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PAIN AT THE PUMP: POLICIES THAT SUPPRESS

DOMESTIC PRODUCTION OF OIL AND GAS

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MAY 24, 2011

Serial No. 112–54

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

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on May 24, 2011 ............................................................................... 1

Statement of:

Jackson, Lisa P., Administrator, Environmental Protection Agency; and

David J. Hayes, Deputy Secretary of the Interior ...................................... 10

Jackson, Lisa P. ......................................................................................... 10

Hayes, David J. ......................................................................................... 14

Letters, statements, etc., submitted for the record by:

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, Democratic staff report .......................................................... 4

Hayes, David J., Deputy Secretary of the Interior, prepared statement

of ..................................................................................................................... 17

Issa, Hon. Darrell E., a Representative in Congress from the State of

California, staff report .................................................................................. 28

Jackson, Lisa P., Administrator, Environmental Protection Agency, prepared statement of ........................................................................................ 12

(1)

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

AND GAS

TUESDAY, MAY 24, 2011

HOUSE OF REPRESENTATIVES,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The committee met, pursuant to notice, at 9 a.m., in room 2154,

Rayburn House Office Building, Hon. Darrell E. Issa (chairman of

the committee) presiding.

Present: Representatives Issa, Platts, McHenry, Jordan,

Chaffetz, Mack, Walberg, Lankford, Amash, Buerkle, Labrador,

Meehan, DesJarlais, Gowdy, Ross, Guinta, Farenthold, Kelly,

Cummings, Norton, Kucinich, Tierney, Connolly, Quigley,

Yarmuth, and Speier.

Also present: Representative Gibbs.

Staff present: Ali Ahmad, deputy press secretary; Michael R.

Bebeau, assistant clerk; Robert Borden, general counsel; Lawrence

J. Brady, staff director; Drew Colliatie and Nadia A. Zahran, staff

assistants; Adam P. Fromm, director of Member services and committee operations; Linda Good, chief clerk; Ryan M. Hambleton,

professional staff member; Christopher Hixon, deputy chief counsel,

oversight; Mark D. Marin, senior professional staff member;

Kristina M. Moore, senior counsel; Jeff Solsby, senior communications advisor; Sharon Meredith Utz, research analyst; Krista Boyd,

minority counsel; Lisa Cody, minority investigator; Kevin Corbin,

minority staff assistant; Ashley Etienne, minority director of communications; Jennifer Hoffman, minority press secretary; Carla

Hultberg, minority chief clerk; Chris Knauer, minority senior investigator; Lucinda Lessley, minority policy director; Dave Rapallo,

minority staff director; Susanne Sachsman Grooms, minority chief

counsel; and Alex Wolf, minority professional staff member.

Chairman ISSA. Good morning, the committee will come to order.

The Oversight Committee exists to secure two fundamental principles: First, Americans have a right to know that the money

Washington takes from them is well spent. And second, Americans

deserve an effective, efficient government that works for them.

Our duty on the Oversight and Government Reform Committee

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right

to know what they get from their government.

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We will work tirelessly in partnership with citizen watchdogs to

deliver the facts to the American people and bring genuine reform

to the Federal bureaucracy. This is our mission.

Today’s hearing is entitled, ‘‘Pain at the Pump.’’ But it goes beyond that; pain at the pump is what the American people see. The

American people see an administration who said before they came

to Washington that we need European oil prices; we need $8 a barrel gasoline. Although they’ve only gotten us to $4 a barrel, we are

clearly on a pathway to some day soon having European-style cost

of energy.

Worse than that, it is likely that energy will be imported. It will

represent jobs many miles away and governments that are often

hostile to us who profit from high oil prices. Having failed to get

cap-and-trade passed, it appears as though this administration is

finding alternative ways to achieve the equivalent.

Secretary Chu before joining the Cabinet said, and I’ll put it on

the screen, somehow we have to figure out how to boost the price

of gasoline to the levels of Europe. That is not my statement; that

is the administration’s statement.

Additionally, the President has repeatedly as a candidate said

that there will be pain in transition, that prices will skyrocket.

These are not our words; these are the President’s words. So as we

watch the cost skyrocket, as we watch impediments to job creation

here, particularly in onshore—I repeat, onshore—oil and natural

gas, we ask the question, are we seeing by regulation what cannot

be done by legislation?

Let us not forget, this committee has a long history of going after

agencies that fail to do their job on the other side. Our history of

going after Minerals Management Service, although good, lacks

only one conclusion; having proven that MMS was unable to supervise properly the oil and natural gas industry, that it was in fact

an out-of-control entity, we failed to get real reform under the Bush

administration. We then failed to get real reform under the Obama

administration, and the American people suffered in the Gulf.

This committee will do both, ensure that agencies meet their obligation to allow the production and exploration of minerals here in

America while ensuring that they also meet the safety requirements.

With that, I recognize the ranking member for his opening statement.

Mr. CUMMINGS. Thank you very much, Mr. Chairman.

And I would remind the chairman that this is our watch. We are

on the earth today, and we have a duty to leave a better environment than the one we found when we were born.

I just want to take a moment to remember why we are here

today. We are not here because of a conspiracy theory that the administration is deliberately increasing gas prices. And we are not

here because of so-called pre-moratorium or a de facto moratorium

on drilling permits, that does not really exist.

We are here because on April 20, 2010, a massive oil explosion

in the Gulf of Mexico killed 11 people and launched the worst environmental disaster in the history of our country. We all watched

as the oil spewed into the water for days and days and days. And

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for the entire summer, there was nothing we could do but wait and

pray.

Ladies and gentlemen, we are better than that.

Finally, after 87 days, it stopped, but not before releasing 200

million gallons of oil, not before reaching 780 miles along the Gulf,

not before devastating the Gulf’s commercial and recreational fishing industries, and not before decimating the Gulf’s travel and

tourism industries, which represent nearly half of the Gulf’s economy, generating over $100 billion a year, and are responsible for

more than a million jobs. We also represent them by the way. That

is why we are here. And we can never, ever, never, ever forget.

So, thank you, Administrator Jackson and Deputy Secretary

Hayes, for testifying today about the administration’s efforts to prevent this kind of disaster from ever happening again.

We are also here because of recent increases in the price of gas, which has now surpassed $4 per gallon. These increases make it

harder for average Americans to get to work and for small businesses to function. I remember—I remind members of this committee that they are our constituents.

Chairman Issa issued a report today that essentially blames the

Obama administration for everything, including higher gas prices.

In fact, former Alaska Governor Sarah Palin has been espousing

this exact same theory for several months now.

The problem is that this theory has been debunked by conservative and industry experts. For example, Michael Canes, the

former Chief Economist for the American Petroleum Institute, said

this, ‘‘It’s not credible to blame the Obama administration’s drilling

policies for today’s high prices.’’

Ken Green, a resident scholar with the American Enterprise Institute, said this, ‘‘The world price is the world price; even if we

were producing 100 percent of our oil, we probably couldn’t produce

enough to affect the world price of oil.’’

Chris Lafakis, an economist at Moody’s Analytics, said this,

‘‘There is absolutely no merit to this viewpoint whatsoever.’’

In other words, when you actually talk to experts who know the

industry and who know the facts, these arguments are exposed as

blatant attempts to score political points with no basis in fact.

I also released a report today, and I ask unanimous consent that

it be made a part of the official record of today’s hearing.

Chairman ISSA. Without objection, so ordered.

[The information referred to follows:]

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Mr. CUMMINGS. Thank you, Mr. Chairman.

My report analyzed what industry, government, and academic

experts accurately believe is causing higher gas prices, and that is

excessive speculation by entities that have no consumption interest

in the underlying commodities and that profit by doing nothing

more than forecasting price trends.

The report’s chief conclusion is that in order to make the most

significant impact on the lowering gas prices, our primary focus

should be on countering the growing impact of energy speculation,

rather than simply promoting the oil industry’s priorities of increasing domestic drilling.

As the report finds, addressing excessive speculation offers the

single, most significant opportunity to reduce gas prices for American consumers. Experts, including oil industry officials and investment firms, estimate that excessive oil speculation could be inflating prices by 30 percent. But increasing domestic drilling would impact prices by only 1 percent and then only after a decade or more.

In my opinion, this committee could have a much more significant and immediate impact on the price of gas if it stopped focusing solely on the oil industry’s interest and started focusing on real

efforts to help American consumers.

Again I remind our committee, this is our watch. We are on the

earth today. We must protect our environment. We must protect

the fisherman. We must protect the tourism industry. We must

have balance.

And so, Mr. Chairman, I hope that you and I can work together

in a bipartisan manner to effectively and efficiently conduct an investigation into these issues so that the American people might

have relief.

With that, I yield back.

Chairman ISSA. I thank the ranking member.

I ask unanimous consent that the Politico article of April 26th,

entitled ‘‘EPA Chief: Gas Prices Not Our Fault,’’ in which the administrator says what appears to be the most important factor at

work is our dependence on imported energy, be entered into the

record.

Without objection, so ordered.

All Members will have 5 legislative days in which to put their

opening statements in, and with that, we move to our panel of witnesses.

The honorable Lisa Jackson is the Administrator of the U.S. Environmental Protection Agency. Our second witness, the honorable

David Hayes, is the Deputy Secretary of the Department of the Interior.

As I have told both of our witnesses earlier, we are on an unusually tight schedule. We will adjourn to be with the joint session of

Congress at 11 o’clock, and so I am going to execute a very heavy

gavel. I don’t want to be unfair to anyone, but I would like for everyone to understand that we will end each round at 5 minutes, including each of the opening statements. This is intended to give everyone an opportunity to be heard. It will not be our usual talk

until the zero and then expect an answer.

So, pursuant to the committee rules, all witnesses must be sworn

before testifying.

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Would you please rise to take the oath?

[Witnesses sworn.]

Chairman ISSA. Let the record reflect that both witnesses answered in the affirmative.

Please be seated.

With that, Administrator Jackson is recognized.

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

DEPUTY SECRETARY OF THE INTERIOR

STATEMENT OF LISA P. JACKSON

Ms. JACKSON. Thank you, Chairman Issa.

To you, Ranking Member Cummings and members of the committee, thank you for inviting me to testify.

Americans are again suffering at the pump. Gasoline and diesel

cost more today than they did a year ago. As ExxonMobil’s CEO

recently testified, the prices of those fuels are a function of crude

oil prices, which are set by global supply and demand.

As a matter of geology, America will never control more than a

tiny fraction of the world’s oil supply. Therefore, America cannot

prevent gasoline and diesel prices from rising.

Still, all else being equal, buying a barrel of American oil is better than buying a barrel of foreign oil.

Last year, American oil production reached its highest level since

2003, and President Obama recently announced steps that the Interior Department is taking to increase safe and responsible oil

production here at home.

Deputy Secretary Hayes will describe those steps today.

For parts of the Outer Continental Shelf, Congress has declared

that a company cannot operate drilling equipment that emits large

amounts of air pollution without first demonstrating through EPA

permitting that the emissions will not harm Americans. That requirement is not simply red tape because a single exploratory drilling operation can emit as much air pollution on a daily basis as

a large oil refinery.

In 2007, Shell Oil began seeking from EPA’s Region 10 Office air

permits for exploratory drilling operations on the Outer Continental Shelf off Alaska. Region 10 has since issued five permits to

Shell. An administrative court called the Environmental Appeals

Board remanded two of the permits last December after Alaska

residents had challenged them.

I am confident that we will give the board the analysis it has

called for in time for the permits to be upheld before the start of

the next drilling season.

I should note that on average, the board decides air permit appeals in just over 5 months; that only four of the board’s more than

100 air permit decisions have ever been appealed to a Federal

court; and that none of the board’s air permit decisions has ever

been overturned.

Currently there are only four pending air permit applications for

drilling on the Arctic OCS. That includes the two that I just mentioned. We anticipate many more, though. So, at the President’s direction, the White House has formed a team of relevant bureaus

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at the Department of Interior, the Department of Commerce and

EPA to coordinate closely and prevent unnecessary delays.

Thanks to advances in drilling technology, including hydraulic

fracturing or fracking, America’s potential natural gas resource is

nearly 50 percent larger than we believed it was just a few years

ago. The price we pay for natural gas is not set on a global market

the way the price of oil is, and burning natural gas creates less air

pollution than burning other fossil fuels. So increasing America’s

natural gas production is a good thing.

Fracking involves injecting chemicals underground at high pressure and various substances come back to the surface with the gas.

It is not surprising then that Congress has directed EPA to study

the relationship between fracking and drinking water. We are

doing that with input from technical experts, the public and industry.

In the meantime, EPA will step in, as necessary, to protect local

residents if drilling jeopardizes clean water.

With that said, State governments are appropriately the first

line of defense again harmful or unsafe drilling practices.

We can mitigate the impact of high fuel prices on American families and businesses by enabling them to travel the same distances

and conduct the same commerce on less gasoline and diesel. The

fuel efficiency standards that EPA and the Department of Transportation established last year for new cars and light trucks will

save the average American driver $3,000 over the life of the car

and conserve 1.58 billion barrels of oil.

Additional standards that we will set this summer for heavy-duty trucks will save a tractor trailer rig operator up to $74,000 over the

life of the rig and conserve another a half a billion barrels of oil.

The increased biofuel production mandates that EPA set last

year will displace 7 percent of America’s expected gasoline and diesel consumption in 2022, while decreasing oil imports by $411⁄2 billion.

