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EXAMINING ACCESS TO OIL AND GAS 

DEVELOPMENT ON FEDERAL LANDS 

OVERSIGHT HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND 

MINERAL RESOURCES 

OF THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

Thursday, June 29, 2017 

Serial No. 115–13 

Printed for the use of the Committee on Natural Resources 

( 

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

or 

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

(II) 

COMMITTEE ON NATURAL RESOURCES 

ROB BISHOP, UT, Chairman 

RAU ́ L M. GRIJALVA, AZ, Ranking Democratic Member 

Don Young, AK 

Chairman Emeritus 

Louie Gohmert, TX 

Vice Chairman 

Doug Lamborn, CO 

Robert J. Wittman, VA 

Tom McClintock, CA 

Stevan Pearce, NM 

Glenn Thompson, PA 

Paul A. Gosar, AZ 

Rau ́l R. Labrador, ID 

Scott R. Tipton, CO 

Doug LaMalfa, CA 

Jeff Denham, CA 

Paul Cook, CA 

Bruce Westerman, AR 

Garret Graves, LA 

Jody B. Hice, GA 

Aumua Amata Coleman Radewagen, AS 

Darin LaHood, IL 

Daniel Webster, FL 

Jack Bergman, MI 

Liz Cheney, WY 

Mike Johnson, LA 

Jenniffer Gonza ́lez-Colo ́n, PR 

Greg Gianforte, MT 

Grace F. Napolitano, CA 

Madeleine Z. Bordallo, GU 

Jim Costa, CA 

Gregorio Kilili Camacho Sablan, CNMI 

Niki Tsongas, MA 

Jared Huffman, CA 

Vice Ranking Member 

Alan S. Lowenthal, CA 

Donald S. Beyer, Jr., VA 

Norma J. Torres, CA 

Ruben Gallego, AZ 

Colleen Hanabusa, HI 

Nanette Diaz Barraga ́n, CA 

Darren Soto, FL 

Jimmy Panetta, CA 

A. Donald McEachin, VA 

Anthony G. Brown, MD 

Wm. Lacy Clay, MO 

Todd Ungerecht, Acting Chief of Staff 

Lisa Pittman, Chief Counsel 

David Watkins, Democratic Staff Director 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES 

PAUL A. GOSAR, AZ, Chairman 

ALAN S. LOWENTHAL, CA, Ranking Democratic Member 

Louie Gohmert, TX 

Doug Lamborn, CO 

Robert J. Wittman, VA 

Stevan Pearce, NM 

Glenn Thompson, PA 

Scott R. Tipton, CO 

Paul Cook, CA 

Vice Chairman 

Garret Graves, LA 

Jody B. Hice, GA 

Darin LaHood, IL 

Jack Bergman, MI 

Liz Cheney, WY 

Rob Bishop, UT, ex officio 

Anthony G. Brown, MD 

Jim Costa, CA 

Niki Tsongas, MA 

Jared Huffman, CA 

Donald S. Beyer, Jr., VA 

Darren Soto, FL 

Nanette Diaz Barraga ́n, CA 

Vacancy 

Vacancy 

Rau ́l M. Grijalva, AZ, ex officio 

(III) 

CONTENTS 

Page 

Hearing held on Thursday, June 29, 2017 ............................................................ 1 

Statement of Members: 

Gosar, Hon. Paul A., a Representative in Congress from the State of 

Arizona ........................................................................................................... 1 

Prepared statement of ............................................................................... 2 

Lowenthal, Hon. Alan S., a Representative in Congress from the State 

of California ................................................................................................... 3 

Prepared statement of ............................................................................... 5 

Statement of Witnesses: 

Flynn, Ryan, Executive Director, New Mexico Oil and Gas Association, 

Santa Fe, New Mexico .................................................................................. 13 

Prepared statement of ............................................................................... 14 

MacGregor, Katharine, Acting Assistant Secretary, Land and Minerals 

Management, Department of the Interior, Washington, DC ..................... 7 

Prepared statement of ............................................................................... 8 

Questions submitted for the record ......................................................... 12 

Nelson, Laura, Governor’s Energy Advisor, Utah Governor’s Office of 

Energy Development, Salt Lake City, Utah ............................................... 27 

Prepared statement of ............................................................................... 28 

Questions submitted for the record ......................................................... 31 

Squillace, Mark, Professor of Law, Natural Resource Law, University 

of Colorado, Boulder, Colorado Law School, Boulder, Colorado ................ 17 

Prepared statement of ............................................................................... 19 

(1) 

OVERSIGHT HEARING ON EXAMINING ACCESS 

TO OIL AND GAS DEVELOPMENT ON 

FEDERAL LANDS 

Thursday, June 29, 2017 

U.S. House of Representatives 

Subcommittee on Energy and Mineral Resources 

Committee on Natural Resources 

Washington, DC 

The Subcommittee met, pursuant to notice, at 10:04 a.m., in 

room 1324, Longworth House Office Building, Hon. Paul Gosar 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Gosar, Lamborn, Wittman, Pearce, 

Tipton, Westerman, Graves, Cheney, Bishop; Lowenthal, Brown, 

Tsongas, Beyer, Soto, and Barraga ́n. 

Dr. GOSAR. The Subcommittee on Energy and Mineral Resources 

will come to order. The Subcommittee is meeting today to hear 

testimony on examining access to oil and gas development on 

Federal lands. 

I ask unanimous consent that the gentleman from Arkansas, 

Mr. Westerman, be allowed to sit with the Subcommittee and 

participate in the hearing. 

Without objection, so ordered. 

Under Committee Rule 4(f), any oral opening statements at the 

hearings are limited to the Chairman, the Ranking Minority 

Member, and the Vice Chair. This will allow us to hear from our 

witnesses sooner, and help Members keep to their schedules. 

Therefore, I ask unanimous consent that all other Members’ opening statements be made part of the hearing record, if they are submitted to the Subcommittee Clerk by 5:00 p.m. today. 

Without objection, so ordered. 

I ask that there not be any type of disruption regarding the testimony given here today. It is important that we respect the decorum 

and the rules of the Committee of the House, and to allow the 

Members and the public to hear our proceedings. 

Today, the Subcommittee will examine access to oil and gas development on onshore Federal lands. Our Subcommittee is holding 

a hearing in several weeks to discuss offshore Federal oil and gas 

development, and we ask the Members to reserve all offshore questions for the next hearing. 

STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF ARIZONA 

Dr. GOSAR. Federal mineral estates are owned by all Americans, 

and the Bureau of Land Management is obligated to responsibly 

manage and develop these valuable resources. Onshore Federal oil 

and gas accounts for roughly 20 percent of America’s production, 

and is integral to our Nation’s energy independence and security. 

2 

However, non-Federal production far outpaces Federal production figures, due in large part to the overwhelming administrative 

burdens of the Federal mineral development process. Not only has 

the new Administration inherited a backlog of 3,000 drill permit 

applications, but an incredibly burdensome regulatory scheme that 

discourages investment and development. It is critical that we 

evaluate these obstacles to access, to ensure a fair return to the 

American people. 

There are many factors that influence an operator’s decision to 

lease and develop hydrocarbons, including oil price, geology, and 

transmission infrastructure. While some may point to a low commodity price as a reason to withhold leasing and production, market conditions are no excuse for poor policies, or for the Federal 

Government failing to uphold its statutory obligations. In fact, 

many operators avoid Federal lands due to unquantifiable risk and 

level of uncertainty associated with the leasing and permitting 

schematic. 

The current Federal oil and gas leasing and permitting processes 

are fraught with uncertainty, duplication, and delay. Designating 

lands for development can take years, and parcels nominated for 

lease were often explicitly retracted from the auction. Although the 

Mineral Leasing Act requires the BLM to hold quarterly lease sales 

of eligible lands, this requirement has not been enforced for years. 

Furthermore, once an operator has successfully navigated the 

Federal leasing scheme, the lessee must still proceed through the 

Application for a Permit to Drill, or ‘‘APD,’’ review process, which 

could set drilling back over a year. The uncertainty, delay, and 

risks presented throughout the process make operational and 

financial planning nearly impossible, and is a detriment to the locality, state, and the American people. 

Despite the complications and inefficiencies of leasing and permitting under the previous administration, we are confident that 

the new Administration will take the time to carefully examine and 

optimize the BLM’s processes. Secretary Zinke, a friend and former 

member of this Committee, testified before us last week and shared 

some of the steps he is taking to recommit the BLM to upholding 

its mission. 

In addition to increasing program funding, Secretary Zinke is 

committed to improving field office performance. We are grateful 

for the Department of the Interior’s initial steps in the right direction, and look forward to finding practical solutions that optimize 

the responsible developmental process. 

[The prepared statement of Dr. Gosar follows:] 

PREPARED STATEMENT OF THE HON. PAUL A. GOSAR, CHAIRMAN, SUBCOMMITTEE ON

ENERGY AND MINERAL RESOURCES

Today, the Subcommittee will examine access to oil and gas development on 

onshore Federal lands. Our Subcommittee is holding a hearing in several weeks to 

discuss offshore Federal oil and gas development, and we ask that Members reserve 

all offshore questions for the next hearing. 

Federal mineral estates are owned by all Americans, and the Bureau of Land 

Management is obligated to responsibly manage and develop these valuable resources. Onshore Federal oil and gas accounts for roughly 20 percent of American 

production, and is integral to our Nation’s energy independence and security. However, non-Federal production far outpaces Federal production figures, due, in large 

3 

part, to the overwhelming administrative burdens of the Federal mineral development process. Not only has the new Administration inherited a backlog of 3,000 drill 

permit applications, but an incredibly burdensome regulatory scheme that discourages investment and development. It is critical that we evaluate these obstacles to 

access to ensure a fair return to the American people. 

There are many factors that influence an operator’s decision to lease and develop 

hydrocarbons, including oil price, geology, and transmission infrastructure. And 

while some may point to low commodity prices as a reason to withhold leasing and 

production, market conditions are no excuse for poor policies, or for the Federal 

Government failing to uphold its statutory obligations. In fact, many operators avoid 

Federal lands due to the unquantifiable risk and level of uncertainty associated with 

the leasing and permitting scheme. 

The current Federal oil and gas leasing and permitting processes are fraught with 

uncertainty, duplication, and delay. Designating lands for development can take 

years, and parcels nominated for lease were often inexplicably retracted from auction. Although the Minerals Leasing Act requires the BLM to hold quarterly lease 

sales of eligible lands, this requirement has not been enforced for years. Furthermore, once an operator has successfully navigated the Federal leasing scheme, the 

lessee must still proceed through the Application for a Permit to Drill, or ‘‘APD,’’ 

review process which could set drilling back over a year. The uncertainty, delay, and 

risks presented throughout the process make operational and financial planning 

nearly impossible, and is a detriment to the locality, state, and American people. 

Despite the complications and inefficiencies of leasing and permitting under the 

previous administration, we are confident that the new administration will take the 

time to carefully examine and optimize the BLM’s processes. Secretary Zinke, a 

friend and former member of this Committee, testified before us last week and 

shared some of the steps he is taking to recommit the BLM to upholding its mission. 

In addition to increasing program funding, Secretary Zinke is committed to improving field office performance. We are grateful for the Department of the Interior’s initial steps in the right direction, and look forward to finding practical solutions that 

optimize the responsible development process. 

Dr. GOSAR. With that, I now recognize the Ranking Member for 

his statement. 

Thank you. 

STATEMENT OF HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Dr. LOWENTHAL. Thank you, Mr. Chairman. First, I want to compliment you, and I want to compliment all the Members on both 

sides of the aisle of this Committee, as we have been doing so well 

in our last few meetings. They have been bipartisan, they have 

been cooperative, and they have been constructive. I think today is 

going to be a little bit more contentious, and I hope that that 

doesn’t end that spirit. 

Mr. Chairman, I do not oppose oil and gas development on public 

lands. But I do oppose letting the oil and gas industry call all the 

shots on how to manage those lands that are owned by all 

Americans. 

An all-of-the-above policy does not mean that we do not set 

priorities, and I am concerned about our priorities. 

It has only taken 5 months, and nearly every move on energy 

that this Administration has made could have come right out of the 

executive boardrooms of the American Petroleum Institute or the 

National Mining Association. And that may actually be the case, 

given the number of oil, gas, and coal lobbyists that now occupy 

high-ranking positions at the Interior Department, at the Energy 

Department, at the Environmental Protection Agency, and in the 

White House. 

4 

Rules to protect public health? Gone. Rules to protect our land, 

air, and water, and cut down on pollution? Gone. Rules to protect 

fish and wildlife? Gone. Rules to make sure that companies are 

paying their fair share? Gone. The standard seems to be: did the 

Obama administration put it in place, and did one oil, gas, or coal 

company complain about it? If so, it is gone. 

In no place is it more important to balance multiple uses, environmental protection, as well as economic development, than on 

America’s public lands. But this idea of balance, this idea that 

some areas should be protected while others can be developed, is 

at least endangered now. And soon that could be gone, too. 

To quote the statement of the Acting Assistant Secretary, 

‘‘America’s free markets will help determine where and when 

energy development on public lands is feasible.’’ That means that 

the idea that these lands, which belong to all Americans, should be 

managed in a way that will ensure that they are here for our children and our grandchildren, that idea is now gone. 

Instead, the Administration is operating under the idea that the 

Department of the Interior should become a service station for the 

oil and gas industry. Which lands would you like to lease? Where 

and how fast do you want to drill? What regulations do you want 

us to repeal? Are these national monuments getting in your way? 

Just let us know. The Department of the Interior is apparently 

here to keep you happy. 

Secretary Zinke paid lip service to the idea of supporting all 

forms of energy, to be in favor of the ‘‘all-of-the-above’’ policy. But 

if we look at his budget, it increases oil, gas, and coal programs by 

$34 million, while renewables suffer a $15.3 million cut. In fact, 

the fossil fuel program increase seems to be the only one in the entire Interior budget that has an increase. 

We have seen this movie before, we have seen an administration 

where energy policy was literally written by big oil. During the 8 

years of the Bush administration, the only measure of success for 

the Bureau of Land Management was how many drilling permits 

it could issue. 

But what did we get? Interior Department officials thrown in jail, 

regulators doing drugs and literally getting into bed with the people they were supposed to be regulating, and a thirst for mineral 

revenues that put safety standards on the back burner, and helped 

to contribute to the Deepwater Horizon, according to the 

Presidential Oil Spill Commission. 

When it comes to giving the keys to our public lands to the oil 

and gas industry, President Trump has made the Bush administration look bush league. 

The fact is that oil and gas companies are doing just fine on our 

public lands and in our oceans, despite the misleading statistics 

that they are going to throw around today. 

Oil statistics really show that oil production on public lands is 

up 59 percent since 2008. Offshore production is at a record high. 

Companies have more than 7,500 approved drilling permits that 

they are not using, and 26 million acres of public land under lease 

to be developed. It shows you from 2008, right through 2015, the 

Federal onshore oil production has increased every single year up 

5 

to 2015. And 2016 was slightly below 2015, but above all the other 

years. 

So, kind of in closing, I just want to say our new quest for energy 

dominance, whatever that means, is not going to be enough. Nothing is ever going to be enough. We must do more. Hunting, fishing, 

camping, hiking, boating, off-roading, grazing, and all other uses of 

our public lands, are now second-class. Oil and gas are dominant. 

Mr. Chairman, we have an opportunity on this Subcommittee to 

ensure that energy policies reflect the multiple uses of our public 

lands, for the benefit of all of our constituents, not just for the 

special interests of a few billionaires. Let’s not squander that 

opportunity. 

Mr. Chairman, I just want to say in closing that I understand 

your desire—and you sent out a few days ago—that the title of this 

hearing would be focusing on onshore, and I will try to abide by 

that. However, the title to the hearing was really, ‘‘Examining 

Access to Oil and Gas Development on Federal Lands.’’ And, as you 

know, our Outer Continental Shelf is really defined as submerged 

lands lying seaward of the coast line. 

Ms. MacGregor is responsible for overseeing both offshore and 

onshore development, so there may be some questions that come up 

because people did not know. I am just letting you know that, even 

though we understand. 

[The prepared statement of Dr. Lowenthal follows:] 

PREPARED STATEMENT OF THE HON. ALAN S. LOWENTHAL, RANKING MEMBER, 

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

Thank you, Mr. Chairman. 

You know, we have been doing so well in our last few EMR hearings—they have 

been bipartisan, cooperative, and constructive. I hope that it is not coming to an end 

today. 

Mr. Chairman, I don’t oppose oil and gas development on public lands. But I do 

oppose letting the oil and gas industry call all the shots as to how to manage these 

lands owned by all Americans. It’s only taken 5 months, and nearly every move on 

energy that this Administration has made could have come right out of the executive boardrooms of the American Petroleum Institute or the National Mining Association. And that might actually be the case, given the number of oil, gas, and coal 

lobbyists that now occupy high-ranking positions at the Interior Department, at the 

Energy Department, at the Environmental Protection Agency, and in the White 

House. 

Rules to protect people’s health? Gone. 

Rules to protect our land, air, and water, and cut down on pollution? Gone. 

Rules to protect fish and wildlife? Gone. 

Rules to make sure companies are paying their fair share? Gone. 

The standard seems to be: did the Obama administration put it in place, and did 

one oil, gas, or coal company complain about it? If so, it has to go. 

In no place is it more important to balance multiple uses—environmental 

protection as well as economic development—than on America’s public lands. But 

this idea of balance—the idea that some areas should be protected while others can 

be developed—is gone. 

To quote the statement of the Acting Assistant Secretary, ‘‘America’s free markets 

will help determine where and when energy development on public lands is feasible.’’ That means the idea that these lands, which belong to all Americans, should 

be managed in a way that will ensure they are still here for our children and our 

grandchildren—that idea is gone. 

Instead, the Administration is operating under the idea that the Department of 

the Interior should become a service station for the oil and gas industry. 

Which lands would you like to lease? Where and how fast do you want to drill? 

What regulations do you want us to repeal? Are these national monuments getting 

in your way? Just let us know. The Department of the Interior is apparently here 

to keep you happy. 

6 

Secretary Zinke pays lip service to the idea of supporting all forms of energy, to 

being in favor of ‘‘All of the Above.’’ But his budget increases oil, gas, and coal programs by $34 million while renewables suffer a $15.3 million cut. In fact, the fossil 

fuel program increase seems to be the only one in the entire Interior Department 

budget. 

We’ve seen this movie before. We’ve seen an administration where energy policy 

was literally written by Big Oil. During the 8 years of the Bush administration, the 

only measure of success for the Bureau of Land Management was how many drilling 

permits it could issue. 

What did we get? Interior Department officials thrown in jail. Regulators doing 

drugs and literally getting into bed with the people they were supposed to be regulating. And a thirst for mineral revenues that put safety standards on the backburner and helped contribute to the Deepwater Horizon, according to the 

Presidential Oil Spill Commission. 

When it comes to giving the keys to our public lands to the oil and gas industry, 

President Trump has made the Bush administration look bush league. 

Look, the fact is that oil and gas companies are doing just fine on our public lands 

and in our oceans, despite the misleading statistics that are going to be thrown 

around today. Here are some statistics: Oil production on public lands is up 

59 percent since 2008. Offshore production is at a record high. Companies have 

more than 7,500 approved drilling permits they’re not using, and 26 million acres 

of public land under lease waiting to be developed. 

But in our new quest for ‘‘energy dominance,’’ whatever that means, this is not 

going to be enough. Nothing is ever going to be enough. Hunting, fishing, camping, 

hiking, biking, boating, off-roading, grazing, and all other uses of our public lands 

are now second-class. Oil and gas are dominant. The oil barons want everything, 

and this Administration is trying to serve it to them on a silver platter. 

Mr. Chairman, we have an opportunity on this Subcommittee to ensure that 

energy policies reflect the multi-use nature of our public lands, for the benefit of 

all our constituents, not just the special interests of a few billionaires. Let’s not 

squander that opportunity. 

I yield back the balance of my time. 

Dr. GOSAR. I thank the gentleman for that clarification. 

I am going to now introduce our witnesses. 

The first one we see is a familiar face, Ms. Katharine MacGregor, 

who is the Acting Assistant Secretary, Land and Minerals Management, U.S. Department of the Interior. 

And now I am going to yield time to the gentleman from New 

Mexico to introduce the next witness. 

