conditions for leasing, and would not have provided the protections for 

grasslands and other sensitive areas developed in the BLM’s current plan amendment. 

Recreation 

Along with the BLM’s Healthy Lands Initiative, the BLM is participating in the 

new ‘‘Take it Outside’’ campaign to reconnect America’s families to the great outdoors. Our goal is both to increase an appreciation for the wonderful world of nature 

and address problems of physical and mental health brought on by inactivity. 

Opportunities for physical and educational experiences and activities abound 

through the discovery and exploration of public land adventures. By engaging children through their schools, youth groups, and families, we hope to increase outdoor 

activities for all families and children, including the growing numbers who call the 

public lands their backyards. In our strategy, which is in the process of being finalized, our hope is to: 

• Connect children to nature through schools and an educational program using 

the BLM’s existing Environmental and Heritage Education programs; 

• Create and promote outdoor activities which encourage family-friendly recreation; and, 

• Engage children in nature through volunteer and public service opportunities 

on public lands. 

Efficiency Improvements 

The BLM is aggressively focusing on the effective stewardship of our resources—

funding, employees, and assets—to ensure that they are used wisely and responsibly. The agency will undertake a series of actions to promote a more effective and 

efficient organization, including: 

• Establishing a set of broad-ranging management concepts to maintain the 

agency’s core mission; 

• Creating consistently structured state organizations made up of a state office, 

district offices, and field offices; 

• Establishing a National Operations Center in Denver that consolidates the 

existing business functions already located there, thus providing greater support to the field because of its proximity to the majority of Rocky Mountain offices; and 

• Taking advantage of technological improvements to centralize functions in information technology and human resources. 

Mr. Chairman, thank you for the opportunity to testify on the BLM’s FY 2008 

Budget Request. I will be pleased to answer any questions you may have. 

Mr. COSTA. Thank you very much, Mr. Hughes. I would now like 

to recognize Mr. Frederick Norbury, who is the Associate Deputy 

Chief of the United States Forest Service. 

28

Actually, I went out of order. First we will hear from Brent 

Wahlquist, Acting Director of the Office of Surface Mining Reclamation and Enforcement. Mr. Wahlquist. 

STATEMENT OF BRENT T. WAHLQUIST, ACTING DIRECTOR, 

OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT, U.S. DEPARTMENT OF THE INTERIOR 

Mr. WAHLQUIST. Thank you, Mr. Chairman, and thank you, 

Members of the Committee, for the opportunity to discuss the 

budget. 

Our nation is blessed with huge reserves of coal. For over 200 

years, coal has fueled our nation’s development. It built our industrial might, heated our homes, and moved—I am having some more 

trouble with that mike. We might want to use the other one. Paula, 

you might try to figure out what is going on. We will see if we are 

doing better here. 

Over 30 years ago, Congress had the wisdom to address the impact of coal mining, because that development of coal certainly had 

substantial impacts upon the public and the environment. And 

with the passage of the Surface Mining Act in 1977, the Office of 

Surface Mining was created. 

I should note here that the Office of Surface Mining is really misnamed, in that it is really the Office of Coal Mining. We deal with 

coal, and only coal, both surface and underground. 

We operate two basic programs: a regulatory program to address 

prospective mining after the passage of the Act, to make sure that 

that mining is conducted in a way in which the public and the environment is protected and the land is restored. We also operate an 

Abandoned Mine Lands program that is based upon the collection 

of a fee on each ton of coal that is produced. In this past fiscal year we collected over $300 million from that 

fee. That is used to fund an Abandoned Mine Lands program 

across the Nation to address those problems that had existed prior 

to 1977. 

While implementing that Act has not been without controversy, 

OSM and our state and Federal partners are proud of the achievements of the past three decades. Mining has truly become a temporary use of the land. As we implement that, we recognize that 

we do this primarily through state primacy. We have approved programs with 23 states and three Indian tribes that also operate an 

abandoned mine land program. 

Today the primary use of coal is to generate electricity. Electric 

power is the backbone of this nation’s economy, and is integral to 

the daily life of each and every citizen; and more than half of that 

electricity comes from the burning of coal, and that is on the rise. 

The Act requires that we balance the need for environmental 

protection with our nation’s need for coal. OSM and our state partners continually strive to provide that stable regulatory environment necessary to achieve that balance. 

This afternoon I would like to highlight three critical aspects of 

our budget request with implications for OSM and our state and 

tribal partners. To continue this record of success, it is critical that 

funding for state regulatory programs be increased, as the President has requested, in our Fiscal Year 2008 budget. 

29

State programs regulate 97 percent of U.S. coal production. Just 

like the Federal government, state programs have fixed-cost increases each year, but they have gone unfunded now for several 

years. This is a mistake. 

State regulatory programs are a tremendous bargain because 

they accomplish the permitting and enforcement work essential to 

keep the coal moving and the lights on at a fraction of what it 

would cost OSM to do the same work under Federal programs. 

Without additional funding, states will be forced to further reduce 

staff, which will impact permitting and enforcing efforts. 

Virginia, for example, has already asked us to work with them 

to explore options to current grant funding, including giving the 

program back to OSM. I cannot over-emphasize how important it 

is that no state lose primacy. 

The second point I would like to highlight is that there are major 

changes in our budget request, resulting from the 2006 amendments to the Surface Mining Act. 

On behalf of the OSM and states and tribes that administer 

Abandoned Mine Lands programs, I want to thank the Congress 

for reauthorizing AML fee collections. That debate is now over. 

We are now engaged in new debates that will arise as we implement and interpret these amendments as signed into law. We will 

work closely with the Congress, and the states and tribes, in an 

open and transparent process, as we make the regulatory, procedural, and administrative changes needed to implement these 

amendments. In doing so, we will focus on the goal of finishing the 

job of mitigating all of the serious health and safety problems at 

coal AML sites in the 15 years you have given us for this extension. 

Finally, our budget proposal continues to emphasize the importance of sound science and modern technology tools in maximizing 

the efforts of regulatory and reclamation programs. We will continue our efforts to apply current technology to mining and reclamation issues, to use good science to solve technical problems, 

and to increase the technical capacity of states and tribes in doing 

their jobs. 

An example of this is our Appalachian Reforestation Initiative. 

Almost all of the land in Appalachia surface mined for coal over the 

past 30 years was forested before mining. However, very little of 

it has been returned to productive forest. Yet it is possible to restore highly productive forests on mine land. 

Over the past three years, in cooperation with states, academic 

experts, industry, the American Chestnut Foundation, and other 

public interest groups, we have made a substantial progress in 

changing perceptions of how reclamation should be done in order 

to restore the benefits associated with forests. 

We anticipate the investment of our 2008 budget makes the 

nation’s coal mining and regulation programs, together with the 

amendments to the Surface Mining Act, will bring about a period 

of unprecedented achievement. And we look forward to working 

with the Congress and this committee, or Subcommittee, to bring 

the benefits of these achievements to millions of Americans living 

and working in the coal fields. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Wahlquist follows:]

30

Statement of Brent T. Wahlquist, Acting Director, Office of Surface Mining 

Reclamation and Enforcement, U.S. Department of the Interior 

Mr. Chairman and Distinguished Members of the Subcommittee, I am pleased to 

present to you the Fiscal Year (FY) 2008 budget request of the Office of Surface 

Mining Reclamation and Enforcement (OSM). 

In August, OSM will mark the 30th year since its creation. OSM was established 

with the passage of the Surface Mining Control and Reclamation Act of 1977 

(SMCRA). Since then, working closely with the States and Tribes, OSM has been 

responsible for assuring that coal mines are operated in a manner that protects citizens and the environment and that the land is restored to beneficial use following 

mining. Additionally, we are responsible for reclaiming and restoring lands and 

water degraded by past mining operations. 

Coal is an important energy source for the nation. It provides over one-half of the 

nation’s electricity. Balancing coal production and the protection of the public and 

environment during operations to produce coal is a challenge faced by OSM and its 

State and Tribal partners on a daily basis. 

Currently, 24 States have regulatory primacy programs in place. Twenty-three 

States and three Tribes administer approved abandoned mine land reclamation programs. The primacy States are successfully implementing their approved regulatory 

and reclamation programs. OSM’s role has evolved to establishing policy direction 

and guidance, providing grants to primacy States and Tribes, conducting oversight 

activities in accordance with SMCRA, and administering and operating programs on 

Federal and Tribal lands and in States that have not assumed primacy. 

Since enactment of SMCRA, OSM has provided about $1 billion in regulatory 

grants to the States and Tribes to assist in funding the regulation of active coal 

mines. Also, since that time, OSM has provided about $3 billion in grants to States 

and Tribes to clean up mine sites abandoned before passage of SMCRA. In the 

course of addressing health, safety and environmental hazards, more than 215,000 

acres of Priority 1 and 2 abandoned coal mine sites have been reclaimed under 

OSM’s Abandoned Mine Land (AML) Program. 

The authority to collect the mine reclamation fee and distribution of the fee was 

revised by the Tax Relief and Health Care Act of 2006, which included the Surface 

Mining Control and Reclamation Act Amendments of 2006 (Public Law 109-432). 

Among other things, these amendments extended the authority for fee collection 

through September 30, 2021, and changed the way State and Tribal reclamation 

grants are to be funded, beginning in FY 2008. State and Tribal grants, except for 

grants under the emergency program, are now mandatory spending derived from 

the AML Fund and the general fund of the U.S. Treasury. OSM continues to review 

the new law, which was signed on December 20, 2006, and discuss the changes with 

its State and Tribal partners. Appropriate rulemaking will occur during FY 2007 to 

implement the many changes contained in the law. OSM will also be revising policy 

directives and operational systems to accommodate these changes. 

In order to maximize the effectiveness of our program, OSM must also take advantage of the tools modern science and technology have to offer. We will continue 

our efforts in several areas to increase the technical capacity of our staff and State 

and Tribal partners, apply current technology to mining issues, and pursue new 

ways to solve technical issues. 

Fiscal Year 2008 Budget Request 

To address some of the issues I have just outlined, I would like to present some 

highlights of our FY 2008 budget proposal. With enactment of the FY 2007 Joint 

Resolution, we now have a full year appropriation of $294.2 million not including 

additional funds that will be provided for at 50 percent of the January 2007 pay 

raise. Based on direction in the Joint Resolution, we are preparing a detailed operating plan for FY 2007. We are not at liberty to disclose the details of the operating 

plans until they are approved and submitted to Congress on March 17. At that time, 

we will be able to provide comparisons at the program level with the 2008 budget 

request. 

The comparisons in our 2008 budget are with the third 2007 continuing resolution, which was in effect through February 15. Throughout this testimony, the comparisons will be on that basis. OSM’s FY 2008 budget request totals $168.3 million 

in discretionary spending (or current appropriations) and 544 full-time employees. 

Compared with the 2007 continuing resolution level of $291.7 million, this represents a total decrease of $123.5 million. This change is comprised of a shift of 

$134.2 million in State and Tribal grant funding that is mandatory and no longer 

subject to appropriation. The balance of the change from the 2007 level reflects an 

increase of $1.5 million for fixed costs and net program increases of $9.2 million. 

31

OSM’s budget also contains an estimated $ 401.4 million in mandatory spending 

(or permanent appropriations). Mandatory spending includes $ 288.4 million for reclamation payments to States and Tribes and $113.0 million for payments to the 

United Mine Workers of America for specified health benefits plans. Mandatory 

spending comes from both the AML and Treasury Funds. These estimates, as contained in our budget submission, are very preliminary and subject to change as we 

refine our understanding of the SMCRA Amendments of 2006. 

Current Appropriations 

The FY 2008 request will enable OSM to provide sufficient financial support for 

24 State regulatory programs, and for State AML emergency programs implemented 

by 14 States. It will also enable OSM to continue to administer Federal regulatory 

and reclamation programs in States that do not operate their own programs and on 

Federal and Tribal lands. 