I am proud of the role EPA played to shield Americans from the

harmful economic impact of high gasoline and diesel prices.

EPA’s core mission, though, is protecting Americans from harmful pollution. That is what Congress has ordered EPA to do, and

that is what the American people expect. Even when gas prices are

high and the economy is still recovering, Americans do not like it

when their families and livelihoods are harmed by industrial pollution that could have been avoided.

Thank you, Mr. Chairman.

[The prepared statement of Ms. Jackson follows:]

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Chairman ISSA. Thank you.

Mr. Secretary.

STATEMENT OF DAVID J. HAYES

Mr. HAYES. Thank you, Mr. Chairman, Ranking Member

Cummings, I appreciate the opportunity to give a short oral statement and request that my written statement be submitted for the

record.

Chairman ISSA. Without objection, so ordered.

Mr. HAYES. As you know, the President has emphasized the importance of securing our energy future by pursuing a multiprong

strategy that includes increased domestic oil and gas production,

improved energy efficiency, and the production of alternative fuels.

The President reviewed his comprehensive plan in the energy

blueprint document that he released last month. And when discussing this plan, the President emphasized that there is no quick

fix to address high gas prices and that rather than ‘‘rushing to propose action when gas prices rise, then hitting the snooze button

when they fall again, ‘‘we need to pursue a comprehensive strategy.

The Department of the Interior has a key role in this regard in

addressing today’s and tomorrow’s energy issues. Our department,

for example, is for the first time in history permitting utility scale

renewable energy projects on our public lands and in our offshore

waters. Last year, we permitted more than 4,000 megawatts of renewable solar, geothermal and wind projects, the equivalent of

more than a dozen medium-sized coal-fired power plants. At the

same time, however, our department is focused on increasing domestic oil and gas production from our public lands and our offshore waters.

The facts show that our emphasis on responsible oil and gas development combined with the efficiency improvements that the administration has introduced with our transportation fleet and Administrator Jackson just referenced is paying off.

Over the past 3 years, our domestic oil and gas production has

gone up, while our imports have gone down. Oil imports in 2008

were 57 percent of the total oil consumed in the United States,

today it’s less than 50 percent. Oil production is higher in 2010

than it has been in any year since 2003.

Offshore oil production in the last 3 years has gone up by a third,

by approximately 200,000 barrels a year—million barrels a year,

and production onshore has gone up 5 percent during the same period.

The President is committed to seeing this trend continue. As you

know, he has vowed to cut our oil imports by one-third by 2025,

down from the 11 million barrels per day that we were importing

when he took office.

At the Interior Department, we are taking a number of steps to

facilitate responsible oil and gas development in the United States.

First, we are providing industry with ample opportunity to develop

domestic oil and gas supplies. Offshore, in 2009 and 2010, our department offered 53 million and 37 million acres respectively for

leasing. Onshore, we held 29 lease sales in 2010; we have scheduled 33 lease sales for this year.

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Notably, industry has not taken full advantage of the lands we

have opened up to them for development. Offshore, out of the 53

and 37 million acres offered, industry leaves 2.7 million and 2.4

million acres respectively. And of the total offshore leased average,

fully 70 percent of the leased areas are idle. Onshore, out of the

61⁄2 million acres offered for lease during our administration, less

than half were leased. And 55 percent of the overall acreage that

is leased is idle. That is, 22 million acres are currently available

onshore for development, leased and in the hands of domestic oil

and gas companies, but there is no exploration or development occurring.

The President has initiated additional actions to further

incentivize the oil and gas industry to utilize these available domestic oil and gas resources. He announced that last week in his

radio address, and it was amplified earlier this week by the Secretary. Including the fact that leases in the Gulf impacted by the

moratorium are being extended by a year, leases in Alaskan waters

are being extended, new lease sales will be scheduled for the Gulf

of Mexico, with the first one occurring by the end of year and two

more before mid next year, the President announced that BLM will

have annual lease sales in the National Petroleum Reserve Alaska,

and we are looking for ways to encourage industry to invest earlier

in their leases by considering financial and lease term incentives

for early development.

In our view, it makes no sense to have leased acreage available

to oil companies. And if oil companies are not going to develop

those leases, they should be put back and made available to other

companies who may make those investments. We are confident

that our continued focus on responsible oil and gas development

will maintain and accelerate the decline of oil imports.

Despite this evidence, some have suggested that domestic oil and

gas development is in decline and that high gas prices are due to

limited production. Again, the facts tell a different story. Ranking

Member Cummings discussed the fact that oil prices set on a global

basis.

And let me say that our permitting is also not a constraint.

Today we have 7,000 approved permits to drill on onshore resources that are sitting on the shelf and not being used. Again, 22

million of acres have been leased and are available for development.

In the offshore, as I will discuss in the Q and A, after the

Macondo well situation and the need to upgrade safety standards,

we are back in business in the Gulf, with 55 new permits in the

shallow water and 14 new permits in deep water. In the shallow

water, we are at approximately the same pace of permitting that

we were in 2009. And we are in a strong process that we are

strongly processing our deep water permits as well.

My time is up, I would like to just conclude by saying we are increasing our oil and gas production at the same time that we are

reforming the former Minerals Management Service.

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And Chairman Issa, I know you have had a personal interest in

that, and I hope I will have an opportunity to provide a little more

information in the Q and A about the pace of our reform effort.

Thank you.

[The prepared statement of Mr. Hayes follows:]

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Chairman ISSA. Thank you.

I recognize myself for 5 minutes.

I first ask unanimous consent that the majority report be placed

in the record since it is exactly the opposite, no surprise, of the minority report.

Without objection, so ordered.

[The information referred to follows:]

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Chairman ISSA. Mr. Secretary, you know, in this town, everyone

is entitled to an opinion, but not facts. Why can you name one reason that in Alaska the Federal Treasury has received $2.2 billion

in Federal lease money during your administration and additionally another billion has been invested by the oil companies in exploration, and yet they have gotten nothing back, in no small part

because Shell and others have been delayed in actually receiving

the permit? So aren’t you willing to take at least some responsibility for the fact that a lease is not a permit? And when you call

it idle, are you really saying it’s idle? And this is the real question,

are they idle, or are they not yet producing? Would you please explain yourself on your figures? Isn’t it true your figures are what

you say idle, not yet producing, and it can well mean that money

is being invested?

Mr. HAYES. The term, as described in the report that was provided to the President and I am sure your staff has available, made

it clear that by idle, it means that there is no active exploration

or production occurring.

Chairman ISSA. Does that mean that there is no permit request

or environmental impact being done?

Mr. HAYES. There may be some activity, but there is no exploration activity.

Chairman ISSA. So, again, a lease costing $2.2 billion in Alaska,

the stockholders would sue and win if they were—if it was not in

the best interest of the company to do everything they could to get

a return on their $2.2 billion; isn’t that true?

Mr. HAYES. I can’t speak to a shareholder’s rights. I do know

that we are working with Shell very closely to address their interests, and we have just in the last month received exploration plans

that we are processing for the potential exploration of those permits next summer.

Chairman ISSA. Right, which is 1 year later than it would have

been if they had been processed in a timely fashion.

You know, there is a belief that in fact prices are artificially high

because of speculators. I am not going to debunk that. I am going

to ask you a simple question. If we got all of the resources, of oil

and natural gas, from both Federal and private lands that are estimated to be available, isn’t it true that we could be energy self-sufficient for 100 years? Isn’t that what all the studies show? I am not

saying it is an easy goal, but with fracking and other technology,

isn’t it true we could raise at least 40 percent, which would put us

marginally within self sufficiency, if you include Canada, it would

make us self sufficient? Yes or no, isn’t that true?

Mr. HAYES. I don’t know if you are referring to technically recoverable resources or economically recoverable resources.

Chairman ISSA. Well, at $100 a barrel, isn’t it more than an

enough to be economically recoverable, not just technically recoverable?

Mr. HAYES. I really don’t know the answer to that question.

Chairman ISSA. OK, well, if you would answer for the record I

would appreciate it.

Mr. HAYES. Certainly will.

Chairman ISSA. For the administrator, I have just a very simple

question. Both sides will have other questions that will probably be

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more thoughtful in some ways. But in your opening statement, you

talked about the requirement to make sure that these drilling rigs

that were, ‘‘as much pollution as a refinery.’’ Isn’t it true that when

China is drilling just south of our border in Cuban waters, isn’t it

true that they do just as much polluting or more than anybody producing just slightly north of that in U.S. waters? Isn’t it true that

the amount of global pollution will actually be higher if it is produced outside the United States than if it is produced inside the

United States, yes or no?

Ms. JACKSON. That is certainly possible. I don’t know what emissions come from Chinese rigs. What I can say is——

Chairman ISSA. Oh, yes you do. You know that we have some of

the highest standards of emissions in the world, isn’t that true?

Ms. JACKSON. Our standards are high because under the Clean

Air Act, passed by Congress, we are told to protect the health of

Americans, including from pollutants that are not global pollutants; they can be quite local, like SO2, particulate matter and

smog, which can affect everyone from those on a cruise ship in

Alaskan waters to recreational——

Chairman ISSA. I appreciate that, but isn’t it true that the primary pollutants, especially those that you were talking about earlier in fact are global pollutants?

Ms. JACKSON. They are certainly admitted globally, sir, but have

local impacts.

Chairman ISSA. Last but not least, isn’t it true that more oil has

been spilled in the Pacific by importation than by actual drilling

over the last 30 years?

Ms. JACKSON. I don’t have the figures.

Chairman ISSA. I do. It has been.

I now recognize the ranking member.

Mr. CUMMINGS. Let me make it clear, Administrator Jackson, I

want us to have high standards. I want us to set a model for the

world. We are—this is the United States of America, and we are

better than that.

On May 12, 2010, Rex Tillerson, the CEO of ExxonMobil, testified before the Senate Finance Committee along with CEOs of five

other major oil companies. During this testimony, he estimated

that without excessive speculation, oil would be adding—trading at

$60 to $70 a barrel instead of roughly $100 a barrel. Are either of

you familiar with these comments, Ms. Jackson?

Ms. JACKSON. Yes, sir.

Mr. CUMMINGS. And you, Mr. Hayes?

Mr. HAYES. Yes, I recognize.

Mr. CUMMINGS. Well, he is not alone. On April 11th, Goldman

Sachs issued a warning to its investment clients—now this is Goldman Sachs—that says speculators may be inflating the price of oil

by as much as $27 a barrel, so that is very close to Mr. Tillerson’s

estimate of about 30 percent.

Mr. Hayes, are you aware of that estimate by Goldman Sachs?

And are you aware, Administrator Jackson?

Mr. HAYES. I am, I am, Mr. Ranking Member. And I also note

that your staff paper laid this out in quite a bit of persuasive detail.

Mr. CUMMINGS. And you, Ms. Jackson?

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Ms. JACKSON. Yes, sir.

Mr. CUMMINGS. U.S. Energy—let me turn to a different estimate.

The U.S. Energy Information Administration [EIA], is the Nation’s

foremost independent—independent—source of energy analysis. In

2009, EIA examined the potential impact of expanding domestic oil

drilling to the Outer Continental Shelf of the Atlantic and Pacific

Coasts and the eastern and central regions of the Gulf of Mexico.

EIA issued a report concluding that there would be no, and I emphasize, no changes in gas prices by the year 2020 and that there

would be a decrease of only 3 cents per gallon by the year 2030.

Mr. Hayes, are you familiar with the EIA estimate?

And Administrator Jackson, are you familiar?

Mr. HAYES. I am.

Ms. JACKSON. Yes, sir.

Mr. CUMMINGS. Well, let me put all of this together. On one

hand, you have oil company CEOs and investment banks saying

that excessive speculation may be inflating prices by 30 percent.

Now that is the oil company CEOs and investment banks. On the

other hand, you have the Energy Information Administration saying that opening up vast portions of the Outer Continental Shelf

will result in only a 3 cent difference 20 years from now.

So the question is, let me ask you both and let me ask you as

drivers and consumers, if you could save a dollar per gallon or only

3 cents per gallon, you would save the dollar, wouldn’t you?

Ms. JACKSON. Yes, sir.

Mr. HAYES. Yes, sir.

Mr. CUMMINGS. Here is my point, this committee has a tremendous and awesome opportunity to really help everyday Americans,

like the ones I saw going to work this morning in Baltimore, getting up at 5:30 and filling up their tanks and it costing them more.

It is our duty to help them.

But we have limited resources, so we have to prioritize. It seems

to me that addressing excessive speculation offers a much, much

better opportunity to help lower gas prices rather than focusing our

efforts on expanding domestic drilling, which will help oil company

profits but will make little difference on the price of gas as people

try to get to work every day, try to get to church on Sunday, try

to take their kids to the baseball game, they try just to go out, not

go out to Disney World from Baltimore but just go to the local

Arby’s and have a lunch.

Even if these estimates are half of what the experts predict, they

still dwarf any conceivable cost benefit we get from additional drilling.

Let me just close by quoting CFTC commissioner Bart Chilton,

on April 20, 2011, he said this, ‘‘this is a Wall Street premium on

gas prices.’’

He went on to say, every time folks fill up their tanks, they can

expect that several dollars are due to speculation.

I didn’t say that; he said that.

And so I hope that we have a chance to investigate this issue

more in detail in the future. And I will say it until the day I die:

We have a duty as Members of this Congress to leave our children

with a better environment than the one we found on the day we

were born.