Mr. PEARCE. Thank you, Mr. Chairman. I would like to introduce 

Ryan Flynn, who is the Executive Director of the New Mexico Oil 

and Gas Association. As the director of that, he has watched the 

permitting times on our wells increase from around 200 man days 

to get to a permit to something over 400, and he was formerly the 

Secretary of New Mexico Environmental Department, where he has 

a strong reputation for balancing energy development with responsible environmental stewardship. 

Ryan, we appreciate you being here to testify today. I yield back. 

Dr. GOSAR. I thank the gentleman. Our next witness is Mr. Mark 

Squillace, Professor of Law, the University of Colorado, Boulder, 

Colorado Law School. 

And Dr. Laura Nelson, Governor’s Energy Advisor, Utah’s 

Governor’s Office of Energy Development. 

Let me remind the witnesses that under our Committee Rules, 

they must limit their oral statements to 5 minutes, but their entire 

statement will appear in the hearing record. 

Our microphones are not automatic, so you will have to press 

that little button. And if you will kind of watch up front, when it 

7 

goes to the first 4 minutes it is green, then it will turn yellow. And 

when you see red, please summarize. 

I will let the entire panel testify before we ask questions. 

And now I will recognize Ms. MacGregor for her testimony. 

Welcome back. 

STATEMENT OF KATHARINE MACGREGOR, ACTING ASSISTANT 

SECRETARY, LAND AND MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR, WASHINGTON, DC 

Ms. MACGREGOR. Thank you, Chairman Bishop, Chairman 

Gosar, Ranking Member Lowenthal, and members of the 

Subcommittee. I have to say it is very good to be back here today. 

I absolutely loved working here, with both Majority and Minority 

staff. 

My name is Kate MacGregor, and I am currently serving as the 

Acting Assistant Secretary for Land and Minerals Management at 

the Department of the Interior, where our responsibility is the 

management of four bureaus: the Office of Surface Mining 

Reclamation and Enforcement; the Bureau of Ocean Energy 

Management; the Bureau of Safety and Environmental Enforcement; and the Bureau of Land Management. I appreciate the opportunity to testify on the BLM’s onshore oil and gas program, 

which plays a critical role in our Nation’s energy economy. 

The BLM manages 245 million surface acres and 700 million 

subsurface acres, most of which are located in 12 western states, 

including Alaska. Production on BLM-managed lands accounts for 

7 percent of our Nation’s onshore oil, 10 percent of our natural gas, 

and 41 percent of coal-produced domestically, as well as approximately 18,000 megawatts of renewable energy. 

Last year, the BLM oil and gas program generated over 

$1.56 billion in royalties, rental payments, and bonus bids, all of 

which were shared with states. States and counties, in turn, use 

these funds for roads, schools, and other important municipal 

needs. Public lands are integral to the Administration’s America 

First energy agenda, and Secretary Zinke’s priority to maintain 

U.S. energy dominance by growing domestic energy production, 

generating revenue, and creating and sustaining jobs throughout 

our country. 

Access to responsible energy development on these lands begins 

with the planning and leasing process. Ten years ago, the BLM had 

nearly 45 million acres under oil and gas lease. Today, we are at 

27 million acres. This is nearly identical to the total area currently 

designated as areas of critical environmental concern, also known 

as ACECs, which stand at over 24 million acres. This is nearly 10 

percent of all BLM-managed lands in the United States. 

In 2016, the BLM designated 8.2 million acres, the most ACEC 

acreage since 1980. This is one example of designations that limit 

how public lands may be used. Responsible energy production and 

conservation need not be mutually exclusive. That is why it is 

vitally important to Secretary Zinke to restore our multiple-use 

mission and strike the appropriate balance in onshore leasing that 

allows for job creation in rural America. This is about restoring 

balance. 

8 

Under Secretary Zinke’s leadership, the Department and the 

BLM have been proactive in prioritizing responsible energy production on public lands, including by Secretarial Order. Order 3349 

aims to remove duplicative burdens on energy production while 

promoting job growth for hard-working American families. Order 

3352 will jump-start Alaskan energy production in the National 

Petroleum Reserve Alaska, helping to unleash Alaska’s energy potential and increase throughput in the Trans-Alaska Pipeline. 

These efforts have already shown to be effective. Under Secretary 

Zinke’s leadership, the BLM has had more lease sales, offered more 

acreage, and generated more revenue in the first 6 months of 2017 

than the same time last year. And we are only just getting started. 

The BLM plans to hold 14 additional lease sales this year. 

Still, promoting access to public lands does not come without its 

challenges. I am sure that all members of this Committee are in 

close contact with their state and local leaders who do not hesitate 

to communicate their frustrations. It is the Secretary’s goal to restore trust and improve relationships with our state and local partners, many of whom rely upon the economic activity and revenues 

that come from responsible oil and gas production on public lands 

in the West. 

For example, the U.S. Census Bureau has found that rural New 

Mexico has one of the highest poverty rates in the country. Yet, 

rural New Mexico is also home to some of the most promising oil 

and natural gas deposits in the entire world. These resources are 

a tremendous source of jobs, economic growth, and revenue for 

these rural communities. This is why the Administration remains 

committed to promoting responsible oil and gas production that create jobs, promote a robust economy, and contribute to America’s 

energy security. 

There are a multitude of factors that affect access to Federal oil 

and gas resources, and the Department and the BLM are reviewing 

all of these and taking action where possible to encourage development opportunities and improve efficiencies without cutting corners 

on our duties to ensure that these activities are done in a smart 

and environmentally responsible way. 

Thank you for the opportunity to testify today, and I will be 

happy to answer any questions. 

[The prepared statement of Ms. MacGregor follows:] 

PREPARED STATEMENT OF KATHARINE S. MACGREGOR, ACTING ASSISTANT

SECRETARY, LAND AND MINERALS MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR

Chairman Gosar, Ranking Member Lowenthal, and members of the 

Subcommittee, I am pleased to join you today to discuss the Bureau of Land 

Management’s (BLM’s) onshore oil and gas program and our efforts to advance the 

program to help secure American energy independence, create jobs, and build a 

strong economy. 

BACKGROUND

The BLM manages about 245 million surface acres and 700 million subsurface 

acres, located primarily in 12 western states, including Alaska. This diverse portfolio of lands is administered by the BLM on behalf of the American people as part 

of the agency’s multiple-use mission—including energy and mineral development, 

livestock grazing, timber production, recreation, and conservation, among others. 

The BLM manages approximately 30 percent of the Nation’s minerals. In Fiscal 

Year (FY) 2016, onshore energy production on Federal lands accounted for 7 percent 

of oil, 10 percent of natural gas, and 41 percent of coal produced domestically, and 

9 

another 17,963 megawatts of renewable energy projects are approved. Public lands 

support the Administration’s America First Energy Agenda and Secretary Zinke’s 

priority to maintain our Nation’s energy dominance by advancing domestic energy 

production, generating revenue, and creating and sustaining jobs throughout our 

country. 

America First Energy Plan is an ‘‘all-of-the-above’’ plan that includes oil and gas, 

coal, and renewable resources. Public lands are integral to the development of these 

important energy resources. Through this plan, America’s free markets will help determine where and when energy development on public lands is feasible. In order 

to respond to our Nation’s energy needs, the BLM is engaged in a variety of efforts 

to support domestic production. These efforts include predictable leasing; reducing 

barriers to accessing energy resources on BLM public lands; reviewing and streamlining the BLM’s leasing and permitting processes to serve its customers and the 

public more efficiently and effectively; and improving coordination among key stakeholders, including state and local governments, other Federal agencies, and the public. The BLM is also committed to supporting improved electricity transmission and 

pipeline development—key areas of our Nation’s energy infrastructure that stabilize 

the U.S. electric grid and keep energy prices low for American families. 

The BLM oversees onshore oil and gas development on Federal lands and lands 

held in trust for the benefit of various tribes. Collectively, these lands contain worldclass deposits of energy and mineral resources which power millions of homes and 

businesses. BLM-managed public lands provide a diverse marketplace for industry 

and play a significant role in creating jobs for hardworking Americans. Last year, 

the BLM economic study estimated the Federal onshore oil and natural gas program 

alone provided approximately $50 billion in economic output and supported approximately 188,000 jobs nationwide. The BLM is also a key revenue producer for the 

Federal Government by providing a significant non-tax source of funding to state 

and Federal treasuries and is an important economic driver for local communities 

across the country. For example, while Congress appropriated about $135 million to 

the BLM’s oil and gas program in FY 2016, the program generated more than $1.56 

billion in royalties, rental payments, and bonus bids—all of which were split between the U.S. Treasury and the states where the development occurred. States and 

counties in turn use these funds to support roads, schools, and other important community needs. 

The BLM is providing access to our diverse energy resources across our public 

lands while also adhering to key environmental laws and regulations. We remain 

committed to the safe and responsible development of these resources alongside our 

state and local neighbors. 

PUBLIC LANDS’ CONTRIBUTION TO ENERGY INDEPENDENCE

Onshore oil and gas production on BLM-managed public lands is a significant 

part of this strategy and makes an essential contribution to the Nation’s energy supply. The BLM has 27 million surface acres specifically under lease for oil and gas 

development, including approximately 94,000 active wells and 40,000 leases. Under 

Secretary Zinke’s leadership, the BLM has scheduled a quarterly lease sale in nearly every office. To date, the BLM has held 13 lease sales, including the February 

2017 Wyoming lease sale, which garnered nearly $129 million—the second largest 

amount generated from an onshore lease sale in the last 30 years. 

While we are proud of the BLM’s contribution to domestic energy production, we 

also recognize that there is a significant amount of work to be done. At the 

Secretary’s direction, the BLM established ambitious 90-day targets to approve oil 

and gas Applications for Permit to Drill (APDs), shifting resources to the more active offices of Carlsbad, New Mexico; Casper, Wyoming; and Dickinson, 

North Dakota. While the first 90-day goal BLM set was to process 711 APDs, the 

BLM approved an impressive 758 APDs. The BLM remains committed to completing 

reviews on all pending APDs and to work with operators to match their rig 

schedules. 

ACCESS TO ENERGY RESOURCES AND MULTIPLE-USE CONSIDERATIONS

There are a number of factors that may open, limit, or close Federal lands to oil 

and gas development, including land use planning, statutory and regulatory requirements, consideration of potential impacts to public land resources, and whether the 

resources in question are located on lands that have been withdrawn from mineral 

leasing. The Department and the BLM are reviewing all of these factors, and we 

are taking action, where possible, to encourage development opportunities and improve efficiencies. 

10 

Identifying Lands Available for Oil and Gas Leasing/Land Use Planning 

The BLM’s land use planning process provides—among many other resource considerations—a standardized procedure for analyzing the opportunities for oil and 

gas development on public lands, while also ensuring that such development is done 

in a way that minimizes environmental impacts and considers the public interest. 

Resource Management Plans (RMPs) contain general resource allocations and other 

decisions that reflect the BLM’s efforts to weigh the many resources and competing 

uses within a planning area, and they often include reasonably foreseeable development (RFDs) scenarios that analyze the known and potential oil and gas resources 

of the planning area. For purposes of oil and gas leasing, lands within a planning 

area are identified as fitting into one of three categories—lands open under standard lease terms, lands open with restrictions, and lands closed to leasing. 

While the RMPs identify appropriate uses of public lands, generally it is industry 

and the public who will nominate lands for leasing in the form of expressions of interest (EOIs). Upon receipt of an EOI, the BLM determines where lands are eligible 

for leasing under the RMP. Following applicable laws and regulations, with limited 

exceptions the BLM holds competitive lease sales quarterly in each of the state offices where lands are nominated and available. After the lease sale is held, any protests are resolved, and leases are issued, a lessee may then submit an APD for a 

specific area within their lease. The BLM then works with the lessees on final surface use and downhole drilling plans. Often, however, operators will assess drilling 

targets based on ongoing data analysis of resource potential and determine where 

and when to develop based on a variety of business model decisions. 

Regulatory Limitations 

When industry is considering whether to develop Federal onshore oil and natural 

gas resources, current regulations can serve as a significant barrier. The Department is committed to the Administration’s priority of eliminating unnecessary or duplicative regulations, thereby reducing burdens that may unnecessarily encumber 

responsible energy production. As directed by Secretary Zinke’s March 29, 2017, 

Secretarial Order 3349, American Energy Independence, the BLM is currently reviewing all regulations related to domestic oil and natural gas development on public lands. The BLM has proposed a rule to rescind the final rule titled Oil and Gas; 

Hydraulic Fracturing on Federal and Indian Lands and has reviewed the Waste 

Prevention, Production Subject to Royalties, and Resource Conservation Rule, postponing the implementation of any rule provisions that have not yet gone into effect. 

Finally, the BLM is working with industry to identify areas to adjust the technical 

requirements for the new regulation updates on-site security, metering, and measurement standards. This effort is designed to ensure that production accountability 

is maintained, but does not deter the successful development of oil and gas resources or lead to premature abandonment of marginal wells. 

Stipulations on Oil and Gas Leasing 

During the land use planning process, the BLM determines if lease stipulations 

are needed to ensure that development is done in an environmentally sound manner. Lease stipulations may include no surface occupancy (NSO), controlled surface 

use (CSU), and timing limitations (TL). Areas identified as NSO open to fluid mineral leasing, but surface-disturbing activities cannot be conducted on the lease; however, the lease may potentially be developed by directionally or horizontally drilling 

from nearby lands that do not have NSO limitations. CSU areas are also open to 

fluid mineral leasing but, in contrast, allow surface-disturbing activities, subject to 

special operational constraints to protect the specified resource or value. Finally, 

areas identified for TL are closed to fluid mineral exploration and development, 

surface-disturbing activities, and intensive human activity during identified time 

frames. 

Mineral Withdrawals 

Public land withdrawals are formal land actions that reserve or withhold public 

land by statute or proclamation, or in more limited cases by administrative order, 

from operation of public land, mining, mineral leasing, and geothermal leasing laws. 

Withdrawals are established for a broad array of public purposes, including for military reservations which account for approximately 16 million acres of currently 

withdrawn BLM-managed public lands. In addition, on lands where the Federal estate is split with other Federal agencies, the Federal surface management agency 

may require withdrawal of the Federal mineral estate. 

Wilderness, Wilderness Study Areas and Areas of Critical Environmental Concern 

Many conservation designations lead to withdrawals from the mineral leasing 

laws through legislation, presidential proclamation or administrative determinaVerDate Mar 15 2010 09:50 Sep 29, 2017 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 J:\115TH CONGRESS\ENERGY & MINERAL\06-29-17\26167.TXT DARLEN
11 

tions. Each of these special designations is subject to valid existing rights, and some 

include exceptions for specific types of mineral leasing. The BLM currently manages 

nearly 8.8 million acres of wilderness and 517 WSAs comprising approximately 12.6 

million acres across the West. In addition to these designations, the BLM also manages approximately 1,100 Areas of Critical Environmental Concern (ACECs) 

spanning over 24 million acres. An ACEC designation by itself does not automatically prohibit or restrict other uses in the area; rather, the BLM determines as part 

of the land use planning process which activities or uses are consistent with the resources and values for which the area was designated. 

PUTTING AMERICA FIRST BY BUILDING A STRONG ENERGY ECONOMY

Under Secretary Zinke’s leadership, the Department and the BLM have taken 

many proactive measures to reduce the burdens associated with developing onshore 

oil and gas resources on public lands. Following is a discussion of some of these 

efforts. 

Secretarial Orders 

Improving access to oil and gas resources is an important component for ensuring 

energy independence. As discussed earlier, Secretarial Order 3349 provides guidance 

for removing unnecessary impediments to oil and gas leasing while fostering the 

creation of good jobs for hard-working American families. Secretarial Order 3348 

overturned the Federal coal leasing moratorium enacted by the last administration. 

On May 31, 2017, Secretary Zinke signed Secretarial Order No. 3352 to jump-start 

Alaskan energy production in the National Petroleum Reserve—Alaska (NPR-A) and 

update resource assessments for areas of the North Slope, helping to unleash 

Alaska’s energy potential. The Order calls for the review and development of a revised Integrated Activity Plan for the NPR-A that strikes an appropriate balance 

of promoting energy development while protecting surface resources. The order also 

aims to maximize the tracts offered for sale during the next NPR-A lease sale. 

Online Leasing and Other Technological Process Improvements 

The BLM is proactively streamlining its business processes to better serve its customers and the public. In addition to the 13 lease sales conducted to date, the BLM 

plans to hold 14 additional sales throughout 2017 using the new authority to conduct onshore oil and gas lease sales via Internet-based bidding. The BLM is also 

committed to continuing the National Fluids Lease Sale System (NFLSS) automation effort, which standardizes many leasing functions while providing additional 

EOI transparency to the nominator and the public. Finally, the BLM is adding features to enhance the new electronic APD processing system, the Automated Fluid 

Minerals Support System II (AFMSS II), and plans to decommission parts of the 

prior APD processing systems—established nearly 20 years ago—to improve the 

automation capacity and better match the BLM resources to permit activities. These 

improvements increase transparency and reduce overhead costs and processing 

times, leading to increased competition and revenue for states and the Treasury. 

Building Stakeholder Relationships and Being a Better Neighbor 

The BLM has also sought to improve interagency coordination during the oil and 

gas permitting process, which is instrumental in removing communication barriers, 

providing an efficient means for dispute resolution, and eliminating delays during 

the NEPA process. In order to achieve results, the BLM has focused on restoring 

full collaboration and coordination with state and local governments, tribes, individuals, and other stakeholders to resolve issues, develop productive relationships, and 

build consensus. 

Establishing BLM’s Energy and Minerals Task Force 

The BLM is also looking at establishing an Energy and Minerals Task Force to 

assist BLM state and field offices with expediting the leasing and permitting process. In order to decrease backlogs, the BLM intends to expedite the completion of 

planning efforts, collaborate with other bureaus within the Department as well as 

external surface management agencies, and coordinate resource needs among BLM 

offices. The Task Force will monitor significant actions and resource needs in the 

field, identify trouble spots, and resolve resource challenges. 

Prioritization and Capacity Building 

To address the high-priority energy demands of our Nation, the President’s FY 

2018 Budget Request includes an additional $16 million for the BLM’s oil and gas 

program. This includes an increase of about 82 full-time-equivalent employees to enhance the core capacity for processing APDs, EOIs, and rights-of-way. In the past, 

funding increases provided by Congress, along with substantial improvements in the 

12 

BLM’s approval process, have enhanced the BLM’s capacity to process and issue 

leases and permits. 

CONCLUSION

The BLM and the Administration remain committed to promoting responsible oil 

and gas production that helps create jobs, promotes a robust economy, and contributes to America’s energy independence, while also protecting consumers, public 

health, and sensitive public land resources and uses. The BLM’s oil and gas leasing 

program is a critical component of the Nation’s energy infrastructure and is an important Federal revenue generator. Thank you for the opportunity to present this 

testimony. I will be glad to answer any questions. 

QUESTIONS SUBMITTED FOR THE RECORD BY REP. LOWENTHAL TO KATHARINE

MACGREGOR, ACTING ASSISTANT SECRETARY, LAND AND MINERALS MANAGEMENT, 

U.S. DEPARTMENT OF THE INTERIOR

Ms. MacGregor did not submit responses to the Committee by the 

appropriate deadline for inclusion in the printed record. 

Question 1. Ms. MacGregor, please provide the following information to the 

Committee: 

a. The number of onshore oil and gas drilling permits approved but unused as 

of September 30, 2016, broken down by BLM State Office and Field Office, 

indicating how many are on Federal land and how many are on Indian land. 

b. For the APDs pending as of September 30, 2016, a breakdown of the length 

of time that those APDs had been pending (i.e. the number that have been 

pending for less than 30 days, the number pending between 31 and 60 days, 

and so on), broken down by BLM State Office and Field Office. 

c. The number of APDs received and approved for each month in Fiscal Year 

2017 for which data is available, as well as the number of pending APDs at 

the end of each month, broken down by BLM State Office and Field Office. 

d. The number of wells on public land that have been drilled but uncompleted 

(or drilled but have not reported first production to the BLM), broken down 

by BLM State Office and Field Office, as well as by the number of months 

since those wells have been spud. 

Question 2. Certain witnesses supported the idea of granting states the primary 

responsibility for managing Federal oil and gas operations within their borders? 

Under such a system, how would the Federal Government assure compliance with 

the myriad Federal laws and other requirements that apply to public lands 

including, for example: 

• The Mineral Leasing Act and its regulations, which charge the Secretary of 

the Interior and BLM with managing Federal minerals leasing and permitting. See 30 U.S.C. § 226(a); 43 CFR § 3162.3–1(c). 