A portion of the funding appropriated to OSM is passed on to the States and 

Tribes in the form of regulatory and reclamation grants. For FY 2008, our request 

includes $11.2 million in reclamation grants to States for the emergency program, 

and $60.6 million for regulatory grants. These grants, along with Federal emergency 

and high priority project funding, and watershed cooperative agreement funding, account for 50 percent of OSM’s budget. The remaining portion of the budget provides 

funding for OSM’s internal operations, including the operation of Federal programs, 

technical training, and other technical assistance to the States and Tribes. 

OSM’s overall FY 2008 request includes $115.5 million for the Regulation and 

Technology (R&T) appropriation and $52.8 million for the AML appropriation. This 

request represents an increase of $6.6 million for the R&T program and a decrease 

of $130.0 million for the AML program, thus accounting for a total decrease of 

$123.5 million from the FY 2007 continuing resolution level. 

Our FY 2008 budget request contains an increase in regulatory grants for a total 

of $60.6 million in funding. This level of funding is important to support continued 

operational increases at the State level (e.g., salaries, benefits, rents and utilities) 

that constitute by far the largest proportion of State regulatory program expenditures. States must have sufficient staff to complete permitting and inspection and 

enforcement actions needed to protect citizens of the coal fields. If a State were to 

relinquish primacy, OSM would have to hire sufficient numbers and types of Federal employees to implement the program. The cost to the Federal government 

would be significantly higher than the current matching grant amount. 

Additional increases include $0.5 million for Watershed Cooperative Agreements, 

$0.1 million for the Working Capital Fund to support implementation of the Department-wide Financial and Business Management System that will result in improved 

effectiveness and efficiency, and fixed costs for increases in FY 2008 for OSM of $1.5 

million. 

The major decrease is $134.2 million in AML grants to States and Tribes as a 

result of the SMCRA Amendments of 2006. That funding is now accounted for under 

mandatory spending. 

Our FY 2008 budget is a fiscally responsible proposal that enables OSM to implement its mission goals effectively and efficiently. 

Government-wide Management Reforms 

This budget supports the Administration’s Government-wide management reforms 

by integrating budget and performance measures; improving capital asset planning 

and control; improving strategic management of human capital; improving financial 

performance; and expanding electronic government. OSM’s budget proposals have 

integrated strategic goals and associated measures with OSM’s budget structure for 

the past several fiscal years. Our 2008 proposal continues this integration and incorporates the Department’s Strategic Plan for FY 2007-2012. 

OSM is also implementing a new financial system, the Financial Business and 

Management System (FBMS). Furthermore, OSM continues to refine its workforce 

plan to help strategically manage its human resources. Finally, because of OSM’s 

expanded electronic government initiatives, greater opportunities exist for citizens 

to access OSM provided information. 

I thank the Subcommittee for providing this opportunity to present OSM’s FY 

2008 budget request, and I look forward to answering your questions. 

[A letter submitted for the record by Mr. Wahlquist follows:]

32


33676.003
33

Mr. COSTA. Thank you, Mr. Wahlquist, for your testimony. And 

I am glad we got the mike problem resolved. Hopefully it will work 

as well for our next testifier, Mr. Fred Norbury, who is the Associate Deputy Chief for the National Forest System. 

Now you are on. 

STATEMENT OF FRED NORBURY, ASSOCIATE DEPUTY CHIEF 

FOR NATIONAL FOREST SYSTEM, U.S.D.A. FOREST SERVICE 

Mr. NORBURY. Thank you, Mr. Chairman. 

Mr. COSTA. Thank you very much. 

Mr. NORBURY. Thank you for giving me this opportunity to talk 

to you today. 

With your permission, I would like to submit my testimony for 

the record, and just summarize it briefly for you. 

Mr. COSTA. That would be welcome. 

Mr. NORBURY. And use a little bit of the time to address the 

question that you raised at the beginning, about the nature of our 

program on the national forests. 

Just to dimensionalize the program for you a little bit, there is 

193 million acres in the national forest. Five million of those acres 

are currently leased for oil and gas development. There are 90,000 

mining claims in the national forest There are 15,000 ongoing mineral operations. There are 39,000 abandoned mines in the national 

forests, of which roughly 2,000 have some sort of environmental 

hazard that needs to be mitigated, and 22,000 have some sort of 

safety hazard, physical safety hazard that needs to be mitigated. 

Now, to address all of these issues, we work in a close and complex relationship with the Bureau of Land Management and the 


33676.004
34

rest of the Department of the Interior. The exact nature of that relationship depends upon the mineral in question, and whether or 

not you are dealing with public domain land or land that was acquired. So it is very complex. 

In general, you could characterize the kind of relationship that 

we have is that we provide advice to the Bureau of Land Management as to stipulations that should be included in leases, and conditions that should be included in plans of operations, in order to 

manage the surface resources in conjunction with the subsurface 

and mineral resources in a way that is optimal for all the resources 

and interests considered. 

For example, on oil and gas leasing, the Forest Service will provide advice to the Bureau of Land Management as to areas which 

are available to oil and gas leasing, and what stipulations should 

be attached to leases when they are issued. The Bureau of Land 

Management actually manages the leasing process. 

Our program in Fiscal Year 2008, our proposed program in 

Fiscal Year 2008, is down slightly from last year. Well, actually, 

the overall budget is down slightly. The Minerals Program is down 

by about 14 percent in this coming year. 

It is a tight budget year for us. We have increasing demands 

from fire; fire has gone from 13 percent of our budget in 1991 to 

an estimated 48 percent of our budget in 2008. And it continues to 

go up every year as the fire years get worse. In addition, we are 

devoting increased resources to law enforcement because of the 

growing drug problem in the national forests. 

This means that most of the discretionary programs on the national forest system are declining by somewhere between 9 percent 

and 15 percent in 2008, in our proposed program. 

Within that program, the biggest single activity will be administering those 15,000 ongoing mineral operations, and making sure 

that all the requirements that we have established for those operations are adequately enforced. 

The second-largest program is processing new applications for 

mineral operations. I think we are planning for something on the 

order of 7,000 of those, although the exact number to be processed 

will depend upon the number of complexity of those that get proposed. 

The third-largest program is in environmental restoration, and 

we also have programs in management of geologic resources, including groundwater and paleontological resources, and mitigation 

of physical hazards to public safety. 

We do hope to mitigate some of these reductions in the overall 

budget with increased operational efficiencies. We expect to see 

some efficiencies out of, there are consolidation of some administrative operations in Albuquerque. We have some administrative, 

some efficiencies we have achieved with the legislated categorical 

exclusions that were in the Energy Policy Act, and additional categorical exclusion from NEPA that we have adopted administratively. 

We are also embarked this year on a redesign effort for our 

Washington office and our regional offices, and our intent is to reduce the overall spending at those levels of the organization by 25 

percent by the end of 2009. Our expectation is that we will make 

35

more money available at the ground level which will mitigate some 

of the reductions in funding that are in our proposed budget. 

That is the highlights of the testimony. And again, I would like 

to stress our close relationship with the BLM and the rest of DOI, 

and say that has been a good working relationship. And we are 

proud to be a partner with them. 

[The prepared statement of Mr. Norbury follows:]

Statement of Fred Norbury, Associate Deputy Chief for National Forest 

System, U.S.D.A. Forest Service 

Overview 

Mr. Chairman and members of the Subcommittee, thank you for the opportunity 

to discuss the President’s Fiscal Year 2008 Budget for the Forest Service’s Minerals 

and Geology programs. I am pleased to be here with you today. 

Forest Service Fiscal Year 2008 Budget 

The Forest Service’s Fiscal Year 2008 Budget request must be viewed in the larger context of the overall federal budget in which it is presented. Like other non-defense domestic discretionary programs, the Forest Service faces a constrained budget. And the results of the Administration’s policies on economic growth and fiscal 

restraint include cutting the deficit in half, three years sooner than originally predicted. The Fiscal Year 2008 President’s Budget request for the Forest Service is 

$4.127 billion, which is approximately the same level of funding as Fiscal Year 2006 

and a modest reduction below Fiscal Year 2007. However, within that total are 

some important shifts: the budget makes important changes to the Wildland Fire 

account, maintains funding for Healthy Forests including a commitment to fully 

fund the Northwest Forest Plan, and emphasizes public health and safety by proposing a significant increase in the Law Enforcement Operations budget. 

In order to fund these high priority programs, the Budget makes hard tradeoffs 

to other programs. Moreover, efficiencies gained through the centralization of Business Operations, Planning Rule revisions, and renewed focus on collaborative management will help offset reductions under the Fiscal Year 2008 Budget request. In 

Fiscal Year 2008 and Fiscal Year 2009, the agency will further its efforts to optimize organizational efficiency by restructuring leadership and program management 

functions at its National and Regional Offices. In order to provide additional funding 

for on-the-ground performance, many headquarters and regional activities will be 

consolidated on a centralized basis, and appropriate program management functions 

will be zoned across multiple regions. The Forest Service will realize personnel cost 

decreases of approximately 25 percent in National and Regional Office operations 

by the end of Fiscal Year 2009. An executive Steering team, led by Eastern Regional Forester Randy Moore, has been appointed to oversee the reorganization effort. 

These and other efficiencies are reflected in the request. Today I will provide an 

overview of the FY 2008 proposed budget and program for the Minerals and Geology 

Management and a summary of accomplishments. 

Minerals and Geology Management Program and Budget 

The Fiscal Year 2008 President’s Budget requests $71 million for the Minerals 

and Geology Management program. This decrease from prior year levels reflects 

greater efficiencies and supports the agency’s increased emphasis on administration 

of operations to ensure the protection of surface resources, supports continued implementation of the National Energy Plan and Energy Policy Act of 2005, and funds 

environmental compliance and environmental restoration programs at levels similar 

to prior years to continue the focus on cleanup of abandoned mines and other contaminated sites. 

In general, the Minerals and Geology Management program is responsible for the 

management of energy and non-energy mineral commodities which includes processing proposals and administering approved operations. Program responsibilities 

also include the protection of groundwater, paleontologic and geologic resources, and 

restoration of hazardous waste sites within the 193 million acres of National Forest 

System lands. The value of mineral production from National Forest System lands 

typically exceeds $2 billion per year yielding over $125 million in revenues to the 

U.S. Treasury. National Forest System lands are the single largest source of municipal water supply providing over 66 million people with safe drinking water. Estimates also state that there are over 2,000 abandoned and inactive mines on 

National Forest System lands requiring some type of cleanup. 

36

The energy component of the Minerals and Geology program continues to emphasize the implementation of the National Energy Plan and the Energy Policy Act of 

2005. Funding for the energy program will focus on opportunities for development 

and supply of oil and gas, coal, and geothermal resources from Federal lands. Specifically the 2008 Budget identifies $15 million for activities authorized by the Act. 

The Environmental Compliance and Protection and Abandoned Mine Lands 

(ECAP/AML) programs consists of three major funding areas: 1) cleanup and restoration of NFS lands impacted by hazardous materials and/or mining activities; 2) 

mitigation of safety hazards associated with inactive/abandoned mine lands; and 3: 

environmental compliance audits of Forest Service operations, facilities, and permitted activities. The FY 2008 Budget will support environmental audits that will 

be conducted at 33 administrative units and mitigation of over 470 physical safety 

hazardous such as open shafts and adits. The agency will continue to emphasize 

cost recovery from potentially responsible parties and partnership opportunities 

with state, federal, and private organizations to mitigate safety hazards and cleanup 

of abandoned mines and other sites that pose the greatest risk to human health. 

The locatable or ‘‘hardrock’’ mineral program provides for approval and administration of operations on National Forest System lands under the General Mining 

Law. There are approximately 90,000 mining claims on National Forest Systems 

land. Operations range in size and complexity from major underground and open 

pit platinum-palladium, gold, silver or copper mines producing millions of dollars in 

value, to small, individual hand tool or suction dredging activities occurring on a 

seasonal basis. The salable mineral program involves approximately 8,000 mineral 

material sale contracts and permits. These provide mineral materials such as sand, 

gravel and other construction material for industrial mineral uses. In total, the FY 

2008 Budget supports the processing of more than 6700 mineral applications and 

administering almost 12,000 mineral operations. 