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With that, I yield back.

Chairman ISSA. I thank the gentleman.

We now recognize the gentleman from Utah, Mr. Chaffetz, for 5

minutes.

Mr. CHAFFETZ. My understanding is the Department of Energy

was created on April 1, 1977. I remember as a small child being

with my dad when we would go to the gas lines and couldn’t get

gas. So we created this Department of Energy, but over the course

of time, when we were importing roughly, and it is very rough

numbers, 40 percent of our oil needs were being imported, that

number moved closer to 60 percent.

The Federal Government has failed under two different types—

very different types of administrations to wean our way off of the

need to import oil from overseas. And yet what I find now is every

time I turn around and you see companies willing and wanting to

invest heavily with the hope and the idea and the speculation that

they are going to be able to actually produce some energy resources, and not just oil, but natural gas, coal, those types of

things, that it is the EPA and the BLM, the Department of the Interior, that are putting up so many road blocks that we can’t extract the resources that we have in our own very back yard.

Now one of my core questions here is particularly for the BLM—

I am from Utah; I am a Representative from Utah—is that it appears that the administration in its frustration and in its inability

to actually have legislation passed is going to go ahead and use its

rulemaking authority and just bypass the Congress and put up

some rules and roadblocks and implement things that would never

pass this body. Even when the Democrats had the House, the Senate and the Presidency, they couldn’t pass cap and trade.

The Red Rock Wilderness Act is something that has been introduced many times here in Congress, it has never even come close

to being implemented. And then the Wild Lands Policy, which kind

of 2 days before Christmas was implemented, that should be a

flashing red light to the American public that something was

wrong when that was introduced.

My question for the Deputy Secretary here, in citing those, isn’t

it the policy of the BLM to just go ahead and implement this stuff

anyway? I mean, at what point does the BLM say, OK, we are

going to use this information, and we are just going to go with it

anyway?

Mr. HAYES. Congressman, the intent of the reform efforts that

BLM has had is to provide more clarity for industry and for other

interests in how the public lands——

Mr. CHAFFETZ. But that clarity should by based on what is

passed in the U.S. Congress.

Mr. HAYES. Absolutely. Section 202 of the Federal Lands Management Policy Act provides the authority and responsibility for

BLM to make the——

Mr. CHAFFETZ. But not before it becomes law, correct?

Mr. HAYES. It is law already.

Mr. CHAFFETZ. No, if something hasn’t become law, if something

hasn’t become law, then you are not supposed to be doing it, right?

Let’s put up—let me deal with this first slide here. This is the official map from the BLM, severe lake tracks map, and it goes

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through with the number. In one of those designations, if you look

over at the right, it talks about as one of the things the Red Rock

proposal. Why does the BLM issue an official map with the Red

Rock proposal designated on it when it has yet to become law?

Mr. HAYES. There is simply a map. There is no regulatory implication to the Red Rock wilderness area at all, Congressman. What

we are trying to do is reduce the problem that has developed in the

last several years, when prior administrations essentially leased

whatever industry nominated wherever, and the protest——

Mr. CHAFFETZ. You cannot—that is not true, that is such a miscalculation. That is such a gross exaggeration of the reality. You

can you not sit here and say, they just leased whatever. That is not

true. There are rules and regulations and they abided by those. It

wasn’t just sign up and you get it.

Mr. HAYES. The facts are——

Mr. CHAFFETZ. You are losing total credibility when you make a

statement like that.

Mr. HAYES. The facts are, Congressman, that in 1998, 1 percent

of the leases nominated and in fact leased to industry were protested. When we came into office, 48 percent of all leases were

being protested because of broadscale concerns that BLM was not

taking into account its multiple-use mission and leasing in areas

that made sense. We want to reduce the——

Mr. CHAFFETZ. My time—I have just a few seconds here, I am

sorry. On December 22, 2010, Secretary Salazar issued Special

Order 3310, which created the wildlands, but it was also the policy

of the Department of the Interior, it seems to have actually implemented that even though when we pass the CR, there is no funding

for the wildlands. Is it the policy, yes or no, to implement the

wildlands? Is it the policy of the BLM to actually implement——

Mr. HAYES. We will not implement the wildlands policy. We will

honor the congressional rider.

Mr. CHAFFETZ. Thank you. My time——

Chairman ISSA. Would the gentleman yield? Should we on the

dais consider the amount of environmental leftists who sue and

protest is the basis for whether or not these are valid leases or not?

So a growth in lawsuits exponentially is in fact simply a growth

and a difference between the Clinton administration and the Bush

administration as far as who decides to sue, right?

Mr. HAYES. I would say, Congressman, that it is indicative of an

additional challenge for industry and for other parties to develop

their oil and gas resources in an economic and timely manner. No

one wants that sort of litigation.

Chairman ISSA. OK, my time has expired. The gentleman from

Illinois, Mr. Quigley.

Mr. QUIGLEY. Thank you, Mr. Chairman.

Mr. Secretary, the world seems to be focus on just one spill, the

Horizon spill. Could you give some quick summary of how much—

how many spills take place in a routine year, not just in water, but

in Alaska, the degree of these, the incident that took place in

Prudhoe and the fact that this isn’t just an isolated incident as bad

as it was.

Mr. HAYES. I would be happy, Congressman, to give you those

statistics for the record. I don’t have them offhand. There are a

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number of spills. Obviously, the Macondo Well was enormously

anomalous in its size, but there are routine spills that occur.

Mr. QUIGLEY. In the ocean?

Mr. HAYES. Yes.

Mr. QUIGLEY. And in Alaska, the same—hundreds in the course

of the year, correct.

Mr. HAYES. I am not sure there are hundreds that occur in Alaska.

Mr. QUIGLEY. I promise you, you will find that when you give us

these numbers. And the significant spills which have taken place

already, including Prudhoe Bay, you would pass that on as well?

Mr. HAYES. Certainly will, Congressman.

Mr. QUIGLEY. Ms. Jackson, I know you had limited time at the

beginning of your introduction, could you elaborate to a certain degree on the issues with fracking and the concerns that you have

from your initial analysis of the issues?

Ms. JACKSON. Certainly, sir.

First, let me start by saying that in general, States have been

regulating various aspects of oil and gas exploration and recovery

and are on the front lines of that.

EPA has certain authorities under the Clean Water Act and the

Clean Air Act. One of the things we are doing in addition to our

authorities as mandated by Congress is a study of fracking to determine its impacts on drinking water.

That is very much in the minds of the American people and I assume Congress, which is why they asked us to do it. So as we do

that study, the other thing we have said, because we will not see

initial results from that study until the end of next calendar year,

is that we will, when asked or when we become aware of an issue

that may be a violation of the Clean Water Act, the Safe Drinking

Water Act or the Clean Air Act, respond, and we will provide guidance on those areas that are becoming areas of concern or challenges for the regulated community as we see our country move

into fracking in new areas such as the Marcellus Shale.

Mr. QUIGLEY. It is not just the contamination of the water; it is

the amount, right? This is a country that is facing water shortages

in many areas, correct? The amount, the volume that is used in

this process.

Ms. JACKSON. That is correct, sir. It takes millions of gallons to

frack a well. And what happens is that water is injected. Oftentimes that is not a regulated activity at the Federal level, but then

the water has to come back. It is flowback water, and that water

and the disposal of that water is an enormous amount of water as

well as it can bring up contamination, such as radiation, in low levels that may be in the formation. That is part of what the study

is looking at as well in addition to quantity.

Mr. QUIGLEY. Currently, to the limits of your knowledge at this

point, what happens to that water that comes back up?

Ms. JACKSON. Well, a mixture of things, depending on the area

of the country, there are some places where there are just enormous pools where this water is stored and where there is some

amount of concern about whether that will be regulated and how

those pools will be closed. In other areas, we learn that recently—

until recently, when the State of Pennsylvania asked them to volVerDate 17-JUN-2003 13:39 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00080 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70675.TXT KATIE PsN: KATIE
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untary cease, that producers were sending the water to publicly

owned treatment works. That is a regulated activity under the

Clean Water Act. And so we have concerns and are working with

the State of Pennsylvania to ensure that is being done according

to law and to protect citizens, because those publicly owned treatment works eventually discharge into surface water, which can be

drinking water. And in other cases, it is put back down the hole

in an underground injection disposal or recycled and reused.

Mr. QUIGLEY. Thank you.

I yield back.

Mr. CHAFFETZ. Will the gentleman from Illinois yield?

Mr. QUIGLEY. Yes.

Mr. CHAFFETZ. Going back to Deputy Secretary Hayes, Beverly

Gorney, who is the spokeswoman for the Wyoming BLM State office, who said this on April 21st, when asked why BLM pulled six

oil and gas drilling leases new Adobe Town, Wyoming, ‘‘They have

everything to do with the secretarial order on wildlands.’’ Was she

wrong or right?

Mr. HAYES. I don’t know the specifics. All I do know is that we

have informed everyone in the department that we are complying

with the congressional rider dealing with wildlands.

Mr. CHAFFETZ. So there should be absolutely no activity in any

way, shape, or form anywhere within the BLM to try to implement

the wildlands.

Mr. HAYES. No designation of wildlands will occur while that

rider is effective, Congressman.

Mr. CHAFFETZ. And there should be no preliminary work on putting that in place, correct?

Mr. HAYES. The order’s focus is on the designation of land as

wildlands. The authority to inventory lands with wilderness characteristics is clearly continuing under the Federal Land Management Policy Act, but I repeat and to your point, we will not designate any lands as wildlands in respect and compliance with the

congressional direction.

Mr. CHAFFETZ. Thank you.

Thanks to the gentleman from Illinois.

Chairman ISSA. Thank you. We now go to the gentleman from

Pennsylvania, Mr. Meehan, for 5 minutes.

Mr. MEEHAN. Thank you, Mr. Chairman.

Administrator Jackson, thank you for taking the time to appear

before us today. I am not aware that we really had an opportunity

to speak with you before. In my district of southeastern Pennsylvania, a big issue related to energy relates to refineries. I have

some 7,000 jobs that are tied to the two refineries in my district,

which is a good thing, because according to your own report, the

number of U.S. refineries declined by almost half since the 1980’s

here in the United States. And employment in the refining segment

has declined by 13 percent in the last decade. Now, most of those

refining opportunities have actually moved over to places like India

and China and Nigeria, where they are building new refining capacity.

In fact, the refineries, as you point to health, and I think that

is an appropriate concern, are facing huge regulatory challenges.

One of my refineries has spent 20 percent of its total value in reguVerDate 17-JUN-2003 13:39 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00081 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70675.TXT KATIE PsN: KATIE
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latory compliance. That is, a $5 billion capitalized company spent

$1.3 billion on compliance just in the last recent, recent history.

And I understand the health, but what point in time, while health

is an issue with respect to people, at what point in time do the welfare of fish start to take precedence over the creation of jobs?

Within one of my refineries, there is now a regulation called

clean water cooling water intake structures under 316(b), in which

this one refinery is now being asked to put in a cooling tower at

the cost of $350 million, the effect of which will be so that they can

return the water back to the Delaware River at a 2 percent or 2

degree warmer texture or cooler temperature, because apparently

the fish are thrown off by the warmer water of 2 degrees. The impact of that $350 million additional cost, may will put

that refinery that employs close to 2,000 people in my district on

the line at a point in time where jobs are at stake and at risk of

going overseas, would you please tell me specifically how does the

EPA decide whether the loss or creation of jobs directly as a result

of a regulation should be part of a thorough economic analysis?

Ms. JACKSON. Sir, thank you. I would just like to point out that

while the number of refineries has declined, refining capacity in

this country has actually increased. So we have fewer refineries refining more and more product.

Mr. MEEHAN. Capacity here, but those jobs are going overseas,

so tell that to the people in my district.

Ms. JACKSON. My point, sir, is there is as much oil returning

from refineries or more than 20 years ago. So what is actually happening is that technologically, they are becoming less employee-intensive and yet able to process more oil, and that is not as a result

of——

Mr. MEEHAN. Those are refineries in the Gulf Coast, I am aware

of that. I have refineries that have been operating for 50 years that

are struggling to continue to compete, and most of the struggle

comes at virtue of the regulations. I am not arguing with regard

to—I am not making that point here today because most of it relates to health. I am talking about the welfare of fish.

Ms. JACKSON. Well, sir, let me speak to that issue directly. We

recently proposed a rule—it hasn’t been final—on intake structures, not only for refineries but for power plants. That rule relies

heavily on the States. The States are delegated authorities for implementation of the majority of Clean Water Act permits. So although I don’t know the specifics of the permit that has been proffered by——

Mr. MEEHAN. You are saying this is a State of Pennsylvania responsible for this?

Ms. JACKSON. Sir, I will double-check those facts, but my belief

is that, having run a State program, States proffer proposed permits based on their analysis of requirements.

I would offer this as well. It is not simply the welfare of fish, as

you put it, but the ecosystem health that the Clean Water Act intends to restore.

Mr. MEEHAN. Where does the ecosystem of the health of the

7,000 jobs in my district come into play. I asked you a specific

question, whether the loss of creation of jobs directly as a result of

regulation is part of a thorough economic analysis. I need a specific

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answer because, just on May 4th, your deputy assistant, Mathy

Stanislaus, specifically said, we do not take a look at jobs. So I

want to know the answer; do you directly take a look at jobs?