• The National Environmental Policy Act and its requirements for 

environmental impact analysis; 

• The Endangered Species Act including its requirements for consultation with 

the FWS; 

• The National Historic Preservation Act including its requirement for consultation with State Historic Preservation Officer and the Advisory Council on 

Historic Preservation; 

• The Secretary’s trust responsibility to Native American tribes; 

• The Federal Land Policy & Management Act and it requirements for land use 

planning, for management of the public lands to ‘‘protect the quality of 

scientific, scenic, historical, ecological, environmental, air and atmospheric, 

water resource, and archaeological values,’’ and for the prevention of unnecessary and undue degradation of public lands. 

Question 3. Several witnesses testified about the need to ‘‘streamline’’ oil and gas 

permitting on public lands? How would you streamline the process in light of the 

myriad legal requirements that apply to activities on public lands as noted in 

Question 2 above. 

13 

Question 4. The Energy Policy Act of 2005 sets out five categories of categorical 

exclusions from NEPA for certain limited types of oil and gas activities. In 2011, 

the GAO found that the BLM was abusing these exclusions by using them for activities that were outside their scope. How has the BLM responded to this report and 

what more, if anything, should be done to avoid the abuses of these categorical 

exclusions as found by the GAO? 

Dr. GOSAR. Thank you, Ms. MacGregor. 

I now recognize Mr. Flynn for his 5 minutes. Thank you. 

STATEMENT OF RYAN FLYNN, EXECUTIVE DIRECTOR, NEW 

MEXICO OIL AND GAS ASSOCIATION, SANTA FE, NEW MEXICO 

Mr. FLYNN. Thank you, Chairman Gosar, Chairman Bishop, 

Ranking Member Lowenthal, members of the Subcommittee, and 

staff. My name is Ryan Flynn, I am the Executive Director for the 

New Mexico Oil and Gas Association. Prior to taking over NMOGA, 

I was the Secretary of Environment and Natural Resource Trustee 

in the state of New Mexico, and worked in state government for approximately 6 years prior to taking this role. 

I want to thank Representative Pearce for recognizing me. I want 

to recognize Representative Pearce, as well, who just had to step 

out of the room. But he has been a tremendous leader, and his district is home to one of the most resilient and productive oil and gas 

plays in the world, the great Permian Basin. 

I want to talk to you a little bit about New Mexico’s oil and gas 

industry, and talk to you about some challenges to oil and gas development on Federal lands in New Mexico, and suggest some opportunities for improving BLM’s operations in New Mexico. 

I want to be very clear that my goal here today is not in any 

way, shape, or form to criticize BLM individually. We have had a 

tremendous working relationship with BLM staff and leadership, 

and we look forward to continuing that working relationship, 

moving forward. But like any large agency, there are several opportunities for improvement. I believe Secretary Zinke has inherited 

a difficult situation, but he is more than capable and up to the task 

of turning things around in a positive direction. 

New Mexico’s oil and gas industry is the most important 

economic industry to the state of New Mexico. Last year, in 2016, 

New Mexico’s oil and gas industry contributed $1.6 billion to the 

state’s general fund, our budget. That equaled roughly 25.8 percent 

of the budget last year, in 2016. The total budget was about $6.2 

billion. In the last 10 years, oil and gas typically contributes about 

a third directly to the state’s general fund. This money goes directly to roads, hospitals, schools—that infrastructure in the state 

would simply not be possible without the oil and gas industry’s 

contributions. 

Our industry also employs over 100,000 people in the state of 

New Mexico, a state with about 1.8 million people. New Mexico 

also has one of the highest poverty rates in the country, with almost a quarter of our population living below the Federal poverty 

line. So, oil and gas jobs are extremely attractive in our state, 

given that the average wage on an oil and gas rig is about $75,000 

a year. 

14 

Nationally, New Mexico is one of the top energy-producing states 

in the country, ranking fifth in crude oil production and eighth in 

natural gas production. Even during a prolonged period of low 

prices, New Mexico’s oil and gas industry has remained resilient. 

In the last 8 months, we have seen major acquisitions and purchases in New Mexico, totaling over $13 billion. The New Mexico 

portion of the Northern Delaware Basin has recently been the focal 

point of some of the most expensive acreage-basis oil and gas acquisitions in the world. 

In calendar year 2016, New Mexico was the largest producer of 

oil and gas from Federal lands, accounting for over 78 million 

barrels of oil, and over 770,000 cubic feet of natural gas. 

The biggest challenge to oil and gas development on Federal 

lands in New Mexico remains regulatory uncertainty at BLM. And 

I think the best illustration of this issue is to look at the Permian 

Basin and to look at the development in west Texas, compared to 

the development in New Mexico. 

As of June 16, 2017, there were 59 rigs running in the 

New Mexico Permian, versus 309 in the Texas Permian. The main 

difference is the Bureau of Land Management. BLM’s Farmington 

field office takes approximately 1 year to process a drilling permit, 

an APD. BLM’s Carlsbad field office also takes approximately 250 

days to process a drilling permit. Right-of-ways take approximately 

a year or more, depending on the field office. 

Overall, BLM suffers from a lack of staffing, a poorly designed 

and cumbersome new system, the AFMSS 2 program, and systematic irregularities in the permit processing protocols. These delays 

translate directly into lost revenue for Federal and state stakeholders alike. 

Our estimates are that approximately $1.4 million in Federal 

royalty and $831,000 in state severance tax is deferred each day, 

based on the current backlog at BLM’s offices in New Mexico. This 

financial impact is huge in a state like New Mexico, where we face 

prolonged budget issues in light of the low market pricing for oil 

and gas. 

I will conclude by just noting that there are many opportunities 

to improve BLM’s operations in New Mexico, such as simple edits 

to the AFMSS 2 program; agreements with state regulatory 

authorities to transfer some of the tedious work of processing permits from BLM to state offices like our oil conservation division; 

and BLM making use of existing laws, such as categorical exclusions, to allow for expedited review and approval of permits. 

Thank you very much, Mr. Chair. 

[The prepared statement of Mr. Flynn follows:] 

PREPARED STATEMENT OF RYAN FLYNN, EXECUTIVE DIRECTOR, NEW MEXICO

OIL AND GAS ASSOCIATION

INTRODUCTION

Chairman Gosar, Ranking Member Lowenthal, members of the Subcommittee, 

thank you for the opportunity to provide testimony today about oil and gas development on Federal lands in New Mexico. My name is Ryan Flynn and I am the 

Executive Director of the New Mexico Oil and Gas Association (‘‘NMOGA’’). Founded 

in 1929, NMOGA represents over 1,000 members who account for 95 percent of the 

oil and gas activity in New Mexico. 

15 

Before leading NMOGA, I worked in New Mexico Governor Susana Martinez’s administration for almost 6 years, where I served as Secretary of Environment and 

the Natural Resource Trustee. My experience in state government gave me firsthand experience dealing with the sort of problems inherited by Secretary Zinke and 

his staff at the Department of the Interior’s Bureau of Land Management. For 

example, when Governor Martinez took office in 2011, inconsistencies and delays 

plagued New Mexico’s environmental permitting and enforcement programs. In one 

extreme case, a permit application was pending for over 18 years. Permit applications typically took years to review and permit conditions varied wildly depending 

on the individual permit writer. Enforcement decisions were at times were driven 

by political agendas with supplemental environmental projects occasionally being 

used to fund pet political projects. These permitting and enforcement issues gave 

the state a reputation for being a difficult place to conduct business, which in turn 

hindered investment in New Mexico. Beginning in 2011, under the leadership of 

Governor Martinez and with bipartisan support, we successfully implemented a 

series of regulatory reform efforts focused on various energy and environmental 

issues, including revisions to environmental permitting and enforcement programs. 

Permitting times decreased dramatically. For example, New Mexico air quality permits are issued in 45 days or less, and applications for permits to drill (‘‘APD’’) are 

issued in 10 days or less. While permitting programs became more efficient, the 

state’s enforcement programs remained strong. During my tenure, we collected approximately $250 million in fines for violations of environmental regulations, the 

overwhelming majority of which were collected from Federal agencies operating in 

New Mexico, such as the U.S. Department of Energy. 

While Secretary Zinke and his staff inherited some major challenges at the BLM, 

I believe he is the perfect fit for leading the Department of the Interior and I have 

no doubt he will turn this situation around. His success in this regard will have a 

profound impact on the state of New Mexico. In the past year, major acquisitions 

and purchases in New Mexico have totaled over $13 billion and oil production has 

dramatically increased on non-Federal lands. While the rest of New Mexico’s economy struggles to gain a foothold, the state’s oil and gas industry remains a bright 

spot. Strong leadership at the state level has helped New Mexico’s oil and natural 

gas industry remain strong over the past few years, yet the state has not fully realized its resource development potential due to problems at the BLM. Specifically, 

delays for approving permits and rights-of-way is costing New Mexico and the 

Federal revenue millions of dollars each day. NMOGA estimates $1,473,000 in 

Federal royalty and $831,325 in state severance is deferred each day due to BLM’s 

administrative problems. With early projections showing the state facing a potential 

deficit of $200 to $250 million for the Fiscal Year 2018, the lost revenue associated 

with administrative issues plaguing development on Federal lands in New Mexico 

is a critical issue that must be addressed immediately. 

NEW MEXICO’S OIL AND GAS INDUSTRY

The oil and gas industry is New Mexico’s most important industry. In 2016, the 

oil and gas sector contributed more than $1.6 billion to the state’s general fund for 

schools, hospitals, and roads, and employed over 100,000 people. For context, New 

Mexico’s total budget for 2016 was $6.2 billion, making the oil and gas industry’s 

contribution approximately 25.8 percent of the total budget in 2016. Nationally, 

New Mexico is one of the top energy producing states in the entire country, ranking 

fifth in crude oil production and eighth in natural gas production. New Mexico is 

also a leader in other forms of energy production, such as renewables. 

New Mexico’s oil and gas industry remains resilient even through a prolonged 

period of low prices. In the last 8 months, major acquisitions and purchases in New 

Mexico have totaled over $13 billion, and the New Mexico portion of the Northern 

Delaware Basin has recently been the focal point of the some of the most expensive 

acreage-basis oil and gas acquisitions in the world. 

The Oil Conservation Division and the State Land Office are primarily responsible 

for regulating the oil and gas industry at the state level while BLM is charged with 

leasing, selling, and generally managing oil and natural gas reserves on Federal 

land. BLM’s field offices in New Mexico are among the busiest in the Nation. In calendar year 2016, New Mexico was the largest producer of oil and gas from Federal 

lands, accounting for 78,646,829 bbls of oil (53 percent of NM oil production) and 

771,601,140 mcf of natural gas (65 percent of NM gas production). 

CHALLENGES TO OIL AND GAS DEVELOPMENT ON FEDERAL LANDS IN NEW MEXICO

While New Mexico’s oil and gas industry has been resilient during this difficult 

period of low prices, challenges to the industry’s ability to capitalize on the recent 

16 

investments remain. The greatest challenge today is regulatory uncertainty at BLM. 

Although there is a distinct advantage to operating on the New Mexico side of the 

border in terms of royalty rates (12.5 percent for New Mexico Federal vs. 25 percent 

for Texas fee land), the fact remains that operators are willing to pay a premium 

to develop in areas where regulatory certainty can be relied upon as a matter of 

course. For example, the Baker Hughes rig count from the week of June 16, 2017, 

indicates the discount economic factor associated with the Federal royalty rate for 

New Mexico production is not much of an incentive, with only 59 rigs running in 

the New Mexico Permian versus 309 in the Texas Permian. While some of this may 

be due to the majority of surface acreage defined as the Permian Basin being on 

the Texas side of the line, it cannot account for the fact that New Mexico has some 

of the most sought-after geology and development potential, yet consistently trails 

Texas where development is concerned. The oil and gas industry invests millions of 

capital budget dollars in development projects when presented with a level playing 

field, and a lack of regulatory certainty is driving more investment to Texas than 

New Mexico. 

Operators working through BLM’s Farmington Field Office (‘‘FFO’’), which regulates all production in New Mexico’s San Juan Basin, have seen drilling permit wait 

times approach the 500-day mark, with an average wait time of nearly 1 year for 

a standard application for a permit to drill (‘‘APD’’) without revisions. By contrast, 

New Mexico’s Oil Conservation Division, the state agency handling drilling permit, 

approves APDs in 10 days or less. Better management practices are required to 

remedy a lack of procedural uniformity, which often leads to multiple, differing interpretations of policies and protocols for document review. While industry appreciates the efforts of some individual staff members to create workarounds in this 

cumbersome system, there is no regulatory certainty in APD processing from the 

FFO. Additionally, the FFO does not use tools already at its disposal, such as categorical exclusions and pre-established protocols for NEPA review, that would go a 

long way toward getting projects initiated and revenue flowing to the Federal 

Government and the state of New Mexico. 

The rights-of-way (‘‘ROW’’) process at the FFO is likewise inefficient, with operators waiting up to a year for approvals. By contrast, the state approves ROWs in 

45 days or less. Recent internal changes to the determination of the ROW starting 

point have hindered infrastructure projects, and constitute a drastic departure from 

the FFO’s previous interpretation of lease rights and product transport guidelines. 

Additionally, poor coordination between BLM, the Bureau of Indian Affairs and various other tribal authorities has resulted in severe delays for ROW approvals. In addition to these difficulties in the ROW process, new interpretations of threatened 

and endangered species requirements have curtailed development on Federal lands 

in the San Juan Basin due to a lack of regulatory flexibility and a seeming unwillingness to work with industry in this regard. 

The Carlsbad Field Office (‘‘CFO’’) is responsible for processing applications for development in New Mexico’s portion of the Permian Basin, a region witnessing a 

drastic uptick in development from the low point of severely depressed commodity 

pricing in early 2016. While it might seem that one of the most prolific oil and gas 

plays in the world should merit additional resources to alleviate a permitting bottleneck, this was not the case at the CFO until recently. Fortunately, Secretary Zinke 

and his staff have recently begun giving the Permian Basin the attention it deserves. Currently in the Permian Basin, operators wait an average of 250 days for 

an APD, and over a year for a ROW. Companies that diligently follow up on applications with CFO staff can achieve shorter wait times, but this is not an optimal solution for either industry or the CFO staff, especially as the area sees a resurgence 

in activity associated with major recent merger and acquisition activity. 

The biggest challenges facing the CFO include a lack of personnel in key positions, and a cumbersome and relatively unworkable permit processing system, referred to as the Automated Fluid Minerals Support System 2 (‘‘AFMSS 2’’). AFMSS 

2 was designed to expedite and automate permit processing, but has so far failed 

to deliver on either of these promises. Concurrent processing of different portions 

of APDs and ROWs by specialists responsible for independent sections of the permitting process was replaced by a completely linear system that does not allow for even 

simple edits by the CFO staff. The rigidity of the system has resulted in 70 percent 

of submissions being rejected for deficiencies, when historically there were very few 

deficiencies reported at the CFO. In short, AFMSS 2 has failed to deliver on its 

promise of greater efficiency and the system needs to be fixed or replaced. 

Overall, BLM suffers from a lack of staffing, a poorly designed and cumbersome 

new system in the AFMSS 2 program and systematic irregularities in permit processing protocols. The APDs and ROWs processed by both the FFO and CFO are generated in spite of the organizational structure, rather than as the natural output 

17 

of the organizational structure. While APDs and ROWs are the most significant instruments in terms of volume, BLM is also responsible for other important permits—such as unitizations, communitizations and commingling agreements—that 

also experience similar delays while moving through the current maze of the BLM 

approval process. These delays translate directly into lost revenue for Federal and 

state stakeholders alike. NMOGA estimates $1,473,000 in Federal royalty and 

$831,325 in state severance is deferred each day based on an April, 2017, count of 

491 APD backlog (assuming wells were drilled and producing at conservative rates). 

In a state like New Mexico, where oil and gas revenue typically constitutes roughly 

one-third of the state’s budget, fixing BLM’s permitting issues will provide immediate economic benefits. 

OPPORTUNITIES TO IMPROVE BLM’S OPERATIONS IN NEW MEXICO

While there are many challenges to overcome on the path to a more efficient regulatory process at BLM, several identifiable opportunities for improvement exist. 

Simple edits to the AFMSS 2 program to allow BLM staff to edit permits moving 

through the application corridor will greatly enhance the workability of the system. 

Additional staff dedicated to permit processing (at the CFO in particular) will essentially guarantee a good return on investment for both state and Federal entities, as 

expediting drilling permits and ROWs translates directly into severance tax and 

royalty dollars that can be put to good use for the taxpayers. Agreements with state 

regulatory authorities could transfer some of the more tedious work of processing 

permits from the BLM to local authorities. For example, even a small, focused pilot 

program aimed at allowing the New Mexico Oil Conservation Division to process the 

downhole engineering portions of APDs would free up much-needed time for BLM 

staff to focus on multi-use land management on the surface and expedite the entire 

application process. Last, BLM should make use of existing laws, such as categorical 

exclusions that allow for expedited review and approval of permits. 

CONCLUSION

New leaders at the Federal Government, including President Trump and 

Secretary Zinke, are enacting good policies and regulations that are breathing fresh 

air into American energy production, and helping ensure the United States leads 

the way in safe and responsible energy production. Addressing the administrative 

issues at BLM, which are currently restricting access to Federal lands, is critical 

issue that must be addressed immediately if the United States is going to fully 

realize the development potential of our oil and gas resources. 

Dr. GOSAR. Thank you, Mr. Flynn. 

The Chair now recognizes Mr. Squillace for his 5 minutes. 

STATEMENT OF MARK SQUILLACE, PROFESSOR OF LAW, 

NATURAL RESOURCE LAW, UNIVERSITY OF COLORADO, 

BOULDER, COLORADO LAW SCHOOL, BOULDER, COLORADO 

Mr. SQUILLACE. Thank you, Chairman Gosar and Ranking 

Member Lowenthal, for this opportunity to testify today. My name 

is Mark Squillace, I am a professor of law at the University of 

Colorado Law School. I want to first note that I began my written 

testimony by asking that we each commit to each other that we 

will engage in a meaningful way on the important issues that are 

the subject of this hearing, and I am offering this testimony today 

in the hope that we can have a constructive dialogue. 

I want to make three points regarding oil and gas programs on 

Federal lands. 

First, oil and gas production on Federal lands remains strong, 

despite a weak market and lackluster interest in new leases and 

development. 

Second, efforts to accelerate leasing and development under current market conditions are misguided, because what they could do 

is lock up Federal oil and gas resources, even as they deny the 

18 

public a fair return on these valuable assets. In this regard, by the 

way, the Committee’s focus really should be on improving and reforming our royalty and revenue policies at the Federal level, 

which are much in need of reform. 

Finally, if we are going to have oil and gas development on our 

public lands, it has to be preceded by appropriate environmental 

analysis and planning. In my judgment, it is entirely inappropriate 

to use our Federal lands for industrial-scale oil and gas development. 

Let me turn to the first question about oil and gas production. 

As I acknowledged in my written testimony, the number of Federal 

leases, the amount of acreage under lease, and the number of new 

leases issued have all declined in recent years. But here is the 

thing: Federal onshore oil production more than doubled between 

Fiscal Year 2008 and 2015. The number of Federal producing 

leases has never been higher. And if you look just at the year 2016, 

the amount of Federal land producing oil and gas was higher in 

only 1 year out of the last 10. 

What is remarkable about these statistics is that it is all happening at a time of weakening demand. Just a few figures here to 

support that claim. First of all, Federal land under production 

amounts to less than 47 percent of the Federal land that is under 

lease. And in 2016, the industry did not even bid on two-thirds of 

the leases that were offered by the BLM. I should note, by the way, 

that in 2015 they bid on only 15 percent of the leases that were 

offered. 

Right now, we have 7,500 APDs that have been approved and 

that are not being drilled upon, and that is the most that we have 

ever had at the BLM. If you just look at 2016, the BLM issued 

2,184 drilling permits, but industry drilled on fewer than 

39 percent of these permits. By the way, that contrasts with most 

other years, when the number of drilling permits that were drilled 

upon was in the 70 and 80 percent range. 

So, what is going on here? Well, that takes me to my second 

point, which regards market conditions. And here I just want to 

make two observations. One, when I last looked at the market 

price for oil on Monday, the price was at a very low level. On 

Monday, West Texas Intermediate was at $42.46 a barrel. That, obviously, has an impact on the interest of the oil and gas industry. 