Forest Service Accomplishments 

The Forest Service has been highly successful at implementing actions authorized 

by the Energy Policy Act of 2005. The Forest Service and Department of the Interior 

agencies have entered into an interagency Memorandum of Understanding that has 

improved energy permit coordination on Federal lands and included the assignment 

of personnel to pilot project offices. The Forest Service is participating in four of the 

pilot project offices, which are located in areas with a high volume of development 

and project proposals. Project processing timelines have been shortened substantially, as a result of the efficiencies realized by having multi-agency personnel involved in the approval of operations who are working out of a single office. The 

agency has also worked closely with the BLM on the revision of the Oil and Gas 

Onshore Order No.1. 

Accomplishments in the Environmental Compliance and Protection and Abandoned Mine Land program for 2006 included: 

• 346 dangerous safety hazards at 70 abandoned mine sites in 12 states were 

eliminated with appropriated funds and State partners’ funding. 

• 77 site characterization and enforcement activities: 11 cleanup plans; and 38 

cleanups were completed with appropriated funds and Department of Agriculture Central Hazardous Materials Management funds. 

• 7 environmental compliance audits were conducted by the National Environmental Audit Team. 

• The agency recovered nearly $3,000,000 in past costs and $3,000,000 to cover 

future costs associated with cleanup of abandoned and other sites affected by 

hazardous materials from support received by the Department of Agriculture 

Office of General Counsel Pollution Control Team. 

The Minerals and Geology Management program has designed and is beginning 

to implement new national databases that will accurately track and report accomplishments. This will enhance program performance by providing consistent, accurate and timely information. Additionally, the Agency revised guidance to comply 

with the Clean Water Act for locatable mineral operations; thereby ensuring mining 

operations meet water quality requirements. 

Conclusion 

Thank you for this opportunity to discuss the President’s Budget for the minerals 

and geology program. I look forward to working with you to implement our Fiscal 

Year 2008 program, and I’m happy to answer any questions that you may have. 

37

Mr. COSTA. Well, thank you very much, Mr. Norbury. And thank 

you for falling within the five minutes allotted for your time. We 

appreciate your good work. 

Now we begin the rounds of questions to the witnesses, and I 

shall begin by taking my five minutes. And we will follow normal 

rules of the House and the Committee and custom, and then alternate it between our Republican colleagues as we go through the 

rounds, until the time that I designated on the outset, which will 

be approximately 4:00, at which we will conclude the hearing. 

Ms. Burton, let me begin with you. As I indicated on the outset, 

accountability and transparency is something that I think is very 

important as we do the proper oversight of this Subcommittee. And 

while there can be differences of opinion, the numbers that I have 

is that only 9 percent of the oil/gas leases have been reviewed by 

auditors. And of 20 percent of all the companies in the last five to 

six years, which has been a total decline, as I said in my opening 

statement, of approximately 22 percent, and the auditors have been 

reduced by 15 percent. 

What I am trying to understand—and if you could please explain 

to me—under the Fiscal Year 2008 budget for Mineral and Management Services, is that the proposal does not reflect, as I understand it, the Inspector General’s recommendations to use compliance reviews solely in conjunction with the audits. I am wondering 

if you could respond, please. 

Ms. BURTON. Mr. Chairman, the goal of an audit program or 

compliance program is to make sure everybody pays what they 

need to pay. But it is also to entice people to do it right the first 

time. Which means that as our regulations are getting more clear, 

then industry ought to be reporting more correctly, and there 

should be less mistakes made that can be caught on the back end. 

Now, why do the numbers go down? There are several reasons. 

New regulations, more clear regulations that we have issued in the 

last five years, are making it easier for industry to report correctly 

the first time around. 

The other issue that is really a very big part of the decline that 

you saw is royalty-in-kind. When we take product in kind, we sell 

it ourselves, there is no need for that much audit. All we verify is 

the volume, the meter. But there is no valuation audit necessary. 

And therefore, that declines the number of companies and the 

number of properties that need to be audited. 

Furthermore, we have audited, we have reviewed 72 percent of 

the volume of money that we take in. A compliance review is really 

a fairly extensive check. And I would like to share a couple——

Mr. COSTA. So you take issue with the Inspector——

Ms. BURTON. I would like, Mr. Chairman, if you——

Mr. COSTA.—General’s recommendation 

Ms. BURTON. No. I think that the idea has given us some good 

information, and we will improve our program wherever we can. 

But I would like to share a couple numbers with you. 

For every dollar that we spend on compliance review, we get back $3.27. For every dollar we spend on an audit, we get back 

$2.06. Which is telling us that we do better to allocate our resources where we can get more money back. And this is what we 

are doing. We are doing more compliance review. We are still doing 

38

a lot of audits; we need to do more. And this is why part of our 

budget is asking for money to improve our computer system so that 

we can catch certain types of errors much more quickly. 

Mr. COSTA. I don’t want to belabor this; this is something that 

I will go into in further questioning. But in terms of the audits and 

the randomness of the audits and how they take place, I would like 

to understand that better. I am sure other Members of the Subcommittee would, as well. 

Let me move on quickly to Mr. Hughes, who is the Acting Direc- tor. The proposal for the $20 million Healthy Lands Initiative 

under the Bureau of Land Management proposes to address the 

conflict between oil and gas development. 

The President obviously has proposed promoting additional development and the issuances of the APDs, the applications for permits to drill. That obviously has positive impacts because we need 

the additional energy, but on the same time it has additional environmental impacts, as well. How do you think we are going to address that with $20 million? 

Is that going to be sufficient? 

Mr. HUGHES. We are trying to do this, this is a whole new way 

of thinking for the BLM, looking at it in a landscape, a landscape 

view of where we are having these programs on the ground. 

So what we are going to do, we are going to try to find partners, 

partners who will also contribute money. I think it is a conservative estimate, but I think in the next year we think we can find 

a minimum of $10 million in partners’ money to also come in and 

work with us. 

In the State of Utah there is a bill currently in the Legislature 

to put up $6 million to help us with this program in Utah. Other, 

in the case of EnCana, a company in Pinedale, Wyoming, they have 

offered up $2.5 million per year for the next 10 years to help mitigate the impacts of development in that part of the country. 

So we think people are ready to step up to the plate. We want 

to try it in six locations. Once these six locations work, we will try 

and expand this program. We have been all over the country talking to groups like the Rocky Mountain Elk Foundation, the Wild 

Turkey Federation; these groups are ready and excited to step up 

to the plate and work with us on this. 

Mr. COSTA. Well, Mr. Hughes, I don’t want to belabor the point. 

I can understand why the Wild Turkey Association would be excited and enthusiastic about wanting to participate, but I am not 

so sure that is the pilot project we want to highlight. 

My time has expired, but I do want you to know the Subcommittee will continue to look at these, I don’t know if you described them as pilot projects, but state/Federal participation and 

collaboration is something from my previous background I am a big 

supporter of. I would like to understand that better. 

Mr. HUGHES. Yes, sir. 

Mr. COSTA. I would like now to defer to the gentleman from New 

Mexico for a question. Mr. Pearce. 

Mr. PEARCE. Thank you, Mr. Chairman. Ms. Burton, if you were 

to estimate the number of audits—in other words, of the total receipt transactions that you get, about what percent do you audit? 

Not the compliance review, but the audit. 

39

Ms. BURTON. I am not sure. 

Mr. PEARCE. Just roughly. How many, what percent of your activity gets audited, I guess 

Ms. BURTON. From a money standpoint, 72 percent of the revenue gets reviewed, and probably I would say that 20 percent of 

that is audited. But that is a rough number, and it is off the top 

of my head. 

Mr. PEARCE. Sure. I mean, we are just trying to get a flow, we 

are not trying to get you into a corner. So roughly 20 percent of 

70 percent, about 14 percent if I were doing the calculation; 20 percent of 74 percent, 14 percent? If you just multiply 20 percent 

times 74? 

Ms. BURTON. Might be. 

Mr. PEARCE. Might be, but something in that range 

Ms. BURTON. Yes. 

Mr. PEARCE. Now, that is interesting, because we only audit 3 

percent of income, Internal Revenue Service people. So you are outperforming Internal Revenue Service by 5 percent, I suspect, or five 

times, on less of a budget. 

And I do understand that you get $1.21 more for every compliance review than what you do on your audits 

Ms. BURTON. That is correct, sir. Because when we do a compliance review, we exchange letters with the company. And unless 

they really fight us, they pay us at that point. So we get the money 

in faster, and we don’t have to expend the resources that it takes 

to do a full-blown audit. 

Mr. PEARCE. OK. Now, on your in kind, I got a little distracted 

at that point. You are taking how much in in-kind amount? In 

other words, you don’t even have to do a calculation of the dollars 

coming in, you just take the oil at the well heads? You have a 

meter reading of what the oil was pumping up through, just like 

a water well, so you get the oil pumped to the surface. And you 

take your, what is your royalty rate, 12.5 percent? 

Ms. BURTON. It depends. It is 12.5 or 16-2/3, depending on where 

it comes from. 

Mr. PEARCE. But you know on each different well what you get. 

Ms. BURTON. Right, right. 

Mr. PEARCE. So you simply take that number of barrels, and so 

you know you have a lock-solid deal at that point. 

Ms. BURTON. That is correct. 

Mr. PEARCE. And what of your production that is capable of converting from audits or compliance reviews to in kind, how much? 

Ms. BURTON. The in-kind production comes mostly from the Gulf 

of Mexico, and we are now at 75 percent of all royalty position 

taken in kind. 

Mr. PEARCE. So you are converting from 75 percent, and yet your 

reduction of compliance reviews or audits is only down by 22 percent. It looks like you are checking more of a smaller—

Ms. BURTON. We are. 

Mr. PEARCE. A smaller universe. And yet you are checking more 

if you have changed 75 percent out. And so if you had changed 75 

percent of your audits or compliance reviews down, you could say 

that it would be almost roughly equivalent. But you are only down 

40

22 percent, and yet the need to check is only like 25 percent of 

what it was a couple years ago 

Ms. BURTON. Right. We are taking 75 percent of the oil and 

about 45 percent of the natural gas in kind. And so that eliminates 

the need to audit those——

Mr. PEARCE. And some of the personnel changes? I assume you 

are sticking them over in the in kind 

Ms. BURTON. That is correct, sir. 

Mr. PEARCE. When it makes business sense——

Ms. BURTON. We have moved people into the——

Mr. PEARCE.—to me. Mr. Hughes, kumbaya, the first hearing is 

over. Mr. Hughes and I had a previous hearing today, and it was 

all easy-going. 

Now, then, you are recommending—we had an energy summit in 

our state in August, and were trying to figure out what New Mexico can do to lead the Nation in renewables. We have wind, we 

have solar, we have biomass, we have geothermal, we are leading 

the Nation in nuclear. And here you are trying to undermine our 

geothermal program that we have laid out there. I mean, not you, 

but the Administration is suggesting rolling back on the Energy 

Policy Act. 

Why are you doing this? It is, the 25 percent savings was important. The improvement of the NEPA process was important. Here 

we are trying to convert to renewables. We have a pretty good 

stimulation package that industry, consumer advocates, we all met 

here in Albuquerque in August to see what we can do. And now 

you are unspooling it. 

What am I to conclude by that? 

Mr. HUGHES. Mr. Pearce, we are moving ahead on the new geothermal program. We are going to be submitting regulations. 

But I think what we are trying to do here, as an Administration, 

is to keep those royalties coming into the Treasury, and then putting through sort of a regular order in terms of the process. 

I know people on the Hill have strong feelings about the way this 

program, in the Energy Policy Act, is financed. But I think the Administration just feels that it is better that all those revenues go 

into the Treasury, and then are appropriated through the normal 

process. 

We proposed to replace the geothermal rental fees as a source of 

funding for the program. We know there are Members on the Hill 

who disagree with that, but we think this is a proper way of administering the program. 