Ms. JACKSON. We have done it, sir, although we have not done

it in every example. Let me explain a little bit about that.

We do an economic analysis if it is mandated by law. We also do

it in compliance with executive orders issued by the President Clinton that have survived through three administrations. Because of

the times we are in, we have leaned heavily into jobs analysis

around the rules that have been proposed under the Obama administration.

Chairman ISSA. The gentleman’s time has expired.

We now go to Mr. Yarmuth, if he is ready, for 5 minutes.

Mr. YARMUTH. Thank you, Mr. Chairman.

Welcome, Administrator Jackson and Deputy Secretary Hayes.

I have a question about in relation to oil supplies. Is there to

your knowledge a serious shortage of oil supplies in the world right

now?

Ms. JACKSON. There is an increasing world demand for oil, and

certainly, in this country, I think as the deputy secretary said, demand is down over the last year.

Mr. YARMUTH. And isn’t it true that domestic production under

the Obama administration has actually increased?

Mr. HAYES. Yes, Congressman, it has. It has increased substantially, and oil imports have declined by 7 percent in the last 3

years.

Mr. YARMUTH. So, in fact, whereas we heard a lot about ‘‘drill,

baby, drill’’ under prior administrations, the actual evidence shows

that production has expanded under this administration where it

actually hadn’t under previous administrations.

Mr. HAYES. That is correct, Congressman.

Mr. YARMUTH. When we are talking about prices at the pump,

and there are a lot of contributors to pricing in oil companies—I

know in my district, my attorney general, Jack Conway, has on two

separate occasions taken on refiners and distributors, so that when

we talk about gouging, and people say, is there any evidence of

gouging from big oil companies, that is not the only aspect of gas

pricing that we need to be concerned about in terms of questionable

activities; is that right?

Mr. HAYES. That is correct, Congressman. As you know, Attorney

General Holder has a task force looking into all of these issues.

Mr. YARMUTH. The other question—I don’t want to belabor oil

pricing too much, but I did want to get that one point on the record

about domestic production. But on another subject that the administrator and I have talked about a number of times, in my State,

a State that is a large producer of coal, we are constantly informed

by the industry that the EPA through its actions is actually threatening employment in our State. There are ads being run now in

Kentucky that say, there are 18,000 good coal-mining jobs in Kentucky, and the EPA is threatening those jobs.

Administrator Jackson, would you like to comment on the question of EPA activity vis-a`-vis the coal industry and employment?

Ms. JACKSON. Yes, thank you. I certainly can’t answer for those

ads, but I do believe they are misleading.

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What EPA is doing in Appalachia in particular is addressing the

water pollution issues associated with a practice known as mountain top surface mining, mountain top mining, mountain top removal mining. And in that practice, because of the way that spoils,

the remains of the noncoal portions of the mountain top are disposed there are increases in solids in the water that—selenium and

other metals that peer-reviewed science and literature continues to

show over and over again are quite problematic for the health of

those ecosystems. And because they are headwaters, it can become

a problem for communities downstream.

EPA has worked under draft guidance that we are about to finalize after rounds of public comment to give clear guidance to mining

companies, to State officials, as to how we will implement our authorities under the Clean Water Act to try to minimize that pollution.

Mr. YARMUTH. And in terms of employment, you may not know

the figures, but 30 years ago, before mountain top removal became

a widespread practice in Appalachia, there were 55,000 coal-mining

jobs in Kentucky. And in fact, going from 55,000 to 18,000 was not

the result of any EPA action because EPA was largely, until your

administration, was largely basically apathetic toward that process.

One of the things that I am constantly impressed with, with regard to the mountain top removal issue, is that the citizens of eastern Kentucky come to my office and bring water that they took

from wells on their property and so forth and out of their tap, and

it is water that no one would want to drink or want their children

to drink.

And so while I know that there has been a number of initiatives

before this House and before this committee to basically incapacitate EPA in its ability to protect the citizens of my State and their

children, I would like to say that if House Republicans or if anyone

has a problem with our environmental laws, they ought to make—

take the initiative to change the law. If they want to move to eliminate the Clean Water Act or Clean Air Act, they ought to do that,

instead of taking the cop off the beat, which have been the steps

recommended by this House.

With that, I yield back.

Chairman ISSA. The gentleman’s time has expired.

We go to the gentleman from Texas, Mr. Farenthold, for 5 minutes.

Mr. FARENTHOLD. Thank you very much, Mr. Chairman.

I did have a couple of questions. I would like to start with Administrator Jackson. There are a lot of folks in Texas who are kind

of getting the impression the EPA has it out for us.

We have had a pretty good system in place under the Clinton administration; came up with a flex permitting system for various refineries. Under that system, we saw a decrease over a 9-year period

of 27 percent in total air emissions.

Now the EPA is stepping in and saying that flex permitting system isn’t good enough, and it is creating all sorts of regulatory

problems with the EPA trying to redo what we have been doing

pretty well for about 10 years.

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I kind of subscribe to if it ain’t broke, don’t fix it. Can you tell

me why the EPA is unhappy with Texas and convince me it is just

something more than you guys don’t like us very much.

Ms. JACKSON. No, sir, I certainly like Texas very much. I have

family members there.

Let me just go over a couple of things. It was actually the George

W. Bush administration that made the determination that the

flexible permits in the State of Texas did not comply with the

Clean Air Act. And it was then left to us in the Obama administration to try to find a way out of that morass.

We have worked with the largest flexible permit holders. And I

was just briefed on this yesterday. And I believe, with one notable

exception, which we are still working on, we have worked them to

a place where their permits are now compliant with the Clean Air

Act.

It took work on their part, and so I want to commend the regulated industry for that. And I think we are in a better place. Because where that leaves us is with permits that are enforceable

under law, are transparent and also that give industry the ability

to do their job.

Mr. FARENTHOLD. And now you all are also looking at it permitting greenhouse gas emissions under Title V. It seems the last Congress specifically said we really weren’t interested in doing that

right now under cap and trade. Why are you all pursuing that considering that even the last Congress wasn’t able to pass that out?

Ms. JACKSON. Well, two things. First, we are not pursuing cap

and trade under the Clean Air Act. And it is my opinion, I have

said this before, that we cannot, and we will not.

We are pursuing regulation of greenhouse gas emissions under

the Clean Air Act because of a Supreme Court decision that essentially found in 2007 that greenhouse gases were covered under the

Clean Air Act and that EPA needed to make a determination as

to whether or not greenhouse gasses cause a threat to public health

and welfare, which is the statutory threshold for——

Mr. FARENTHOLD. I apologize for cutting you off. I only have a

couple of minutes, and I wanted to go on to Mr. Hayes for a second

and talk about drilling in the Gulf of Mexico.

There has been a whole lot of hoopla on that. We are spending

a whole lot of time arguing about whether permits are coming out

at all and how fast they are coming out and all. Isn’t it true that

Mexico has some drilling going on in the Gulf of Mexico; China is

undergoing—issuing leases just right off our coast, basically, in the

Gulf of Mexico, for various oil companies to drill on Chinese and

Mexican lands.

Mr. HAYES. Congressman, Mexico is looking at potential deepwater drilling. The Secretary and I were in Mexico City about a

month ago meeting with the energy minister, and we are actually

working with them. And the President has indicated his interest in

applying the same safety standards that we are applying in the

United States.

Mr. FARENTHOLD. And Cuba, as well, is doing it. I don’t think we

are working as well with Cuba as Mexico.

Mr. HAYES. That is a fair point, Congressman. Cuba apparently

is considering oil drilling off the coast——

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Mr. FARENTHOLD. Wouldn’t we be better off, rather than spending all this time and money with the complicated permitting process, focusing our efforts on spill response and technologies to train

people and get the equipment and knowledge in place, so if there

were something that happened, be it in foreign waters or domestic

waters, we could respond to it and protect our coast? Wouldn’t that

be a better use of our time and resources?

Mr. HAYES. Congressman, it certainly spill response is a very,

very important focus. But I think the primary lesson out of the

Presidential commission and other—the National Academy of Engineering is that we have the capacity and should prevent these occurrences from happening in the first place. And our safety upgrades focus on that, and industry has responded. Industry is able

to meet the higher safety standards. And frankly, they have not objected to the higher safety standards.

Mr. FARENTHOLD. All right, well, I see I have only got about 10

seconds left.

Chairman ISSA. Would the gentleman yield?

Mr. FARENTHOLD. Absolutely.

Chairman ISSA. Earlier, you took credit for this high level—the

highest level since 2003. Aren’t there two truths about that,

though? First of all, it takes about 5 years at best case to get from

the beginning of the process to drilling production, so isn’t all the

credit for this new peak in the previous administration; simply you

haven’t been here long enough for anything you have done in the

way of new leasing to have any yield? Isn’t that absolutely true

that not one new lease that you put out is today producing?

Mr. HAYES. I would say it differently, Congressman. There has

been a lot of focus suggesting the Obama administration has been

holding up permits, which are the last, the last event to occur before the production occurs. The fact that production has increased

demonstrates the fact that we have in fact been permitting both

onshore and offshore.

Chairman ISSA. The time I borrowed has expired.

The gentleman from Massachusetts, Mr. Tierney, is recognized

for 5 minutes.

Mr. TIERNEY. Thank you so much. I thank our witnesses for

being here.

I know that the chairman started off by talking about speculation being what he thought was a belief that he wasn’t going to debunk, but in fact, as the chairman said before, we are entitled to

our own beliefs or opinions maybe but not entitled to our own facts.

And I think when you have experts from outside, you have industry officials and you have regulators all understanding that speculation is about $27 on a barrel of oil, it is a serious matter. And

this casino of future speculators is perhaps where I had hoped this

hearing would have gone. And I sent a letter to the chairman asking that he would do that, and I hope he does get down to the real

businesses of what is going to make a difference of prices at the

pump.

Now looking at this drilling idea, from what I see in the U.S. Energy Information Administration, they say that if we were to permit the Outer Continental Shelf of the Atlantic Pacific Coast and

eastern central regions of the Gulf of Mexico, the resulting difVerDate 17-JUN-2003 13:39 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70675.TXT KATIE PsN: KATIE
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ference in gas prices at the pump would probably be about 3 cents

by 2030. I watched prices go up and down about 10 cents of late

on that. So 3 cents by the year 2030 seems pretty tiny.

Mr. Hayes, do you concur with that finding?

Mr. HAYES. Yes, Congressman, and it is due to the simple fact

that the U.S. production cannot affect the global oil price in a

meaningful way.

Mr. TIERNEY. I think those experts have said you are absolutely

right; there is a glut currently on oil. I think the CEO of

ExxonMobil stated as recently as last month that there is no shortage of supply on the market. And so I guess increased drilling really wouldn’t lower the prices of oil and gas; is that correct?

Mr. HAYES. That is correct. I will say, though, that it is our policy to increase domestic oil and gas production responsibly, because

it is better to have a barrel produced here in the United States

than to import it.

Mr. TIERNEY. Well, let’s talk about that for a second.

Interior Secretary Salazar just testified in front of the Senate

that about 70 percent of the tens of millions of offshore acres currently leased to oil companies are inactive. That includes about 24

million inactive leased acres in the Gulf of Mexico, where I guess

there is an estimated 11.6 billion barrels of oil and 59.2 trillion

cubic feet of natural gas that are technically recoverable, and

they’re going unused. Why is the industry just sitting on those

leases, Mr. Secretary?

Mr. HAYES. It is not clear. The President has indicated an interest in encouraging companies to utilize those leases, and that was

the subject of his radio address a week ago Saturday.

Mr. TIERNEY. Well, you know, the Secretary also testified about

onshore, that 57 percent of the leased acres—that is about 22 million acres in total—are not being explored nor developed. So what

can the President do, what can the department do, to encourage

these companies to start using what they have?

Mr. HAYES. One of the recommendations that the administration

has made is to change the lease term of the Mineral Leasing Act

of 1920. Now onshore, every lease is leased for a full 10 years. It

does not take 10 years to make a decision of whether to invest or

not. We would prefer to have that lease term reduced. And thus,

if a company does not, decides not to invest, have the leases returned, so another company that might be more willing to invest

will do so.

Mr. TIERNEY. I look at this even more. And the Interior Department as a report on oil and gas utilization. So they say about 53

million acres were offered for sale in 2009. Under this, administration 53 million acres—37 million acres, I am sorry; 2.4 million

acres were bid on and sold, so 5 percent. In the central Gulf, 37

million acres were offered in 2010. Again, this administration, 37

million acres; 2.4 million acres were bid on and sold, so 61⁄2 percent. Can you explain why these companies aren’t bidding on those

leases and we have to listen to ‘‘drill, baby, drill’’ and this administration won’t this or won’t that in terms of 5 percent in one instance, 61⁄2 percent in the other; what is the explanation for that?

Mr. HAYES. I can’t explain why companies are not bidding. I

think our primary point, Congressman, is that our administration

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is providing the opportunity, a robust opportunity for domestic oil

and gas production, and I think those numbers make that point.

Mr. TIERNEY. Well, according to the EIA administrator, there are

already open to Federal and gas leasing about 95 percent of the

technically recoverable oil and gas in the Outer Continental Shelf;

is that right?

Mr. HAYES. I am not familiar with the exact report, but I assume

so.