But there is another important point here which the Committee 

needs to recognize. The major plays for oil and gas, which have 

really driven development in recent years, happen not to be found 

on Federal land. There are exceptions; the Permian Basin, which 

Mr. Flynn talked about is one of them. But, for the most part, 

these plays are on private lands and in other areas. 

So, what happens is if the government tries to sell these leases 

under these current market conditions, we are going to get low-ball 

kinds of prices. Essentially, we are going to be giving away these 

valuable Federal resources, and that just doesn’t make sense. What 

we ought to be doing is looking at leases and improving the APD, 

rather than approving more APDs. 

We need to reform our policies. We now charge just $2 an acre 

for leases that do not otherwise receive a bid, $1.50 an acre in 

rental. That does not generate much revenue, but it encourages 

19 

speculation, and that needs to be reformed. We have not reformed 

our royalty rates since 1920, when the Mineral Leasing Act was 

passed. We need to increase those royalty rates to reflect market 

conditions. 

The state of Texas, by the way, charges 25 percent in royalties 

on oil, twice what the Federal Government charges. In my home 

state of Colorado it is 20 percent. And, as most of you know, on offshore lands it is 18.75 percent. 

Finally, if we are going to use our public lands for oil and gas 

development, we really need to be smart about it. I do not oppose 

oil and gas development on our public lands. But for now, at least, 

all of us rely, to some extent, on oil production, on gas production 

for power generation, but we need to recognize that we could accommodate these interests without doing damage to our public 

lands. 

If we could, show the slides that I think are on the scheme. 

[Slide] 

Mr. SQUILLACE. Mr. Flynn talked about the Permian Basin, and 

this is a picture of the Permian Basin in Texas. And for those of 

you who have not been there, I would urge you to go. This kind 

of development goes on for miles and miles in every direction, and 

it is not the kind of thing that I think we want for our public lands. 

This is private land. But on our public lands we ought to be 

doing things like doing appropriate planning, doing appropriate environmental analysis. And if it takes more time, well, we owe that 

to the American people, to make sure that if we are going to have 

development, we do it right. I do not oppose development of our 

public lands for some oil and gas development, but it is different 

from our private lands. These are our multiple-use lands, and we 

need to make sure that we do better than we have often done on 

our public lands. 

And, by the way, we cannot do this if we are denying the BLM 

adequate resources in funding and in personnel. Good management 

requires proper funding. 

Thanks very much. I look forward to your questions and to the 

discussion of these issues. 

[The prepared statement of Mr. Squillace follows:] 

PREPARED STATEMENT OF PROFESSOR MARK SQUILLACE, UNIVERSITY OF

COLORADO LAW SCHOOL

Chairman Gosar, thank you for the opportunity to appear before the House 

Subcommittee on Energy and Mineral Resources to offer my views on oil and gas 

development on our public lands. I am a professor of law at the University of 

Colorado Law School. I teach and work primarily in the fields of environmental, 

natural resources, and water law and I have written extensively on all of these subjects. My professional experience with public lands issues also runs deep. As a law 

student at the University of Utah, I worked in the Utah State Office of the BLM 

as a land law examiner—a position that allowed me to review all manner of public 

lands activities and gain firsthand knowledge about the operation of our public land 

laws. Following law school, and before entering law teaching, I was hired into the 

Solicitor’s Honor’s Program at the U.S. Department of the Interior where I gained 

significant additional experience on public lands and mineral law issues. I took a 

leave from teaching and returned to the Solicitor’s Office in the year 2000 as a 

Special Assistant to the Solicitor where I worked on a wide range of special projects 

involving public lands. All of this experience both inside and outside of government 

has helped to inform my understanding about how best to manage oil and gas development on our public lands. 

20 

1 Under current land use plans, more than 90% of BLM-managed minerals are open to new 

oil and gas leasing. http://wilderness.org/open-business-and-not-much-else-analysis-shows-oiland-gas-leasing-out-whack-blm-lands. 2 30 U.S.C. § 226(b)(1)(A). 

3 Id. at § 226(e). 4 Id. 

5 Id. at § 209. During the period of suspension, the lessee does not pay rentals. See also Copper 

Valley Machine Works, Inc. v. Andrus, 653 F.2d 595 (D.C. Cir. 1981) where the court held that 

‘‘conservation’’ was not limited to conservation of the oil and gas resources but included 

measures deemed necessary to protect the environment. 

Before sharing my views on this subject, I wish to make an observation about congressional testimony. Over the last decade, I have had the distinct honor and privilege of appearing before House and Senate Committees to lend my expertise on 

many occasions and on a wide range of issues. Increasingly, however, the hearings 

at which I have appeared have seemed largely unproductive. They often devolve into 

efforts to score political points at the expense of learning about and trying to solve 

the complex but important problems that are the subject of the hearings. Members 

often choose to engage only with those with whom they agree or think they agree, 

and a process that is supposed to shed light on a problem, often serves instead to 

harden ideological positions in a way that is unlikely to lead to the creative policy 

solutions that are often available if we allow ourselves to see them. 

I appear today with an open mind and a willingness to learn from you and from 

the other witnesses. But we cannot learn if we do not engage with each other in 

a meaningful way. In addressing the hard questions before this Committee, we must 

begin with the facts as best we can know them. Information will always be imperfect, both because of scientific uncertainty and the time lag between the collection 

of information and the decision point. But we must accept the findings of those who 

by training and expertise provide us with the information essential to good government decision making. Once we assemble the best information, policy will still play 

an important role. But good policy is stymied if we cannot even agree on the basic 

facts that inform it. 

My substantive remarks begin with a review of basic data about the Federal onshore oil and gas leasing program. This is followed by a detailed look at other factors that help to explain this data including the economics of public land oil and 

gas development. 

FEDERAL OIL AND GAS DEVELOPMENT AND CURRENT BLM DATA

Federal onshore oil and gas development on our public lands involves a multistage process. It begins with land use planning whereby the BLM determines, 

among many other things, which lands should be made available for possible oil and 

gas leasing.1 This is followed by a process for nominating tracts for leasing. Industry, the public, and the BLM itself may nominate lands that are then made available through an open, competitive auction process. Auctions are typically held by 

individual BLM state offices on a quarterly basis. Leases are generally awarded to 

the highest bidder but if no bids are received the BLM makes these lease tracts 

available for purchase for 2 years at $2.00/acre.2 Lessees usually have 10 years to 

develop the lease before it expires but leases are automatically extended beyond the 

10-year primary term so long as oil and gas is being produced in paying quantities.3

Leases may also be extended for 2 additional years beyond the primary term where 

actual drilling is occurring on the site,4 and they may be suspended for an unlimited 

period of time ‘‘in the interest of conservation.’’ 5 Lessees may drill on a lease site 

for either exploration or development purposes but they must first file and receive 

BLM approval for an application for a permit to drill (APD). Environmental analysis 

in accordance with the National Environmental Policy Act is required at most stages 

of this process and is particularly important at the APD approval stage because it 

is at that stage where the government is able to assess site specific impacts of 

development. 

21 

6 BLM Oil and Gas Statistics, Table 1, available at https://www.blm.gov/programs/energy-andminerals/oil-and-gas/oil-and-gas-statistics. State lands leasing, like federal lands leasing, has 

also declined significantly over the past several years. ECONorthwest, Oil and Gas Leasing and 

Permitting on State Lands: Recent Trends in the Rocky Mountain West (Aug. 2016) available at 

http://westernvaluesproject.org/wp-content/uploads/2016/09/Final-WVP-State-Lands-Report.pdf. 7See ECONorthwest, supra note 6. 8See BLM Oil and Gas Statistics, Table 1, supra note 6. 9 Congressional Research Service, ‘‘U.S. Crude Oil and Natural Gas Production in Federal and 

NonFederal Areas’’ (June 22, 2016) at p. 3, Table I available at https://fas.org/sgp/crs/misc/ 

R42432.pdf. 10See BLM Oil and Gas Statistics, Table 1, supra note 6. 11 Id. 12Data available upon request. 13See BLM Oil and Gas Statistics, Table 1, supra note 6. 14 Id. 

Those who support increased oil and gas leasing activities on our public lands will 

likely point to the fact that the total number of extant Federal leases, the total 

number of acres leased, and the total number of new leases issued during the year 

have all declined in recent years.6 What they may not tell you, however, is that a 

similar trend exists for leasing of state-owned minerals in the West.7 Additionally, 

the number of producing leases on Federal land has never been higher and, when 

compared to 2016 fiscal year, the amount of Federal land producing oil and gas was 

higher in only 1 year out of the last 10, and only three times in the last 20 years.8

According to the Congressional Research Service, Federal onshore oil production increased by more than 70 percent between Fiscal Year 2006 and 2015.9

Moreover, even as production has increased a large surplus of unused oil and gas 

leases and permits on Federal lands remains. Current Federal land under production is less than half (46.9 percent) of the leased land.10 Put another way, more than 

14 million acres of Federal land currently under lease are not producing any oil or 

gas.11 Furthermore, during the 2016 fiscal year, the industry bid on less than onethird of Federal acreage offered for lease at auction.12 As a result, the BLM leased 

only 577,000 acres for oil and gas development during that year, which is substantially less than in prior years.13 In light of slack demand this reduction in leased 

acreage is not at all surprising and it is actually remarkable that during this period 

the number of producing leases on Federal lands has grown to 23,926—its highest 

level ever.14


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22 

15 BLM Oil and Gas Statistics, Table 13 ‘‘Approved Applications for Permit to Drill—Not 

Drilled’’ (Sept. 30, 2015) available at https://www.blm.gov/sites/blm.gov/files/oiland 

gas_ogstatistics_t13AAPD%20Report.pdf. 16 BLM News Release, BLM Releases Statistics on Oil and Gas Activity on Federal, Indian 

Lands, (April 11, 2016) (‘‘[T]he number of approved drilling permits that have not yet been put 

to use by industry is at a record high of 7,500.’’) available at https://www.blm.gov/or/news/files/ 

2015_Oil-GasStats_PR_FINAL_BLM.pdf. 17 Id. See also Congressional Research Service, U.S. Crude Oil and Natural Gas Production 

in Federal and NonFederal Areas, R42432 (June 22, 2016), at pp. 9–10, available at https:// 

fas.org/sgp/crs/misc/R42432.pdf. As this report notes, industry requested 12,200 more drilling 

permits between 2006 and 2008 than it requested from 2013 to 2015. 18 Id. 19 Id. 

As for approved drilling permits, at last count in September of 2015, the BLM had 

approved more than 7,500 APDs that were not being used.15 This is an all-time 

record.16 As the number of unused APDs grew it should surprise no one then that 

in 2016 only 2,184 new drilling permits were issued by the BLM. This is certainly 

well below the record numbers of approvals from 2007 and 2008 when the BLM 

approved 7,124 and 6,617 permit respectively, but that was a time when the industry was applying for far more permits.17 But these numbers are consistent with the 

growth in unused drilling permits because industry commenced drilling or ‘‘spud’’ 

only 847 new wells in 2016, which is less than 39 percent of the number the BLM 

approved.18 By contrast in 2007 and 2008, industry spud 75 percent and 76 percent 

of the approved drilling permits respectively.19 Ramping up the issuance of drilling 

permit during a time when so many approved permits are not being used would 

thus seem to be irresponsible. 


26167.002.eps
23 

20See ‘‘President’s Budget FY 2018—Appendix—Detailed Budget Estimates by Agency— 

Department of the Interior’’ available at https://www.whitehouse.gov/sites/whitehouse.gov/files/ 

omb/budget/fy2018/int.pdf. 21 U.S. EIA, Today in Energy, June 26, 2017, available at https://www.eia.gov/todayinenergy/ 

prices.php. 22 Id. 23 U.S. EIA, ‘‘Henry Hub Natural Gas Spot Price’’ available at https://www.eia.gov/dnav/ng/ 

hist/rngwhhdd.htm. 

THE POLICY CHOICES FACING THE ADMINISTRATION

A key question before this Committee is whether it should support a policy to accelerate lease issuance and drilling permit approvals in the face of the existing glut. 

Leasing and permitting activities require the BLM to expend considerable time, 

money, and resources. Given the surfeit of existing leases and permits that are 

going unused due to low demand the prudent course, and the only responsible 

course, is to limit leasing and permitting until there is sufficient demand to ensure 

higher bonus bids and a fair return to the public on our valuable oil and gas resources. Notwithstanding these facts, the Administration’s proposed Interior budget 

would increase funding for energy and minerals development while starving other 

Interior programs such as our national parks and other public recreation lands 

where demand is soaring.20

THE ECONOMICS OF OIL AND GAS DEVELOPMENT

So what explains the lackluster demand for Federal oil and gas resources? Well, 

much of it can be traced to low market prices. The Energy Information Administration’s daily report on the price of West Texas Intermediate light crude was $42.46/ 

barrel this past Monday, June 26, 2017.21 While the price dipped to below $30/ 

barrel in the early part of last year, it has hovered around or below the $50/barrel 

mark for most of the past year.22 Natural gas prices have also remained low, ranging from $1.81 in the Mid-Atlantic states to 3.12 in northern California.23 At these 

prices, oil and gas companies can still make a decent profit, but in many cases, enhancing production at existing wells may be more attractive than developing new 

wells or stockpiling more leases. 


26167.003.eps
24 

24 U.S. EIA. ‘‘Short Term Energy Outlook’’ (June 6, 2017) at Table 2 (Energy Prices) available at https://www.eia.gov/outlooks/steo/tables/pdf/2tab.pdf. 

25See Government Accountability Office, Raising Federal Rates Could Decrease Production on 

Federal Lands but Increase Federal Revenue, at pp. 10–11 (June, 2017), available at https:// 

www.gao.gov/products/GAO-17-540. 26See Congressional Budget Office, Options for Increasing Federal Income from Crude Oil and 

Natural Gas on Federal Lands, at p. 2, (April, 2016). 27 Id. at p. 11, Figure 1. 

Commodity prices for oil and gas are notoriously difficult to predict, but significant increases in price seem unlikely, and a decrease in price is perhaps just as likely as an increase. The U.S. Energy Information Administration currently forecasts 

that Brent crude oil prices will increase from an average of $53/barrel to $56/barrel 

during the 2017–2018 fiscal year. The Henry Hub natural gas spot price is projected 

to increase from an average of $3.16/MMBtu in 2017 to $3.41/MMBtu.24 These modest increases are unlikely to have a significant impact on the demand and use of 

Federal oil and gas leases and permits. Devoting more money and resources to public lands oil and gas development simply cannot change the global market forces 

that are the primary factor behind whether companies choose to develop. 

THE IMPLICATIONS OF SLACK DEMAND FOR THE FEDERAL OIL AND

GAS LEASING PROGRAM

As described above, market forces suggest slack demand for Federal oil and gas. 

Nonetheless, the government can certainly sell some additional leases if it is prepared to accept low bids. But pushing oil and gas leases at a time when the markets 

are down will inevitably result in far lower revenues for both the state and Federal 

coffers. Oil and gas revenues are generated in three ways—through auction bids, 

royalty payments on production, and annual rental fees.25 When oil and gas prices 

are low, bids on Federal leases are also low. Those that are sold are often bought 

by speculators who pay little up front for the lease in the hope that the market price 

will rise and make the lease more valuable. But if the market does turn around it 

is the speculator who profits rather than taxpayers. Furthermore, nearly 90 percent 

of government revenue from Federal oil and gas development comes from royalty 

payments 26 and the government receives no royalties when low market prices 

disincentivize production. And as with low bonus bids, very little revenue is generated from the modest rental payments charged under the current Federal policy.27

From a strictly revenue generating perspective the government would be wise to 

wait for commodity prices to rise again before even thinking about increasing the 

level of Federal oil and gas leasing. To the extent that leasing is allowed to proceed 

the government should set higher minimum bonus bids and higher annual rental 

fees as a means to increase revenues and discourage speculation. 

THE NEED TO REFORM FEDERAL ROYALTY POLICIES

Federal royalty rates, which were set in the 1920s, are currently well below market rates and the government would realize significant additional revenue if it 


26167.004.eps
25 

28 Id. at 16–24. 29 81 Fed. Reg. 43338 (2016). 30The Office of Natural Resources Revenue postponed implementation of the 2017 valuation 

reform rule on February 27, 2017. 82 Fed. Reg. 11823 (2017). The rule had taken effect on 

January 1, 2017. On April 4, 2017, Interior further proposed to repeal these rules in their 

entirety. 82 Fed. Reg. 16323 (2017). 31See Federal Coal Program, Programmatic Environmental Impact Statement: Scoping 

Report, available at https://eplanning.blm.gov/epl-front-office/.../CoalPEIS_RptsScoping_ Vol1_508.pdf. 32Secretarial Order 3348 (March 29, 2017). 33Multiple use management is required by the Federal Land Policy and Management Act 

(FLPMA). 43 U.S.C. § 1732(a) (2017). 34DOI/BLM Memorandum, ‘‘Recommendation to Defer the St. George Oil & Gas Lease 

Parcels’’ (May 25, 2017) available at https://eplanning.blm.gov/epl-front-office/projects/nepa/ 

69396/108022/132359/Deferral_recommend_memo_to_SO_052517.pdf. 35See National Park Service, ‘‘Visitor Use Statistics’’ available at https://irma.nps.gov/Stats/. 36See National Park Service, ‘‘Visitor Spending Effects—Economic Contributions of National 

Park Visitor Spending’’ available at https://www.nps.gov/subjects/socialscience/vse.htm. 37See Outdoor Industry Association, ‘‘The Outdoor Recreation Economy’’ (2017) available at 

https://outdoorindustry.org/wp-content/uploads/2017/04/OIA_RecEconomy_FINAL_Single.pdf. 

increased those rates. Earlier this month, the General Accounting Office issued a 

report that found that increasing royalty rates for oil and gas would increase 

Federal revenue with only minimal impacts on production.28 The Interior Department itself had recognized this problem by issuing final rules in 2016 that were designed to bring about much needed reforms to the Federal mineral royalty 

program.29 Unfortunately those rules were stayed by the Trump administration, 

which has further announced its intention to repeal these rules entirely.30 That 

would be a serious mistake and the Administration should reconsider its position 

before taking final action. 

While I understand that this hearing is focused on the Federal oil and gas leasing 

program, the Committee should not overlook the parallel need to reform Federal 

royalty policies for coal. For a host of reasons including the dire economic circumstances of the domestic coal industry, the arguments for reforming the entire 

coal leasing program including royalty policies are even more compelling than they 

are for oil and gas.31 One simple but important step that would allow the government to assess the options for reforming the coal program would be to resume preparation of the programmatic EIS on coal that was begun at the end of the Obama 

administration. This step, which would help both the government and the public to 

better understand their options for coal reform, was inexplicably abandoned by the 

Administration in March of this year.32

FEDERAL OIL AND GAS LEASING AND MULTIPLE USE

In addition to negative market forces, oil and gas production on Federal lands also 

faces multiple use constraints that govern Federal land management.33 Aerial photographs from certain parts of the country, such as the Permian Basin in west 

Texas and the Bakken fields of North Dakota, which are readily available on the 

Internet, have seen industrial scale oil and gas development, with little advance 

planning. Development at this scale and intensity is antithetical to the notion of 

multiple use. While intensive oil and gas development has sometimes occurred on 

Federal public lands, such as in the Jonah field in Wyoming, and near Farmington, 

New Mexico, such development often generates significant opposition from the public beyond what might be expected with private land development because it imposes significant, long-term costs on our wildlife, water, and recreation resources 

that might otherwise be accessible to the public for activities such as hunting, 

fishing, and hiking. This is especially true when oil and gas development threatens 

our most precious national conservation lands. When the BLM proposed to lease 

lands near the western boundary of Zion National Park earlier this year, it received 

more than 40,000 public comments in opposition, including letters of opposition from 

Governor Herbert of Utah, county commissioners and town councils and numerous 

local businesses.34 In total, our national parks hosted 330 million visitors in 2016, 

the third record-setting year in a row.35 Park visitors spent an estimated $18.4 

billion in local gateway regions while visiting national parks across the country.36

Our national parks form the backbone of a burgeoning outdoor recreation industry 

that generates hundreds of billions of dollars in consumer spending every year.37

Oil and gas development puts at least some of this economic activity at risk. And 

even putting aside the aesthetic values and moral arguments for preserving our 

public lands for future generations, the significant economic values associated with 

26 

38See Congressional Budget Office, ‘‘Options for Increasing Federal Income From Crude oil 

and Natural Gas on Federal Lands’’ (April 19, 2016) at p. 3 (‘‘. . . shale resources are found 

primarily on lands owned by state governments and private landowners.’’), available at

https: / / www.cbo.gov / sites / default / files / 114th-congress-2015-2016 / reports / 51421-oil _and_gas_ options-2.pdf; Congressional Research Service, ‘‘U.S. Crude Oil and Natural Gas Production in 

Federal and NonFederal Areas’’ (June 22, 2016) at p. 4 (‘‘Any increase in production of natural 

gas on Federal lands is likely to be easily outpaces by increases on nonFederal lands, particularly because shale plays are primarily situated on nonFederal lands and are located where 

most of the growth in production has occurred in recent years and where future growth is projected to occur.’’) available at https://fas.org/sgp/crs/misc/R42432.pdf; GAO Report, supra note 24 

at Figure 2, available at https://www.gao.gov/products/GAO-17-540. 39See GAO Report, supra note 24 at Figure 2. 40See e.g., Ctr. for Biological Diversity v. Nat’l Highway Traffic Safety Admin., 538 F.3d 1172, 

1217 (9th Cir. 2008); High Country Conservation Advocates v. United States Forest Service, 52 

F. Supp.3d 1174, 1190–91 (D. Col. 2014). 

the protection of our conservation lands is sustainable over the long term, without 

compromising the use of those lands for other purposes sometime in the future. 