Mr. PEARCE. Thank you, Mr. Chairman. As I yield back, I would 

say that the normal process is what we were doing, and geothermal 

is at this level of what it should be, what it could be. And so we 

are going back to the normal process. And I will tell you, thank 

you, Mr. Chairman, I will look for a second round if you have it. 

Mr. COSTA. We will have a second round, and we will allow you 

to follow up on that at the appropriate time. I think that suffice 

it to say that the gentleman from New Mexico and I would like to 

have a better response. 

Dr. Myers, I would like to move over to your area, with the U.S. 

Geological Survey. 

41

In the Fiscal Year 2008 budget, as we look at the U.S. Geological 

Service budget, that it continues to refocus on the Mineral Resources program, how can you do that when it proposes a decrease 

of $2.6 million from 2007 under the continuing resolution? 

Mr. MYERS. Mr. Chairman, first of all, I come from Alaska, which 

is a traditional mining state, and I have a lot of respect for mining. 

We value the Mineral program very much in the Survey, and that 

is not just rhetoric. 

Mr. COSTA. We have a lot of respect for Alaska, too. 

Mr. MYERS. Thank you. But truly, it was a matter of having to 

make some tough choices on the budget; that is really what it 

amounts to. It is a significant cut to the program. It is a good program, but it is really a matter of tough prioritization made by the 

Administration. 

Mr. COSTA. All right. Mr. Wahlquist, under the Office of Surface 

Mining and Reclamation Enforcement as you explained it, what 

steps is OSM taking to ensure prompt implementation of the 2006 

amendments to the Surface Mining Control and Reclamation Act? 

Mr. WAHLQUIST. That is a fairly complex set of amendments that 

were passed in December. 

Mr. COSTA. That is why I asked the question. 

Mr. WAHLQUIST. We have already had a series, we had a meeting 

with our states in late January to discuss preliminary estimates of 

how this was going to be undertaken. We are participating again 

with a meeting with the Association of Abandoned Mine Land 

States this week in Santa Fe. And we have had discussions with 

Members of Congress. 

We will continue to operate through an open and transparent 

process as we undertake these changes. We recognize that there 

are administrative changes, there is regulatory changes, and there 

is system changes that we have to make as we do this. We have 

kind of laid out a process. We are comfortable at this point that we 

will be able to get this done by September 30, to be able to accommodate the shifts in terms of how the money is going to come in, 

and how the money is going to come out. 

Mr. COSTA. Do you have a timeline? 

Mr. WAHLQUIST. Basically, by September 30 of 2007. Because 

that is when the major shifts come in as to how this money is coming in and going out. We anticipate that those things that are being 

done as to regulatory changes, we may need to do an interim final 

rule on some of that, along with the proposed rule, in order to be 

able to have those changes in place to operate for Fiscal Year 2008. 

Mr. COSTA. Right. Well, that is an area that I believe we will 

continue to track, and that we want to maintain updates on as you 

proceed to implement the challenges that you explained. 

Mr. Norbury, you talked about the comprehensive level of jurisdiction that the Forest Service has, and having a great deal of 

Forest Service land in California. I am familiar with some of it, and 

commend your efforts in those challenges you face. 

There is a decrease in the funding, though, for the Forest Service 

budget, as you know, in terms of the testimony. 

How, in the area of the Minerals and Geological program of the 

Forest Service, are you going to maintain the responsibility for the 

development of energy and non-energy mineral commodities; and at 

42

the same time, try to restore the hazard waste sites that you spoke 

about, that are voluminous in number when you get down to it, including abandoned and inactive mine sites that are within, you 

know, hundreds of miles of the National Forest system? I just 

think that with over 15,000 mining operations, that this lack of 

funding is going to present you with some real tough choices. How 

are you going to prioritize? 

Mr. NORBURY. Well, Mr. Chairman, you are correct, it does 

present us with tough choices. Our initial response is to try to get 

more efficient administratively, to cut out administrative costs, to 

reduce overhead costs, to make more resources available to the people who are on the ground who actually have to oversee these operations and do the cleanup work. That is our primary emphasis. 

We have also been very successful in getting some additional 

funds through the Department of Agriculture for some mitigation 

of contaminated sites. And in cooperation with the Office of General Counsel, we have been very successful in getting large sums 

of money from the PRPs, potential responsible parties, for circular 

cleanup sites. We are going to pursue those efforts very aggressively, as well. 

Mr. COSTA. If you could share those priorities with the Subcommittee as you detail them, we would be, I think, wanting to get 

a better grasp of how you develop the criteria. 

Mr. NORBURY. I would be happy to provide that. 

Mr. COSTA. My time has expired, but I would be happy to yield 

to the gentleman from Texas, who is a classmate of mine. Mr. 

Gohmert. 

Mr. GOHMERT. Thank you, Chairman, and I am delighted you are 

having this hearing. I think it is very worthwhile. And I appreciate 

you all being here. 

I want to follow up on what the Chairman and Mr. Pearce have 

both brought up regarding the geothermal policy and the way the 

Administration seems to be backing off of that. 

Mr. Hughes, you said, as I understood it, basically you want to 

keep the royalties flowing, and that is why—when you say royalties, which royalties are you talking about? From oil and gas, or 

what? 

Mr. HUGHES. No, I may have misspoke, Congressman. 

Mr. GOHMERT. Well, I may have misheard. But that is what I understood. 

Mr. HUGHES. What I am talking about, the Administration feels 

that royalties, rents, and bonuses should go into the Treasury. 

Mr. GOHMERT. From what? From everything? 

Mr. HUGHES. From everything. 

Mr. GOHMERT. OK. 

Mr. HUGHES. This is consistent. We have, in our budget we proposed that a prohibition on getting cost recovery from the applications for permits to drill, there is currently a prohibition against 

us doing that. It is in the 2005 National Energy Act. 

We have called for the repeal of that, and that we should be allowed to charge companies for cost recovery on the applications for 

permits to drill. 

43

The geothermal area, we are just trying to be consistent with 

that, in that the rentals would go to the Treasury. And we 

would——

Mr. GOHMERT. So you don’t like the 25 percent that would go to 

the host counties? Is that one of the problems you have got, or 

what? 

Mr. HUGHES. What we are trying to do is do cost recovery and 

get those rentals back into the Treasury. 

Mr. GOHMERT. So do you have a problem with 25 percent going 

to host counties because of the effect locally? 

Mr. HUGHES. We are more in tune with trying to get cost recovery back from the companies, sir. 

Mr. GOHMERT. Oh, OK. Well, let me ask it a different way. Do 

you have a problem with the 25 percent share going to the host 

counties? 

Mr. HUGHES. Good question. That is an excellent question. 

[Laughter.] 

Mr. GOHMERT. Well, let us see, I am still green. I am going to 

keep asking until I get an answer. 

Mr. HUGHES. We have numerous programs that try and——

Mr. GOHMERT. Let us go at it from a different way. Do you have 

a problem with the host counties getting 25 percent of the royalties? 

Mr. HUGHES. Typically, the Administration favors that money 

going back into the Treasury, and——

Mr. GOHMERT. Typically, but how about in geothermal? 

Mr. HUGHES. In geothermal, we will take a look at that, and I 

will take your views back to the Administration, sir. 

Mr. GOHMERT. I just asked a question, that is all I have done. 

Do you have a problem—you are the one testifying—do you have 

a problem with the host counties getting 25 percent of the royalties? I mean, this is a little different than some areas of energy, 

and it is an alternative energy. And Heaven knows, we are sure 

needing to make use of all that we can. 

So do you personally have a problem with that? 

Mr. HUGHES. Well, we favor sharing royalties——

Mr. GOHMERT. OK, are you talking about everybody here? 

Mr. HUGHES. With the Mineral Leasing Act, we split 50 each——

Mr. GOHMERT. Well, the way it confuses me, that is the first person plural. I am asking first person singular. Do you, Mr. Hughes, 

have a problem with host counties getting 25 percent of the royalties? 

Mr. HUGHES. Mr. Hughes’s opinion I don’t think is—I understand 

what you are saying, that——

Mr. GOHMERT. I haven’t said anything. I have asked a question. 

Mr. HUGHES. No. You have said there is an impact on local counties, communities——

Mr. GOHMERT. Right, I did say that. 

Mr. HUGHES.—development. We have numerous programs that 

we send back to the state, shares of income that we collect to offset 

those. 

Mr. GOHMERT. OK. So for that reason, you have a problem with 

host counties getting 25 percent of the royalties? Is that fair? 

Mr. HUGHES. That is probably fair, sir. 

44

Mr. GOHMERT. OK, thank you. All right. Now, also, Mr. 

Hughes—and hopefully we will have other rounds. This is very 

helpful, I appreciate this. But on the issue of leases, you know, we 

have heard a number of times that this Administration has just 

leased, had so many more leases than prior Administrations. Anybody that knows something about the business knows that you 

don’t get leases until you have, well, let us see—I am sorry. We 

had twice the number of applications to drill in 2005 than we did 

in 2000. So you don’t get the application to drill until you have 

leases done. 

And apparently, the Clinton Administration had 63 percent more 

leases actually entered. Do you know why the Clinton Administration had so many more leases than the current Administration? 

Mr. HUGHES. I think it depends on what your base years are. 

Our figures——

Mr. GOHMERT. Well, let us go from 1994 to 2000, with the Clinton Administration, and 2001 to 2007. 

Mr. HUGHES. OK. From 1995 to 2000, 19.7 million acres were 

leased in the Clinton Administration, according to our records. 

From 2001 to 2006, a five-year period, we leased, 22.1 million acres 

were leased. Now, some of those leases may have been larger in 

acreage than in the previous, so the numbers. 

However, earlier, if you would go from 2001 to 2004, and from 

1997 to 2000, I think you will see that the Clinton years, they 

leased more than we did. Part of the reason, there is a couple 

things going on. 

One is in some cases, our resource management plans we had to 

redo, and we had to put leasing on hold. We were shut down in the 

Powder River Basin for about a year and a half while were doing 

new resource management plans, where we did no leasing in the 

early 2002/2003 period. So that plays into it. 

I think currently, for instance, we could put another 4 million 

acres on the market, but we are currently deferring that while we 

do additional studies on those acres. We found out there are some 

discrepancies; they need additional NEPA, additional cultural resource surveys. So we have deferred leasing on close to 4 million 

acres during the past few years while we look at issues that have 

come up. 

Mr. COSTA. The gentleman’s time has expired, but I wanted to 

allow the witness to answer the question. 

Mr. GOHMERT. Thank you. 

Mr. COSTA. Let it be stipulated for the record that there are a 

lot of factors under which, why percentages of application to drill 

permits take place over a certain period of time. And I believe the 

witness was trying to explain that to us. 

Notwithstanding that, there are issues as it relates, Mr. Hughes, 

to remediation. And you know, I get, right or wrong, constituents 

of mine, when they see $50, $60, $70 a barrel oil and record profits, 

asking me to explain why the remediation shouldn’t be paid by oil 

and gas companies that are benefitting from the use of these public 

resources, public-owned resources. And why taxpayers get stuck 

with the bill for the remedying of that remediation that takes place 

in an industry that obviously has enjoyed record profits. 

45

Could you please give your best answer to explain that? You did 

such a good job with Mr. Gohmert on the previous question. I don’t 

want to get back to the counties, though. 

Mr. HUGHES. Right. There are a lot of factors that are going on. 

Let me say first, an oil company that is out there gets a lease, 

goes through a process. In many cases we do not have the funds 

available to do environmental work when that company wants to 

do it. In many cases that company is paying for the environmental 

work. It pays for cultural resource service. 

Mr. COSTA. Do you document that? 

Mr. HUGHES. Yes, sir. We can get you those numbers. 

Mr. COSTA. I would like to see that. 

Mr. HUGHES. OK. In other cases we have required companies to 

decrease the footprint on that, what they are going to have to do 

to plug those wells when they are done, to spend money to, as I 

say, fix up the area, so to speak, once they are completed. 