Mr. TIERNEY. Well, I guess I am having some difficulty understanding why the oil and gas industry believes they don’t have

enough of the taxpayers’ land to work on already and were given

those numbers. Let me ask you this: What more can we do about

speculation. That seems to be the real problem and the one that

I hope the chairman will have a hearing on. If it is $27 or $30 of

every barrel, what can we do or what aren’t we doing about really

focusing on the real problem?

Mr. HAYES. Well, Congressman, as you know, the President has

indicated a strong interest in addressing this issue and has asked

the Attorney General to set up a special strike force to investigate

potential speculation, and I know that group is under way.

Mr. TIERNEY. All right. Thank you.

Chairman ISSA. Sorry, that was not for you.

The gentleman from Tennessee, Dr. DesJarlais.

Mr. DESJARLAIS. Good morning, Administrator Jackson and Deputy Secretary Hayes. I really appreciate your being here today.

There are an awful lot of folks in Tennessee Four that are obviously excited about you being here as well because obviously, I had

several calls back from the district, and we have questions that

were sent in on Facebook and other medium to ask you, so we do

really appreciate you being here.

One of the reasons I was sent to Congress was to help create

jobs. And as part of our Oversight Committee, I have traveled Tennessee’s Fourth District over the past several months visiting businesses and industries and asking them, what is standing in the

way of job growth?

And almost unanimously the No. 1 thing that people were telling

me was to get government out of the way. And not surprisingly,

Administrator Jackson, the EPA often comes up, that they feel that

there are burdensome regulations that are preventing job creation.

Now, when we started here earlier today, the ranking member

cited the Gulf oil spill, which was obviously very tragic. And he

said that it was our job and your job to never ever, ever, never,

never, ever allow that to happen again. Do you feel if you had unlimited power and resources that you could prevent that from

never, ever happening again?

Ms. JACKSON. No, sir, I can’t guarantee that.

Mr. DESJARLAIS. How good are you guys? Because there is an

awful lot of power and rules and regulations that are being levied

on our businesses here that seem to be prohibiting job growth. Do

you feel like the EPA is doing a good job?

Ms. JACKSON. In general, yes. One of the reasons I don’t believe

I could guarantee that is because EPA does not primarily regulate

the safety of offshore drilling, so there is nothing within EPA’s auVerDate 17-JUN-2003 13:39 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00088 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70675.TXT KATIE PsN: KATIE
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thority that speaks to whether or not those regs are safe. I think

the deputy secretary has spoken to that this morning.

Mr. DESJARLAIS. Just out of curiosity, because we had the Secretary of Labor here on an earlier hearing, and they were citing the

mining accident in West Virginia that took so many lives, and I

had asked over the past 10 years, if they could show me an improved safety record because of their inspections and the fines that

they levied, because they do go into these mines and levy fines for

any number of things, and then when they leave, I assume that

they are satisfied that the mine is safe. But then there is a disaster, and it is always the mine’s fault; it is not the MSHA’s fault.

If there is a disaster within the environment, does the EPA take

responsibility? Do they feel accountable for that?

Ms. JACKSON. No, in general, in this country, the belief is that

the polluter is responsible, and it is the job of the regulatory agency to set the rules of the game, if you will, and to enforce them so

there is a level playing field.

Mr. DESJARLAIS. I get the impression from the folks that I am

talking to that if you are going to wield that much power, then

maybe you ought to take some responsibility as well, so that is just

the opinion that I get. But the folks that are engaged in calling—

and I did want to get a couple of their questions in. The Oversight

Committee chairman reads our mission statement before each

hearing, and our goal is to work with citizen watch dogs to deliver

more efficient, effective government that works for taxpayers, businesses and their families. Many Americans are concerned that the

EPA’s mission seems to be pitted against efficiency and effectiveness. We invited you here today and we will invite you back to give

you a chance to show the taxpayers otherwise. This is your chance.

Ellen Wetherill, one of our citizen watchdogs from Facebook,

wants to know, is the goal of EPA to protect the environment or

to drive up fuel costs in order to force Americans to modify their

behavior?

Ms. JACKSON. Our mission is to protect human health and the

environment, sir.

Mr. DESJARLAIS. OK. I hope she is satisfied with that answer.

Not only does EPA regulation attempt to enact a cap-and-trade

scheme that couldn’t even pass both Democrat-controlled Houses of

Congress, preventing the private sector from creating good jobs, but

no U.S. cap-and-trade plan would solve the massive pollution generated by growing industrial countries. This fact is not lost on

America. Citizen watchdog Gary Delong from Facebook wants to

know, why is cap and trade viable when in a few short years, India

and China will produce significantly more air pollution and cannot

and will not be held accountable, despite anything done by America?

Ms. JACKSON. Well, please assure your constituents that EPA is

not implementing a cap-and-trade program.

But you might also, and I am happy to speak to him as well,

mention to him that market-based programs have been used successfully in this country to control other pollutants, such as SO2,

the prime contributor to acid rain.

Mr. DESJARLAIS. And I want to get in one more. I am trying to

help these folks out. Citizen and watchdog Melody McMahon WorVerDate 17-JUN-2003 13:39 Nov 30, 2011 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 C:\KATIES\DOCS\70675.TXT KATIE PsN: KATIE
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thington from Facebook wants to know, why do we support the

subsidizing of drilling in Brazil and hamstring our companies here

at home?

Ms. JACKSON. I do not know that we support the subsidizing of

drilling in Brazil. That is outside of my area of expertise.

Mr. DESJARLAIS. The President mentioned that he was looking

forward to being a major importer.

And I am about out of time, so I will go ahead and yield back.

Thank you for answering those questions.

Chairman ISSA. I thank the gentleman.

We now go to the gentleman from Northern Virginia, Mr.

Connolly, for 5 minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman.

And welcome both to Ms. Jackson and Mr. Hayes. I assume, by

the way, picking up on that last question, Administrator Jackson,

your silence, your—you ran out of time, you weren’t conceding that

EPA hamstrings production domestically.

Ms. JACKSON. Absolutely not, sir.

Mr. CONNOLLY. And I assume from your previous answer in

terms of the mission of EPA, neither were you implying or allowing

an inference to be drawn that the choice you were presented is in

fact the choice. I mean, surely we can both drill and produce and

do it in an environmentally safe way. It is a false choice to say it

is one or the other, I would think. What do you think?

Ms. JACKSON. It is indeed a false choice. And in terms of responsibility for our actions, I would point out to Dr. DesJarlais that

EPA is responsible for the fact that air pollution is down 60 percent

in this country over 40 years, while our GDP has gone up 207 percent. So, by that metric, I think we are effectively delivering for the

American people.

Mr. CONNOLLY. You know, listening to my friends sometimes on

the other side of the aisle, they want the narrative to be that this

administration is so environmentally conscious that it has hamstrung the ability of domestic producers both in oil and gas to

produce.

So, Deputy Secretary Hayes, I just wonder if I could run through

some statistics with you and have you confirm or correct them.

My understanding is that actually in the Bush administration,

production, domestic production actually fell from 7.6 million barrels per day to 6.7 million. Is that correct?

Mr. HAYES. I don’t have those numbers handy, but I would certainly be happy to confirm that, Congressman.

Mr. CONNOLLY. And conversely, under the Obama administration, production actually increased. It went from 6.7 million to 71⁄2

million, essentially reversing the 1 million barrels per day loss that

occurred in the Bush administration.

Mr. HAYES. That is correct that production has increased during

the Obama administration.

Mr. CONNOLLY. Now, we heard the chairman, for example, which

I want to applaud him for pointing out, that there is a time lag between the issuance of permits and the actual bringing on of product

to the market, something many on our side of the aisle have actually been trying to point out to our friends on the other side of the

aisle when they say, drill here, drill now, allowing the impression

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with the public that somehow it is magically going to change the

price of oil, and of course it isn’t.

However, dealing with permit applications, it is my understanding that in the last year of the Bush administration, there

were 5,000 applications listed, and under the Obama administration last year, that went from 5,000 to 7,200. So the permit applications actually went up significantly, is that correct?

Mr. HAYES. I think you are referring to the applications for permits to drill on BLM lands.

Mr. CONNOLLY. That is right.

Mr. HAYES. And correct, the applications have gone up, and we

have actually—there was a significant backlog that we have cut

down significantly in the last 2 years.

Mr. CONNOLLY. Now, also part of this narrative is that President

Obama has just caused an absolute moratorium after the worst

deepwater oil spill in American history and that there is this de

facto moratorium on Gulf Coast oil drilling. Now, it is my understanding that actually Outer Continental Shelf production has increased from 446 million barrels in 2008 to 600 million barrels last

year. Is that correct?

Mr. HAYES. That is correct.

Mr. CONNOLLY. So much for moratorium. Switching subjects just

a little bit, Ms. Jackson, there is a lot of talk and promise about

hydraulic fracture. Is there any evidence that hydraulic fracturing,

however, can affect aquifers and water supplies?

Ms. JACKSON. There is evidence that it can certainly affect them.

I am not aware of any proven case where the fracking process itself

has affected water, although there are investigations ongoing and

concerns——

Mr. CONNOLLY. What kinds of chemicals are we concerned about

in terms of possible pollutants to water supply in the fracking process?

Ms. JACKSON. Well, you know, the actual—the contaminants are

not public in terms of the mixtures. But we do know that they include things like benzene and toluylene, ethylbenzene, xylene, compounds like that.

Mr. CONNOLLY. And what is the problem with those chemicals?

Ms. JACKSON. Well, those are listed hazardous waste primarily

because, for most of them, it is the effect on the central nervous

system, either to a baby in utero, meaning birth defects or problems with the nervous system, developmental disorders primarily.

Mr. CONNOLLY. Is benzene a carcinogen?

Ms. JACKSON. It is indeed, sir.

Mr. CONNOLLY. And final question, the Marcellus Shale formation that we are looking at, is it near any major urban water supplies?

Chairman ISSA. You can answer that briefly. The time is up.

Ms. JACKSON. Yes, sir. New York City is concerned about it. Obviously, it is upstream even of Washington, DC, supply.

Mr. CONNOLLY. Thank you.

Chairman ISSA. The gentleman from North Carolina, Mr.

McHenry, for 5 minutes.

Mr. MCHENRY. Thank you, Mr. Chairman. I certainly appreciate

it.

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Now, there has been this discussion with restricting access to domestic oil supplies that when policymakers on Capitol Hill are trying to open up a greater amount of supply here in the United

States, that somehow that is supportive of big oil. But really, the

economic reality is counter to that. The economic reality is that

when you open up a greater amount of supply, it is the small guy

that benefits. It is the small business owner. It is the small trucking firm. It is the mom taking the kids to school. It is the small

guy that benefits when we have more production, greater supply,

which will lower the cost. And those two things are inextricably

linked.

Now, when we restrict supply, like administration policy, especially this administration’s policies have been, that increases the

profits for the big oil companies because they have a smaller quantity of precious resource to access, and therefore, they can charge

more at the pumps. It seems to me that the rhetoric coming out

of this administration, while they are saying they are increasing

supply, is run counter to that; the restrictions, the higher regulations.

You know, we all care about clean water and clean air, but we

also want to be able to drive our kids to school. We also want to

be able to have a job to go to so that we can make the mortgage

payment so we can provide for our families. And it seems like this

President, this administration, simply does not get it.

And with that, I yield the balance of my time to the chairman.

Chairman ISSA. I thank the gentleman.

Mr. Secretary, on your Web site, the BLM Web site, it says,

‘‘BLM are working with local communities, State regulators and industry and other Federal agencies in building a clean energy future

by providing sites for environmentally sound development of renewable energy on public lands.’’ Are you familiar with that?

Mr. HAYES. Yes, sir.

Chairman ISSA. Why is it I can’t—and it goes on about solar and

wind—I can’t find anything about BLM represents the greatest

amount of resources of natural gas and oil of any land owner, and

in fact, it is the second largest revenue to the U.S. Treasury. Why

is it that what we are talking about here today, the access to Federal lands, which I know you are saying it is going up—our figures

and our studies show maybe not so much—why isn’t it anywhere

on your Web site? Are you not proud of the availability of BLM

land for natural resource exploration and development and delivery?

Mr. HAYES. We are absolutely proud of it, Congressman, and Mr.

Chairman.

Chairman ISSA. Well, why is it not on your Web site?

Mr. HAYES. Well, it is probably more importantly in our budget.

We are spending at least 80 percent of our BLM budget on conventional oil and gas compared to renewable energy.

Chairman ISSA. That is because that is what pays. The revenue

that the taxpayers are receiving far exceeds your budget, and it is

coming from oil and natural gas. It is not coming from windmills.

Mr. HAYES. We are proud of both things, Mr. Chairman. We are

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sponded to the market demand, particularly in California, and

have provided siting opportunities for thousands of megawatts of

utility scale, so we are proud of that.

Chairman ISSA. We look forward to seeing if those sitings actually turn into production in California. So far, we are not doing so

well, as California has been watching our attempt to get to the

2020 plan.

Earlier, the ranking member was talking about various figures.

I have one that concerns me. EIA, earlier recognized as an authority, has downgraded production in the Gulf of Mexico by 250 barrels per day over each—or 250,000 barrels per day for each of the

next 2 years. Are you concerned about that precipitous drop in production in the Gulf.

Mr. HAYES. I should say, Mr. Chairman, there is no question

that because of the Deepwater Horizon disaster, the oil spill, and

the need to upgrade our safety standards, which the Congress,

Presidential commissions and others agreed needed to happen, that

there has——

Chairman ISSA. Just to weigh in, hasn’t a Federal judge said that

your moratorium was wrong? And after that was forced to be lifted

by Federal action, didn’t you then go to Alaska and do the same

thing so that it requires Federal action again?