GEOLOGIC FACTORS AND THEIR RELEVANCE TO FEDERAL OIL AND GAS DEVELOPMENT

Another important factor in explaining slack demand for Federal oil and gas resources has to do with simple geology. The Congressional Budget Office, the 

Congressional Research Service and the Government Accountability Office have all 

reached the conclusion that the major shale plays in the United States are located 

primarily beneath state and private, and not on Federal lands.38 A GAO report 

issued just last week found that of the six major tight oil and shale gas plays in 

the United States, Federal lands comprise 38, 15, 9, 7, 8 and 0.4 percent of land 

ownership within their boundaries.39 Put another way, the vast majority of all six 

of the major oil and gas plays in the United States are on state and private lands. 

Increasing Federal leasing and permitting activity obviously cannot change the location of oil and gas resources relative to Federal lands. 

CLIMATE CHANGE AND FEDERAL OIL AND GAS DEVELOPMENT

Finally, the Committee should not ignore concerns about climate change that are 

raised by decisions to accelerate Federal oil and gas development. To be sure, the 

climate-related impacts associated with oil and gas development on public lands are 

complex. Foregoing oil and gas development on public lands may result in some decrease in CO2 emissions as, for example, where it incentivizes a shift toward low 

carbon transportation fuels such as biodiesel. On the other hand, less Federal land 

oil and gas development might also be compensated at least in part by additional 

development on private lands in this country and in other countries. The point, however, is that these are issues worthy of critical analysis before major decisions are 

made to increase oil and gas production on Federal lands. Courts have begun to require such analysis in other contexts, including for example in the related context 

of Federal coal leasing.40 The government would be wise to learn from these cases 

and get out in front of this issue. If they fail to do so, it seems likely that courts 

will require it. 

To summarize, a wide range of factors influences Federal oil and gas production 

but probably none more so than the commodity markets. The sharp decline in the 

market price for oil and gas over the last several years has led to a decline in private sector interest in Federal oil and gas development. Nonetheless, Federal oil and 

gas production remains at historically high levels, notwithstanding the fact that the 

BLM has issued and companies have utilized far fewer Federal leases and drilling 

permits. Other complex factors associated with managing our public land resources, 

including the multiple use mandate, the protection of conservation lands, the relatively minor role of Federal lands to the shale oil and gas boom, and climate 

change all suggest the need for a more cautious approach toward pushing new oil 

and gas development on public lands, and they further suggest that the BLM’s 

leasing and permitting policies have not been stifling oil and gas development on 

our public lands. On the contrary, public lands oil and gas development remains robust even as the Federal Government is receiving far less revenue from our public 

oil and gas resources than the market will bear. Artificially stimulating Federal oil 

and gas development at the present time and under present market conditions 

would not be a rational response and could adversely impact long-term government 

revenues even as it leads to more environmental degradation. 

Thank you again for the opportunity to appear before the Committee today. I wish 

the Committee well as it seeks to address the important issues that surround the 

development of oil and gas on our nation’s public lands. 

27 

Dr. GOSAR. I thank the gentleman. 

The Chair now recognizes Dr. Nelson for her 5 minutes. 

Welcome. 

STATEMENT OF LAURA NELSON, GOVERNOR’S ENERGY 

ADVISOR, UTAH GOVERNOR’S OFFICE OF ENERGY DEVELOPMENT, SALT LAKE CITY, UTAH 

Dr. NELSON. Good morning. Thank you, Chairman Gosar. And I 

also want to thank Chairman Bishop and Ranking Member 

Lowenthal for the opportunity to be here today. I serve as the 

Energy Advisor to the Governor of Utah, Governor Gary R. 

Herbert, and I want to say this morning that I am going to be focusing primarily on our energy resources. 

Utah is a natural resource state. This includes mining and agriculture, as critical natural resources, but it really also includes our 

national and state parks, as well. So, we truly believe in balancing 

both use and conservation, and we think that this is the best approach to leveraging all of our resources to generate revenues and 

create jobs. 

Focusing on energy in particular, though, this is an important 

aspect of our economy. It contributes 9 percent to our gross state 

product. It is 2.2 percent of the state wages, although it is only 1.1 

percent of our employment number. So, it indicates that these are 

very high-paying jobs, as has already been discussed, and it contributes $673 million in revenues, most recently in 2015. 

These revenues are really important to Utah. They help to 

provide education to our students, and they also provide many 

other critical community services, which have also already been 

mentioned. 

Utah, like I think much of the country that is dependent on 

natural resource development, experiences booms and busts in 

natural resource development. Since 2014, Utah has, in fact, been 

experiencing a decline in production activity specifically related to 

oil and gas. As has been mentioned, this is in large part driven by 

lower commodity prices, which are really a function of market 

conditions. 

Just to give you an example of the impact, oil production in 2014 

was around 41 million barrels a year in Utah. In 2016, it was 31 

million barrels, so matching our 2012 levels. Natural gas production has also been on the decline since 2012, but we believe, 

nonetheless, that if we can access our resources, we can create new 

opportunities for development of these commodities. And as commodity prices rationalize, this is going to be critical. 

What we need to do is create a regulatory path forward that allows for sustained growth in jobs, especially in those communities 

that have been impacted by the past year’s decline in oil and gas 

activities. 

For example, in Utah, our overall rate of unemployment as of 

May 2017 was 3.2 percent. But in our oil and gas counties, 

Duchesne and Uintah, they are very dependent on jobs in these 

sectors, and their unemployment rates are 5.9 percent and 

6.6 percent, respectively. So, we truly believe that access to our 

resources, coupled with what we call an all-of-the-above energy 

28 

strategy, can create sustained growth in the development activity 

and in the associated jobs and revenues. 

Utah is a public land state, 70 percent of our land is federally 

owned. So, really getting it right when it comes to leasing and permitting is key if we are going to deliver on the promise of energy 

and minerals opportunities. 

In Utah, as I mentioned, 70 percent is federally managed. This 

leads, oftentimes, to lengthy permitting schedules, and especially 

when they are compared to the permitting schedules for applications for permits to drill of our Utah Division of Oil, Gas, and 

Mining. And we are just not convinced that the Federal process, in 

fact, delivers results that are more robust than those that are provided through our effective and efficient state agency. 

The Energy Policy Act of 2005 specifies that the Bureau of Land 

Management must approve applications for permit to drill, APDs, 

within 30 days. But we understand that the average permit time 

is closer to 220 days and, depending on the field office, it is not uncommon for it to take years. 

Our recommendation is very simple to resolve the lengthy time 

it takes to approve applications to drill, to allow for the primacy 

to be allocated to our Division of Oil, Gas, and Mining, or generally, to states where they are willing and have shown that they 

are capable of taking over this process. This in no way is meant 

to be disparaging to BLM or to the Department of the Interior, in 

particular, but really just to provide an opportunity for those agencies to focus on their broader mandate of multiple land use. 

We do recognize currently that DOI and BLM do not have authority to delegate primacy for regulation, in particular for permitting inspection and enforcement of oil and gas production to the 

states for production that is occurring on Federal land. However, 

we recognize that the primacy may be accomplished by one of two 

actions: first of all, congressionally directed legislation; or application of the Federal permit streamlining pilot project that was, in 

fact, established as part of the Energy Policy Act of 2005. 

In fact, in September of 2014, the U.S. Senate approved S. 2440, 

the BLM Permit Processing Improvement Act of 2014, that, among 

other things, makes permanent the Federal streamlining project 

program. 

So, we believe that assigning primacy of delegation of oil and gas 

development where appropriate to states would allow for better 

efficiency and better environmental outcomes, and would also free 

up the resources—— 

Dr. GOSAR. If the gentlelady will suspend, you are over your 

time. 

Dr. NELSON. Thank you. 

Dr. GOSAR. Remember, your testimony will be in full, en bloc. 

[The prepared statement of Dr. Nelson follows:] 

PREPARED STATEMENT OF DR. LAURA NELSON, ENERGY ADVISOR TO GOVERNOR

GARY R. HERBERT

I appreciate the opportunity to testify as Governor Gary R. Herbert’s Energy 

Advisor and on behalf of the Utah Governor’s Office of Energy Development. This 

morning I will be focusing primarily on oil and gas leasing and permitting on 

federally managed lands, and make recommendations for how areas of the process 

might be improved to increase efficiency, environmental outcomes, and increased 

29 

regulatory certainty. However, I would be remiss if I did not mention the importance of natural resources overall to the state’s economy. As a natural resource 

state, our goal is to provide for economic opportunities with sound environmental 

outcomes across all of our resources. These include our energy, minerals and agricultural sectors, as well as our state and national parks. Each of these represents 

unique and important sectors, providing jobs and revenues for the state. 

Energy jobs in particular in Utah account for 1.1 percent of the state’s jobs, or 

a total of almost 16,000 direct employees in this sector. And these jobs provide some 

of the highest wages in the state accounting for 2.2 percent of the state’s total 

wages. The average energy job in Utah pays 194 percent of the state’s average wage. 

With respect to the state’s energy revenues, they flow through the following means: 

Federal mineral leases, severance taxes, royalties from the School and Institutional 

Trust Lands Administration permanent fund, property taxes, sales tax, income tax, 

and conservation tax. Of these, most significant are the property taxes, sales taxes, 

and Federal Mineral Leases, which in 2015 made up over 68 percent of the $673 

million dollars in energy revenue to the state. These revenues support the state 

budget, particularly our state school system. At the local level, sales and property 

taxes fund police, fire, and other essential services. 

Utah has seen energy booms come and go in recent decades, and since 2014 Utah 

has been experiencing a decline in production activity, in significant part related to 

low commodity prices for oil and gas driven by market conditions fueled by a technological revolution in well drilling and well-stimulation techniques. To give you an 

idea of the impact, oil production in 2014 was approximately 41 million barrels; in 

2015 production declined to roughly 37 million barrels; and in 2016 it was at 31 

million barrels, matching 2012 levels. Gas production has declined since 2012, when 

it peaked at 490 million MCF. In 2016 production was about 365 million MCF. However, we believe that to the extent that we can access our resources, we can create 

a new opportunity for development as commodity prices rationalize. This will be 

critical for building sustained growth and jobs, especially in those communities have 

been most impacted by the past years’ decline in oil and gas activities. While Utah’s 

overall unemployment rate as of May 2017 was 3.2 percent, the unemployment rates 

in Duchesne and Uintah counties, which are more dependent on oil and gas, were 

5.9 and 6.6 percent, respectively. 

In addition to Utah’s core oil, gas and coal industry, Utah supports an all-of-theabove approach to energy development and we have seen a boom in solar activity 

in recent years. However, this has been limited to state and private lands, largely 

due to the same onerous leasing and permitting conditions that face our hydrocarbon resources. Delivering on the promise of all our energy and minerals opportunities requires getting regulation right. 

Unfortunately, in a public lands state with close to 70 percent of land federally 

owned, the ability to access and responsibly develop our natural resources is 

dramatically impeded by complex processes and lengthy timelines for leasing and 

permitting, resulting in a general reduction in leasing activity. The total number of 

active onshore oil and gas leases in the country has declined over recent decades, 

and that pattern has continued without interruption since 2008. 

Utah is 11th among states in oil production, 12th among states in natural gas 

production, and 13th among states in coal production. When it comes to oil and gas 

development in the state today, regulatory compliance on federally managed lands 

is significantly more difficult than what occurs through processes overseen by Utah’s 

highly qualified staff at the Utah Division of Oil Gas and Mining. And we have not 

seen evidence that Federal process deliver results that are more robust than those 

provided through our state agency. 

The Energy Policy Act of 2005 specifies that the Bureau of Land Management 

(‘‘BLM’’) within the U.S. Department of the Interior (‘‘DOI’’) must approve Applications for Permit to Drill (APD) within 30 days, yet the average permit time is 220 

days. In fact, depending on the field office, it is not uncommon for APDs to take 

years. 

Our recommendation to resolve lengthy delays in leasing and permitting is that a 

process be established for delegating primacy to Utah, and to states generally, for the 

regulation of oil and gas operations on federally managed public lands. We are not 

alone in making this recommendation. This year the Interstate Oil and Gas 

Compact Commissions (IOGCC) passed resolution 17.051 titled ‘‘Urging the 

Congress of the United States, the U.S. Departments of the Interior, and the U.S. 

Bureau of Land Management to Establish Processes for Delegating Primacy to the 

States for the Regulation of Oil and Gas Operations on Federal Public Lands.’’ The 

purpose of the resolution is to urge the establishment of an administrative process 

to delegate a portion of BLM’s responsibilities (specifically the regulation of oil and 

gas activities) through an appropriate primacy delegation mechanism to the states 

30 

that may desire such delegation. The intent of the resolution is not to disparage or 

minimize the current role of the U.S. Bureau of Land Management to authorize development on Federal land, but it is an attempt to optimize the operations of government at both the Federal and state level. 

The IOGCC has a long-established interest in oil and gas resource development 

and the regulation of such activities on public lands within the borders of individual 

states. As evidence of this interest, IOGCC has for many years included a Public 

Lands Committee as one of its seven business-related Standing Committees— 

specifically to identify and address issues relevant to the states’ interests in public 

lands. The state of Utah became a member state of IOGCC in 1957. 

The initial Utah Oil and Gas Conservation Commission evolved over time to become the present-day Division of Oil, Gas, and Mining (‘‘DOGM’’) within the Utah 

Department of Natural Resources. DOGM’s guiding principles include the facilitation of the responsible development of oil and gas resources within the state of 

Utah. Specifically, DOGM is the counterpart to the Federal Government’s BLM in 

the regulation of oil and gas operations. BLM is tasked to oversee the development 

of oil and gas resources on Federal lands throughout the Nation. And like DOGM, 

BLM performs this task by analyzing, approving, and monitoring the drilling, completion, operation, and final plugging of wells located on Federal mineral leases. 

We suggest that Utah’s DOGM provide the permitting for wells on both state and 

federally managed lands. Today, DOGM permits wells that are co-located with other 

wells on Federal lands. If DOGM is permitting similar wells in a similar location, 

what limits the state from doing both? 

Utah’s DOGM has a performance measure goal of permitting at least 80 percent 

of state or fee APDs within 60 days. Targets may not always be realized because 

approval time is dependent on a number of factors that can prolong the approval 

process. For example, in 2016, the average time for approval of state land APDs was 

131 days and for approval of fee land wells was 81 days. However, in the 8 years 

prior to 2016, average approval time ranged from 66 days to 121 days for state 

lands and 81 to 108 days for fee lands. Our understanding is that this is significantly more timely than BLM, which we have heard has an approval time in Utah 

ranging from 150 to 240 days. 

Based on our examination of the relevant statutes, the Department of the Interior 

(DOI) and the Bureau of Land Management (BLM) do not currently have statutory 

authorization to delegate regulation (permitting, inspection, and enforcement) of oil 

and gas production to the states for production occurring on Federal land. The primacy delegation may be accomplished by one of two actions: (1) Congressionally directed legislation, or (2) Application of the Federal Permit Streamlining Pilot Project 

established as part of the Energy Policy Act of 2005. In September 2014, the U.S. 

Senate approved S. 2440, the BLM Permit Processing Improvement Act of 2014 

that among other things, makes permanent the Federal Streamlining Project 

program. 

Examples of primacy delegation of the Federal Government to states exist with 

certain environmental programs of the U.S. Environmental Protection Agency and 

even the coal-mining regulation responsibilities of the U.S. Office of Surface Mining, 

Reclamation, and Enforcement within the U.S. Department of the Interior. States 

have a proven track record of success under these delegations, and would do so 

under similar delegation from BLM—if such opportunity were granted. 

History has shown that states have successfully addressed the effective and efficient development of hydrocarbon resources, and this resolution seeks for continued 

primary roles for the states in conservation of resources, prevention of waste, and 

promotion of responsible development within their jurisdictions. One should note 

that even if a legislative process for primacy delegation for oil and gas development 

were to exist, it would be voluntary for states to obtain such primacy, and it would 

also free up the resources of the BLM to focus on its responsibilities of multiple use 

and appropriate leasing of minerals on Federal land. 

In addition, the Utah BLM Mineral Leasing schedule is currently structured in 

a manner that is not conducive to encouraging investment and developing resources. 

The majority of leases offered in Utah are currently deferred. Leases that are deferred are not offered again until a year has passed. According to the Mineral 

Leasing Rules under CFR 43–3120 this time frame is not necessary and is at the 

discretion of the state BLM Director. Our recommendation is that BLM require a 

quarterly mineral leasing schedule for leases on Federal western lands that have 

been deferred in order to encourage investment and development of resources across 

all available western lands on an equitable basis. Consistent BLM practices from 

state to state would also allow efficiencies for companies that operate in multiple 

states. 

31 

In conclusion, our experience has been that Federal regulation in the realm of 

energy development is steered equally by science and by controversy. This unfortunate approach leads to over-zealous regulation that is not reasonable from a costbenefit perspective, and that puts an undue burden on companies hoping to invest 

and create jobs in our rural communities. States like Utah, on the other hand, tend 

to base their regulations on a sensible ‘‘best practices’’ approach that leads to comparable outcomes at far less expense. We urge the Federal Government to recognize 

states with good regulatory track records, judging by environmental outcomes not 

environmentalist outcries, and should be prepared to delegate regulatory authority 

accordingly. 

QUESTIONS SUBMITTED FOR THE RECORD BY REP. LOWENTHAL TO DR. LAURA

NELSON, ENERGY ADVISOR TO GOVERNOR GARY R. HERBERT

Question 1. Under a system where state governments had primary responsibility 

for managing Federal oil and gas operations within their borders, how does the 

state envision working with the Federal Government to assure compliance with the 

myriad Federal laws and other requirements that apply to public lands including, 

for example: 

• The Mineral Leasing Act and its regulations, which charge the Secretary of 

the Interior and BLM with managing Federal minerals leasing and permitting. See 30 U.S.C. § 226(a); 43 CFR § 3162.3–1(c). 

• The National Environmental Policy Act and its requirements for 

environmental impact analysis; 

• The Endangered Species Act including its requirements for consultation with 

the FWS; 

• The National Historic Preservation Act including its requirement for consultation with State Historic Preservation Officer and the Advisory Council on 

Historic Preservation; 

• The Secretary’s trust responsibility to Native American tribes; 

• The Federal Land Policy & Management Act and it requirements for land use 

planning, for management of the public lands to ‘‘protect the quality of 

scientific, scenic, historical, ecological, environmental, air and atmospheric, 

water resource, and archaeological values,’’ and for the prevention of unnecessary and undue degradation of public lands. 

Answer. The proposal outlined in my June 29 testimony is focused on permitting. 

Under this proposal, Utah’s Division of Oil Gas and Mining (DOGM) would provide 

the permitting for wells on both state and federally managed lands. Through 

DOGM, Utah already permits wells that are near similar wells on Federal lands. 

Numerous efficiencies would be achieved by extending Utah’s authority to permit 

wells to Federal lands in Utah. DOGM’s expertise and familiarity with the unique 

attributes of Utah’s oil and gas resources and industry could be leveraged to drive 

more efficient and effective permitting. As mentioned in my testimony, 

congressional legislation would likely be required to delegate regulation (permitting, 

inspection, and enforcement) of oil and gas production to the states for production 

occurring on Federal land. 