Mr. COSTA. Do you have any collaboration with the states when 

you are dealing with this remediation? I know in California they 

tend to get quite involved. 

Mr. HUGHES. Yes, we do. We work closely, especially with the oil 

and gas divisions of state governments. Also the State Game and 

Fish folks, we work closely to make sure again the footprint is 

minimal as possible in that area. 

We are also trying to work out, in some cases, companies are voluntarily, in northwestern New Mexico they have put up a fund to 

go in and clean up some of the fields. They contribute into a fund 

for what we call our orphan wells and roads to go in on their own 

and fix it up. 

Mr. COSTA. We have a similar program in California. I like those 

numbers. 

I would like to move on before my time expires. Mr. Wahlquist, 

getting back to the questions we were asking regarding the Fiscal 

Year 2008 budget. It is proposed, I believe, a $2.3 million increase 

from Fiscal Year 2007 for the state and regulatory grants. Can you 

explain why this was proposed, and where you expect to spend 

those—I mean, what bang for your buck do we expect to get for 

that? 

Mr. WAHLQUIST. That money is primarily to cover the fix costs 

that states have in carrying out their programs. We are asking for 

$60.6 million for state regulatory grants. Actually, because the 

2007 continuing resolution is at the 2006 level, there is—which was 

56.3, we had really expected to have 58.3, but we didn’t get that. 

And so it ends up being a larger step increase between 2007 and 

2008 than we had otherwise anticipated. But that will help ease 

the crunch that states are in very serious trouble this year from 

2007 because of the reduction that we had not anticipated in 2007. 

Mr. COSTA. All right. I am going to yield back the balance of my 

time to the Ranking Member, because I have a longer line of questioning for Ms. Burton, and it would extend beyond the 23 seconds 

that I currently have. So I will yield back to the gentleman from 

New Mexico. 

Mr. PEARCE. Thank you. And I would assume, Mr. Chairman, 

you mean the third round, which fits me really well, too. 

46

So Mr. Norbury, you have how many acres of land in the Forest 

Service? 

Mr. NORBURY. 193 million acres. 

Mr. PEARCE. 193 million. And how much revenue do you make 

off of your mineral leases, your oil and gas leases? Just approximate. 

Mr. NORBURY. The Forest Service doesn’t receive any of that revenue. 

Mr. PEARCE. How much revenue is generated off of——

Mr. NORBURY. In general, the sum total of the revenues that flow to all parties from those activities is around $125 million. 

Mr. PEARCE. About $125 million. How much do you make off of 

your tree sales, your timber sales? 

Mr. NORBURY. I don’t have that figure at my fingertips. 

Mr. PEARCE. Have you got anybody in the audience that could 

give you an approximate? Just, we are talking ballpark figures, trying to get concepts here, so anything. 

Mr. NORBURY. Total Forest Service revenues from all sources are 

around $1.2 billion. 

Mr. PEARCE. Around $1.2 billion? 

Mr. NORBURY. That includes timber and other sources of income. 

Mr. PEARCE. It would be instructive to know that. So that figure, 

if you can get your staff to e-mail out, we will come back around 

on the next round to ask that question. 

The next question, Mr. Hughes, is going to be a bank shot at you. 

But first of all, to get to the question, we really need to approach 

it through Mr. Wahlquist. 

Mr. Wahlquist, you said roughly 50 percent of the electric production in the U.S. is coal generated, is that right 

Mr. WAHLQUIST. That is correct. 

Mr. PEARCE. So of 300 million homes, you would deal with approximately 150 million, right? How significant is the downward 

pressure on the coal? I hear in the Congress a lot of really comments that would decrease the amount of coal, it seems like, I don’t 

know, but it feels like that. How much downward pressure is there 

on the coal usage? 

Mr. WAHLQUIST. Well, I don’t know that there has been that 

much downward pressure. Certainly over the last 30 years, coal 

production has almost doubled under the Surface Mining Act. 

We do have issues in particular certain areas, such as resale controversies in southern Appalachia with mountaintop mining. 

Mr. PEARCE. You don’t have trouble permitting mines and 

things? I noticed the hearing that occurred over this past weekend, 

where a southern Arizona group was objecting strenuously. But 

you are saying it doesn’t really. 

Mr. WAHLQUIST. Well, there are certainly permitting issues, but 

by and large, the permits have been able to continue to flow. 

Mr. PEARCE. Ten years ago, how much of the electricity production was coal? 

Mr. WAHLQUIST. It would have been a little less than 50 percent, 

I believe, but I would have to check that. 

Mr. PEARCE. Pretty static at 50 percent. 

Mr. WAHLQUIST. Yes. 

Mr. PEARCE. OK. 

47

Mr. WAHLQUIST. We stayed around that number in——

Mr. PEARCE. All right, Mr. Hughes, here we go to you. You said 

that we would get 1.2 million households on geothermal if we could 

develop it, and 1 million households on power by solar? Wind, I am 

sorry, it was wind. 

Mr. HUGHES. Right. 

Mr. PEARCE. If we are going to significantly change the pattern 

of usage—and there are people, regardless of what Mr. Wahlquist 

says, I think there are people who would stop use of coal today if 

they could. And what I want to get really clear for me is, do we 

have the capabilities with renewables to do anything else except 

supplement coal and oil and gas? 

In other words, oil and gas and coal are going to fuel the economy; and supplementally, we can take small increments. But when 

I hear you talk in terms of 1.2 million households versus 150 million out of geothermal and 1 million out of wind, can you, on all 

the public lands, get us to where we need to go to be, to have a 

complete renewable fuel economy, which is what some people declare we should have? People in my district say that frequently. 

Can we get there? Or is that a stretch? 

It is harder than Mr.—I won’t ask it as many times as Mr. 

Gohmert did. If you want to dodge, it is OK. 

Mr. HUGHES. I am certainly no expert, Mr. Pearce. But everything I have seen, you can talk to the Energy Information Agency 

and others, the answer is no, we can’t get there. 

Mr. PEARCE. OK, fine, I appreciate it. 

Ms. Burton, before my yellow light turns red, the 149 leases out 

of 230—I am reading in your testimony, 149 leases out of the 230—

were exploratory? That is a pretty stunning figure to me if, because 

as a business guy, I am going to do sound business. And yet, if 

there is 149 out of 230 who are exploring, who are going out beyond, who are trying to open up new areas, I think our Outer Continental Shelf is working pretty well. Am I right? Wrong? 149 is 

a pretty stunning percent of exploration 

Ms. BURTON. You are absolutely right, sir. There is an enormous 

amount of work going on in the OCS. And it has paid off, particularly in deep water in the last 10 years. It has been really extraordinary. 

Mr. PEARCE. OK. Thank you, Mr. Chairman. I will look for another round if you have it. 

Mr. COSTA. Thank you. Ms. Burton, please comment on the 

progress of the independent panel for the Department of Interior’s 

Royalty Policy Committee, which is taking, I understand, a comprehensive policy assessment of the Department of Interior’s royal 

management program 

Ms. BURTON. Are you, Mr. Chairman, talking about a panel that 

is supposed to be investigating our royalty collection, our management? 

Mr. COSTA. Yes. 

Ms. BURTON. I am not sure I understood your question, sir. 

Mr. COSTA. I understand there is an independent panel 

Ms. BURTON. Oh, yes, OK, I am with you. 

Mr. COSTA. I am with you. We are both here together 

Ms. BURTON. I am sorry. 

48

Mr. COSTA. That is OK 

Ms. BURTON. Unfortunately, sir, I cannot talk about that panel 

very much, because it is really a Secretarial Initiative, and the Assistant Secretary for Lands and Mineral is really in charge of that. 

I know very little, other than there will be a panel, and it will look 

at us from an——

Mr. COSTA. You are saying it is above your pay grade 

Ms. BURTON. Yes, sir. 

Mr. COSTA. OK. Well, that is fine. I would like to move further 

on to the situation that is more local for me. As a former Speaker 

of ours once said, all politics is local, and this involves California. 

The State Controller’s office that audits reviews in California for 

Federal leases for money that is owed the state within the boundaries. As you know, the Department of Interior has delegated the 

audit authority to states at the recommendation of the Linowes 

Commission, which, in 1982, recognized that states, as well as 

tribes, have more direct revenue interest, and in many cases greater expertise, about the operation of minerals in their particular regions. I suspect that would go for other states, as well. 

The partnership that Congress envisioned some 25 years ago 

does not exist today, according to the Controller in California who 

wrote me a letter. He believes that SCO and the audit program is 

being steadily dismantled by the Mineral and Management Services funding cuts, and what he believes are questionable compliance policies. These funds, or whatever goals or priorities you may 

have, he believes, and I share his opinion, are in conflict with funding that goes to the states, goes to public schools, as well as the 

counties. Not only the counties in Mr. Gohmert’s constituency and 

in Texas, but counties in California, monies that they believe they 

are owed. 

My first concern is the restoration of the audit funds. And I 

would like you to respond 

Ms. BURTON. Yes, sir. We have not decreased the amount of 

money going to state for the collaborative work they are doing with 

us on audits. 

What we have done, however, is reallocated to different states in 

different ways. We have made a business case for how much revenue and how many leases are to be audited in a particular state, 

and made sure the state that had the highest level of work received 

the bigger share of the money. 

For example, New Mexico and Wyoming were two states that 

were under-funded. But California, in terms of how much, how 

many audits they had to do and how much money was coming 

back, and how many companies were operating, they were overfunded. 

So what we did was we reallocated——

Mr. COSTA. I don’t think the Controller in California believes 

that he shares that opinion 

Ms. BURTON. You are right, you are absolutely right, sir. We 

don’t agree necessarily. 

Mr. COSTA. I mean, you may think they were over-funded. 

Ms. BURTON. But we made a business case. We looked at the 

amount of money, and we decided that the state with the biggest 

49

amount of money at risk were the one requiring the most audits. 

And so we reallocated the money based on that. 

Some states gained, some states lose. But the total amount of 

money is still the same. We still have about $9.5 million a year 

that goes to paying our state partners. 

Mr. COSTA. Well, in case you are in the doubtful column, let me 

indicate to you that Controller John Chiang and myself believe 

that—and it is not a fair question to you, but we think our public 

schools and our counties in California frankly are not—not—receiving their fair share of royalty revenue that is owed to them through 

this public resource. 

And while California has not generally looked upon it in that 

way, we are a tremendous oil- and gas-producing state. And I know 

you know that. And certainly the State Lands Commission, as well 

as the Controller’s office, monitors that effort. And I will submit 

this letter to you, and please respond. And hopefully you can give 

a better response to our Controller, Mr. John Chiang, than you 

gave just now to me, with all due respect 

Ms. BURTON. Yes, sir, we will do. 

Mr. COSTA. And I will now refer to the gentleman from Texas, 

who is concerned about all sorts of things, including counties. 

Mr. GOHMERT. Thank you. I am concerned about all kinds of 

things, thank you. 

I would like to ask Dr. Myers—I feel like you have been neglected here for a little bit—but I was surprised to hear your discussion about the U.S. Geological Survey role in assessing climate 

change, with all the things that you are concerned with. And I am 

curious, was the USGS assessing climate change back in the late 

sixties, seventies? How long has USGS been involved in that? 

Mr. MYERS. Sir, pretty much from the start of the concern. We 

have had, because we had the geological component——

Mr. GOHMERT. Start of the concern, being when? 

Mr. MYERS. The start of the concern being recognizing, on the geological record, that climate has changed dramatically over——

Mr. GOHMERT. And when would you say that start was? 

Mr. MYERS. The understanding of that probably goes back at 

least 50 years. 

Mr. GOHMERT. OK. So back when I was in school, and I was 

being taught, and I said that doesn’t make sense, but I was being 

taught that we were dangerously at the very beginning of a new 

ice age, USGS was helping formulate that type of thinking back 

then? Is that correct? You are going back 50 years. 