Mr. HAYES. No, sir. A Federal judge in Alaska confirmed, there

was no moratorium in Alaska.

Chairman ISSA. Well, let’s talk about the Gulf. You had to be ordered to undo a moratorium that was overly broad and held at.

Mr. HAYES. No, sir.

Chairman ISSA. Well, we will consider the record. I don’t want

to have you say anything that ultimately would be bad, considering

you are under oath.

With that, we go to the gentlelady from California, Ms. Speier,

for 5 minutes.

Mr. TIERNEY. Mr. Chairman, if I might, just a personal point of

privilege, if you are going to make an assertion that a witness may

not be telling the truth, the least you could do as a matter of decency is allow him to respond.

Chairman ISSA. To the gentleman, I cut him off because in fact

the record of the court action speaks for itself. And if he is going

to say that somehow what they were ordered as unreasonable and

overly broad isn’t part of the problem, I didn’t want to have him

go any further in that.

Mr. TIERNEY. He is an adult and he is quite conscious. If you

want to cut someone off to save them, then don’t editorialize. In

fairness to the concept——

Chairman ISSA. The gentleman is no longer recognized.

The gentlelady from California, it is your time. The gentlelady

controls the time.

Mr. CUMMINGS. A point of order, Mr. Chairman.

Chairman ISSA. State your point of order.

Mr. CUMMINGS. Mr. Chairman, you have basically implied that

this gentleman may be lying.

Chairman ISSA. No, I did not.

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Mr. CUMMINGS. Yes, you did. You should give him an opportunity

to answer the question. I mean, let me tell you something. This is

about the integrity of this committee.

Chairman ISSA. The gentlelady’s time is now running.

Mr. CUMMINGS. And I said it from the beginning, I am not going

to allow people to come in here to be called all kinds of things and

not being treated fairly. Now, this man has to go home. He is got

people watching this. And I ask you to give him an answer—give

him an opportunity to answer the question you asked him.

Chairman ISSA. It is not a point of order.

The gentlelady’s time is running.

Ms. SPEIER. Mr. Chairman—Mr. Hayes, would you like to continue your comments, please?

Mr. HAYES. Thank you, Congresswoman.

The moratorium was lifted on October 10th by the Secretary of

the Interior after a series of public meetings in which we concluded

that the basis for the moratorium were satisfied. And as the chairman said, the litigation record speaks for itself.

Ms. SPEIER. Do you have anything further to say?

Mr. HAYES. No. Thank you.

Ms. SPEIER. All right.

You know, for all the talk about expanding the drilling opportunities in this country, if we were to do everything in the fantasies

of every oil executive’s mind, we are still looking at oil production

that wouldn’t be on line until 2020–2030, is that correct?

Mr. HAYES. Certainly some oil production is in the out years.

Ms. SPEIER. And having that oil drilled would actually have the

effect of lowering the cost of gas at the pump by 1 percent, is that

correct?

Mr. HAYES. The EIA study indicated, that was quoted earlier,

suggested that.

Ms. SPEIER. So for all this hyperbole going on in this hearing

room today, it would suggest that if we allowed every CEO of every

oil company in this country to drill everywhere they wanted to

drill, that the most that consumers would see would be in my

State, which is about $4 a gallon, a 4 cent reduction, and that

would be in out years. It wouldn’t be this year. It wouldn’t be this

month. It wouldn’t be tomorrow. Correct?

Mr. HAYES. That is correct, Congresswoman.

And that is why the President has focused on the importance of

looking forward and having an energy economy that doesn’t just

focus on oil and gas production domestically, although we will focus

on that, but also focuses on efficiency, alternative fuels and a clean

energy future.

Ms. SPEIER. So I have the, I guess, audacity when I first got

elected to Congress to introduce my very first bill, which was to

lower the national speed limit in this country by 5 miles, except in

rural areas. So, in rural areas, it could continue to be at the higher

speed, but lower it to 65 in other areas. It would, if I am recalling

correctly, reduce the actual cost of gas to the consumers today as

much as 40 cents or 50 cents on the gallon, is that true?

Mr. HAYES. I am not familiar. I know that going slower saves

gas.

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Ms. SPEIER. And also, if I recall correctly, it would save maybe

3,000 to 4,000 lives a year, is that correct?

Mr. HAYES. It sounds plausible. And I defer to Administrator

Jackson, who says yes.

Ms. SPEIER. Ms. Jackson, would you like to respond?

Ms. JACKSON. Well, I can certainly respond on the savings. One

easy way for people to save money is by slowing down. On EPA’s

Web site, there is a page that talks about things you can do, including maintenance on your car, the speed you drive, how you

drive, that can actually have a total effect, if I am recalling correctly, of around 50 or so cents a gallon.

Ms. SPEIER. All right. Mr. Chairman, I would like to submit for

the record a letter signed by 54 of my colleagues and myself asking

both Attorney General Holder and Chairman Gensler to immediately start an investigation of price speculation. I don’t necessarily think we need a strike force or a study or another evaluation; I think it is time for an investigation. I would like to submit

this for the record.

Chairman ISSA. Without objection, so ordered.

[The information referred to follows:]

[NOTE.—The information referred to was not provided to the

committee.]

Ms. SPEIER. And let me just see if there is any other questions

I might—I guess I would like to have Mr. Hayes speak to us about

what is being done to streamline the royalty process.

Mr. HAYES. Thank you for asking that question.

We have had a very vigorous reform effort on the royalty collection side. This is an area that has been of special interest to the

chairman, and I appreciate his leadership in this area. Two main

reforms: No. 1, we eliminated the royalty-in-kind program that we

believed provided potential abuse in terms of nontransparent collection of royalties. And then, second, we are announcing today an

initiative on royalty simplification. We are asking for comment on

a proposal that would involve using market-based pricing for the

basis of royalty calculations, rather than the current system that

looks at transaction-by-transaction, case-by-case evaluation of

transportation and processing costs, a lot more potential for expense by industry and the agency and also potential abuse, so we

are announcing that today.

Chairman ISSA. Thank you.

The gentlelady’s time has expired.

The gentleman from Pennsylvania Mr. Kelly, for 5 minutes.

Mr. KELLY. Thank you, Mr. Chairman.

Ms. Jackson, and also Mr. Hayes, thanks for being here today.

I know it is not always comfortable to sit here and try to answer

questions that we throw at you. But coming from Western Pennsylvania, Marcellus Shale was obviously a great opportunity for Pennsylvania and for the country. My concern is right now DEP is sitting on a lot of permitting.

And the big question is the water, the fracking water. Now,

fracking is 60 years old; it is not new. We know that Marcellus

Shale is 5,000 to 7,000 feet below the surface. It really doesn’t affect some of the water tables in the aquifers.

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However, I know there is a question about wastewater and what

happens with it. A lot of it has to do with DEP-approved regulations for wastewater people to do the treating, and they make a lot

of money doing that. If you were to check DEP, all the rivers in

Western Pennsylvania, everybody is right at where they should be;

there has been no substantial change in it. My question is, why all

of a sudden is the EPA interested in what is happening in Pennsylvania with the DEP? Because there really isn’t an instance there

to question has there been any water contamination, or am I wrong

on that?

Ms. JACKSON. I am not aware of any water contamination associated with the recent drilling. There has certainly been issues I am

aware of in Western Pennsylvania around surface water contamination and other issues like mining, especially in West Virginia on

the Monongahela.

EPA is involved for two reasons, sir: One, because the State is

a delegated authority under the Clean Water Act. They run most

aspects of the water program in Pennsylvania but not all. For example, EPA runs the industrial pre-treatment program in the State

of Pennsylvania, which is the program that regulates what drillers

are allowed to send to wastewater treatment plants. So it is a

shared jurisdiction; although my understanding is that the staff

are working together and that EPA staff in general believe that the

State should be the frontline agency.

Mr. KELLY. But they haven’t found any examples of any real

dangers right now, and they are working well within DEP regulations. It is just all of a sudden EPA is involved. And I have to tell

you, when I am back home in the district, the EPA doesn’t really

sit well with a lot of those folks. And it is about job creation. It

is about opportunity.

We are really looking at things that are kind of crazy. And I noticed today that the talk is about, are we getting gouged? Are we

getting gouged? And I think most would go to oil. But nobody questions gold and silver commodities and why they are rising in prices,

and are we getting gouged there. I think a little bit is disingenuous

as to what it is that we are trying to regulate, who makes too much

money, who is making too much money in such and such. We do

have a tendency to demonize others and we really don’t get to the

problems that are at hand.

I will tell you this, at 4.16 in Mcf, and that is on NYMEX on natural gas futures right now, there is a great opportunity; it is a

great buy right now. I know permits are available. But I got to tell

you, for investors, it is the uncertainty of what is happening with

regulation that keeps people from going forward. And I think we

all know that. Because the only people that don’t worry about a

positive return on investment is the U.S. Government. All the rest

of us really are driven by the fact that we actually have to have

a positive return on it. And I understand why we have regulations,

so that is fine.

But I do want to ask you this. The NPDES, or the National Pollutant Discharge Elimination System, right now backlog in their office, the PA DEP has sent 75 draft permits to the EPA’s Philly region office, OK? As of May 2nd, 22 permits have been issued; 53

are pending some sort of review. According to the DEP, EPA’s

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intervention has increased the DEP’s workload and has extended

an already lengthy burdensome process. So what is the end game,

and how can we speed up this permitting?

Ms. JACKSON. Well, sir, we are happy to work with the State to

ensure efficient oversight and review of permits. I am not aware of

exactly which permits you are referring to.

Let me simply say to you and your constituents. As EPA administrator, I see the incredible potential in natural gas. I think it is

important for our country. And I look at it through the lens of my

job and duties, which is its potential to decrease pollution.

So the only thing that I see as our job is to work with the State,

with regulators, with communities, to respond to their concerns, because public acceptance of safe and responsible exploitation of resource, in a good way—exploitation in a good way—is key to having

it happen.

Mr. KELLY. Excuse me for interrupting. There is a very highly

motivated and very mobile group that show up at these different

community meetings. It isn’t always the people that live in those

communities. They are highly motivated; they are highly organized,

and they are very vocal. They are addressing problems that really

don’t exist right now. And in fact, if you were to go back and look

at what Mr. Krancer says and other people in Pennsylvania, they

are more concerned with facts than they are with fear. But what

it is doing is it is driving a market perception or a public perception out there that Marcellus is dangerous and is affecting drinking

water. It simply is not true.

And with that, I yield back my time, Mr. Chairman.

Chairman ISSA. I thank the gentleman.

We now go to the gentleman from Florida, Mr. Mack, for 5 minutes.

Mr. MACK. Thank you, Mr. Chairman.

And I also want to thank the witnesses for being here today. And

I know it can be uncomfortable and difficult at times, and we do

respect and value your time for being here.

That being said, uh-oh. I listened to—Mr. Hayes, I listened to

your opening statement, opening testimony, and I got to tell you

that I am positive that if there are people in my district who listened to that, they would be quite angry. Because in your statement, basically what you said is that everything is so rosy and it

is really the oil company’s fault. They have the potential to drill;

they are just not doing it. They have the potential to drill for oil

and natural gas; they are just not doing it. No one believes that.

Absolutely no one believes that.

Now, you can get creative in the way that you present the information and you can sugarcoat it and present it in a way that may

support your position, but no one believes it.

Let me ask you this question. You keep talking about that under

the current administration there is more opportunities to drill,

more leases, all that kind of stuff. So would you say that, on average, the Obama administration has had more leases or less leases

than the Bush administration?

Mr. HAYES. I don’t have the exact number of leases. I know that

in terms of the number of acres that have been leased, that the

numbers are quite similar, both administrations.

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Mr. MACK. So, on average, in a year between the Obama administration and the Bush administration, the average acres is similar?

Mr. HAYES. That is certainly true, I believe, Congressman. I

want to check the numbers, but it is certainly true on the offshore.

Mr. MACK. Let me just tell you the figures that I have.

Mr. HAYES. Sure.

Mr. MACK. Under the Obama administration, the average acres

leased per year is 1.63 million; under the Bush administration, it

is 3.66 million. I don’t think those are close.

But that being said, again, I think that just points to the fact

that on one hand, you are taking credit for the past administration’s work, and then, on the other hand, you are saying that it is

the oil company’s fault that they haven’t drilled or they haven’t

done what they need to do, that somehow there is this, all of these

acres out there for them to drill and that they own leases to and

that they are ready to go, but they just haven’t done it. Isn’t that

not true?

Mr. HAYES. If I can please explain. Thank you for raising this

issue.

0the primary reason why we are laying out these facts on how

much acreage has been made available and how many permits we

have processed is to respond to the argument that our administration somehow has inappropriately restricted the areas for oil and

gas leasing and that we have been the cause for what is perceived

to be but is not in fact the case a decline in domestic oil and gas

production. With regard to the reasons why oil companies and gas

companies may or may not drill, that is largely a business issue.

Mr. MACK. My time is limited, so let me ask you this, do the oil

companies have the ability to go find where the oil reserves are,

apply for a lease and a permit to drill in that area, or is it the administration sets the areas in which they can explore to see if there

is any oil, which one of the two?