Under a primacy delegation for permitting of oil and gas, leasing authority would 

remain with the Secretary of the Interior and Bureau of Land Management (BLM). 

Although Utah would continue to advocate for and support the provision of timely 

and high quality Federal leases to the oil and gas industry, a Federal agent is generally needed to properly represent Federal interests in leasing Federal lands. 

Utah’s proposal for establishing primacy in the oil and gas sector would be 

initially limited to permitting. As Utah established a successful permitting program 

on Federal lands within Utah, it would work closely with its Federal partners to 

enhance effective, timely and affordable industry compliance with all environmental, 

historic preservation, Native American and other Federal requirements. Permitting 

primacy on Federal lands would enable Utah to better coordinate with Federal partners to streamline industry compliance with the diverse Federal requirements mentioned in your question. Furthermore, as state permitting primacy on Federal lands 

was successfully implemented, opportunities for state administration of some or all 

of the Federal requirements mentioned in your question could be explored. 

A primacy delegation of Federal responsibilities to a state government entity can 

be creatively crafted in various ways to ensure compliance with other applicable 

Federal laws. The Federal agency granting primacy may consider granting all 

32 

responsibilities or only a partial set of duties. Once the Federal agency designates 

a discrete transfer of responsibility to a state, then the primacy granting agency 

retains solely an oversight role, and the state is then required to perform any additional necessary functions within the implementing Federal statute. A primacy delegation is not a unilateral decision to pass all critical decision making from one party 

to another party. It is more of a cooperative partnership to allow each party to recognize their strengths and to efficiently and effectively apply their resources to 

mutually acceptable outcomes. 

The functions of oil and gas operations regulation has been historically and effectively performed by many states since the early 20th century. It was decades later 

that Federal land managers assumed the oil and gas regulatory role for Federal 

lands that states had conducted for many years. A negotiated primacy delegation 

under a mutually acceptable cooperative agreement may take time to develop in 

order to satisfy both parties, but still represents an efficient delineation of duties 

with successful outcomes for each party. 

Ultimately, a carefully prepared and executed cooperative agreement can be the 

basis to identify that all Federal needs are met by the programs and processes being 

offered by the states. Either party can deny the execution of primacy if they are 

unsatisfied that their individual needs remain unmet. The process models for primacy delegation already exist and they can be tailored to suit the roles of the 

Federal Government and states for oil and gas regulation. Specifically within the 

Utah Division of Oil, Gas and Mining, there are already two Federal primacy 

delegations that have been in effect for nearly 35 years—these are the primacy delegation from the U.S. Office of Surface Mining, Reclamation and Enforcement for 

coal mining regulation and the primacy delegation from the U.S. Environmental 

Protection Agency for oil and gas Class II injection well regulation. We understand 

that there may be interest in ‘‘testing’’ this process before advancing full primacy 

delegation to the state for oil and gas permitting. This could be accomplished with 

a pilot project where there is a single operator, with a group of similar wells located 

on both state and Federal land. In this pilot study, DOGM would provide oil and 

gas permitting for the test wells located on both state and Federal lands. Activities 

and results could then be used to study the effectiveness of the state process. 

DOGM has demonstrated that it can responsibly use delegated primacy powers 

to develop Utah’s natural resources, protect the environment, prevent waste and 

work effectively with its Federal partners. We recommend improving oil and gas 

permitting through delegating primacy to Utah, and to states generally, for the regulation of oil and gas operations on federally managed public lands. This 

recommendation is not intended to disparage or minimize the current role of the 

U.S. Bureau of Land Management or any other Federal agency, but rather an effort 

to identify an effective pathway for optimizing the operations of government in the 

responsible development of oil and gas resources. 

Dr. GOSAR. I thank the panel for their testimony. Reminding the 

Members that the Committee Rule 3(d) imposes a 5-minute limit 

on the questions, the Chairman will recognize Members for any 

questions they may wish to ask. I will start with myself. 

Mr. Flynn, leasing policy changes put in place in 2010, Internal 

Memo 2010–117, has resulted in a situation in which the BLM is 

not fulfilling the Mineral Leasing Act’s requirement to hold a lease 

sale in every oil and gas state at least quarterly. Only one lease 

sale was held in the state of New Mexico in 2016, and sales in 

lower interest areas of the state were canceled and not replaced by 

sales in the highly prospective areas of the Permian and San Juan 

Basins. 

What impact does the rotational lease sale schedule have on oil 

and gas development in New Mexico, considering the Texas 

Permian is right across the border? And how does this affect the 

budget of the state of New Mexico? 

Mr. FLYNN. Mr. Chair, thank you for the question. The impact 

is profound, from both an economic and a jobs perspective. As I 

mentioned before, approximately one-third, give or take a couple of 

33 

percentage points, in a given year of our budget is derived directly 

from severance taxes paid by the oil and gas industry. So, when the 

state of New Mexico is not attracting activity, we are suffering, 

from an economic perspective. 

Of the Federal royalty, nearly 50 percent of the Federal royalties 

paid come back to the state of New Mexico, as well. So, we derive 

benefits both from our severance tax, as well as from our share of 

the Federal royalties that are paid. 

Each drilling rig constitutes approximately 50 to 100 high-paying 

jobs. So, each rig that is drilled on the Texas side of the border 

means 50 to 100 high-paying jobs that average about $75,000 a 

year are going to Texas instead of New Mexico, and that trickles 

down and has an impact throughout our economy. Those workers 

are spending money in restaurants, they are buying goods, and 

they are paying more taxes to the state when they are buying different goods and paying for services. 

So, New Mexico’s budget is dependent on the oil and gas industry. We certainly, as an industry, support efforts to diversify our 

budget. However, the fact remains that we are the foundation of 

the budget, and when we suffer the state suffers. 

And, from a budget perspective, we just had a special session to 

deal with the shortfall because of the low-market prices, where we 

had to account for about a $100 million deficit. And next year we 

have current projections which are inherently inaccurate at this 

point that show that we are facing another budget deficit of perhaps $2 to $250 million. 

So, this impact is profound in a state like New Mexico, where our 

jobs and economy are dependent on the oil and gas industry. 

Dr. GOSAR. Yes, you had said 50 percent. It is 48 percent since 

the Murray-Ryan budget. 

Mr. FLYNN. It is nearly 50 percent. 

Dr. GOSAR. Ms. MacGregor, in your written testimony you state 

that, since taking office, Secretary Zinke has scheduled quarterly 

lease sales in nearly every office. You also highlight the successful 

February 2017 Wyoming lease sale that generated nearly 

$129 million. 

What, in your opinion, precluded quarterly lease sales during the 

previous administration? 

Ms. MACGREGOR. Thank you for the question, sir. I cannot speak 

to the previous administration’s decision on whether to hold lease 

sales or not hold lease sales. 

Dr. GOSAR. Isn’t it statutorily required? 

Ms. MACGREGOR. It is in the Mineral Leasing Act to conduct 

quarterly lease sales in each state office. I can speak to the fact 

that we have had more lease sales this year than last year. Eleven 

lease sales were canceled or postponed last year alone. We are hoping to continue forward with our schedule of lease sales. And, of 

course, we believe that leasing can be done economically, even in 

these price conditions. 

Just to touch back on Mr. Squillace’s comments, I think it is important to note that there is no low-balling that goes on. The 

Department, when we conduct leases, actually ensures that every 

lease that is sold is reaching a fair market value threshold. And 

yesterday, I believe, the Bureau of Ocean Energy Management 

34 

announced that we rejected 10 bids and $10 million for bids that 

were made that just did not reach fair market value thresholds. 

So, we will conduct our lease sales in accordance with Federal 

law, and we will make sure that the taxpayer is getting fair market 

value. 

Dr. GOSAR. Thank you. My time is short, so I will acknowledge 

the Ranking Member for his time. 

Dr. LOWENTHAL. Thank you, Mr. Chair. 

Ms. MacGregor, as I mentioned earlier when I quoted your testimony, where you said, ‘‘America’s free markets will help determine 

where and when energy development on public lands is feasible’’— 

to me that is a troubling statement because it sounds an awful lot 

like an admission that the oil, gas, and coal industries will control 

the location and the timing of energy development on our public 

lands. 

And then the energy counselor today, through the Secretary, is 

quoted as saying that we are moving toward ‘‘an energy-dominant 

public policy.’’ 

My first question is, do you agree with the policy statement in 

the Federal Land Policy and Management Act that states, ‘‘It is the 

policy of the United States that public lands be managed in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air, and atmospheric water resources, and 

archeological values?’’ Do you support that statement? 

Ms. MACGREGOR. Absolutely, and I also support the area of 

FLPMA that speaks to managing and balancing multiple use of 

those lands. 

Dr. LOWENTHAL. Thank you. But do you also believe, though, in 

that balance that you point out, that balance between that and also 

exploration and production of oil leases, that there are times that 

it is necessary to over-ride the wishes of the free market? 

Ms. MACGREGOR. Just to speak to that, I believe that the statement that anyone aside from the Secretary and the Bureau of Land 

Management will control where and when leases are held is not 

true. It will be a measured development that, of course, preserves 

the multiple use of the lands, and the varied uses that—— 

Dr. LOWENTHAL. So, you do believe that there will be times when 

you will overstay or protect those values, to over-ride the wishes 

of the—— 

Ms. MACGREGOR. Mr. Lowenthal, I absolutely do. And I know 

that there are areas that are going to be more treasured and special than others, but I think that we can strike that appropriate 

balance and find ways—— 

Dr. LOWENTHAL. I think that is what we are trying to find on 

this—— 

Ms. MACGREGOR. Absolutely. 

Dr. LOWENTHAL [continuing]. Because we have real concerns that 

the policy has moved us away from that balance, and not toward 

that balance. 

Ms. MACGREGOR. I understand your concerns, and I think that 

the entire planning process done through RMPs at the Bureau of 

Land Management will ensure that we manage well and that we 

find that balance. 

35 

Dr. LOWENTHAL. Talking about that balance, let’s talk about that 

according to the BLM budget—there were 2,552 drilling permits 

currently pending at the end of the last fiscal year, and it seems 

like taking care of this backlog and issuing permits as quickly as 

possible is a high priority for the Department. 

I believe that is true, it is good to be efficient. Permit processing 

should not take longer than it needs to, and I think some of those 

issues have been raised. But we do not need to tell people out there 

that there is a huge backlog of permits that need to be addressed, 

and potentially at the risk of not doing thorough environmental 

reviews, not evaluating protests, not dealing with other activities, 

because is it not true that the number of unprocessed permits is 

currently the lowest is has been since 2005? 

Really, we have the smallest backlog that we have had in over 

a decade. Is that not true? 

Ms. MACGREGOR. I am sure that it true, but a backlog is still a 

backlog. And taking care of—— 

Dr. LOWENTHAL. Thank you for stating that it is true. And at the 

end of 2015, there were over 7,500 of those—this is the most in a 

decade—7,500 drilling permits that companies have still not used, 

which is the most. So, we have the most drilling permits and the 

smallest backlog that have not been used. Is that not true? 

Ms. MACGREGOR. It is correct that we have 7,950 APDs approved 

but not yet drilled in this year. 

Dr. LOWENTHAL. And that is also the most we have had in this 

decade. 

Ms. MACGREGOR. I am not sure if it is the most or not. I can get 

back to you on that. 

Dr. LOWENTHAL. Well, let’s get back to that data, and I will finish up. Ranking Member Grijalva wrote to the Secretary in April, 

looking for the number of permits that have been approved, but not 

used at the end of Fiscal Year 2016. That is what he has done, he 

has written to that. 

And last week the Secretary said there was no need to answer 

letters, because he will simply call us with the information. I am 

asking you, will you please ask the Secretary to either call me or 

Ranking Member Grijalva with the 2016 data? Or you can call me 

with that data, or you can text me. 

Ms. MACGREGOR. So, you are going to give me your number? 

Dr. LOWENTHAL. Yes, I am. 

[Laughter.] 

Ms. MACGREGOR. I would be more than happy to work with your 

office on fulfilling that data request. 

Dr. LOWENTHAL. Thank you, and I yield back. 

Dr. GOSAR. I thank the gentleman. I now recognize the 

Chairman of the Full Committee, Mr. Bishop from Utah. 

Mr. BISHOP. Would you call me if I gave you the number, too? 

Ms. MACGREGOR. Sure. 

Mr. BISHOP. In the past, I got calls, but just no information was 

forthcoming. So, if you could actually add the information to it, it 

would be nice. 

[Laughter.] 

Mr. BISHOP. Let me ask Mr. Flynn and Dr. Nelson, just for a second, because there are some questions. If 39 percent of the leases 

36 

that are out there, the bids are not being taken, why would a company not bid on something an administration—either this one or a 

previous one—would actually put out for bid? Why would they not 

go for that? Very quickly. 

Mr. FLYNN. Chairman Gosar, Chairman Bishop, it is too difficult 

to provide a single answer. It would really depend on the geology 

and—— 

Mr. BISHOP. You have 16 seconds to give me a couple of answers. 

Mr. FLYNN. Well, I think it depends on what you are bidding on, 

first and foremost. So, they would be considering the productive 

potential—— 

Mr. BISHOP. Are you telling me that there is a possibility that 

bids for lease would not have enough resources there to make it 

practical? 

Mr. FLYNN. Yes. 

Mr. BISHOP. Or that those lands would actually be so litigationprone that it would not be worth actually going for them? 

Mr. FLYNN. Yes, absolutely. 

Mr. BISHOP. And that may be one of the reasons why bids were— 

would it actually be possible for any administration, past or 

present, to be so devious that they would actually put out bids for 

a lease that they knew would not be acceptable? 

Mr. FLYNN. Mr. Chair—— 

Mr. BISHOP. You can’t answer that. You don’t have that vision 

of their heart. I will let that go down there. OK. 

Dr. Nelson, let me go to you, then. We have been talking about 

how cheap the royalties are on Federal lands. Why would a company not go to the Federal lands just to pay those cheaper royalty 

rates? Why would they go to state or private lands to pay more 

money? 

Dr. NELSON. I think the question can be answered pretty simply. 

First of all, what we have seen in terms of leases that are offered 

is that there are very few parcels that are offered at a single time. 

And, as I know you are well aware, Chairman Bishop, the companies really look to maximize a resource play. And if they cannot 

block up a resource play, then they are simply not going to bid, 

irrespective of what the royalty requirements are. So, thank you for 

the question. 

Mr. BISHOP. So, the only reason somebody would actually bid on 

Federal lands is if they can make money. And the longer it takes 

to permit, the longer it takes to go through litigation, the longer 

it takes to try and get those areas—it simply means it is not profitable. They are willing to pay more money if they could actually be 

in production, which should be an idea for the Federal Government, that if we can actually guarantee you are going to be in production, and the permitting process goes further faster, that people 

would be willing to pay more, simply to do that. 

Dr. Nelson, are there other examples of how land can be stopped 

from production? For example, would there be projects that could 

be established, shown that they are worthy, but then all of a sudden they need, let’s say, some electricity or power to go into that 

plant, and the Federal Government could block rights-of-way to 

that power, to make the entire project worthless? Would that actually ever happen? 

37 

Dr. NELSON. Yes. 

Mr. BISHOP. And in my district? 

Dr. NELSON. Yes. Infrastructure is critical, and oftentimes must 

cross federally managed lands. So, it does sometimes inhibit the 

ability to develop a project, even after a lengthy leasing process followed by a lengthy APD process, then the need to secure leasing 

for the infrastructure. 

Mr. BISHOP. Ms. MacGregor, let me go to you. As you know, 

there are some Native American tribes who rely upon energy and 

development. They do not have gaming opportunities. Southern 

Utes in Colorado are one. Were there examples in prior administrations where they were prohibited from actually implementing the 

programs they want, the tracking devices, the programs that they 

had which inhibited their ability to do that? 

Ms. MACGREGOR. I think there are several examples where 

energy-producing tribes did reach out and issue public comment on 

some of their concerns for responsible production on their lands. 

Mr. BISHOP. And it is not just DOI that was dealing with that, 

as far as permitting. Sometimes the EPA got involved, which basically shut down any kind of production they would have, going 

forward. 

Is DOI considering reforms that would delegate permitting 

process and regulatory authority to states? Kate? 

Ms. MACGREGOR. It is something that I would be more than 

happy to talk to your staff in your office about. That sounds like 

an interesting idea that we would be willing to discuss. 

Mr. BISHOP. Dr. Nelson, maybe I can come back to you, because 

I do know there was a bill out there that talked about this. 

If, indeed, a company was held to Federal standards, but the 

state actually did the permitting process, could such a system actually work, and facilitate faster permitting? 

Dr. NELSON. We believe that it would, and we would like to move 

forward with assigning that primacy for approval of applications 

for permits to drill to our Utah Division of Oil, Gas, and Mining, 

and also to other states that have proven the capability. 

Mr. BISHOP. All right, I was unfair. I asked you that question 

with less than 30 seconds remaining, so I am over. That is my rule 

that I violated. 

[Laughter.] 

Dr. GOSAR. That is all right. 

Mr. BISHOP. Thank you for your answers. Thank you for actually 

being here and spending the time and talking about this. This is 

a significant issue. I yield. 

Dr. GOSAR. I thank the Chairman—— 

Mr. BISHOP. I yield what I don’t have. 

Dr. GOSAR. Before I recognize the gentlewoman from 

Massachusetts, Mr. Flynn, we are having a hard time hearing from 

you. Can you take your microphone and move it a little bit closer 

to you, and just kind of speak in the microphone? Kind of get closer 

to it, please? 

Mr. FLYNN. Is that better, Mr. Gosar? 

Dr. GOSAR. That is a little bit better, thank you. I now recognize 

the gentlewoman from Massachusetts, Ms. Tsongas. 

38 

Ms. TSONGAS. Thank you, Mr. Chairman. And welcome to our 

guests. 

While the oil and gas industry wrestles with changing market 

conditions, as you all have testified to, our Nation also happens to 

be in the midst of a clean energy revolution. In Massachusetts 

alone, jobs in the clean energy sector have grown by 75 percent 

since 2010, and it is now an $11 billion industry across the entire 

Commonwealth. 

Nationally, we have reached a significant milestone this past 

March, when over 10 percent of all electricity came from wind and 

solar. In many individual states, the percentage of electricity generated by wind and solar is even higher. Our Nation’s public lands 

stand to play a significant role in this transition to clean energy. 

The Obama administration’s Bureau of Land Management approved permits on public lands for utility-scale solar facilities, wind 

farms, and geothermal plants, and set a goal of approving projects 

that would generate 20,000 megawatts of clean energy by 2020. I 

believe this Committee and the new Administration should also be 

working to ensure that our public lands are supporting renewable 

energy development where it is appropriate, and in an all-of-theabove framework to help decarbonize our electric grid, support job 

creation, and increase royalty payments to Federal taxpayers and 

local communities. 

Ms. MacGregor, welcome back to the Committee. On this issue 

of supporting renewables, the Bureau of Land Management’s Fiscal 

Year 2018 budget request includes a $13 million cut to renewable 

energy programs. This is money that was budgeted for activities 

such as public outreach and stakeholder engagement, lease sales, 

and making sure that permits are reviewed in a timely manner. 

Your written testimony outlines the many steps that this Administration is taking to rush approvals of oil and gas development, but 

no similar steps for renewable development. 

How will you ensure that renewable energy projects have the 

proper funding and staff levels to ensure similarly timely reviews, 

and are you considering setting similar targets, as the Obama 

administration did, for renewable energy development? 

Ms. MACGREGOR. Thank you for the question. We are definitely 

supportive—this Administration—of all energy jobs. We are not engaged in picking winners or losers in any way. When it comes to 

clean energy, which, of course, is very important to you, we are remaining supportive of those projects that have already been permitted and will continue to be permitted on Federal land in the 

appropriate areas where it has already been determined. 

In my opening statement, when I said that we have 18,000 

megawatts of approved renewable energy, much of that is still remaining to be installed. So, we are aware that there will be permitting on continued work with the Bureau of Land Management to 

allow these projects to move forward in a responsible manner. 

I believe, by focusing on our permitting process in general, and 

making sure that we are looking at efficiencies across the board, 

it will benefit all energy producers on Federal lands, including renewable energy producers. 

Ms. TSONGAS. So, you are abiding by the Obama administration’s 

goals, is that correct? 

39 

Ms. MACGREGOR. We will ensure that renewable energy is 

permitted in an appropriate and smart time frame. 