Mr. MYERS. Sir, again, as we get back into the geologic record, 

we recognize ice ages come and go. The geologic climate has 

changed dramatically. My home state, Alaska, for example, 66 million years ago there were dinosaurs really roaming across the north 

slope of Alaska. So we recognize the history of climate. 

Now, obviously today we are in a bit of a different state, as we 

understand the effects of climate change, having effects on our environment. And we can document those effects. 

Mr. GOHMERT. Right. 

Mr. MYERS. That is not to say how much percentage of that is 

human induced versus natural systems. But clearly, those changes 

50

are occurring, and the USGS has been, being an integrated science 

agency, has watched it and monitored——

Mr. GOHMERT. Well, let me get back to the question. Was USGS 

supportive in the seventies, that we were beginning a new ice age? 

Because that was the prevalent thing being taught back then. 

Mr. MYERS. The USGS, again, is actually looking at the longterm climate record. We were not the agency that developed the 

current climate models, but we did provide a lot of significant input 

into those models, including the understanding of the climate 

change as we see it occurring during a period. 

During the nineties, for example, the USGS was, in fact, the lead 

agency for the United States with respect to climate change. So 

again, we understand——

Mr. GOHMERT. You provide the data, and other people say oh, ice 

age is starting; 30 years later they are saying no, we are starting 

to warm up; Alaska is going to melt. Texas will be the biggest state 

in the union then. Those type of things, right? OK. Thank you, Dr. 

Myers. 

Ms. Burton, we had a hearing previously with the full committee, 

and a big topic of conversation was the price thresholds that were 

omitted. And of course, we heard from the IG, and I was very concerned, and at first I thought he would be part of the solution, but 

he kept wanting to talk about criminal conduct and paint it with 

a broad brush, and seemed to be painting that more of the Bush 

Administration. We finally pinned him down. It turned down that 

1998/1999 leases by the Clinton Administration were the only ones 

in which the price thresholds or the price triggers were omitted, 

and that he said initially it was a mistake. And then we found out 

actually that someone within the Administration, the Clinton Administration, one of three people had directed that they specifically 

be omitted, the appendix be omitted, so that these were not included. 

Obviously, the Federal government is losing money as a result of 

that. If it is criminal, I would like to see somebody go to jail, I don’t 

care what administration they are in. 

But we had, since the Democrats took the majority, we had a 

bill, as you are probably aware, last month trying to address this. 

As somebody who has dealt extensively with contract disputes, I 

have concerns when the Federal government unilaterally steps in 

and says we are going to breach the contract and start over, and 

the litigation that that may spawn. It may be, you know, the attorney savior act if we were to do something like that. It would give 

a lot of lawyers a lot of business. 

But what do you see that could be done to correct the problem, 

without triggering all kinds of lawsuits 

Ms. BURTON. I think that we need to entice the company to voluntarily come and accept, to get a price trigger in those contracts, 

without forcing them, because that would breach their contract, 

and the Administration doesn’t believe this is something we can do. 

Mr. GOHMERT. Entice with a hammer, or with sugar 

Ms. BURTON. No, with sugar. I think that if there is a way to 

give something to bring them to the table that doesn’t cost too 

much, maybe we need to do that. But I think that using only a 

hammer is going to create a situation where we will have lots of 

51

litigation, because those contracts are valid. Even though they may 

be bad, they are valid. And so that may create a situation where 

maybe we would be enjoined in future sales, and the repercussions 

of that action, because of litigation, would be disastrous for the 

country. 

Not only would we, years down the road, have decrease in production, we would have also huge decrease in money. I think we 

calculated or we estimated that if we are enjoined for three years 

to have OCS sales, it may cost as much as $13 billion. 

Mr. GOHMERT. Thank you. 

Mr. COSTA. I think you answered the question, and the gentleman’s time expired. 

One more question to you, Ms. Burton, and this deals with our 

efforts that we have talked about somewhat in oil and gas leasing 

offshore in the next five years within the budget for the Offshore 

Minerals and Management. It states that there will be a $1 million 

reduction, if my information is correct, on environmental studies 

that take place with regards to the Outer Continental Shelf fiveyear leasing program. 

You spoke in your own testimony about the difficult on the outer 

shelf at depths of 5,000 to 10,000 feet. I am wondering what the 

justification is for the reduction. Can you explain? 

Ms. BURTON. It is a redirection that $1 million that we are decreasing here, is because we need it somewhere else. 

In other words, we are asking, in our budget, $4 million for the 

five-year program, so that we can do some more environmental 

oversight. And environmental studies that we are willing to give $1 

million for are general studies. We need to be more specific for the 

five-year program. 

And so we are sort of redirecting that request to have $4 million 

additional put in the five-year program, but we give up $1 million 

of the general environmental studies. It is just a matter of trying 

to make a few dollars go a long way. 

Mr. COSTA. It sounds to me like you don’t have sufficient resources to begin with. But I want to move on to Mr. Hughes, because I have some questions as relates to hard rock mining. 

It relates to the GAO’s 2005 recommendation that the BLM 

needs to better manage financial assurances to guarantee the coverage of reclamation costs; that there needs to be adequate protections in place to ensure that the hard rock mining operations are 

reclaimed, and not abandoned, for the taxpayers. We have spoken 

about this earlier with the testimony by the Forest Service. 

Can you please explain, Mr. Hughes? 

Mr. HUGHES. Mr. Chairman, we are taking a look at a number 

of items. One is our reclamation bonding requirements. We are reviewing that at the department level. We did look at those recommendations. We think in some cases they—we think they didn’t 

adequately portray what was going on out there in the field. 

Mr. COSTA. Well, but the financial assurances to guarantee the 

coverage of reclamation costs found that, correct me if I am wrong, 

48 hard rock mines without bonding that were abandoned, and left 

for the government to reclaim. I mean, aren’t you concerned about 

that? 

52

Mr. HUGHES. That is why I say that is why we are reviewing our 

current standards to make sure we do have adequate bonding out 

there. That is one thing——

Mr. COSTA. I mean, the bonding seems to be, to me, would have 

to go part and parcel with the issuance of the permits, at least prospectively. Otherwise, we are asking the taxpayers to reclaim these 

sites. I mean, we have some sites that I am familiar with in California that for decades have potentially created potential water 

quality issues that, you know, are significant. 

Mr. HUGHES. You are correct, we have numerous abandoned 

mines on public lands we are taking a look at each year. We are 

working to address those issues, and prioritize which ones we look 

at. 

But you raise an excellent point, Mr. Chairman. 

Mr. COSTA. And if you could, for the Committee’s information, 

provide information that would demonstrate what the Bureau of 

Land Management is doing to implement and accomplish these 

protections for hard rock mining operations? And please provide a 

report to the Subcommittee on all the hard rock mines on Bureau 

of Land Management lands that have been abandoned since 1987. 

Mr. HUGHES. Yes, sir. 

Mr. COSTA. And if we could get that information, that would be 

helpful. I would appreciate it. 

Again, in the balance of fairness, I have a longer line of questioning, so I will yield back the balance of my time to, I believe it 

is the gentleman from New Mexico’s turn. 

Mr. PEARCE. Thank you, Mr. Chairman. Mr. Hughes, you have 

258 million acres of land, and the Forest Service has got 193 million acres. What is your revenue off of your, what is the total revenue off of your lands? 

Mr. HUGHES. Well——

Mr. PEARCE. Just approximate. 

Mr. HUGHES. Approximately $5 billion. 

Mr. PEARCE. Five billion? 

Mr. HUGHES. Yes, sir. 

Mr. PEARCE. See, the Forest Service generates $101.2 billion off 

of their 193 million, and you have about 1.3367 times as much 

land. So if you were making revenue at the same rate as the Forest 

Service, you would be getting $1.6 billion. Instead you are getting 

five-point-how many billion? 

Mr. HUGHES. Five billion. 

Mr. PEARCE. Five billion. We ought to let you manage the Forest 

Service land, excuse me. Excuse me, Mr. Norbury, I got on tricky 

ground. I have to take that back. But I do recognize the difference 

in the numbers. 

Mr. Hughes, let us go to you first, and then I will come to Ms. 

Burton. You mentioned how many leases that we are now creating 

shale in Colorado. How many of those leases are actually producing, and how much production do we get out of that? More or 

less. 

Mr. HUGHES. On the oil shale, there is no real producing leases. 

These are 160-acre leases that they are using for research and 

demonstration projects. 

53

We are currently in the process of doing an oil shale leasing EIS 

that, under the auspices of the 2005 National Energy Act——

Mr. PEARCE. OK. Basically nothing is coming out of the research. 

Mr. HUGHES. Nothing is coming out right now. There is 800 million, an estimated 800 million barrels of recoverable shale oil. 

Mr. PEARCE. Eight hundred million barrels compared, how does 

that compare to something else? How much in regular oil through 

the rest of the nation? 

Mr. HUGHES. That——

Mr. PEARCE. Is it a lot or a little? 

Mr. HUGHES. It is a lot. 

Mr. PEARCE. Yes. So I mean, so it is promising, but would need 

some stimulation. Because the same thing is happening here that 

happened in the Gulf 15 years ago. Nobody is putting money into 

it, and so we need some kind of stimulations. We have the stimulations, and as I covered last time, 149 out of 230 of the wells being 

drilled are exploratory. A lot of times our friends just, it is hard 

to understand why we need stimulations. But business is frankly 

the only one that can’t get it out. 

Now, Ms. Burton, we are back at this point of trying to figure 

out if the government is getting a good deal, and then we got this 

letter from the State of California, the SEO, being concerned that 

we are dismantling. Now, one of the rough checks that I would 

do—and I do it on my, for instance, my MRA—I know about what 

percent we want to spend on things, and then I would take a look. 

So I do a lot of percentages. 

If I look at the total revenue dollars produced out of the Gulf, 

and I want to know—and roughly, you said, we have some leases 

at 12 percent, some at 16 percent, but most of them I think are 

at 12 percent, 12.5 percent royalty rate. I am going to do a rough 

calculation in my head that we have so many dollars produced, and 

it ought to be 12.5 percent of that, plus a little bit more. 

When you do the calculations just with a pencil and a piece of 

paper—we are not doing big mainframe computers—what kind of 

percentage rate do you come up with? Again, rough is close enough. 

How much revenue are you generating? 

Ms. BURTON. I would think that the rough number is between 9 

percent and 10 percent. 

Mr. PEARCE. So about 10 percent. So what was that figure three 

years ago or two years ago? In other words, is it trending up or 

trending down? Are we getting stronger 

Ms. BURTON. That number stays about the same, because the 

royalty rate is about the same. So whatever they sell, we get 10 

percent net of that——

Mr. PEARCE. You get 10 percent net, and you are between 9 percent and 10 percent. 

Ms. BURTON. Between 9 percent and 10 percent. 

Mr. PEARCE. And so the worry that we are not getting our money 

for what we are doing with a large-view picture says that we are 

getting pretty close 

Ms. BURTON. I think so, sir. 

Mr. PEARCE. Now, the letter, I was looking at the letter, and it 

seems pretty well constructed, from the guy in California. And you 

54

seem pretty familiar with the discord there, with the different opinion. 

How do reasonable people—on policy I can understand how people come to different things. What I am going to do is I am going 

to ask a question. I am going to wait, I think we are going to get 

one more round, and I am going to let you have until the next 

round. But why do you think that he is under the belief that you 

are dismantling the MMS, and that you are not getting the revenues desired? When to me, the rough looks like 10 percent is what 

we ought to be getting, and we are between 9 percent and 10 percent. We are going to increase some, but there is not much room 

there to increase 

Ms. BURTON. Congressman, what I heard from California, and a 

couple of other states actually, is not so much that they weren’t 

getting the revenues they were entitled to in terms of royalty 

share; but that they weren’t getting as much money to pay for the 

audits. And what happens, as I tried to explain, but obviously 

didn’t do a very good job, is that we have to allocate the money to 

those states based on certain criteria. And we made a business case 

of how much revenue there are——

Mr. PEARCE. I understand, you have three-point-something, you 

know, $3.60, OK 

Ms. BURTON. And we decided how much money to give them, 

based on what we could collect——

Mr. PEARCE. And they just would like to have a bigger share to 

run their audits or whatever. OK 

Ms. BURTON. Right. 