Mr. HAYES. It varies in the offshore. Traditionally the entire central and western Gulf have been made available.

Mr. MACK. Isn’t it true, though, that there are areas in which are

available for exploration of oil and there are some areas that are

off limits? In other words——

Mr. HAYES. Certainly, certainly.

Mr. MACK. So here is my point. If you say to the oil companies

that—basically if you offer them crap, you get crap, and that is just

the way it is. If you say to them, you can drill in these areas that

there is no oil to drill for and then blame them for not drilling, that

is the problem. And that is the picture that you are painting. That

is what people back home are hearing. It is why they are frustrated

with government.

Chairman ISSA. The gentleman’s time has expired.

The gentleman from Oklahoma, Mr. Lankford, is recognized for

5 minutes.

Mr. HAYES. May I respond, Mr. Chairman?

Chairman ISSA. If you want to respond. I didn’t see a question

there, but if you have a response, please.

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Mr. HAYES. I would just like to make a point that there are certain areas that we believe are not appropriate for drilling, very

close to national parks, for example, other sensitive areas.

But the fact that we have 40 million acres onshore, many of

which are in prime oil and gas territory—Wyoming, Utah, etc.—

areas with history and infrastructure, suggest—and the Gulf experience—suggests that we are offering industry prime areas for production. Thank you.

Chairman ISSA. I thank the gentleman.

Mr. Lankford.

Mr. LANKFORD. Thank you, Mr. Chairman.

This is one of those areas apparently we are not going to solve

today. I would like to request, Deputy Secretary Hayes, that you

would sit down with some of the folks from oil companies and we

try to resolve this together at a table, and that we have a hearing

saying, we don’t understand why these companies aren’t drilling in

these areas and what the permit and the process. It might be a

very informative conversation for us to get everybody together and

all get under oath and all start trying to talk this out and be able

to resolve it and get everybody together. Would you be open to that

kind of conversation?

Mr. HAYES. We would be delighted to do that. We have had a

number of conversations in the Interior Department with CEOs of

oil companies. And in fact, the President’s suggestions on how to

facilitate more production have come out of the kinds of discussions

we have had with CEOs.

Mr. LANKFORD. You mentioned several times about production

being at this highest level since 2003. Can you name a specific action that Interior or EPA took in 2008 and 2009 to give us this

large production in 2010? Which specific action would you point to

and say because we did that in 2008 and 2009, now we have this

great production.

Mr. HAYES. I think I can point to probably thousands of actions.

The fact that we processed at least more than 5,000 APDs in——

Mr. LANKFORD. So those came on line within a year and they

were out producing revenue?

Mr. HAYES. Typically they do, yes. Typically those are the onshore productions that come on line.

Mr. LANKFORD. It seems to me the market has driven this. When

oil went to about $100 a barrel, it is amazing how much production

suddenly occurred. And it seems to be that Interior is taking credit

for a hundred bucks a barrel what really happened when the market drove that up.

Mr. HAYES. No, that is a very fair point, Congressman.

Mr. LANKFORD. Well, that is why it is frustrating for me to keep

hearing, you know, we have this great production. We have this

great production; we didn’t have it in the Bush administration. We

have a $100 barrel of oil. Every marginal well that is out there is

now pumping oil. And we seem to be confusing apples and oranges

here. When we start talking about production, our production is at

an all-time high. Production is not the issue at this point. Great,

I am glad we have production, but a lot of those are marginal

wells. Those are other wells that are already drilled. We need to

talk about future exploration, and a lot of this conversation seems

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to be future exploration we are talking about; you are responding

with production. And so that’s two different things in that. We

need to talk about what happens 5 years from now, 10 years from

now. What is coming on line with that.

Let me ask you a question to both of you on this. The President

put out Executive Order 13563, which deals with regulation and

regulatory review, looking backward on it. Both of your agencies,

have you already submitted your paperwork for that? That should

be coming out in the next week and a half, those public documents

as preliminary. Do both of you have those reviews complete?

Ms. JACKSON. EPA has.

Mr. HAYES. Yes.

Mr. LANKFORD. Great. Terrific. Look forward to getting a chance

to go through that. A major part of that statement, which was a

great statement from the president, is talking about all the regulations need to promote predictability and reduce uncertainty in our

regulatory environment. If there is any area that I can tell you

from energy companies that I talk to and I interact with in my district, it is the sense of uncertainty. We don’t know what the regulations are going to be. The rumors run wild.

And while you can say we haven’t done that, there is the perception. Let me give you a ‘‘for instance.’’

And Administrator Jackson, you mentioned multiple times about

natural gas is terrific. But if you talk to natural gas companies,

they have no idea what is happening in this frack study. And there

is a large sense of founded fear that natural gas fracking is about

to be crushed, and they can’t seem to find any response back on

it. Since 1949 in Oklahoma, we have been doing natural gas

fracking and oil fracking. This is a long-term use process. And I

would invite anyone to come to Oklahoma and drink our water and

look at our beautiful land and breath our air and see it as a terrific

State. And as you mentioned before, these State-preferenced permits seem to being pulled back somewhat, and it is creating a

sense of uncertainty in it.

My colleague Mr. Meehan earlier mentioned about the 316(b)

permits, and you deferred that immediately to the States and said

that is a State issue. I can tell you in my State, for the energy companies in my State, they are struggling with EPA right now over

316(b) because there are minnows, there are bait minnows being

killed in one of their cooling ponds, and they are being pushed toward creating a cooling tower, costing millions of dollars, which

will be passed onto ratepayers for their own cooling pond. It is not

creating certainty in what prices are going to be, where they can

invest and what they can do.

So, on the other side of that, dealing with the State preference

is not consistent with the actual actions on the field and doing a

316(b) with regional Haze requirements. My own State has put up

a proposal for dealing with regional Haze; it is being rejected by

EPA. And so those dynamics don’t practice out in real life. It is

coming out in your testimony, but in real-life examples in my district and in my State, those things don’t actually occur.

So I have a significant I guess issue with some of your testimony

and what is actually happening on the field.

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Ms. JACKSON. Well, sir, I am happy to answer some of those factually. First, with respect to the natural gas companies and their

concerns about the study, which again was asked for by Congress—

they asked us to do it—that study has been publicly scoped. We

had several listening sessions and meetings and hearings to hear

input on how the study should be scoped. We have gone through

peer review of the scope of the study in a very public forum to do

it. In fact, the scope is not yet set for that very reason. So I am

perplexed as to how they could not know what this study is about,

because we have gone to great pains to make it a very transparent

process.

Chairman ISSA. The gentleman’s time has expired.

Mr. LANKFORD. I apologize. That is fine.

Chairman ISSA. And I know—you can answer for the record if

you don’t mind. I realize he had a lot of good questions there.

The gentlelady from the District of Columbia, Ms. Holmes Norton, is recognized for 5 minutes.

Ms. NORTON. Well, some of us value the seafood from the Gulf

region. I think it is the very best, so I am particularly interested

in the effect of the Gulf’s oil spill on that part of the economy,

which I understand is almost half of the economy, a million jobs

or so.

In your view, has the tourism industry, for example, fully recovered from the oil spill?

Ms. JACKSON. I think as we enter this summer season, we will

find out. So far, I hear bookings are up. I think if you speak to

business owners along the coast, though, they feel as though last

summer put them, because things were so depressed, last summer

has put them in a place where they may never be able to recoup

those losses, and some businesses are still potentially marginal.

Ms. NORTON. What has the effect—when you see these merchants who used to go out for lobsters and the rest on TV, you hear

a kind of pessimism in them, a sense that the rest of the country

thinks they are not recovered, that they may never get back to

where they were. What is the continuing effect of the oil spill regarding the safety of that seafood around the country?

Ms. JACKSON. The seafood in the Gulf has been tested, is widely

tested. And FDA and NOAA both agree that seafood is safe. The

Gulf fishermen and shrimpers still struggle with a bit of a stigma.

And of course, the most recent issue that is affecting their livelihood is the horrible flooding throughout our country. That has

meant a lot of fresh water in their oyster beds, which may threaten

them. It has nothing to do with the spill, but it is certainly another

blow to their livelihood.

Ms. NORTON. Well, poor Louisiana, they have two big industries;

one is seafood, and the other is oil, all in the same spot.

Chairman ISSA. Would the gentlelady yield for just a second?

Ms. NORTON. I will be glad to, Mr. Chairman.

Chairman ISSA. Just so you know in advance, next Thursday, we

will be having a hearing as a result of all our trips to the Gulf, so

we will provide you with additional information that is going to be

very focused on the plight of the Gulf.

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Ms. NORTON. That is very important to know, because I think we

need some statistics on, are they selling as much in seafood? Are

people coming to this great tourist region as much as possible?

Do you think—let’s go through like the oil industry, the other

part of that economy—do you think that the oil spill has, because

of its mammoth nature, has damaged the reputation of the oil industry in the Gulf, or as a whole, have they recovered?

Mr. HAYES. If I can speak to that. I think the oil industry has

shown significant resilience and commitment to meet the higher

safety and environmental requirements that were put in place after

the Gulf disaster and is committed for the long term to continue

to develop the——

Ms. NORTON. But what about its reputation? In that area, is this

industry trusted once again?

Mr. HAYES. I can’t speak to that.

Ms. NORTON. Mr. Chairman, I hope that when you say the next

hearing, we will have some sense of these two industries, how they

are perceived in the region and how they are perceived in the country, since we have this anomaly that these two industries dominate

the Gulf Coast, and we would need some perception of what the

biggest oil spill, loss of 11 lives in our history——

Chairman ISSA. And we will send you an advance memo before

the end of the week so that you can have additional input into it.

Ms. NORTON. I appreciate that, Mr. Chairman.

I yield to the ranking member.

Mr. CUMMINGS. Just one question. Thank you, gentlelady, for

yielding.

Chairman Issa and the oil industry lobbying groups have asserted that the administration intensely delayed the permitting

process to discourage offshore drilling. Mr. Hayes, can you just address that concern directly. Did you or the current administration

intentionally delay any permits in order to discourage offshore

drilling?

Mr. HAYES. No, sir, we did not.

Mr. CUMMINGS. I see my time is up.

Chairman ISSA. The gentleman from Florida, Mr. Ross, is recognized for 5 minutes.

Mr. ROSS. Thank you, Mr. Chairman.

Ms. Jackson, thank you very much for being here.

I appreciate your testimony. It is an opportunity for me being

from central Florida, where we have quite an involvement of the

EPA—we have a phosphate industry, a lot of agricultural industry—and to ask a self-serving question. We have had some situations where EPA has been there, of course, doing radon studies, flyovers, and my office has tried to get some cooperation and find out

what is going on. So I would just ask you personally if you will cooperate with me so that I might respond to my constituents back

home as to what is going on with regard to EPA’s investigation, not

only of radon but also of water quality studies.

Mr. HAYES. Sir, I am happy to meet with you or to get you whatever information you are looking for.

Mr. ROSS. Thank you.

The other thing I want to talk to you about briefly, because I notice in your bio, you talk about that you and your staff of more

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than 17,000 professionals are working across the Nation to usher

in a green economy. And I think that is pretty important as we are

talking about oil and gas exploration, our dependence on such and

the production of such from within our domestic borders. But more

importantly to me is that if we are going to usher in a green economy, it has been my feeling that we need to do so by way of competition, market forces, as opposed to mandates, meaning that I

don’t think that it is appropriate that we force a green economy on

people that are neither prepared to accept it or able to pay for it.

Again, I talk to you about my district coming from a strong agricultural area. In an area where we have farmers that are looking

at alternative crops, such as grasses, algae, crops that make up

biofuels, my concern is that we have, you know, from a regulatory

standpoint, choked so much of our industry. Is there anything that

the EPA is doing to incentivize or encourage a green economy by

way of alternative fuel sources that are biofuels and not edible fuel

sources either?

Ms. JACKSON. Absolutely, sir. Under the Energy Independence

and Security Act, EPA is required to develop renewable fuel standards for the country, and we have done that and will do it as called

for by law. Those standards mandate certain amounts of biofuels

to be mixed in with our fuel supply. And of course, that displaces

gasoline in our fuel supply. In addition, EPA has again by law required to review an application for a waiver to increase the amount

of ethanol and gasoline.

Mr. ROSS. But why is it just ethanol? I mean, why aren’t we looking—really, I mean, are we not affecting other market forces, food

crops, food sources and supplies when we are using anedible fuel

crop for a fuel source? I mean, is the EPA doing anything to look

at other alternative green fuels that are biofuels?

Ms. JACKSON. Well, certainly EPA is working to, in addition to

their renewable fuels work at our Ann Arbor laboratory, which

works quite closely with vehicles, we are looking at the impacts of

various fuels. We have quite an extensive scientific arm that looks

at and supports private sector research on biofuels. And I believe

that biofuels for the ag sector is a huge area of potential economic

growth, yes.

Mr. ROSS. The other question, and I will pose this to both of you,

is that being from Florida and 90 miles away from our southernmost border city there, Cuba, and Cuba, as we talked about earlier,

is starting to look at offshore oil exploration. That will be just as

close as the Deepwater Horizon was to Florida. Are we doing—do

we know how far along Cuba is, Mr. Hayes, Secretary Hayes?

Mr. HAYES. The company that may go first in terms of drilling

off of Cuba is a Spanish company called Repsol that also does business in the United States. And they have been in and talked to our

department about their plans. And my understanding is that they

are potentially planning to drill later this year.