Ms. TSONGAS. Are you setting new goals for the Trump 

administration in this area? 

Ms. MACGREGOR. The Trump administration and the Secretary 

have been very clear on their priorities, moving forward. I think it 

is restoring balance on Federal lands, which includes all energy. 

And, based on some of the acreage and numbers that we are looking at that were taken care of in the last administration when it 

comes to oil and natural gas, we are still trying to dig out of a little 

bit of a hole there to restore that balance. But yes, we will 

prioritize all energy jobs on Federal lands. 

Ms. TSONGAS. The Trump administration has touted its all-ofthe-above energy strategy, but renewables are frequently omitted. 

And, I think, even though you are looking to see through the 

Obama permits, you are not aggressively looking for additional 

ones. I do think a responsible energy production calls for a more 

thought-through plan as to how to maintain some balance, given 

the extraordinary job opportunities that we have certainly seen in 

Massachusetts, and that I am sure present a real opportunity 

across this country. 

Professor Squillace, in your experience, are fossil fuels given 

preferential treatment in terms of development on public lands? 

Mr. SQUILLACE. Well, it varies from administration to administration—— 

Dr. GOSAR. Push your button, please. 

Mr. SQUILLACE. Oh, thank you. Sorry about that. It varies from 

each administration, I would say. But I think the budget proposal 

from the Trump administration seems to clearly favor fossil fuels 

over renewable energy. So, that is one indication. 

What I would say about that more broadly is that the United 

States has a responsibility to address the problem of climate 

change in the long term, going forward. If it is going to do that, 

it needs to manage the decline of fossil fuels. Fossil fuels are going 

to decline because of market conditions, irrespective of the other 

issues that we have been talking about. But we need to manage 

that decline in a responsible way, because if we don’t, we are going 

to see the kinds of economic dislocations that we have seen already 

with the coal industry, and that we are likely to see, going forward, 

with oil and gas. 

As I said—— 

Dr. GOSAR. The gentlewoman’s time has expired. I now acknowledge the gentleman from Colorado, Mr. Lamborn, for his 

5 minutes. 

Mr. LAMBORN. Thank you, Mr. Chairman. Ms. MacGregor, I have 

a couple of questions for you. But before I ask that, let me just go 

on the record and say that when you were on this side of the dais 

as a professional staff member, I found you to be one of the hardest 

working, most dedicated people I have ever met, and I think the 

country is fortunate to have you doing what you are doing now. So, 

keep that up. 

You said in your testimony, the BLM is adding features to enhance the new electronic APD processing system, the automated 

fluid minerals support system, and plans to decommission parts of 

40 

the prior APD processing systems to improve the automation capacity and better match the BLM resources to permit activities. 

And that was what you said. 

So, using Internet-based bidding and enhancing the electronic 

processing of APDs is exactly what this Subcommittee has been 

pushing the BLM to do for a long time, as you know. Could you 

tell us just a little bit more about these efforts? 

Ms. MACGREGOR. Sure, I would be more than happy to talk 

about that. And speaking of AFMSS 2, which is the more enhanced 

Internet-based program that we are talking about when it comes 

to filing APDs, I do recognize that New Mexico, in their field 

offices, has a different program. We are still working out the details of how these programs can work better together to make sure 

that, overall, we have a better program to process APDs. 

But processing APDs through Internet-based means is going to 

help us in many different ways, especially in eliminating, hopefully, a lot of the discrepancies that we see when industry files 

their permits. 

Right now, the BLM actually has a permitting time frame of 257 

days. In my testimony, I said that we are trying to get to 90 days. 

And, by statute, we recognize that we are supposed to be at 30 

days. But we think that utilizing this Internet-based means and 

harnessing that, we will be able to find ways—our staff compares 

it to TurboTax, but allowing folks to fill in the data and make sure 

that data does not get filed until it is fully complete. 

So, that is one of the areas I think will be helpful, and also will 

increase transparency for folks on the Committee and the general 

public, who want to have a better understanding of what the absolute workload, what our folks on the front lines, out in the field, 

are facing on a daily basis, especially in areas like Casper, 

Wyoming and Carlsbad, New Mexico. 

When it comes to Internet-based leasing, that is something that 

Congress allowed the Bureau of Land Management to do in the 

2015 NDAA, I believe. We are moving to that model, and our folks 

internally are noticing that, through online-based bidding, we are 

seeing an uptick in participation, as more people can attend the 

lease sales online and perhaps increase revenues coming in. 

But we are still analyzing all of the details of what we are seeing 

in those lease sales, and hoping to get something up to the Hill 

eventually that provides more information on that. 

Mr. LAMBORN. OK, thank you. At the end of Fiscal Year 2016, 

the BLM oversaw a little more than 40,000 leases across the country. This may sound like a lot, but it is actually the lowest number 

of Federal leases since Fiscal Year 1985, 30 years ago. And, despite the fact that the Mineral Leasing Act requires lease sales to 

be held in each state at least quarterly—or more frequently, if the 

Secretary deems that is necessary—the BLM has repeatedly canceled or failed to hold the required lease sales. 

So, what will the current Administration do to correct this? 

Ms. MACGREGOR. We are committing to making sure that we 

find—to be respectful of Ranking Member Lowenthal, we are going 

to find the appropriate areas to conduct lease sales, and we will 

conduct those lease sales. And we are aiming to be doing quarterly 

lease sales. 

41 

I think it is important to talk about leasing, because in the example that 2014 was one of our highest-producing years, in that 

year alone, in North Dakota, an example of a project that came online that initially produced 4,200 to 6,000 barrels of oil a day in 

2014, a great project, got through the process, more wells might be 

drilled there, it was leased 15 years before, in 2001. There are long 

lead times to get from lease to production. 

That is why leasing and having certainty in the leasing process 

is so key, because companies take time to develop these resources, 

and have to allocate their own economic resources to do that. 

Mr. LAMBORN. Thank you for being here today, and thank you 

for your testimony. 

Mr. Chairman, I yield back. 

Dr. GOSAR. I thank the gentleman. The gentleman from Florida, 

Mr. Soto, is recognized for his 5 minutes. 

Mr. SOTO. Thank you, Mr. Chairman. I appreciate the discussion 

today. Obviously, we need to make sure we are not just focusing 

on 20th century jobs, but 21st century jobs. And, in our state, we 

have avoided trying to have just an oil and gas economy. I realize 

there is a big push among a lot of states who are addicted to oil 

and gas jobs because they have not diversified their economy like 

Florida and a lot of other states, and so there is a big pressure to 

try to maximize this as much as possible. 

But we know we still have gas and oil that we will need for 

homes and cars and for goods. So, obviously, for the near future we 

will need to keep up the demand. But if we look to the future, we 

need to make sure that we are addressing climate change, that we 

are pushing renewable energy, that we are making sure that we 

are conserving our parks, and conserving our natural resources, 

and protecting our coastline. 

In Florida, it is much more about tourism and agriculture than 

it is about oil and gas, and that has been something that has hurt 

our economy, particularly with the disastrous BP oil spill in the 

Gulf that wrecked the western part of the state for a year plus. 

And we are still getting reimbursed for that. 

But I want to focus on the issues that have been addressed by 

our speakers here. According to our information, the leasing times 

from about 2005 to 2015 have been about 190 to 220 days under 

both the Bush and the Obama administrations, and now it is at 

250. What specifically, Ms. MacGregor, are you recommending to 

get us from 257 or 250-something that you mentioned, back down 

to that average range of 190 to 220? 

Ms. MACGREGOR. Thank you for your question. I know that there 

are very few BLM lands in Florida, but I know this is an important 

issue to you. 

But what we are doing is prioritizing, again, areas where there 

is a good return on investment to the American taxpayer. One of 

those areas is an America First energy agenda. What we have done 

so far is simply create priorities and start looking at vacancies out 

in the field. 

Two weeks ago, I was in Carlsbad, New Mexico and Casper, 

Wyoming, visiting with some of the folks out there who are processing these permits, and talking to them about what exactly they 

need to help move these permits in a more responsible time frame. 

42 

Mr. SOTO. So, just to be clear, there are efficiencies that will be 

forthcoming to us, but there are none today. 

Dr. Squillace, I see that we have 192 out of our 213 million acres 

that are already eligible for leases, so we are talking 10 percent 

left. Is this 10 percent of land that is really even feasible for leases, 

or is this something that we really do not need to be pursuing? 

Mr. SQUILLACE. Let me answer that in a little bit different way, 

Congressman. The concern is that when you are deciding whether 

you want to lease oil and gas or any other resource on our public 

lands, you go through a land use planning process. And the land 

use planning process is what has made so much of the land available for leasing, so there is that initial judgment that has to be 

made. 

But then the way that the leasing actually occurs is primarily 

from nominations from industry. It is industry that decides what 

lands they want put up for leasing, and then they come in and bid 

on them. That process, of course, has not worked very robustly in 

recent times, simply because there has not been that much interest, frankly. I know we are talking, there are certain areas where 

there is interest, but——— 

Mr. SOTO. Let’s get to that. So, if there is a reduction in 

leasing—— 

Mr. SQUILLACE. Yes? 

Mr. SOTO [continuing]. Is it a supply, demand, or regulatory 

issue? 

Mr. SQUILLACE. I would say it is primarily a demand issue. 

Mr. SOTO. So, Americans in the world are reducing their demand 

on oil, and that is leading to less desire for leases. 

Mr. SQUILLACE. Yes, but I want to emphasize one important 

point about the regulatory issue, because there has been a lot of 

discussion today about the regulations and the ways in which government regulation might limit development. 

As I tried to point out in my original testimony, the problem here 

is that we are dealing with public lands, and it is necessary. It is 

not just that it is legally required, it is necessary that we focus on 

what the consequences are of full-field development of oil and gas 

resources on our public lands. That kind of development can be 

devastating, and it has happened a lot on our private lands. But, 

I think, it is much more problematic when it happens on public 

lands. 

So, there is a regulatory component, but it is a necessary component that is designed to make sure that we are protecting all the 

resources that we have talked about, and that FLPMA requires 

that we protect—— 

Mr. SOTO. Well, right now it is taking 257 days, so it looks like 

we will have plenty of time to review them. Thank you so much. 

Dr. GOSAR. I thank the gentleman. The gentleman from Virginia, 

Mr. Wittman, is recognized for his 5 minutes. 

Mr. WITTMAN. Thank you, Mr. Chairman. I would like to thank 

our witnesses for joining us today. 

Mr. Flynn and Dr. Nelson, I wanted to get your perspective. You 

both come from states that have significant acres of Federal lands. 

And, obviously, that does have an impact on your state. The question is, what type of impact? 

43 

You spoke earlier about the economic impacts of what happens 

on those lands, and lack of activity there that generates economic 

activity does have a significant impact. You spoke about that, but 

I wanted to get a little more detail about not only how does that 

affect the state, but how does it affect local economies? 

And what do you see, from a standpoint of having to deal with, 

as you talked about, Mr. Flynn, budget deficits keeping economies 

going? How do you deal with these massive amounts of public 

lands, looking at ways to make sure that they generate some revenue, and then, looking at the regulatory hurdles that are there for 

energy development on those lands? 

So, I wanted to get both you and Dr. Nelson’s perspective on it 

from your state viewpoints. 

Mr. FLYNN. Chairman Gosar, Representative Wittman, let me 

give you two quick answers, one that would not really go into the 

economic. 

But from an economic perspective, really, it just boils down to infrastructure projects. From a local development perspective, roads 

and sewers are the bread and butter of city and council local government officials. They are really on the front lines of governing. 

I know you all interact with them constantly in your districts, and 

I interact with them in my prior role and in my current role. And 

less revenue means less infrastructure projects for roads, sewers, 

for drinking water systems, period. 

The second issue I would point out—we have already talked 

about the economic issues, but in processing right-of-ways, if climate change is an issue that you believe is important, like I do, 

then one of the key infrastructure challenges we see to reducing 

emissions from venting and flaring is related to infrastructure to 

reduce flaring events. So, right-of-way approvals not being processed actually contributes to the problem that we see when it 

comes to greenhouse gas emissions. 

So, beyond the economic issue, there are profound environmental 

impacts that are associated with the difficulties processing not only 

permits to drill, but also right-of-way approvals. 

Mr. WITTMAN. Very good. Dr. Nelson? 

Dr. NELSON. Thank you so much for the question. I guess I understand and agree with the thing that Mr. Flynn has said, and I 

will just add that in Utah we have 29 counties, and about 23 to 

24 of those counties are rural counties. This is where the preponderance of federally managed lands are. 

And to the extent that access to development of those lands is 

limited where it is appropriate really has significant impact. This 

is where we see the high levels of unemployment, and limited opportunities for even diversification, because natural resources are 

the backbone for allowing for that economic development which, in 

turn, does drive the diversity. 

The infrastructure that is required to meet the needs for that 

natural resource development also lends itself to other industrial 

and commercial development. So, basically, you are creating a conundrum when you limit access to those resources for those communities that are dependent on that initial development. 

Mr. WITTMAN. Very good, thank you. 

44 

Ms. MacGregor, I will go to you. You have heard concerns here 

from both of these states from the state and local level about making sure that there is the highest and best use of those lands that 

are now under Federal control. Give me your perspective on what 

the Department of the Interior can do to help address these concerns and make sure that these states have these Federal lands 

producing to help them deal with the issues that they have to deal 

with. 

Ms. MACGREGOR. Thank you for the question, sir. Every state 

has their different infrastructure needs and different economies 

and goals. These states being represented here today clearly would 

like to see responsible Federal oil and natural gas development on 

their lands. 

The good news for them is that is a priority of this Administration, very clearly, from the top down, starting with the White 

House. So, we are allocating our resources and making sure that 

we are addressing not only planning issues, and making sure on 

the planning side of things that we are finding and striking the appropriate balance to find the right acreage to lease, but also, when 

it comes to permitting, addressing backlogs not just for APDs, but 

also for rights-of-way, and making sure we can get through those 

in a responsible time frame that folks who invest on Federal lands, 

whether it is any building project—it does not have to be oil and 

gas—can get through and have a reliable permitting process and, 

last, regulatory certainty, which I believe other folks have already 

touched upon. 

Mr. WITTMAN. Very good. Thank you, Mr. Chairman, I yield 

back. 

Dr. GOSAR. I thank the gentleman. The gentlewoman from 

California, Ms. Barraga ́n, is recognized. 

Ms. BARRAGA ́ N. Thank you, Mr. Chairman. I have spent the last 

several years sitting as a City Council member where I had an oil 

company that wanted to come into my town, Hermosa Beach, to 

drill 34 oil and water injection wells on land and then out into the 

Santa Monica Bay. 

I have seen time and time again where big oil tries to come in 

and take over urban areas and take over areas that are just causing more environmental pollution. We read about spills happening 

all the time, whether they are on land or offshore. 

I was very disturbed to hear that the President wanted to open 

up the coastlines again to drilling. And I think today we have 

heard, I would say, an assault on our Federal lands. Sometimes I 

take a look at that stuff and I think that this Administration’s 

talking points are coming right out of big oil. 

One of the things I am hearing about is something called energy 

dominance. Mr. Squillace, they have talked a lot about this. Can 

you explain what that means? And do you think it is something we 

should strive for on our public lands? 

Mr. SQUILLACE. It is an interesting question. I don’t know that 

I can answer what exactly an energy-dominance means, but I think 

it is the wrong word. I don’t think any of us should be looking at 

dominance. We ought to be looking at being energy-smart. And energy-smart, to some extent, is about what we have been talking 

about today, an all-of-the-above strategy, but one that recognizes 

45 

the perils of climate change and the risks that we face if we continue to develop fossil fuels at a pace that is simply not sustainable, given the challenges of climate change that we have talked 

about. 

I think that if we think about it in that way, then it is appropriate to allow fossil fuel development to decline in an appropriate 

way, manage that decline in a responsible way, and shift our economy so that we are relying more and more on renewable and other 

forms of energy that do not cause the problems that we have seen. 

Ms. BARRAGA ́ N. What do you think the impact is going to be if 

we start doing more oil drilling on public lands, both to the environment and to the global climate change problem that we have? 

Mr. SQUILLACE. As I mentioned in my original testimony, I am 

not opposed to oil and gas development on public lands, but it is 

fundamentally different from oil and gas development on private 

lands, because these are our public lands. If we are going to have 

it, we need to have appropriate planning to make sure that we are 

doing it responsibly. 

With all the great technologies that we have right now—we can 

do horizontal drilling in ways that allows multiple wells to be put 

on a single pad and minimize the footprint on the public land. But 

if we do not do sufficient advance planning, and if we do not do 

the kinds of environmental analyses that are required for appropriate development of those resources, then we lose that opportunity to sort of make these advantages available to us. 

So, I think there is an appropriate way to do it. I do think we 

need to recognize it cannot go on forever, that we do have responsibilities, globally, to deal with the fossil fuel issue in a timely way. 

But I think, if we are going to have it, we can do it responsibly. 

Ms. BARRAGA ́ N. Well, thank you. I am proud to be from 

California, where we have been leading the charge in moving toward renewable energies and investing, and knowing that there is 

great economic development in that, as opposed to the fossil fuel 

industry. 

Thank you, I yield back. 

Dr. GOSAR. The gentleman from New Mexico, Mr. Pearce, is 

recognized for his 5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. And I appreciate the 

conversation that we are having today, thanks to each one of our 

panelists. 

Mr. Squillace, you have comments on the second page of your 

testimony about the leasing, $2 an acre. 

Mr. SQUILLACE. Right. 

Mr. PEARCE. That section is in there because you feel like it is 

inappropriate? You feel like it is sort of a giveaway? Why is that 

section there? 

Mr. SQUILLACE. So, you are asking about the bonus bids and 

the—— 

Mr. PEARCE. No, the $2 an acre if they don’t sell a lease, then 

it is available for $2 an acre. 

Mr. SQUILLACE. Right. 

Mr. PEARCE. Is that sort of a giveaway to oil and gas, in your 

opinion? 

46 

Mr. SQUILLACE. If you look at the revenues that come in from 

Federal—— 

Mr. PEARCE. No, that is not what I am asking. I am asking on the $2, is that a giveaway to oil and gas? 

Mr. SQUILLACE. I think it is, yes. 

Mr. PEARCE. Yes, it is value that is available for almost nothing. So, I wonder, $2 is pretty achievable to people like you and me. Did 

you ever go and bid $2 on any of these? It is a giveaway. Have you 

bid on these, personally? 

Mr. SQUILLACE. No. I know Terry Tempest Williams did bid on 

one. 

Mr. PEARCE. OK, thank you. I appreciate that. It might not be 

as big a giveaway, because it was going to require tremendous investment downstream to actually do something with that lease, 

that what you feel like is a giveaway might not be as much of a 

giveaway. And if it were, I suspect people—maybe not you, but people who could afford $2 an acre, which is almost all of us—might 

be out doing that, instead of putting money in the lottery. You have 

a lot better chance of payoff in this, rather than on a lottery ticket. 

And you had made a comment just a second ago that the decrease in permitting, the decrease in lease sales, is a demand issue, 

and I would point out that the American Energy Institute just put 

out that 2016 was the highest use of gasoline in our record. So, it 

does not sound like a demand issue. It sounds like we have drilled 

enough that we are producing enough oil that the price of gasoline 

is coming down, even though the use is going up. Usually, increased use would drive the price up, but instead we have 

increased the amount of supply. So, I think that maybe your insertion into the record that it was a demand issue should be rethought 

at some point. 

Now, New Mexico has about 40 percent, somewhere between 30 

and 40 percent of its revenues to the government established by oil 

and gas. Mr. Flynn, I would like your opinion on the BLM APD 

delays that we are seeing there in the state. And I have worked 

very much with BLM on those. But from the business perspective? 

Mr. FLYNN. Representative Pearce, I think you know it better 

than anyone, but just very bluntly, it has a huge impact on our 

ability, from a state, to provide basic infrastructure needs. 

Mr. PEARCE. How much of the delays? 

Mr. FLYNN. Well, the delays, as I mentioned in my testimony, we 

believe, about $1.5 million in lost Federal royalty is deferred each 

day, as a result of the backlog. And approximately $800,000 

deferred in state severance—— 

Mr. PEARCE. Yes. Just the interruption in a lease sale that 

stopped $70 million from coming to the state because of a protest 

filed by one of the environmental groups. It was eventually thrown 

out, but that $70 million was 10 percent of our shortfall. Ten 

percent of the shortfall for the state of New Mexico—so, yes, we get 

a little bit energetic when we are talking about the issues. 