Mr. PEARCE. Thank you, Mr. Chairman. 

Mr. COSTA. Thank you. And I thought I said earlier, but if not 

I would like to, for the purpose of this hearing, to submit the letter 

from Mr. John Chiang for the record. And as I asked you earlier, 

please respond to Mr. Chiang, and you can CC me. 

Ms. BURTON. I would be happy to.

[The letter from John Chiang, California State Controller, to The 

Honorable Jim Costa and the response to Mr. Chiang from the 

Minerals Management Service submitted for the record follow:]

55


33676.012
56


33676.013
57


33676.014
58


33676.015 33676.016
59

Mr. COSTA. On request of our Chairman, Chairman Rahall, and 

I try to honor requests, especially when it comes from our Chairman, he has a line of questioning, Director Wahlquist, that he has 

asked me to ask you, on behalf of the full committee, on his behalf. 

Throughout your testimony you referred to the Office of Surface 

Mining. In fact, you even stated, I remember quite clearly, earlier 

that it actually should be called the Office of Coal Mining. 

Chairman Rahall would like to remind you that, from his vast 

experience—and of course, he has been here for a few years, even 

though he was very young when he started—that the statutory 

name of the office is Surface Mining, Reclamation, and Enforcement. The Chairman also notes that he can’t even find a reference 

to the Office of Surface Mining, Reclamation, and Enforcement on 

your website, and he wanted you to note that. 

Chairman Rahall also strongly believes that the reclamation and 

enforcement, he believes, and I think Members of the Committee 

do, is an important part of your mission, and that he observes that 

reclamation enforcement is something that your bureau has not always done very well. 

And so, as such, he is curious as to why your bureau does not 

utilize the proper statutory name. 

Mr. WAHLQUIST. That is a fair question. Certainly when we first 

began in the late seventies, it was shortened to the three-letter acronym. In the eighties it was expanded, and you will notice Federal 

Register Notices in the 1980s as OSMRE. And then our director, 

in the early nineties, under Secretary Babbitt, said no, let us go 

back to the three-letter acronym. And so we have gone back to the 

three-letter acronym really since 1994. 

Mr. COSTA. So we will blame it on Secretary Babbitt, huh? Seriously, though, I will tell you—and this is just one of my own personal gripes I will share with Members of the Subcommittee—I 

think we get so involved oftentimes here in Washington in 

government-speak, with all these acronyms. If you will notice, and 

I probably won’t always do it, but I try to say Bureau of Land Management. I try to say the Mineral Management Services. 

I mean, we get so caught up here in our acronyms and our initials that frankly, most of my constituents think we are speaking 

a foreign language. And I am a big believer in that we should all 

be literate in as many foreign languages as possible, but 

government-speak I think oftentimes is to confuse and obviate the 

obvious. So therefore, I would suggest you take Chairman Rahall’s 

suggestions seriously, because I think we can all do a better job in 

making sure that we follow and better communicate, whether or 

not we agree. 

Mr. WAHLQUIST. We will take any suggestion from the Chairman 

very seriously. 

Mr. COSTA. Good. Let me move over to Dr. Myers. You talked 

about—and again, this deals with the budget for Fiscal 

Year 2008—to provide scientific information for the objective resource assessment on mineral potential and production, consumption, and environmental effects. 

My understanding is, Dr. Myers, that you are going to have decreased funding. How are you going to do more with less? 

60

Mr. MYERS. Mr. Chairman, in truth we are going to do less with 

less with the Minerals program. 

Mr. COSTA. Thank you. I mean, I am saddened to hear that, but 

that is the most truthful answer that you could give, and I appreciate it. 

How do you think that the United States Geological Service is 

going to maintain the critical publication of your mineral commodity summaries that are published on an annual basis, that furnishes and estimates covering non-fuel mineral industry data, and 

are a focal point of a lot of the new and emerging science and technology that are in the mineral fields, and that many of us believe 

are a part of our efforts to reduce our dependence on foreign 

sources of energy? 

Mr. MYERS. Mr. Chairman, energy minerals are not part of the 

MIT program, so it is strictly with strategic commodities. In those 

reports, about 50 of the 100 commodities we now track will not be 

tracked with the budget decrease. Furthermore, some of the geochemical labs will be closed, and there will be a significant decrease in staff. 

So we will be challenged to maintain it. We will maintain it with 

50 significant mineral commodities. But it will be a much more 

limited——

Mr. COSTA. Well, I think you put it best, you are going to be 

doing less with less. Thank you very much. My time has expired. 

I believe the gentleman from Texas is up. Mr. Gohmert. 

Mr. GOHMERT. Thank you, CC. 

Mr. COSTA. Chairman Costa. 

[Laughter.] 

Mr. GOHMERT. I have a question for Ms. Burton regarding the 

minerals review management. In your statement you talked about 

the minerals review management its primary business of collecting, 

accounting, and assuring compliance for disbursement of Federal 

and Indian mineral revenues, and is highly dependent on its information technology system. 

And I mean, that is pretty elementary. But do you think, because 

of allegations that the Federal government is getting less than it 

should, that we should be more relying on people in the field? 

Should we have a different type of information technology system? 

Or should we just convert to having somebody that examines the 

books, see how much is sold, and what the right was, and divide 

that and see exactly what the amount was? 

It doesn’t seem like this should be too difficult to zero in on what 

the Federal government’s portion would be 

Ms. BURTON. Congressman, I think you are absolutely right. But 

it is complex. 

Mr. GOHMERT. On which part? That was really a multifarious 

question. 

Ms. BURTON. Well, you are correct that we need to make sure the 

government gets its share. And we want to do our share in making 

sure that happens. 

The problem is that it is a complex system. We are dealing with 

an enormous amount of laws and regulations that have to be applied. How do we do that, or how can we do that better? 

61

The Inspector General has given us some recommendations that 

we are going to follow to improve our process. But the fact is that 

we have 26,000 leases to look at, we have 2600 companies. We 

can’t audit every one of them. And so we have to have a system 

to decide which to audit. 

We had picked a system based on money. We looked at the most 

vulnerable and the larger amount of money. Obviously the Inspector General thought that was not enough; we needed to vary our 

strategy. So we looked at very small companies, too, so that we 

would look at more companies, maybe less money, but more companies. So we are in the process of looking at what the IG gave us, 

and redesigning our process. 

But in the meantime, we need to use technology. There is no way 

we can have enough people to do all of that. It would not be, from 

business standpoint——

Mr. GOHMERT. What kind of technology are you talking about? 

Ms. BURTON. We need to modify our computer system. We have 

a very complex computer system that looks at a lot of things. When 

companies send us their production report, their sales report, et 

cetera, we look at a lot of things. 

We now need to add some modification. For example, a company 

can take recoupment for maybe some money they overpaid at some 

point in their business. We now have trouble tracking those 

recoupments. Are they done within the limits that the statute permits recoupment or not? 

And right now we have trouble following that, because our system doesn’t have that module. So we need to do that, and that is 

why we are asking for about close to $1 million to do that. We are 

asking for some more money to make our program a little more 

interactive with companies, so we can follow what they do and immediately pin them back when we don’t like what we see or something is missing, so they can come back with the right answer. 

So we need to be a little smarter in how we do things with computers. But I think that the two major recommendations of the IG 

is to have a different way of picking companies we audit, and we 

are going to do that. 

Mr. GOHMERT. Well, in speaking of the money, why is there a reduction in your budget for methane hydrate programs? 

Ms. BURTON. Congressman, I will tell you what I answered the 

Chairman about the difference in the OCS money. 

In the times of constraints, of budget constraints, we have to use 

the money where the priorities are. The USGS does a lot of work 

on methane hydrate. They are out scientific agency; they do a lot. 

We will come into the picture on hydrate when they are producible. Then we have to worry about the value, how they are produced, how we manage the production, and how we value them, 

and what royalty we receive for the government. 

So our work comes down the line a little bit. So right now it is 

not as crucial for us to have money for hydrate as it may be for 

the USGS. And so we have more crucial needs right now, with a 

five-year oil and gas program, and the new alternative energy program. So that is why we redirected the money. 

Mr. GOHMERT. Well, I would encourage you to keep looking at 

this. 

62

Ms. BURTON. I know. 

Mr. GOHMERT. I mean, we have got, what, 44 years nearly of gas 

out there, and we are paying higher gas prices probably than anybody in the world. 

Thank you, Mr. Chairman. 

Mr. COSTA. Thank you, Mr. Gohmert. There is also obviously a 

focus on natural gas as it relates to its clean-burning capabilities. 

And so there are a number of different dividends here that we are 

talking about. 

I would like to go back to Mr. Myers. The mission of the Cooperative Topographical Mapping Program, otherwise known as CTM—

that is a mouthful—provides the Nation with access to, as I understand it, current and accurate, consistent-based geographic data 

from derivative products that include topographical maps. The 

CTM program, as I understand it, is the lead responsibility of developing and maintaining and making available the national map. 

In your Fiscal Year 2008 budget you have a lack of funding for 

this program, in my view. Do you want to respond? Will you be 

doing less again? 

Mr. MYERS. Mr. Chairman, that is not the case at this time. 

What happened is the money moved over from what was traditionally the geography discipline into the Geospatial Information office. 

So you will see a transfer of those funds for——

Mr. COSTA. So is the work going to still get done? 

Mr. MYERS. Yes, Mr. Chairman. 

Mr. COSTA. In a timely fashion? 

Mr. MYERS. Mr. Chairman, the basic mapping capabilities of the 

Survey, our GIS capabilities, are crucial to our success. They are 

also crucial to the national success with, again, understanding natural resources and——

Mr. COSTA. So you haven’t dropped this down on the priority list. 

Mr. MYERS. Mr. Chairman, it is one of my highest priorities. 

Mr. COSTA. Good, I am glad to hear that. Mr. Hughes, back to 

you. I get questions from many of my colleagues, and I share some 

of the concerns, on why the Bureau of Land Management continues 

to issue leases on what, in many cases—and this relates to all politics being local—but where they view, in their respective districts, 

environmentally sensitive areas. Lands that have been identified 

for wilderness characteristics are areas that they may to, in fact, 

designate that as such. 

Does the Bureau of Land Management propose or is currently 

looking at wilderness designation by Members of Congress when 

we are still in the process of obviously facilitating permits that are 

going through the pipeline? No pun intended. 

Mr. HUGHES. Mr. Chairman, the Bureau of Land Management, 

as you are probably well aware, sent a recommendation a while 

back to Congress, after running an intensive wilderness inventory. 

That recommendation has been up here. In some cases Congress 

has acted on it; in other cases, those areas remain out there, waiting for Congressional action. 

We do not typically pull lands from consideration because someone, you know, puts a bill out saying we want to do something with 

that. We look at that very closely. But for instance, in some cases, 

in the State of Utah there has been——

63

Mr. COSTA. Do you take in the wilderness impacts as you are 

considering these? 

Mr. HUGHES. We have in many cases made those judgments already, and sent those recommendations to Congress. In other cases 

we are required by law, when companies come in and petition us 

to put lands up for lease/sale, we look at those. We have a resource 

management plan. If that management plan does not indicate a 

protective status for those lands, we would, in that we have adequate environmental studies available, that we have adequate cultural studies, adequate threatened endangered species studies, we 

offer those up for lease. 

Mr. COSTA. OK. Before my time expires, I want to go to Mr. 

Norbury. 

You have a backlog, I understand, in facilitating the process for 

energy leasing and permit applications. In respect to eliminating 

that backlog of oil and gas lease nominations for APDs, with the 

implementation of the Energy Policy Act of 2005, how do you expect to deal with that in an environmentally safe fashion, Mr. 

Norbury? With the decrease of funds that seems to be the case in 

the 2008 proposed budget? 

Mr. NORBURY. The backlog, as defined in the Energy Policy Act, 

my understanding is that we will process all those applications this 

year. We will go into 2008 with no backlog. 