Mr. ROSS. Is there anything that we can do in terms of remediation or at least enforcement of regulation to make sure that what

is being done there is in accordance with what we require in our

offshore drilling?

Mr. HAYES. This is a matter, Congressman, that is really in the

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ment, so, unfortunately, I am not sure of the answer to that question. I do know that the Department of State is involved in this

issue and following it closely.

Mr. ROSS. Would it be safe to say that the only hope that we

have now is just a strong remediation program that will be located

somewhere off the coast of Florida in the event of a spill?

Mr. HAYES. Well, our hope is that Repsol in particular, which

knows and follows our own safety requirements, would do the same

if they were to drill in Cuban waters.

Mr. ROSS. Thank you. I’ll yield back.

Chairman ISSA. Would the gentleman yield?

Mr. ROSS. Yes, sir.

Chairman ISSA. For the administrator, if I had the Department

of Energy here, I would have three agencies, all of whom are studying fracking and its effects on water, wouldn’t you agree when the

President said we should eliminate duplication, that the three

agencies that are all studying fracking right now should consolidate behind one of you, rather than three redundant studies?

Ms. JACKSON. No, because I don’t agree that the studies are redundant. And rather than consolidate, I would agree that we

should coordinate, which is what we are doing.

Chairman ISSA. I hope so.

I recognize the gentlelady from New York, Ms. Buerkle.

Ms. BUERKLE. Thank you, Mr. Chairman, and thank you to both

of our guests this morning for your being willing to sit here and

take this, answer our questions.

I had some prepared questions, but I first want to just refer to

some of the comments you just made.

Ms. Jackson, I heard you say that the polluter is responsible, it

was in response to Mr.—or Dr. DesJarlais’ question. And I am concerned that you are looking at coal industry and the oil industry

and natural gas as a polluter rather than a job creator and someone who—these industries are the backbone of this country. They

employ millions of people. They are a great source of revenue, great

source of tax revenue for the Federal Government. They are not the

enemy. And my sense is, and when I talk to the small businesses

and the larger businesses in my district, that the EPA has moved

from being someone who advises and helps and helps a business

get on track and comply with all of these, just a whole host of regulations; now their sense is that the EPA views this business as the

enemy. And that is a concern, because now we move from being

helpful to that business in making them be compliant to being punitive. And that is the feeling that is out there in this country. And

that is—we, many of us here, came to Congress, came to Washington, because of our concern regarding jobs in the economy in

this Nation. The last thing we need to do is to be discouraging to

the job creators.

And my sense is when the EPA takes on this aura of being punitive rather than being helpful, and I heard you mention about,

well, we want to work with the community, we want to work with

the businesses, that is not the sense I am getting out there from

these people who are right on the front lines. So I would like you

to comment on that and your sense of whether the EPA has moved

from being let’s help people versus we are just going to be punitive.

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Ms. JACKSON. Well, two points, Congresswoman. First, I believe

you might be taking my comments a bit out of context. The question from Dr. DesJarlais was about who was responsible for pollution. And so my answer referred to polluters because the question

was in the context of when pollution happens.

Please don’t take that to mean that I believe that all businesses

are polluters, far from it. The vast majority of businesses in this

country comply with our environmental laws. They are good stewards. They want to be great stewards. Oftentimes many of them

that I have met with, and I have met with dozens and dozens of

CEOs of large and small companies, come in and want to comply.

And I do not believe that EPA has moved into a place of being

punitive.

However, we have very much so set ourselves on the path of

doing our job. What I said when I became administrator is that

EPA was once again going to protect the health of the American

people, not look the other way if there is pollution or if there is an

opportunity to ensure that pollution doesn’t happen.

Ms. BUERKLE. Well, then what is the problem? Is it a PR problem? Or when I hear from these businesses that the EPA, and we

were fortunate enough to have in-district hearings from Oversight

and Government Reform. We talked to members of the agriculture

community, dairy farmers. And their biggest problem was with the

EPA. So maybe it is a PR problem. But my sense from the folks

in the district is that it is more than that.

I also want to talk about Deputy Secretary Jackson, you mentioned—or Hayes, I am sorry—you mentioned about businesses,

and it is really a business decision whether or not they drill or

whether or not to produce oil. But I want to emphasize that uncertainty is the enemy of growth, uncertainty. When these businesses

don’t know what regulation or what tax is coming down the pike,

that is the problem. So they hunker down and they won’t take a

risk. And so my message to both of you is for the economic recovery

of this country, for job creation, send a message to our businesses

of certainty that you are not there to penalize them or to punish

them. You want to encourage them because this Nation needs to

create jobs. We need to get the American people back working. And

with that, I yield back my time.

Chairman ISSA. I thank the gentlelady.

The gentleman from Idaho, Mr. Labrador, is recognized.

Mr. LABRADOR. Thank you, Mr. Chairman.

Administrator Jackson, I—last—I think it was Friday, Thursday

or Friday, I received a Google alert that surprised me a little bit.

In the newspaper ‘‘The Hill,’’ they quoted you as saying that—apparently you were on ‘‘The Daily Show.’’ And on ‘‘The Daily Show,’’

you responded to a largely GOP claim that the EPA is overzealously pursuing regulation. And your response was as follows: It is

definitely an inside the Beltway line of reasoning, she said, and

Washington is a place where industry interests pedal a narrative

that transforms the Beltway into a fact-free zone. And then you

said, outside Washington, and this is what made me laugh a little

or maybe you were just joking because you were on ‘‘The Daily

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ment; they see one of the roles of government is protecting the air

and their water, she said in the interview.

So do you really believe that the problems with the EPA are inside the Beltway line of reasoning, or were you just cracking a joke

because you were on ‘‘The Daily Show?’’

Ms. JACKSON. Well, you should watch it, rather than read about

it.

Yes, I believe that 95 percent of the American people, as I stated

during that show, believe that it is a role of government to protect

them, to keep their air and water clean, to protect their health.

Mr. LABRADOR. Do you also believe that it is only inside the Beltway where people are concerned about the EPA?

Ms. JACKSON. No, I believe people have concerns, and I believe

it is my job and EPA’s job to try to address those people where they

are.

But I also believe that progress is made when we get outside of

Washington, as I did when I visited your fine State and spoke to

people directly about what is really happening—no, we are not regulating cow flatulence. No, we are not regulating milk—versus the

myths that are spun up by professional special interests inside this

Beltway to scare people.

Mr. LABRADOR. The irony of that moment for me is that I went

into a meeting right after I received the Google alert, and the first

thing that the gentleman, who was a businessman, not a politician—he is not a career politician. He is not a regulator. He is just

a regular businessman. The first thing he said is, can we get rid

of the EPA? I am sick and tired of the EPA destroying jobs in

America and destroying this country.

So how is it that you can say on a show that it is an inside the

Beltway mentality, where it doesn’t matter who I talk to in Idaho,

whether it is Republican, Democrat, Independent, they have a

problem with the overzealous regulation of the EPA?

Ms. JACKSON. First, let me correct an error in the record, I

thought you said Iowa. If you are from Idaho, I haven’t visited your

State. So I am very sorry for that. That is a mistake.

Mr. LABRADOR. That is what I thought. That is OK.

Chairman ISSA. You should visit, not just read about it.

Ms. JACKSON. I am happy to go. I have actually been, but I

haven’t been recently, so that would have been an inaccurate statement in the record.

Mr. LABRADOR. That is OK.

Ms. JACKSON. I am happy to visit.

You know, I am happy to speak to this gentleman and happy to

speak to constituents.

What I would say is, I would like it understand the reasoning behind that, because there are constituents in your State who preserve and protect air quality or water quality, clean up Superfund

sites. We are quite busy on a range of issues. And so although I

do not doubt that people have concerns about our agency, and as

I also said on that same show, we can certainly do our jobs better

and more effectively—we look for opportunities to do so—the poll

shows that 95 percent of the American people think that the reason

the EPA is there, which is to protect their health, is a function of

government that should happen, that no one——

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Mr. LABRADOR. And I think I would agree with you that it is a

function of government that should happen, but the problem is the

overzealous regulation. And the overzealous interpretation of regulation, that is killing our jobs and killing our industry and killing

our economy.

And I think I would invite you to come to Idaho, and I would invite you to talk to the businessmen, to the mayors, the Republicans, Democrats, Independents. The first thing I talk to every

mayor about in Idaho, it doesn’t matter what party they belong to

or whether they are nonpartisan, is about the EPA and about how

much money it is going to cost them, the issues with phosphorus,

the issues with the water. We have cities in Idaho that are concerned that over the next 10 years, it is going to cost them over

a billion dollars to remediate some of the things that is only going

to improve the water by 1 percent or half of a percent.

So these are concerns that we really have that are going to cost

jobs, that are going to cost the economy. And I think that you need

to be maybe more concerned about what is happening outside of

the Beltway, because it seems to me that inside the Beltway, all

of your friends are telling you that nobody is concerned about the

EPA.

Now Deputy Secretary Hayes, just a quick question, you keep

mentioning that we have actually increased production of oil. What

is the reality about what happened after Macondo in the Outer

Continental Shelf, has production of oil increased or decreased in

that area?

Mr. HAYES. In the Gulf, it has remained about steady at about

50 million barrels per month. In November 2008, the production I

believe was 48 million barrels per month. The last year we have

monthly records is December of last year; it was 49 million barrels

a month. It is anticipated, as was discussed before, that there will

be a slight erosion, potentially later this year or next year, in terms

of production because of the delay in permitting that was necessary

because of the disaster. We hope to make up for that however with

new discoveries that are now being drilled.

Chairman ISSA. The gentleman’s time has expired, and I thank

the gentleman.

Mr. Gibbs, I thank you for your presence here.

If you will have all of your questions, if you want to ask one

question before we go sine die, I will certainly allow it. I just want

to be respectful that the House Rule is once the joint session starts,

we must adjourn.

Please.

Mr. GIBBS. Thank you, Mr. Chairman.

I will try to be quick.

Talk about the markets and the price, one thing I would like to

just comment on that, uncertainty leads to the futures market with

the people in the market. The market is functioning, because this

administration is putting out a lot of uncertainty. And one area I

want to key on is a week and a half ago, my committee, the Water

Resource and Environment, your subordinate Ms. Nancy Stoner

testified, Administrator Jackson. And it is appalling to me that

here we had a coal operation in West Virginia that went through

10 years of environmental impact study, went far beyond what they

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needed do, got their permit in 2007 from the Army Corps of Engineers. And the EPA was working in concert with them. This administration came in in 2010 and revoked that permit after they

spent $100 million in investment. She testified, when I asked the

question, was State EPA in West Virginia, were they in support of

the revocation; she said, no. Did the Army Corps of Engineers give

any new evidence that they were in permit violation or there’s any

problems? The Army Corps did not supply any of that evidence.

What basis does your administration have to go forward to revoke

that permit under law?

Ms. JACKSON. The Clean Water Act, sir, and protection of water

quality. And let me say for the record that permit had been issued

by the Corps of Engineers over EPA’s strong comments that we believed that it did not comply with the Clean Water Act.

Mr. GIBBS. I think currently under the Clean Water Act, when

the Corps issued that permit, the EPA if they had objections, they

could have vetoed that permit at that time, and they did not do

that. Is that correct?

Ms. JACKSON. EPA did not at that time, but that it was during

the Bush administration. After President Obama was elected and

we were called on by the courts to defend that permit——

Mr. GIBBS [continuing]. Time here. This sets a very dangerous

precedent, because this was 3 years after the permit was given, so

you are creating huge uncertainty across all sectors of the economy

because who is going to come in and risk capital? And what banks

are going to loan money knowing that at the whim of an administration, any administration can come in and revoke a permit? Who

is going to take that risk? So you are creating more uncertainty.

If you want to bring down gas prices, you need to put certainty out

in the market. And you can’t have actions like what happened at

the Spruce Mine in West Virginia. That is creating uncertainty. I

have other examples; the permit that has been delayed, delayed

and delayed up in Alaska, for a large oil company to get to the

lease lands that they have leased. They have been stopped by the

EPA and the Corps to build an 8-mile road that the State of Alaska

wants. The oil company is going to pay for it and no taxpayer expense, and this administration has put a roadblock.

So I continually hear in my committee of road blocks, barriers

put up against the industry to develop these natural resources responsibly, because clearly there is an attempt by this administration to not want to develop these natural resources.

Chairman ISSA. I thank the gentleman.

Pursuant to the House Rules, the gentlelady can answer briefly.

We are going to have to recess, and the balance of both his questions and answers, I would appreciate you answering for the

record.

So, please.

Ms. JACKSON. And I will submit a longer answer for the record.

Let me simply just make three statements. This administration

has not any intent to increase uncertainty in the market. In fact,

many of the rules we have done have been intended to finally answer questions, many of them long overdue.

With respect to the Spruce Mine case, this administration was

forced with a decision either to defend a permit in court that EPA

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had never agreed was given properly or to exercise its right under

the Clean Water Act to veto it.

And finally, happy to give some answers on Alaska for the

record.

Chairman ISSA. I appreciate it. And I appreciate all the Members’ time, and you really went past the hour and 45 that we said;

it is a little over 2. As the Prime Minister takes the floor, we are

going to stand adjourned, and I appreciate your answering questions for the record.

[Whereupon, at 11:10 a.m., the committee was adjourned.]

[Additional information submitted for the hearing record follows:]

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