Now, many people are saying in the agency that they just need 

more staff. Can you address that question for New Mexico? 

Mr. FLYNN. Sure. Representative Pearce, I think briefly, first of 

all, a previous study showed that a pilot program that had been enacted a few years ago to provide Federal permit streamlining pilot 

47 

project created additional funding that allowed 140 additional staff 

members to be hired for seven pilot offices, including two offices in 

New Mexico: the Farmington office and the Carlsbad office. 

And while they were able to increase the amount of applications, 

the APDs that they processed, by 10 percent, the number of days 

it took to actually process the APDs increased. So, they got less efficient by 40 percent. 

Mr. PEARCE. And the same people working in the same agency 

took much longer. My study showed it took about double. 

Ms. MacGregor, I know that you recently—and whatever Mr. 

Lamborn from Colorado said about your performance, it seemed to 

go well, so I am going to identify with that also, but thanks for visiting our state. I look forward to working with you, because these 

delays really do affect us. 

I live 3 miles from the Texas border. I can see all those rigs running over there in Texas that should be running in New Mexico, 

but they cannot get the APDs permitted. Just the companies that 

got the option to drill there are here. And I can see the effect of 

the permitting delays. 

So, it is not quite a level playing field. People just choose the best 

economic opportunity. That is, we will go drill on private land instead of trying to wrestle around with the government. And that 

hurts states like New Mexico, and it hurts the Federal Government, and it hurts our job base in New Mexico. 

Mr. Chairman, I have extended past my time. Thanks for your 

indulgence. I yield back. 

Dr. GOSAR. I thank the gentleman. The gentleman from Virginia, 

Mr. Beyer, is recognized for his 5 minutes. 

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

Ms. MacGregor, I have seen reports that the Interior Department 

is considering recombining the Bureau of Ocean Energy Management (BOEM) with the Bureau of Safety and Environmental 

Enforcement (BSEE). The reason BOEM and BSEE exist was because of the Deepwater Horizon tragedy of 2010. The agency that 

existed at that time was the Minerals Management Service, and 

when that agency was not mired in scandal, it was dealing with 

a sharply conflicting mission: both promoting and regulating offshore drilling. 

So, the creation of a dedicated offshore safety regulator separate 

from a leasing agency was one of the key recommendations of the 

President’s Oil Spill Commission. Senator Bob Graham, who is one 

of the co-chairs of the Commission, was quoted as saying, when he 

heard of this news of the potential BOEM-BSEE combination, ‘‘I 

have heard no indication of why we are doing this. It is just 7 years 

after this enormous disaster, and this was one of the key steps in 

at least mitigating the chances of repetition.’’ 

And I believe it cannot be to address problems with permitting. 

Just look at the first 5 months of this year, January through 

May—BSEE has approved 324 permits with only 20 permits pending, so it sounds like firing on all cylinders. 

What is the evidence that you have that shows that combining 

BOEM and BSEE would be in the public’s interest? 

Ms. MACGREGOR. Sir, thank you for that question. When it 

comes to the offshore, we obviously want to make sure that we are 

48 

ensuring that the bureaus that both lease and conduct inspections 

are doing their jobs and doing them well. 

When it comes to the split of the former MMS into, actually, 

three agencies, the original split broke out the Office of Natural 

Resources Revenue, known as ONRR, which was split, and then 

left BOEMRE, which eventually was itself split into two separate 

agencies. 

As we look at reorganization broadly within the Department, the 

discussion on splitting BOEM and BSEE, and whether or not they 

should be recombined is still ongoing and internal. But I hear your 

comments and I am more than happy to take those back with me 

today. 

Mr. BEYER. Great, thank you. And Secretary Zinke, when he was 

here last week, talked about thinking massive reorganizations, and 

everything should be on the table. But please remember the reason 

they were split in the first place, because you do not have the fox 

guarding the hen house. 

Utah Governor Gary Herbert sent a letter to Ed Robertson, the 

Utah Director of the BLM, asking the Bureau not to sell certain 

oil and gas leases next to Zion National Park. In his letter, 

Governor Herbert said, ‘‘Visitors come from around the world to see 

the lush landscape surrounded by towering, iconic sandstone slips 

at Zion National Park. And the preservation of this unique experience is important to the surrounding communities. Their economy 

is dependent upon recreation and tourism.’’ 

So, Dr. Nelson, do you believe that other local communities and 

economies and communities in Utah that similarly depend on 

recreation and tourism should have a say in how the oil and gas 

leases in their local communities are made? 

Dr. NELSON. Thank you for that question. Yes. I provided in both 

my written testimony and my opening remarks today, Utah is a 

natural resource state, and that includes our national and state 

parks. We absolutely believe in balancing use and conservation, 

and we also are a very collaborative state, working with local 

communities. 

I think our key position here is that this occurs best when 

permitting happens at the state level, that you have that local interest, you have that local control. So, assigning primacy for the 

permitting process associated with APDs is best managed through 

the state. And not to diminish the importance of BLM or DOI in 

the overall management of multi-use of our Federal lands, but just 

to provide for that more efficient, local assessment for these permitting processes. 

Mr. BEYER. Well, I heartily agree with you on the need for local 

input and local engagement. How do you balance the rights of 

Americans who live across the country, the other 49 states, who 

own that land and have, essentially, their rights represented by the 

Federal agencies? 

Dr. NELSON. That is a big question to answer. I guess that one 

thing I would point out is that federally managed lands, the preponderance of those lands are different across the country. Utah is 

70 percent; you go up to Alaska, it is even higher. So, we are limited in our ability to create revenues across those federally managed lands. It is a condition that does not exist for all states across 

49 

the country. I think that we have to take that into consideration, 

as well. 

Mr. BEYER. And part of that taking into consideration is those 

lands were federally owned at the time Utah was admitted as a 

state, and Alaska, too. 

Thank you, Mr. Chairman. I yield back. 

Dr. GOSAR. I just want her to answer the gentleman’s question 

that it is also multiple use, and that was one of the dictations on 

behalf of having public lands in the West that are very different 

than east of the Mississippi. 

The gentleman from Colorado is recognized for his 5 minutes. 

Mr. TIPTON. Thank you, Mr. Chairman, and thank the panel for 

taking the time to be able to be here. 

Ms. MacGregor, I would like maybe you to be able to speak a 

little bit to Dr. Nelson’s suggestion of having some of the permitting going over to the states. 

Right now, when the Department of the Interior or the BLM, 

when you issue a permit, do all environmental requirements have 

to be complied with if there is a choice to be able to move forward 

with drilling? 

Ms. MACGREGOR. Absolutely. 

Mr. TIPTON. So, Dr. Nelson, if you had the right to be able to do 

what you are suggesting, that would still be applicable to you, as 

well, wouldn’t it? 

Dr. NELSON. Absolutely. 

Mr. TIPTON. So, we would still have the responsible energy development, making sure that we are doing it in an environmentally 

sensitive way. 

I was interested when I was reading your testimony, Ms. 

MacGregor, talking about some of the multiple use. I have the bill, 

‘‘Planning for America’s Energy Future Act,’’ which enumerates all 

of the above, literally, in the bill. Chairman Gosar has a bill for 

streamlining some of the permitting that we are seeing. We are 

seeing now multiple use, not just traditional fuel sources, but also, 

as I believe you noted, some of the non-traditional sources being 

developed on the public lands, as well. 

But I do find it interesting, listening to some of the comments 

from our colleagues. The Ranking Member is an example, talking 

about multiple use on the lands. If you lease 1,000, 5,000 acres, do 

they put up a big fence so that nobody can hike, hunt, or fish on 

those lands? 

Ms. MACGREGOR. Not to my knowledge. 

Mr. TIPTON. So, there is still multiple use, even while we have 

a responsible energy development, be it traditional or nontraditional resources? 

Ms. MACGREGOR. Yes, there is, sir. And I think some of the witnesses can speak more to the technologies that are available from 

multi-well pads to do extended-reach drilling and minimize impacts 

to surface acreage. 

Mr. TIPTON. Dr. Nelson, maybe you would like to be able to 

speak to that, as well, in terms of lessening the impact. My friend 

from Colorado, a fellow Coloradoan, was talking about lessening 

the impact. Have we developed technologies to be able to not only 

50 

responsibly access resources, but to be able to minimize the impact 

on public lands? 

Dr. NELSON. Yes. I would say the same technologies that really 

have led to the oil and natural gas revolution that we have today 

significantly limit surface impacts. In fact, Utah is currently looking at how it applies rules for horizontal drilling to, of course, assure we have all of those same environmental standards in place. 

But what we are seeing is absolutely fewer drilling rigs required, 

and fewer pads being developed for drilling, as a result of the advent of these technologies. 

Mr. TIPTON. And I appreciate that. I had an opportunity to be on 

the Piceance in Colorado. And we were looking up to BLM land. 

They said, ‘‘We have a lease up there.’’ 

And I said, ‘‘Well, when are you planning on drilling?’’ 

They said, ‘‘We are already producing.’’ But it was from one well 

pad. No surface development was going on, but still being able to 

responsibly develop that resource. 

Ms. MacGregor, on a little different topic here, it is going to the 

MLPs, Master Leasing Programs. Essentially, that is viewed as a 

narrow RMP, intended to be able to address some of the specific 

land-use conflicts prior to leasing and drilling. 

Would you maybe describe a little bit for us in what ways are 

the MLPs duplicative of the RMPs? 

Ms. MACGREGOR. What I can say, sir, is in the wake of the U.S. 

Congress making a determination and passing legislation to throw 

back the Planning 2.0 regulation, we are taking an in-depth look 

at our planning process, because we recognize, no matter what 

project members have on either side of the aisle, the planning process at the Department takes, on average, 5 to 7 years, often more. 

As we look at planning in the Department, and consider how we 

can do things more efficiently, we are evaluating whether the 

Master Leasing Program is an added step on top of an existing 

planning process. Does it actually increase efficiencies, or is it another step? And we are looking at that, as well as many other 

issues. 

Mr. TIPTON. Well, great. And I was a little encouraged, because 

that is one thing that we have heard out of a number of our constituents, in terms of some of the different time frames. We have 

duplicative regulations, Mr. Chairman, that I believe your bill that 

I am co-sponsoring will be able to streamline those regulations, 

look at the duplicative overlap, and be able to do that in a responsible way. 

I appreciate all of you taking the time to be able to be here. My 

time has expired. 

I yield back. 

Dr. GOSAR. I thank the gentleman from Colorado. The gentleman 

from Louisiana, Mr. Graves, is recognized for 5 minutes. 

Mr. GRAVES. Thank you, Mr. Chairman. 

Ms. MacGregor, I would like to clarify some comments that I 

made earlier from the dais up here. The contribution of Federal 

lands to our overall energy production, particularly in the oil and 

gas portfolio, it is my understanding that we have seen a 

reduction—and I want to be clear in what I am saying—in the 

51 

percentage of oil and gas that our Federal lands are providing to 

the overall domestic energy production. 

Is that your understanding, for example, over the last several 

years? 

Ms. MACGREGOR. Specifically in Fiscal Year 2016 we did see a 

downtick in both natural gas and oil production on Federal lands. 

Mr. GRAVES. I am looking at the memo here for the Committee— 

between Fiscal Year 2010 and Fiscal Year 2015, Federal crude 

production fell from 36 percent of total production to 21 percent of 

total production. 

Number two, again, just want to make sure I am getting this 

right. I am making reference to the memo. At the end of Fiscal 

Year 2016, the BLM oversaw a total of 41,143 leases across the 

country. This is the lowest number of Federal leases since Fiscal 

Year 1985. Is that your understanding? 

Ms. MACGREGOR. That is correct. 

Mr. GRAVES. Thank you. 

Mr. Flynn, changing gears a little bit, could you comment or respond perhaps to comments I have heard in the past about folks 

saying that Federal lands are something that all Americans should 

enjoy, therefore states that host energy production on Federal 

lands should not benefit from the Mineral Leasing Act revenuesharing formula? 

Mr. FLYNN. Mr. Chair, Representative, I think states that are 

burdened with the production should absolutely be deriving benefits from it. In all honesty, while everyone should be part of the debate, I think that people who are living closest to the activity 

should have the loudest voice, in moving forward. 

I think, from an industry perspective, we wholeheartedly respect 

and work collaboratively with the communities that we operate in. 

Mr. GRAVES. So, the communities that host it and those that are 

closest should have the biggest voice and should share in the revenues. Is that accurate, I am restating what you said? 

Mr. FLYNN. Yes. 

Mr. GRAVES. Ok. And number two, the United States benefits, I 

think, to the tune of approximately 10 percent under the Mineral 

Leasing Act, because of the 40 percent that goes to the reclamation 

fund. Do you think that that is an appropriate return on investment for the Federal Government? 

Mr. FLYNN. Mr. Chair, it is really not my place to determine. I 

will leave it up to you to figure it out. 

Mr. GRAVES. All right. That is fine. 

Mr. FLYNN. We want to do our fair share to make sure you are 

getting a fair return on the investment. 

Mr. GRAVES. All right. Dr. Nelson, do you care to comment on 

that same question? 

Dr. NELSON. I think I share the same sentiment as Mr. Flynn. 

I guess the one thing I would add is that in states that are heavily 

burdened with Federal lands—and I say burdened because just 

often the economic opportunities are limited because of those 

lands—that consideration needs to be given to how royalties are assigned to states that have more limited economic opportunities. 

Mr. GRAVES. But you also have benefit from tourism and other 

things, as a result of national parks and other Federal facilities. 

52 

Dr. NELSON. Correct, yes. 

Mr. GRAVES. OK. And, by the way, the entrance fees from those 

national parks, as I understand, go right back into those national 

parks, and are reinvested in maintaining those resources. 

So, Ms. MacGregor, can I ask you a question? I think that Mr. 

Flynn and Dr. Nelson just made very convincing comments about 

the relationship between production and revenue sharing. Can you 

help me understand or distinguish between offshore production and 

onshore? 

Just applying Mr. Flynn’s comment about proximity and hosting 

and the loudest voice, should offshore states be treated in a disparate manner? 

Ms. MACGREGOR. Congressman Graves, I think I know where 

you are going with this. 

[Laughter.] 

Mr. GRAVES. I am pretty sure you recognized it about 5 minutes 

ago, but go ahead. 

Ms. MACGREGOR. Federal revenues from oil and natural gas development are absolutely critical to our budget, and in so many different ways lend themselves to various initiatives throughout the 

government. I believe also with the Land and Water Conservation 

Fund, acquisition of Federal lands, as well. 

Mr. GRAVES. Which is derived from offshore energy production, 

which means that other states are benefiting more from offshore 

energy production off the coast of Louisiana than actually the state 

of Louisiana. 

Ms. MACGREGOR. I think the entire United States benefits from 

offshore energy production. 

Mr. GRAVES. And other states disproportionately benefit from it. 

Ms. MACGREGOR. I can’t speak to that. But, tough choices were 

made in this budget. This is what a balanced budget looks like. But 

I am aware that revenue sharing is really important to coastal restoration and a variety of activities in the state of Louisiana, and 

we are committed to—— 

Mr. GRAVES. Under our state’s constitution, any revenue sharing 

dollars are committed to the restoration of the coast. 

And I know that you are sitting there smiling, because that red 

light is on—— 

[Laughter.] 

Mr. GRAVES. I have so much more to talk about, but I want to 

thank you all for your comments. I yield back. 

Dr. GOSAR. I thank the gentleman. I like the tact that he eventually got back to where we thought he was going to go with that 

question. 

The gentlewoman from Wyoming is now recognized for 

5 minutes. 

Ms. CHENEY. Thank you, Mr. Chairman. I would like to thank 

all the witnesses for being here today. And, in particular, Ms. 

MacGregor, I wanted to thank you. I can’t tell you how refreshing 

it is to have somebody who is in the executive branch, who clearly 

has such a firm understanding of these issues, and to know that 

you have been out in Casper and in Carlsbad, looking at the challenges we are facing, that is very appreciated. 

53 

As you well know, we have spent a large part of the last 8 years, 

and even beyond, dealing with a real disconnect between 

Washington and the policies that were made here and what is happening on the ground. 

I wanted to ask if you could continue a little bit in terms of the 

question that Mr. Soto asked, but then you were cut off, and that 

is I appreciate hearing both from Secretary Zinke and from you 

today about the steps that are being taken to deal with the backlog 

of APDs. Could you talk about, in terms of in the field offices, as 

you are looking at the electronic permitting process, some of these 

Internet-based solutions, how is that translating on the ground? 

What steps will also include perhaps moving people? 

In Wyoming, in particular, I know we have shifted folks from our 

Buffalo office to the Casper office. We really appreciate the change 

in policy, but have yet to see a real breaking of the backlog. Could 

you talk a little bit more specifically about, on the ground, how this 

will affect the movement of the APDs? 

Ms. MACGREGOR. Absolutely. And getting out there was so helpful, to see what our folks and what the state is doing—you know, 

Wyoming is an energy powerhouse, and we want to see it stay that 

way. But we recognize that we need to work better with our state 

and local partners to make sure that we are reducing time frames 

when it comes to the permitting backlog, and dealing with a variety of the different processes we deal with that manage the lands 

that border your state and local communities. 

When it comes to staffing, I think that is part of the recipe to 

dealing with some of this. BLM-wide, we have 325 people working 

on permitting across all BLM offices, but there are currently 90 

vacancies. 

So, what we are doing, in accordance with the Secretary’s priorities when it comes to energy exploration and production on 

Federal lands, we are looking right now at our top-five busiest 

offices, and one of those is Casper. Casper, I think, is perhaps close 

to number one. And we are recruiting right now to fill vacancies 

that are needed, to make sure that we are getting staffing out to 

the front lines—another one of Secretary Zinke’s priorities. We are 

trying to hire out where we need the individuals to get through 

this workload. 

And, I find the workload to be inspiring, because that is just good 

news for the people of Wyoming and for our entire country. But we 

also recognize that when folks talk about permits not being used, 

they do expire after 2 years, and we do receive a $9,500 fee for 

every single permit that is filed. 

So, we are looking to make sure those resources stay where they 

are needed, and that we have some mobility within field offices so 

that, if we are doing things online, maybe Buffalo folks who might 

not be as busy can help folks in Casper, or we could maybe grow 

that to even more nationwide movement, so that folks do not have 

to fly in just to help fix backlogs, and we can be more nimble to 

the variety of development that occurs in accordance with the economics and geology of a different area. 

Ms. CHENEY. Thank you. And in terms of a related issue, the 

planning process—I was very pleased that we were able to pass the 

repeal of Planning 2.0 and have the President sign it. Could you 

54 

talk a little bit more about how that planning process is going to 

be focused on ensuring we get more local voices into the whole land 

use management process, as well? 

Ms. MACGREGOR. Absolutely. Another priority of the Secretary is 

restoring trust, especially in the West, for state and local communities that we have to work with, day in and day out, because they 

actually feel the brunt of the choices made in Washington on lands 

out in the West. 

The Planning 2.0 process aimed to do a lot of things, but did reduce some of the time frames for those communities to have public 

comment. So, I think, from the get-go, we are going to work with 

our state and local communities, get their feedback—they clearly 

will have thoughts on how we can improve our Federal planning 

process. 

But we are also asking our team to think broadly and think differently, and come up with bold new ideas that we can take and 

get help with other Federal partners to make things happen a little 

bit more quickly. 

I am hoping that we can be successful here, because, frankly, 

having a planning process that takes 5 to 7 years—and in some 

cases there are examples of much more—that is not a workable 

solution for anyone. We need to be better at working with these 

communities, so that we can get these uses up and have the land 

managed better. 

Ms. CHENEY. Great. Thank you very much. 

Thank you. 

Dr. GOSAR. I thank the gentlewoman from Wyoming, and thank 

you for bringing up, Ms. MacGregor, that there are plenty of vacancies that need to be filled. In order to do the work properly we need 

to get those filled, so I would nudge a notice to our Senate colleagues to get those actually confirmed and filled. 

I thank the witnesses for their valuable testimony and the 

Members for their questions. The members of the Committee may 

have additional questions for the witnesses, and we will ask you to 

respond to those in writing. 

Under Committee Rule 3(o), the members of the Committee must 

submit witness questions within 3 business days following the 

hearing, and the hearing record will be held open for 10 days for 

these responses. 

If there is no further business, without objection, the 

Subcommittee stands adjourned. 

[Whereupon, at 11:49 a.m., the Subcommittee was adjourned.] 

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