Mr. COSTA. And you have sufficient funding to ensure that they 

are done in an environmentally safe fashion? 

Mr. NORBURY. We believe we do. 

Mr. COSTA. All right, my time has expired. And we will have the 

gentleman from New Mexico have the balance of his time, and then 

I will close the hearing following his five-minute line of questioning. 

Mr. PEARCE. I thank the Chairman for extending past that 4:00 

deadline, because there are just some burning things I had to get 

right out here. 

Ms. Burton, you are one of the lucky two here to wrap us up. The 

five-year plan, 2007 to 2012, what is going to happen to the MidAtlantic Planning Area? And then second, what about the sale of 

181 and 181 South out in the Gulf? Tell me about both of those 

things 

Ms. BURTON. Congressman, the five-year plan is almost reaching 

conclusion. The final EIS should be done I think within the next 

month or so, and then the Secretary will make a decision as to 

whether to keep the Atlantic piece in the plan or not. That decision 

has not been made. 

The offshore of Virginia is still in the proposed plan today. But 

the Secretary will make the decision in another month, 45 days. 

Then the plan will be sent to you for review, to Congress for review 

for 60 days, and then it will become effective by July 1. 

As far as sale 181, the 181 South, I think you asked for, is scheduled to have a sale in 2009. We have to do all the environmental 

work on that, because it was under moratorium. We couldn’t spend 

money on doing the work on this part of the OCS while we were 

preparing the five-year plan. 

So now that you have lifted the moratorium, we can start the 

work. And this is why we are looking at our money very carefully. 

64

Mr. PEARCE. Who in your department is in charge of talking to 

the Secretary as he approaches that decision on the Mid-Atlantic 

Region? Because I think it is important that we get new states involved, that we begin to develop those revenue sources for both the 

Federal government and the states. 

Ms. BURTON. The way the process works——

Mr. PEARCE. No, just who. I don’t want to know the process, I 

want to know who is going to be lobbying. Is that you? 

Ms. BURTON. I make a recommendation to the Assistant Secretary. 

Mr. PEARCE. All right. I hope you hear from at least one Member 

of the Committee. 

Ms. BURTON. I heard you very loud and clear. 

Mr. PEARCE. You know, again, New Mexico has got $13 billion 

that the oil and gas industry almost by itself has created for the 

State of Mexico, the third-largest permanent fund in the world 

when I was at the State Legislature five years ago. And those are 

great sources of revenue. 

Mr. Myers, on the MIT, the minerals information teams, I wish 

Mr. Gohmert were here to ask this question, because I wonder how 

you feel about that MIT. If there has been attempts from the Administration to defund it, and how do you feel about the defunding? 

Or fund it at a lower level and changes. 

Minerals information teams for me seems valuable because what 

it does is assesses the strategic minerals that this country uses, 

and it looks at what we are having to import versus what we get, 

with China being one of the great importers to us, or exporters to 

us today. I worry about that, and I would think we need more information, not less. And yet the Administration continues to try to 

do that. Why is that? And are you a party to that? I guess that 

is a loaded question. You don’t have to answer that last part. 

Mr. MYERS. Thank you, Congressman Pearce. Clearly, it is an 

important program. And it is a matter simply of the prioritization 

process that works with a limited budget. It was one of those 

hard——

Mr. PEARCE. How much is this MIT? 

Mr. MYERS. The MIT cut is for this year about $2.6 million. But 

I believe——

Mr. PEARCE. Out of how big a budget? 

Mr. MYERS. About $50 million. But earlier, because of the way 

the budget structure works, it is actually about, it is 20-some million. Carl, do you have the exact number? About $25 million. About 

half the program. 

Mr. PEARCE. Yes, that is, I mean, on your commodity reports 

there is even the recommendation that we would just measure 

some, and not all of strategic minerals. Why is that? And what 

does it take to go ahead and get the MIT team authority to check 

all those minerals? 

Mr. MYERS. Well, it is clearly, you know, the budget is determined by the Congress. Again, the Administration is trying to 

make—myself included—trying to make some very tough choices 

within a limited budget. And that is strictly it. It is a matter of 

prioritization. 

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Clearly it is up to Congress to determine what they think is appropriate to fund. And again——

Mr. PEARCE. Yes, we funded it at a higher level than you all did. 

And if it is up to us, Congress, both Houses, I think, want to fund 

this thing at a higher level at some point. With all respect, if you 

could carry that message back, too, I would appreciate it. 

Mr. Chairman, I am going to yield back. You have been more 

than gracious with the time, and I appreciate the hearing. It has 

worked out very well. 

Mr. COSTA. Thank you, the gentleman from New Mexico. I appreciate your focus and your earnest questions. I hope the panel that 

testified this afternoon feels the same way. I hope it was relatively 

painless. 

In closing, we obviously want to thank you for your testimony. 

Members of the Subcommittee and I may have, or probably will 

have, additional questions to the witnesses. We will forward those 

to the Department in the next several days. We would appreciate, 

as I said on the outset, your cooperation in responding to those 

questions. 

As I indicated in my opening comments, oversight is an important role of the checks and balances, I believe, of the legislative 

process. And it is our intent, it is my intent as the Subcommittee 

Chairman, to work in a very collaborative basis with Members, 

both Democratic and Republican Members of this Subcommittee, to 

continue this oversight effort throughout the 110th Congress. So 

that is my way of me telling you this won’t be the last time we see 

you. And that goes with other areas within the jurisdiction of this 

Subcommittee as we begin to try to do our best work on behalf of 

our constituents. 

The Subcommittee on Energy and Minerals on Public Lands will 

now be adjourned. 

[Whereupon, at 4:15 p.m., the Subcommittee was adjourned.]

[Additional material submitted for the record follows:]

Response to questions submitted for the record by Johnnie 

Burton, Director, Minerals Management Service 

1. Ms. Burton: I am sorry to have missed the hearing on the 27th, 

but I was unable to get back from New York in time to attend this 

important hearing. I also appreciate your providing me with a response to my December letter to Secretary Kempthorne that same 

afternoon. It contained a good bit of useful information and I appreciate the time you and your staff put into it. I am attaching both 

my letter, the lease agreement document and your response for the 

record. 

However, I would also appreciate your expanding upon the first 

three critiques (bullet points) in my letter, because while I believe 

you met the fourth critique head-on and with some detail, my concerns about the implications regarding recouping past production, 

the impacts of future agreements with other non-negotiating lease 

holders on the existing agreement, and the potential of the KerrMcGee lawsuit to further derail these renegotiations, did not get addressed adequately in my view. Please provide that response for the 

record. 

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Answer: The first bullet point in your letter of December 21, 

2006, states that the agreements ‘‘[d]o nothing to recoup royalties 

on past production that has already occurred before October 2006 

. . . .’’ The agreements we have entered into to date do not address 

pre-October 2006 production. Because the financial consequences of 

the future period are several times greater than for the past period, 

our priority is to address the future period. 

The second bullet states that the agreement allows the lessee to 

terminate the agreement if the Department, in a future agreement 

with another lessee, agrees to different terms that are more favorable to the lessee. The agreements do not allow for termination. 

They do contain a ‘‘most favored nation’’ provision under which the 

terms of an existing agreement would be conformed to the terms 

of any subsequent agreement entered into with another lessee that 

is more favorable to that lessee. Without this provision, none of the 

lessees with whom we have negotiated was willing to be the first 

to enter into an agreement with the Department. We presume that 

their reluctance arose out of an apprehension that they could be 

harmed if the government made concessions to other lessees in subsequent negotiations that it had not made to those who signed 

first. That is why Director Burton noted in her February 27 letter 

that this provision was necessary to break open negotiations. In addition, we desire to treat all lessees equally. We find no reason to 

provide an economic advantage to one company over another. However, if for some unforeseen reason, we had to make a concession 

to a company whose agreement to a lease amendment was critical, 

then everyone should benefit from the same concession. We do not 

anticipate this happening and for these reasons, as I also noted in 

my February 27 letter, we expect this provision to have little or no 

monetary impact. 

The third bullet of your letter notes that the agreement will terminate if the United States loses the pending judicial challenge to 

the legality of including price thresholds in the deep water leases 

issued in the 1996-2000 period that do include them (i.e., the leases 

issued in the lease sales held in 1996, 1997, and 2000). The Department believes that it is on strong legal ground in applying price 

thresholds to these leases. If, however, the courts were to agree 

with Kerr-McGee, the plaintiff in this pending challenge, that section 304 of the Deep Water Royalty Relief Act operates to prohibit 

price thresholds on royalty relief granted under that section, then 

inclusion of price thresholds in leases subject to section 304 would 

be beyond the Department’s statutory authority. The section 304 

leases include the leases issued in the 1998 and 1999 lease sales, 

so under this scenario, the Department would not be authorized to 

collect royalties on the production covered by the new agreements. 

The third bullet also states that the agreements will terminate 

if the Department loses ‘‘any other lawsuit alleging that the Department lacks this authority.’’ This seems to reflect a misunderstanding of the provision. Under paragraph 5(b) of each of the 

agreements, if the United States prevails in the first lawsuit to 

reach a final non-appealable judgment, the agreement will remain 

in force even if another court were to rule against the government 

in a subsequent case, unless the Supreme Court later rules adversely to the United States. 

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2. Ms. Burton, it seems that from the very beginning of this oil 

royalty debacle, you, and the Department of the Interior have been 

undermining the American people’s ability to recoup the missing 

royalty payments from the 1998 and 1999 leases. Whether it was opposing my amendment to provide the Department of the Interior negotiating incentive tools to bring the oil and gas companies to the 

table, or publicly stating in September 2006 ‘‘I don’t like to say ‘‘negotiate’’ because I really don’t have anything to trade.’’ Now, in testimony provided to the Senate Energy and Natural Resources Commerce, the Assistant Secretary for Lands and Management, Stephen 

Allred, requested additional authority from Congress to allow the 

Department of the Interior to extend leases for companies that 

choose to renegotiate their 1998 and 1999 leases. I guess after talking yourself into a negotiating corner, the department wants to 

somehow add more sweeteners to an oil and gas honey pot. 

Which companies are requesting lease extensions as a prerequisite 

for renegotiations? 

Answer: During discussions with companies, including Chevron 

and Devon, this tool was raised as a possible option as a way to 

move forward. 

Has this proposal been submitted to Congress? 

Answer: During a January 18, 2007, hearing before the Senate 

Energy and Natural Resources Committee, Assistant Secretary 

Steve Allred offered this concept in response to a question regarding what Congress could do to help the Department of the Interior 

negotiate terms that would result in companies paying royalties on 

leases from the 1998 and 1999 lease sales. The Department looks 

forward to working with the Congress on this concept. 

What is the reasoning behind this request? 

Answer: The majority of companies have indicated that there is 

management, stockholder or board of director pressure to not negotiate such agreements, since they hold valid leases issued in 1998 

and 1999 without thresholds. 

Presumably, by making a concession such as allowing some 

leases to be extended, companies could go back to stockholders and 

show that they received some benefits in the negotiation. In addition, as Assistant Secretary Allred has noted in his previous testimony, some proposals that would penalize companies that do not 

sign agreements may have an unintended consequence of creating 

legal risk of enjoining future lease sales and delaying new domestic 

production of oil and natural gas. The proposal to extend lease 

terms may avoid that risk. 

[A letter dated December 21, 2006, submitted for the record by 

The Honorable Maurice D. Hinchey to Secretary of the Interior 

Dirk Kempthorne follows:]

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33676.006
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33676.007
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[A letter dated February 27, 2007, submitted for the record by 

The Honorable Maurice D. Hinchey from R.M. ‘‘Johnnie’’ Burton, 

Director, Minerals Management Service, in response to the 

Hinchey letter dated December 21, 2006, follows:]


33676.008
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[NOTE: A sample Minerals Management Service agreement 

submitted for the record by Mr. Hinchey has been retained in the 

Committee’s official files.]

Æ


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